BlueNote, are you aware of any information on the past performance of the GMP? The closest I can find is past projections of the current (approximated) allocation projected backwards and rebalanced as a fixed allocation. But that's obviously flawed.
Shouldn't a non-rebalanced GMP have minimal volatility? Shouldn't it have essentially zero volatility if you include correct allocations of gold, cash, and commodities?
You can't pick stocks/bonds/real estate and expect to beat the market (on a risk adjusted basis) because the market is the sum total of all investment decisions and you're never going to be as smart, adaptable and sophisticated as the market.
I've always had trouble with this assumption. It seems to claim that every single investor is below average. But I read something by Sharpe recently where he says the Market price implicitly includes a weighted statistical insight of all predictions. I suppose that makes sense. Even more so if the investors with the most money invested are also the most well informed.
- Exchange rates are way more volatile than bond values and can also overwhelm stock and real estate values. Currency hedging comes at a cost of the effort/time of implementing it, the cost of the hedging securities and the risk that it won't work as planned.
If PPP generally holds, shouldn't exchange rate volatility cancel out as noise over multi-decade investment horizons? Especially if you hold GMP and never have to rebalance?
- Taxes vary in different countries , in some cases taxes are so onerous on certain investment areas (foreign stocks, bonds, foreign bonds etc.) that investing in those asset classes make no sense.
Can you talk more about this? Any specifics?
according to the GMP strategy it's bad to be a contrarian
Popular sources of investing advice are flooded with the idea that contrarian is good. Be greedy when others are fearful etc. Rebalancing a multi-asset portfolio is cyclical contrarianism, as I see it. When we optimize our way up to the "perfect" index portfolio, all of a sudden that whole line of thought gets abandoned? *This* is where I feel like I'm missing something important. When I see a clear picture of where every other investor in aggregate is putting their money, it seems like that's exactly where I *shouldn't* be following the herd.
I'm not trying to be argumentative. I genuinely feel like thinking about this portfolio is exposing some very fundamental flaw in my understanding.