Lazy Portfolios Thru May 2010

Here are the Year-To-Date returns of the Lazy Portfolios through the end of May 2010. The components of each portfolio are listed at the end. The “Paul Boyer Permanent Portfolio” is my modification of the Harry Browne Permanent Portfolio where instead of investing 25% in the total US stock market, we invest 12.5% in US Small Cap Value and 12.5% in Emerging Markets.

ID#	Portfolio Name	YTD Return
P2	Paul Boyer Permanent Portfolio	5.0%
P1	Harry Browne Permanent Portfolio	4.8%
P3	Permanent Portfolio Fund	3.3%
P11	Bill Schultheis’ Coffeehouse Portfolio Vanguard	2.6%
P23	Larry Swedroe Min Fat Tails	1.6%
P14	David Swensen’s Yale Endowment	1.6%
P24	IFA Index Portfolio 100 Bright Red	1.3%
P17	Scott Burns’ Couch Potato Portfolio	1.3%
P22	Larry Swedroe Simple	1.2%
P7	William Bernstein’s No Brainer Cowards Portfolio	0.9%
P19	Scott Burns’ Four Square Portfolio	0.8%
P13	David Swensen’s Lazy Portfolio	0.7%
P25	IFA Index Portfolio 50	0.4%
P15	MMM Do It Yourself Funds	0.1%
P12	FundAdvice Ultimate Buy & Hold	-0.7%
P20	Scott Burns’ Five Fold Portfolio	-0.9%
P10	Ted Aronson’s Lazy Portfolio	-1.2%
P6	Rick Ferri Core Four	-1.2%
P8	William Bernstein’s Basic No-Brainer Portfolio	-1.3%
P16	Vanguard Windsor	-1.5%
P21	Scott Burns’ Six Ways from Sunday Portfolio	-2.3%
P4	Taylor Larimore 3 Fund	-2.8%
P5	Taylor Larimore 4 Fund	-2.9%
P18	Scott Burns’ Margarita Portfolio	-2.9%
P9	Dilbert World’s Simplest	-3.6%

Below is a Return vs. Risk Chart for these portfolios from 1985 through 2009 (Note: this chart does not include returns through the end of May 2010). The ideal portfolio would be high return at low risk and thus appear at the top left of the chart. [Chart data is computed using Simba’s spreadsheet from the Bogleheads.org forum with the exception of IFA portfolios from ifa.com.]

See how there is almost an invisible boundary line from lower left to upper right? That is the “Efficient Frontier” and shows that returns are correlated with risk over the long term. It is nearly impossible to construct a portfolio that will be above that efficient frontier. So the only question you need to answer is, how much risk are you willing to accept. That is, can you tolerate the downturns in the market in the short term?

Looking at a shorter term, here is a chart showing just the previous ten years from 2000 through 2009.

I like the boost to returns the Paul Boyer Permanent Portfolio got during prosperity and it didn’t hurt too much during recession either.

And to see if you can indeed stomach a bad short term, here is a chart with just the previous three years:

How about a chart of just the recent heyday of stocks from 2003 thru 2006:

Looking at past charts is fun, but should not be the only data you use to make investment decisions. I like the Permanent Portfolio concept because it is so simple, has low fees, and covers the four economic cycles of prosperity, inflation, deflation, and recession. It has been shown to be the lowest in risk among the lazy portfolios while not sacrificing returns. They are the only portfolios to include gold.

Here are the components of each of the portfolios*:

				YTD
ID#	PORTFOLIO NAME	TICKER	%	Return
P1	Harry Browne Permanent Portfolio
	Vanguard Total Stock Mkt Idx	VTSMX	25%	-0.4%
	Vanguard Long-Term Treasury Investor	VUSTX	25%	7.3%
	Vanguard Short-Term Treasury	VFISX	25%	1.4%
	SPDR Gold Shares	GLD	25%	10.8%
		TOTAL	100%	4.8%
P2	Paul Boyer Permanent Portfolio
	Vanguard Small Cap Value Index	VISVX	12.5%	7.7%
	Vanguard Emerging Mkts Stock Idx	VEIEX	12.5%	-6.9%
	Vanguard Long-Term Treasury Investor	VUSTX	25%	7.3%
	Vanguard Short-Term Treasury	VFISX	25%	1.4%
	SPDR Gold Shares	GLD	25%	10.8%
		TOTAL	100%	5.0%

