The original idea of the strategy was that is was not market timing and the best argument for risk-parity is to use it without market timing. If we knew Hedgefundie's behavior since the thread we would either see a constantly changing strategy in the guise of new information or we would see relatively few adjustments.Well, HEDGEFUNDIE wasn't able to. He changed the strategy himself six months after proposing it.Hedgefundie (risk parity) is technically not a timing strategy and yet we see vast numbers changing the strategy along the way and turning it into a timing strategy. Theses timing strategies last a very short time before they are changed again based on new information or current feelings. We see the variance from the original hedgefundie as a function of time.There are plenty of people staying the course with leveraged risk parity. I think that with any AA that has more risk it's common for people who do not have a good understanding of their personal risk tolerance to make reactive changes (e.g. people who tilt towards SCV and then change their minds based on volatility or poor returns) but this does not mean that these strategies are necessarily market timing.The Hedgefundie threads will show the same
Some people are able to follow a non-timing strategy.
On February 5, 2019 he proposed 40% UPRO & 60% TMF.
On August 11, 2019 he changed it to 55% UPRO / 45% TMF. The first "variance from the original HEDGEFUNDIE" was made by HEDGEFUNDIE.
Nine months later, on Jun 21, 2020, he stopped posting in the forum, leaving us uninformed about whether 55/45 was permanent, whether he stayed the course from then on--or whether he continued to make tactical changes.
My target AA is 80/20 but I also have a fixed income goal for retirement and the desire to limit tax-deferred growth as I continue to work. The solution was to accept a 75/25 AA until such time that I can grow my Roth with 98% stocks enough to get an overall AA of 80/20, Roth convert more of tax-deferred into Roth, and/or spend down the tax-deferred that holds a higher percentage of fixed income. I do this without any future market predictions and I do this because good returns have made the tax-deferred size a potential issue. My AA is changing over time but as a result of past/present returns rather than as a prediction of future returns.
The idea of market timing has more to do with degree than all-or-none. Someone that increases savings rate a few percent to increase the size of their emergency fund when they get nervous is not really market timing because the degree of the change is not affecting the outcome. That additional savings is a productive way to deal with anxiety and keep their investment plan from changing. I would be cautious of those that label it market timing to in order justify any timing action. An argument that labels everything as timing can be used to justify any timing action and as such is a very poor argument - so poor as to be meaningless statement.
Statistics: Posted by abc132 — Sat Aug 31, 2024 11:53 pm — Replies 16 — Views 1601