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Thoughts of the "Ginger Ale Portfolio"

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  • Thoughts of the "Ginger Ale Portfolio"

    His rationale seems reasonable but I'm admittedly new at this and so I'm interested to know what others who know more think about this asset allocation?


    https://www.optimizedportfolio.com/g...io-allocations

  • #2
    Obviously there’s a small cap value tilt here but there’s also a million different portfolios that could be considered reasonable. I guess it’s the new big thing to create some kind of portfolio and give it a snazzy name. I’m too lazy to divide international between developed and emerging markets.

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    • #3
      It’s very reasonable but also lots of funds and hard to add to and rebalance unless you use his preferred “Pie” with M1 finance which admittedly is a slick program. You have to believe in the small cap value tilt which has underperformed recently (though better in the last quarter). Honestly if you are new to it and easily overwhelmed then I would go for the ultra simple JL Collins simple path to wealth 100% total stock market ie VTI and forget it until 5-10 years before retirement and then start to add in some bonds until you have 5-10 years of living expenses in bonds. Simplicity and less incentive to tinker and chase performance likely make up for any other arguments though if you must have some international in there then do 20-40% international and the rest US. Spend your time making more money and saving more money, and saving more on taxes. That’s the big ROI.

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      • #4
        Know what you own.
        https://www.investopedia.com/terms/s...alue_stock.asp
        I call this design bottom fishing.
        Avoid the big dogs and avoid PE’s that reflect growth. 55% of your portfolio is invested in stocks that are at the bottom of the food chain. The premise is, no where to go but up.
        There is a reason the total capitalization of your investments will be inversely related to your capital allocation. Not growing and small.

        Would you rather own Coke or Ginger Ale?

        Comment


        • #5
          Originally posted by Hoopoe View Post
          It’s very reasonable but also lots of funds and hard to add to and rebalance unless you use his preferred “Pie” with M1 finance which admittedly is a slick program. You have to believe in the small cap value tilt which has underperformed recently (though better in the last quarter). Honestly if you are new to it and easily overwhelmed then I would go for the ultra simple JL Collins simple path to wealth 100% total stock market ie VTI and forget it until 5-10 years before retirement and then start to add in some bonds until you have 5-10 years of living expenses in bonds. Simplicity and less incentive to tinker and chase performance likely make up for any other arguments though if you must have some international in there then do 20-40% international and the rest US. Spend your time making more money and saving more money, and saving more on taxes. That’s the big ROI.
          Oh, I'm not going down this rabbit hole - I'm a simple man. I can follow a simple plan because the majority of people endorse it and it works but I also want to try and understand how and why people arrived at those recommendations. I get it, in the end, look at the numbers over time but sometimes I also want to understand why other asset allocations schemes do or don't make sense. I'm also just trying to learn as much as I can - I found this after reading a blurb about "small cap value". I knew what the term meant superficially but didn't have any real deeper understanding and so I started reading.

          Comment


          • #6
            Originally posted by PWMDMD View Post

            Oh, I'm not going down this rabbit hole - I'm a simple man. Just wanted to know what others thought who have more experience.
            In that case I think it is too heavy on small cap value and international but that’s just me. It is well thought out and you certainly could do worse. His portfolio research did lead me to AVUV which is my favorite small cap value fund.

            His website also is very supportive of NTSX which makes up the majority of the Ginger Ale portfolio author’s taxable account and I do also use this as the backbone of my taxable account along with some PSLDX in 401k which he also reviews and supports. Neither of these make it to the ginger ale portfolio as published in the single article so not sure how much he practices what he preaches or if this is the composition of his 401k?

            Comment


            • #7
              Originally posted by Hoopoe View Post

              In that case I think it is too heavy on small cap value and international but that’s just me. It is well thought out and you certainly could do worse. His portfolio research did lead me to AVUV which is my favorite small cap value fund.

