Personal Finance

Uber Tuber Extreme?

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  • Feb 1st, 2014 3:52 am
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Sr. Member
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Jul 13, 2009
925 posts
186 upvotes

Uber Tuber Extreme?

The Canadian Couch Potato suggests the Uber Tuber on their site. It says that small-caps and value stocks historically outperform the overall market.

I know that past performance does not represent future performance, but does the 2-3% extra gains make sense?

How come they dont suggest the follow portfolio (or similar) if the person's time horizon is 25+ years?
  • 20% -Cdn value equity
  • 10% -Cdn small cap
  • 20%-US value equity
  • 10% -US small cap
  • 10% -Intl value equity
  • 10% -Intl small cap
  • 10% -Emerging markets equity
  • 10% -Global real estate


If it's going to be 25+years, the portfolio would ride out the dips in the long run.
What are the pros and cons of this portfolio?[/COLOR]
Thanks.
5 replies
Deal Fanatic
Mar 24, 2008
6278 posts
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Toronto
Pros: possibly better returns than the regular passive investing portfolios.
Cons: Too many ETFs to buy, costly in terms of management (rebalancing) and time.
Deal Addict
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Jan 28, 2012
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Also no fixed income. As much as longer time horizon doesn't need as much, if any, I've heard many compelling arguments to hold at least some regardless, to reduce volatility.
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Jul 13, 2009
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Rhaegar wrote: Also no fixed income. As much as longer time horizon doesn't need as much, if any, I've heard many compelling arguments to hold at least some regardless, to reduce volatility.
Isnt reducing volatility to minimize losses? If the long-term offsets the volatility, isnt that acceptable?
The volatility part is to reduce panic selling isnt it?
ksgill wrote: Pros: possibly better returns than the regular passive investing portfolios.
Cons: Too many ETFs to buy, costly in terms of management (rebalancing) and time.
The original Uber Tuber has two extra ones in addition to my post (Gov bonds and Corp bonds). It also suggests 200k+ portfolios so buying isnt too expensive. Rebalancing is once a year, a day spent rebalancing tops.

~~

I'm looking for 9-10% annual average returns in 25+ years. Short of buying penny-stocks or a specific stock (which requires me to keep track of it daily), this is the safest method?
Thanks.
Deal Addict
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Jan 28, 2012
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ChappyHappy wrote: Isnt reducing volatility to minimize losses? If the long-term offsets the volatility, isnt that acceptable?
The volatility part is to reduce panic selling isnt it?
Yes it softens drawdowns by having part of your portfolio in safer assets.

Volatilty hurts, even though the returns seem a lot higher. Dropping 50% means you need to gain 100% to make up for it.

If you have a solid % of your portfolio in fixed income though, when your stocks plunge 50%, that fixed income is like having a big pile of cash to add to your stock positions at the low point. So not only did your portfolio as a whole not lose as much, but you've re-balanced into the equities magnifying the return as they climb back up.
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Jul 13, 2009
925 posts
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Rhaegar wrote: Volatilty hurts, even though the returns seem a lot higher. Dropping 50% means you need to gain 100% to make up for it.
I'm assuming it'll take 5-10 for it to climb back up to 100%. 25+ years should cover that. Right? I dont plan to touch the money for 25+ years.
Rhaegar wrote: If you have a solid % of your portfolio in fixed income though, when your stocks plunge 50%, that fixed income is like having a big pile of cash to add to your stock positions at the low point. So not only did your portfolio as a whole not lose as much, but you've re-balanced into the equities magnifying the return as they climb back up.
Ah! Forgot about that.
But I've also would've gained a lot more during the bull market wouldnt I?

~~

I'm thinking I dont understand volatility as much since it seems I'm ok with the risks for the extra 2%.
Thanks.

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