I think we might be in point of time where cash could make lot of sense. It is uncertain if we are in an other long running bull market yet. And certain sectors might be approaching a top already. Namely the biggest technology stocks.
As someone on the older side, I generally agree with that. The tech sector has been very good for me over the past 10+ years and I still have a fair bit invested but I look at my portfolio and go "that's probably enough." I've been around long enough so that "Don't get greedy" is pretty ingrained.
On the other hand, getting 5% on basically a treasuries fund looks pretty good on a risk-adjusted basis.
I myself tend to lean toward stock-heavy allocations, but this is not something I'd recommend to everyone. I don't know if you remember the 2008-2009 period, or if you even were an investor back then, but those were... interesting times, to say the least. Almost-retired and newly retired didn't sleep well back then.
Your portfolio lost 26% of its value that year, and losing 1/4 of your life's saving isn't something most people are ready to stomach, especially when they need it the most (year just before or just after retirement, typically).
At the same time, Browne's allocation lost less than 1%. Since 2007 it had just one really bad year (2022, -13%, and even then it wasn't as bad as the above allocation), other than that, it was always positive or close to zero.
A simple portfolio that almost never loses money and still has a decent, yet significantly smaller than its competitors, CAGR. That's a pretty good option for very conservative investors, IMO.
There’s different stock ratios for different situations. But half cash is bad advice. Even if you are 85, you might have lots of cash equivalents, but you wouldn’t have 25% gold.
Picking a single year isn’t a productive example because the point of investment is to keep for multiple years.
With a 10+ year horizon, you should definitely be willing to stomach a 25% drop one year, because that happens. And of course the market was up over 100%+ in the following 10 years.
It’s not useful to compare Browne’s allocation without mentioning how it was much worse than the s&p500 over that period.
To compare strategies, you want to look at them compared to one another. And of course past performance doesn’t guarantee future performance. But it can be helpful.
“Almost never loses money” is not a very good strategy unless you are in retirement already. Most people aren’t in retirement so if they choose a never lose money vs strategy they will end up with less money than a “loses 25% sometimes, but averages more.”
Average return is a metric, but it's not the only one. If you really want the biggest possible CAGR and don't care at all about volatility, you won't beat a 100% stocks allocation.
Browne allocation's Sharpe ratio (0.67) is better than yours' (0.60). They serve different purposes and cater to different investors.
I personally wouldn't use Browne's because I'm still young(ish) and have a very, very stable income and will get a pension from my government, so I can stomach the volatility and better take the best average return. But if I were a freelance of some sort in my late fifties or older, I'd get closer to Browne's allocation.