              His website also is very supportive of NTSX which makes up the majority of the Ginger Ale portfolio author’s taxable account and I do also use this as the backbone of my taxable account along with some PSLDX in 401k which he also reviews and supports. Neither of these make it to the ginger ale portfolio as published in the single article so not sure how much he practices what he preaches or if this is the composition of his 401k?
              Thank you! Exactly the kind of discussion I was hoping this would generate.

              Comment


              • #8
                Originally posted by Hoopoe View Post
                I would go for the ultra simple JL Collins simple path to wealth 100% total stock market ie VTI and forget it until 5-10 years before retirement and then start to add in some bonds until you have 5-10 years of living expenses in bonds. Simplicity and less incentive to tinker and chase performance
                This might be all that one needs to do any investing. Just earn, put it in, reinvest and wait it out until retirement.

                But then the financial planners who charge 1% AUM cannot make a living using such a simple investment plan. And neither can people who give slick names like ginger ale plan. What will we see next - Mountain Dew plan or craft beer plan?

                Comment


                • #9
                  Originally posted by Kamban View Post

                  This might be all that one needs to do any investing. Just earn, put it in, reinvest and wait it out until retirement.

                  But then the financial planners who charge 1% AUM cannot make a living using such a simple investment plan. And neither can people who give slick names like ginger ale plan. What will we see next - Mountain Dew plan or craft beer plan?
                  Lol...the story goes it's just his regular plan and he likes ginger ale and so there was a bottle sitting there and he thought may as well since he has to name it something.

                  Comment


                  • #10
                    Originally posted by PWMDMD View Post

                    Lol...the story goes it's just his regular plan and he likes ginger ale and so there was a bottle sitting there and he thought may as well since he has to name it something.
                    Branding. Trying to trademark “Tap Water”. Gonna work on the packaging and internet promotion campaign. For $100 bucks, you receive a secret code. A completely proprietary invisible …….

                    Comment


                    • #11
                      Originally posted by CordMcNally View Post
                      ...I guess it’s the new big thing to create some kind of portfolio and give it a snazzy name...
                      True story.

                      This has been a thing for many years, but nobody follows any of them anyways... they always want to "tweak."
                      I think the only ones who use cookie-cutter are 401ks and some CFPs since they have so much AUM and need to streamline it (and get kickbacks from the fund brands).

                      We may as well call them the Tom Smitherton portfolio, the Alex Jameson portfolio, Suzy Anderson portfolio, Jimmy Valdez portfolio, etc.

                      It has been said a million times, but if you don't have the desire or confidence to pick companies and funds and AA, then index. If you do, then you wouldn't be searching to copy others in the first place (you'd only potentially be reading for ideas to create your own custom mix).

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                      • #12
                        Author here. Thanks for the shout-out! I'll try to respond to some of the replies here.

                        I guess it’s the new big thing to create some kind of portfolio and give it a snazzy name.
                        It's a model portfolio. At the very least, model portfolios give novices some ideas, an illustration of the theory underlying portfolio construction, and/or a foundation to start with if they don't know what to do. This is not at all a "new thing." The Permanent Portfolio from Harry Browne, for example, is 40 years old. But retail investors also now have a much larger sea of products in which to invest, allowing for more granular diversification.

                        It’s very reasonable but also lots of funds and hard to add to and rebalance unless you use his preferred “Pie” with M1 finance which admittedly is a slick program. You have to believe in the small cap value tilt which has underperformed recently (though better in the last quarter). Honestly if you are new to it and easily overwhelmed then I would go for the ultra simple JL Collins simple path to wealth 100% total stock market ie VTI and forget it until 5-10 years before retirement and then start to add in some bonds until you have 5-10 years of living expenses in bonds. Simplicity and less incentive to tinker and chase performance likely make up for any other arguments though if you must have some international in there then do 20-40% international and the rest US. Spend your time making more money and saving more money, and saving more on taxes. That’s the big ROI.
                        Definitely. Factor tilts require conviction. Most are better suited with a simple 100% VT or VTI/VXUS combo. The value of simplicity itself is overlooked too often.