P3	Permanent Portfolio Fund	PRPFX	100%	3.3%


P4	Taylor Larimore 3 Fund
	Vanguard Total Intl Stock Index	VTSMX	50%	-0.4%
	Vanguard Short-Term Bond Index	VGTSX	30%	-11.0%
	Vanguard Total Bond Market Index	VBMFX	20%	3.2%
		TOTAL	100%	-2.8%

P5	Taylor Larimore 4 Fund
	Vanguard Total Intl Stock Index	VTSMX	50%	-0.4%
	Vanguard Short-Term Bond Index	VGTSX	30%	-11.0%
	Vanguard Total Bond Market Index	VBMFX	10%	3.2%
	Vanguard Inflation-Protected Secs	VIPSX	10%	2.9%
		TOTAL	100%	-2.9%

P6	Rick Ferri Core Four
	Vanguard Total Intl Stock Index	VTSMX	48%	-0.4%
	Vanguard REIT Index	VGSIX	8%	11.5%
	Vanguard Total Intl Stock Index	VGTSX	24%	-11.0%
	Vanguard Total Bond Market Index	VBMFX	20%	3.2%
		TOTAL	100%	-1.2%

P7	William Bernstein’s No Brainer Cowards Portfolio
	Vanguard Short-Term Investment-Grade	VFSTX	40%	1.7%
	Vanguard Total Stock Mkt Idx	VTSMX	15%	-0.4%
	Vanguard Small Cap Value Index	VISVX	10%	7.7%
	Vanguard Value Index	VIVAX	10%	-0.4%
	Vanguard Emerging Mkts Stock Idx	VEIEX	5%	-6.9%
	Vanguard European Stock Index	VEURX	5%	-16.0%
	Vanguard Pacific Stock Index	VPACX	5%	-4.8%
	Vanguard REIT Index	VGSIX	5%	11.5%
	Vanguard Tax-Managed Small Cap Inv	VTMSX	5%	6.7%
		TOTAL	100%	0.9%

P8	William Bernstein’s Basic No-Brainer Portfolio
	Vanguard 500 Index	VFINX	25%	-1.5%
	Vanguard Tax-Managed Small Cap Inv	VTMSX	25%	6.7%
	Vanguard Tax-Managed Intl	VTMGX	25%	-12.2%
	Vanguard Short-Term Bond Index	VBISX	25%	1.7%
		TOTAL	100%	-1.3%

P9	Dilbert World’s Simplest
	Vanguard Total Intl Stock Index	VTSMX	50%	-0.4%
	Vanguard Short-Term Bond Index	VEIEX	50%	-6.9%
		TOTAL	100%	-3.6%

P10	Ted Aronson’s Lazy Portfolio
	Vanguard Emerging Mkts Stock Idx	VEIEX	20%	-6.9%
	Vanguard 500 Index	VFINX	15%	-1.5%
	Vanguard Pacific Stock Index	VPACX	15%	-4.8%
	Vanguard Extended Market Idx	VEXMX	10%	5.7%
	Vanguard Inflation-Protected Secs	VIPSX	10%	2.9%
	Vanguard European Stock Index	VEURX	5%	-16.0%
	Vanguard High-Yield Corporate	VWEHX	5%	0.4%
	Vanguard Long-Term U.S. Treasury	VUSTX	5%	7.3%
	Vanguard Small Cap Growth Index	VISGX	5%	5.8%
	Vanguard Small Cap Value Index	VISVX	5%	7.7%
	Vanguard Total Stock Mkt Idx	VTSMX	5%	-0.4%
		TOTAL	100%	-1.2%

P11	Bill Schultheis’ Coffeehouse Portfolio Vanguard
	Vanguard Total Bond Market Index	VBMFX	40%	3.2%
	Vanguard 500 Index	VFINX	10%	-1.5%
	Vanguard Value Index	VIVAX	10%	-0.4%
	Vanguard Total Intl Stock Index	VGTSX	10%	-11.0%
	Vanguard REIT Index	VGSIX	10%	11.5%
	Vanguard Small Cap Value Index	VISVX	10%	7.7%
	Vanguard Small Cap Index	NAESX	10%	6.7%
		TOTAL	100%	2.6%

