Comparison - Lazy Portfolio ETF (2024)

FAQs

Is lazy portfolio good? ›

Lazy portfolios are designed to be easy to set up and maintain, making them a good option for investors who want to invest for the long term but don't have much time to spend on their investments.

Each Lazy Portfolio had a maximum drawdown exceeding -35% over the past ten years. Some of the worst Lazy Portfolios exceeded -40% in the same time frame.

The current David Swensen Lazy Portfolio Sharpe ratio is 1.00. A Sharpe ratio greater than 1.0 is considered acceptable.

The golden butterfly portfolio involves dividing your investments equally into five market segments. Here's how to split up your investments according to Portfolio Charts (the version Stephan shared had some slight differences, but this is the original): 20% U.S. total stock market. 20% small cap value stocks.

Lazy portfolios are designed to perform well in most market conditions. Most contain a small number of low-cost funds that are easy to rebalance. They are "lazy" in that you can maintain the same asset allocation for an extended period, as they generally contain 30-40% bonds, suitable for most pre-retirement investors.

About Ray Dalio's All Weather

Ray Dalio's All Weather portfolio is an investment strategy designed to perform well across different economic conditions. The goal of the All Weather portfolio is to generate consistent returns while minimizing risk, regardless of the economic environment.

Drawdown rules

The basis for calculating Maximum drawdown is the initial account balance. At any point in a day if the running and closed loss exceeds 5% of the account balance at the beginning of the day it will be considered 5% daily drawdown rule violation.

To recover from a 50% loss, an investor needs a 100% gain. During the bear market of 2007-2009, the S&P 500® Index lost approximately 55%, which required an approximate gain of 123% to break even.

*The max drawdown period for the 60/40 portfolio was from February–March 2020 (2 months). **The max drawdown period for the 60/40 portfolio was from December 1980–September 1981 (10 months). For all other periods the max drawdown period for equities and the 60/40 portfolio were the same.

Usually, any Sharpe ratio greater than 1.0 is considered acceptable to good by investors. A ratio higher than 2.0 is rated as very good. A ratio of 3.0 or higher is considered excellent. A ratio under 1.0 is considered sub-optimal.

Is a Sharpe ratio of 1.5 good? ›

Generally speaking, a Sharpe ratio between 1 and 2 is considered good. A ratio between 2 and 3 is very good, and any result higher than 3 is excellent.

According to MPT, the portfolio that maximizes the Sharpe ratio lies on the mean–variance efficient frontier. This portfolio corresponds to the point where the Capital Market Line is tangent to the frontier and, as such, it is known as the tangency portfolio.

The performance of the Golden Butterfly Portfolio is compared to the S&P 500 index from 1978 to the present. Although it shows a lower compound annual growth rate, it also has a lower standard deviation, a less severe worst year, and a smaller maximum drawdown.

Gold is an asset that is inversely correlated with the market. It does well during economic slumps. This is why investors prefer to add gold to their portfolio - to hedge against inflation. Most estimates suggest that gold investments should make up only 5-10% of your portfolio and not more.

To Copy Buffett, Prepare To Be Patient

If you haven't figured it out already, copy trading Buffett is not a strategy for those who want to get rich quickly. Warren Buffett is one of the richest people in the world, but 99% of that net worth was created after he turned 50 years old.

The efficient portfolios are those that have the highest expected return for a given standard deviation value. These portfolios are the green dots starting with the global minimum variance portfolio at the tip of the Markowitz bullet.

It's the typical passive investing strategy, for long-term investors, with time horizons of more than 10 years. It's called lazy because you don't actively manage your portfolio. It's the so called buy and hold investing strategy, designed to achieve a long-term financial independence.

A standard example of an aggressive strategy compared to a conservative strategy would be the 80/20 portfolio compared to a 60/40 portfolio. An 80/20 portfolio allocates 80% of the wealth to equities and 20% to bonds compared to a 60/40 portfolio, which allocates 60% and 40%, respectively.