                        The premise is, no where to go but up.
                        There is a reason the total capitalization of your investments will be inversely related to your capital allocation. Not growing and small.

                        Would you rather own Coke or Ginger Ale?
                        That's actually not at all the premise. If you read the post, you'd know the premise is factor diversification away from concentration in market beta and the fact that small cap value stocks have been the best performing segment of the market historically due to what we think are independent risk premia. Small cap value stocks are more at risk of bankruptcy than of "no where to go but up." That's part of the risk we're expecting to be compensated for. Precisely the opposite of what you described, which would require stock picking to attempt to identify the next Amazon before it becomes the next Amazon, holding it for the entire ride up. If that small cap stock grows, it eventually graduates from the small cap fund...

                        I do also prefer ginger ale to Coke.

                        Oh, I'm not going down this rabbit hole - I'm a simple man. I can follow a simple plan because the majority of people endorse it and it works but I also want to try and understand how and why people arrived at those recommendations. I get it, in the end, look at the numbers over time but sometimes I also want to understand why other asset allocations schemes do or don't make sense. I'm also just trying to learn as much as I can - I found this after reading a blurb about "small cap value". I knew what the term meant superficially but didn't have any real deeper understanding and so I started reading.
                        I think this is a very admirable approach - maintaining simplicity while still being open to learning new ideas and soaking up information.

                        His website also is very supportive of NTSX which makes up the majority of the Ginger Ale portfolio author’s taxable account and I do also use this as the backbone of my taxable account along with some PSLDX in 401k which he also reviews and supports. Neither of these make it to the ginger ale portfolio as published in the single article so not sure how much he practices what he preaches or if this is the composition of his 401k?
                        Ginger Ale is basically representative of my total portfolio holistically. NTSX is most of my taxable account, which is relatively small. 90/10 VOO/EDV is roughly NTSX. PSLDX is somewhat of a lottery ticket in a tiny rollover IRA from an old 401k at my old job. Current 401k is global stock market with SCV tilt.

                        But then the financial planners who charge 1% AUM cannot make a living using such a simple investment plan. And neither can people who give slick names like ginger ale plan.
                        Sure they can. Financial planners' time is mostly spent on educating clients, assessing goals and risk tolerances, maximizing tax efficiency, and facilitating the financial aspects of life changes. The portfolio construction is the easy part. Many advisors even use robo-advisors for their clients' investments.

                        Lol...the story goes it's just his regular plan and he likes ginger ale and so there was a bottle sitting there and he thought may as well since he has to name it something.
                        Branding. Trying to trademark “Tap Water”. Gonna work on the packaging and internet promotion campaign. For $100 bucks, you receive a secret code. A completely proprietary invisible …….
                        Giving it a name visibly differentiates it from all the other lazy portfolios on the website and allows it to show up in Google when people search for it by name, which they do.

                        Comment


                        • #13
                          Originally posted by JohnW2 View Post
                          Giving it a name visibly differentiates it from all the other lazy portfolios on the website and allows it to show up in Google when people search for it by name, which they do.
                          Well at least you must have lol! Welcome to the forum

                          Comment


                          • #14
                            At first I thought this was a spam post based on the recent "Golden Butterfly" portfolio thread..... personally I like the name golden butterfly better than ginger ale (no offense to original author), but hey that's just me... I need to come up with a snazzy name for my boring portfolio....

                            Comment


                            • #15
                              Originally posted by mamaham View Post
                              At first I thought this was a spam post based on the recent "Golden Butterfly" portfolio thread..... personally I like the name golden butterfly better than ginger ale (no offense to original author), but hey that's just me... I need to come up with a snazzy name for my boring portfolio....
                              How about "My Boring Portfolio"?

                              Comment

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