P12	FundAdvice Ultimate Buy & Hold
	Vanguard 500 Index	VFINX	6.00%	-1.5%
	Vanguard Value Index	VIVAX	6.00%	-0.4%
	Vanguard Small Cap Index	NAESX	6.00%	6.7%
	Vanguard Small Cap Value Index	VISVX	6%	7.7%
	Vanguard REIT Index	VGSIX	6%	11.5%
	Vanguard Developed Markets Index	VDMIX	12%	-12.1%
	Vanguard Inflation-Protected Secs	VIPSX	8%	2.9%
	Vanguard Interm-Term U.S. Treas	VFITX	20%	4.1%
	Vanguard Short-Term Treasury	VFISX	12%	1.4%
	Vanguard International Value	VTRIX	12%	-12.7%
	Vanguard Emerging Mkts Stock Idx	VEIEX	6%	-6.9%
		TOTAL	100.00%	-0.7%

P13	David Swensen’s Lazy Portfolio
	Vanguard Total Stock Mkt Idx	VTSMX	30%	-0.4%
	Vanguard REIT Index	VGSIX	20%	11.5%
	Vanguard Developed Markets Index	VDMIX	15%	-12.1%
	Vanguard Emerging Mkts Stock Idx	VEIEX	5%	-6.9%
	Vanguard Inflation-Protected Secs	VIPSX	15%	2.9%
	Vanguard Short-Term Treasury	VFISX	15%	1.4%
		TOTAL	100%	0.7%

P14	David Swensen’s Yale Endowment
	Vanguard Total Stock Mkt Idx	VTSMX	30%	-0.4%
	Vanguard REIT Index	VGSIX	20%	11.5%
	Vanguard Developed Markets Index	VDMIX	15%	-12.1%
	Vanguard Emerging Mkts Stock Idx	VEIEX	5%	-6.9%
	Vanguard Inflation-Protected Secs	VIPSX	15%	2.9%
	Vanguard Short-Term Treasury	VUSTX	15%	7.3%
		TOTAL	100%	1.6%

P15	MMM Do It Yourself Funds
	Vanguard 500 Index	VFINX	12.00%	-1.5%
	Vanguard Value Index	VIVAX	12.00%	-0.4%
	Vanguard Small Cap Value Index	VISVX	20.00%	7.7%
	Bridgeway Ultra-Small Company Market	BRSIX	20.00%	6.4%
	Vanguard REIT Index	VGSIX	5.00%	11.5%
	Vanguard International Value	VTRIX	9.00%	-12.7%
	Vanguard International Explorer	VGTSX	9.00%	-11.0%
	Vanguard Emerging Mkts Stock Idx	VEIEX	13.00%	-6.9%
		TOTAL	100.00%	0.1%

P16	Vanguard Windsor	VWNDX	100.00%	-1.5%

P17	Scott Burns’ Couch Potato Portfolio
	Vanguard Total Stock Mkt Idx	VTSMX	50%	-0.4%
	Vanguard Inflation-Protected Secs	VIPSX	50%	2.9%
		TOTAL	100%	1.3%

P18	Scott Burns’ Margarita Portfolio
	Vanguard Total Stock Mkt Idx	VTSMX	33.30%	-0.4%
	Vanguard Inflation-Protected Secs	VIPSX	33.30%	2.9%
	Vanguard Total Intl Stock Index	VGTSX	33.30%	-11.0%
		TOTAL	99.90%	-2.9%

P19	Scott Burns’ Four Square Portfolio
	Vanguard Total Stock Mkt Idx	VTSMX	25%	-0.4%
	Vanguard Inflation-Protected Secs	VIPSX	25%	2.9%
	Vanguard Total Intl Stock Index	VGTSX	25%	-11.0%
	Vanguard REIT Index	VGSIX	25%	11.5%
		TOTAL	100%	0.8%

