VALUE: After Hours (S07 E44): The Weird Portfolio

During their recent episode, Taylor, Carlisle, and Value Stock Geek discussed The Weird Portfolio. Here’s an excerpt from the episode:

Tobias: VSG, you had a weird portfolio for a while. Do you want to give us an update on the weird portfolio? What is it? What goes into it and– [crosstalk]

Value Stock Geek: Oh, it’s basically a risk parody style portfolio composed of treasuries, gold, and then basically small-cap value funds, and a real estate fund. It’s a vehicle for a lot of my savings. It’s actually having a banner year. It’s up 20% this year.

Tobias: Lots of gold.

Jake: Yeah. Gold’s helped. Huh.

Value Stock Geek: Yeah, the chunky gold allocation has helped. And then, international small cap value has actually–

Jake: [crosstalk] quite well, too. Yeah.

Value Stock Geek: Yeah. So, I own AVDV in there and that’s up over 30% this year, and gold is at a banner year. The philosophy behind that portfolio is to have something that can basically compound at a decent rate over the decades and then be able to handle multiple economic environments. So, you want it to be able to deal with recessions, you want it to be able to deal with booms, you want it to deal with strong dollar, weak dollar. There’s components in the portfolio that should do well in all those environments.

It’ll never be like the best performing portfolio ever, but for me, I was just looking for something that would be able to control the drawdowns. It was almost like my spin on a passive portfolio. In a lot of the financial independence circles, they always talk about just going pure market cap weighted. And to me, that didn’t make a lot of sense, I wanted something more robust than that. I wanted something where it’s not going to decline 50% in a 2008. It’s not going to have a lost decade.

Yeah, that’s been the whole philosophy behind that. It served me pretty well. Really, it just helps me stay invested is the big thing. When I’m freaking out about something, macro happening, I can look at that portfolio and say, “Well–

Jake: At least gold’s going to work, or at least this is going to work.

Value Stock Geek: Exactly.

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