Total returns on invested assets for 2010 with total withdrawals added back into the asset totals were 11.71%. On a comparable basis since I began this portfolio on Labor Day 2003, annualized returns are 10.19%, and returns on the gold part of the portfolio have been 29% annually.
I started the portfolio and this blog on the basis of an investment approach to managing a portfolio ***during*** retirement. My greatest wish has been to find and put in place a "set and forget" portfolio that would generate adequate income and gains to protect against inflation and currency debasement. Taking the US Dollar Index value of assets on Labor Day 2003 and that on December 31, 2010, my real ex-inflation annualized return was 7.65% which is not too bad for a retirement portfolio compared to any stock or bond index you might choose for that period.
But I didn't do this by formula, despite my wish that I could walk away and enjoy and let someone else do it. In all honesty I find when I look at what I did is that I have been operating by investing by "feel" or by the seat of my pants. No genius involved. No predictabilty implied or likely. What I have done first, unconsciously by feel, is to keep ~15-20% in cash or near cash even at nearly 0% return. I did not consciously decide to do this! Then I was exploiting high yield vehicles by buying and selling their ranges and getting out as soon as range busting looked likely. It has been possible to earn 6-12% on these products. 2008 was a great test case in that I basically broke even on the year, a great defensive victory.
If you can make 6% per year on high yield you only need one long term bull market (gold, for example) and a few short term positive trades to get you up to 10-12%. Honestly I did not set out to do this. I was only trying to avoid losses and make a little money because I scare easily. And if you have some cash you can buy value (low prices) if they happen. The lesson (if ANY) is to honestly look at what we've actually done and accept it. I was embarassed when I saw I was just a timid trader and not a macho leveraged guy as in previous lives. But timid is exactly what I should be at this stage. Timid does not mean that you don't act. It means you DO act to prevent losses and take small profits and dividends and hopefully make 10% per year and 7.5% ex-inflation.
The real problem remains what to do if we are retired and don't want to continue to manage our portfolios, or can't. HRux has a solution for pre-retirement portfolios (see her many comments at this site), but I don't see one with a long term record and very low drawdowns for my situation. Yet....
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