P20	Scott Burns’ Five Fold Portfolio
	Vanguard Total Stock Mkt Idx	VTSMX	20%	-0.4%
	Vanguard Inflation-Protected Secs	VIPSX	20%	2.9%
	Vanguard Total Intl Stock Index	VGTSX	20%	-11.0%
	Vanguard REIT Index	VGSIX	20%	11.5%
	American Century International Bd Inv	BEGBX	20%	-7.4%
		TOTAL	100%	-0.9%

P21	Scott Burns’ Six Ways from Sunday Portfolio
	Vanguard Total Stock Mkt Idx	VTSMX	16.7%	-0.4%
	Vanguard Inflation-Protected Secs	VIPSX	16.7%	2.9%
	Vanguard Total Intl Stock Index	VGTSX	16.7%	-11.0%
	Vanguard REIT Index	VGSIX	16.7%	11.5%
	American Century International Bd Inv	BEGBX	16.7%	-7.4%
	Vanguard Energy	VGENX	16.7%	-9.2%
		TOTAL	100.0%	-2.3%

P22	Larry Swedroe Simple
	Vanguard Value Index	VIVAX	15%	-0.4%
	Vanguard Small Cap Value Index	VISVX	15%	7.7%
	Vanguard Small Cap Index	NAESX	13%	6.7%
	Vanguard Emerging Mkts Stock Idx	VEIEX	4%	-6.9%
	Vanguard International Value Inv	VTRIX	13%	-12.7%
	Vanguard Inflation-Protected Secs	VIPSX	40%	2.9%
		TOTAL	100%	1.2%

P23	Larry Swedroe Min Fat Tails
	Vanguard Small Cap Value Index	VISVX	15%	7.7%
	Vanguard Emerging Mkts Stock Idx	VEIEX	15%	-6.9%
	Vanguard Inflation-Protected Secs	VIPSX	35%	2.9%
	Vanguard Short-Term Treasury	VFISX	35%	1.4%
		TOTAL	100%	1.6%

P24	IFA Index Portfolio 100 Bright Red
	DFA U.S. Large Company	DFLCX	12%	0.0%
	DFA U.S. Large Cap Value	DFLVX	12%	3.8%
	DFA U.S. Micro Cap	DFSCX	20%	8.7%
	DFA U.S. Small Cap Value	DFSVX	20%	9.0%
	DFA Real Estate Securities	DFREX	5%	11.7%
	DFA Intl Value	DFIVX	6%	-11.6%
	DFA Intl Small Company	DFISX	6%	-5.7%
	DFA Intl Small Cap Value	DISVX	6%	-8.0%
	DFA Emerging Markets	DFEMX	4%	-5.5%
	DFA Emerging Markets Value	DFEVX	4%	-6.8%
	DFA Emerging Markets Small Cap	DEMSX	5%	-3.6%
		TOTAL	100%	1.32%*

P25	IFA Index Portfolio 50
	DFA U.S. Large Company	DFLCX	12%	0.0%
	DFA U.S. Large Cap Value	DFLVX	12%	3.8%
	DFA U.S. Micro Cap	DFSCX	6%	8.7%
	DFA U.S. Small Cap Value	DFSVX	6%	9.0%
	DFA Real Estate Securities	DFREX	6%	11.7%
	DFA Intl Value	DFIVX	6%	-11.6%
	DFA Intl Small Company	DFISX	3%	-5.7%
	DFA Intl Small Cap Value	DISVX	3%	-8.0%
	DFA Emerging Markets	DFEMX	2%	-5.5%
	DFA Emerging Markets Value	DFEVX	2%	-6.8%
	DFA Emerging Markets Small Cap	DEMSX	2%	-3.6%
	DFA One-Year Fixed-Income I	DFIHX	10%	0.4%
	DFA Two-Year Global Fixed-Income I	DFGFX	10%	0.8%
	DFA Five-Year Government I	DFFGX	10%	2.3%
	DFA Five-Year Global Fixed-Income I	DFGBX	10%	3.2%
		TOTAL	100%	0.36%*

*Note that these results use Yahoo! Finance adjusted historical returns with the exception of IFA portfolios results from IFA.com that include IFA’s fee.

Sat, May 29 2010 » Analysis, Blog

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