Talmud Asset Allocation Strategy

[workathome]

Beats the Permanent Portfolio

http://www.mebanefaber.com/2013/09/26/h ... um=twitter

[KevinW]

Well, the Talmud portfoliot has higher returns but also significantly higher volatility than the PP. Unsurprising for a portfolio that is 2/3 equity vs. 1/4.

That said, I think it's an OK portfolio. I've entertained the thought of using it. I would use dividend stocks for "business," directly owned rental real estate equity for "land," and short term bonds (vs. their intermediates) for "reserves."

[workathome]

If you wanted to be more "historically accurate" you could allocate the reserves portion to silver. Or more practical, something like 50/50 treasuries and gold. Then you're veering back towards a Permanent Portfolio type setup. I'm thinking that income-generating Real Estate might be nicer to hold rather than the massive 50% PP allocates to US debt and US cash.

It is really quite intriguing how useful principles can remain unchanged over millennia.

[Tommy]

This reminds me of a Buddhist passage I read long ago:
"With wealth acquired this way, a layman fit for household life, in portions four divides his wealth: thus will he friendship win. One portion for his wants he uses, two portions on his business spends, the fourth for times of need he keeps."

In other words income can be managed as follows: up to 25% mandatory/discretionary spending, 50% in business, 25% cash reserve.

Now that I think about it, that particular passage was my first introduction to the idea of extreme saving. I remember feeling surprised that the Buddha's advice was basically that you should save/invest 75% of your income.

The passage is from this: http://www.accesstoinsight.org/tipitaka ... .nara.html

[almostthere]

At Tommy. Many thanks for the reference. I also like the six ways one dissipates wealth in the passage. The Buddha had a very evenhanded approach to wealth. If you act wisely, good things happen including getting wealthier. If not, they don't including getting poorer.

[workathome]

Thanks Tommy, very awesome. I can already imagine the back cover pitch for Jacob's next book, "For the first time ever, Dr. Fisker shares the secret ancient wisdom on obtaining personal and financial independence, passed down in direct succession from the Buddha himself. Including his top 108 tips for finding eternal bliss today!"

[Felix]

The four noble truths:

1. All life is production and consumption
2. The desire for conspicuous consumption is the root of all suffering
3. All income is insecure, deal with it
4. Become a renaissance man

[KevinW]

I like that, like the PP, one could implement a Talmud portfolio by buying all securities directly with neglible ongoing holding expenses. Something like:

business: self-managed stock portfolio, e.g. Dogs of the Dow
land: rental real estate owned and managed directly
reserves: T-bills, Kiva, bullion coins, and/or bank CDs

[almostthere]

at workathome and felix, thanks for the belly laugh