GAA summary

 Risk-parity

All-season

Permanent

Global Market Portfolio (GMP)

Arnott Portfolio

Marc Faber

Ivy, Swensen, El-Erian 

Returns

Implementation

• rebalance could gain 0.5% in the long run
• additional advisory fee would make the best performing asset allocation to the WORST.
• to place all the assets you can in a tax-deferred account
• ETFs are often a superior tax vehicle

Summary

• Any asset by itself can experience catastrophic losses. 
• Diversifying your portfolio by including uncorrelated assets is truly the only free lunch. 
• 60/40 has been a decent benchmark, but due to current valuations, it is unlikely to deliver strong returns going forward. 
• At a minimum, an investor should consider moving to a global 60/40 portfolio to reflect the global market capitalization, especially right now due to lower valuations in foreign markets. 
• Consider including real assets such as commodities, real estate, and TIPS in your portfolio. 
• While covered more extensively in our other three books and white papers, consider tilting the equity exposure to factors such as value and momentum. Trendfollowing approaches work great too. 
• Once you have determined your asset allocation mix, or policy portfolio, stick with it. 
• The exact percentage allocations don’t matter that much. 
• Make sure to implement the portfolio with a focus on fees and taxes. 
• Consider using an asset allocation ETF, advisor, or other automated investment service in order to make it easier to stick to the portfolio and rebalancing schedule. Yearly (or even every few years) rebalancing is just fine. Even better, rebalance based on tax considerations. 
• Go live your life and don’t worry about your portfolio!

Appendix

How do stocks and bonds perform relative to various inflation regimes? And what about real interest rates?

Stocks and bonds perform best when inflation is below about 3%. Above 5% inflation and returns fall off a cliff. The opposite goes for real interest rates, stocks and bonds love rates above 3%. While stocks hold up okay with lower real interest rates, bonds get clobbered. 

 

source: Credit Suisse

This is the summary of book "Global Asset Allocation" written by Meb Faber