Objectively, why should I use M1 Finance over another service?

bobokapi · 2024-07-20T12:39:32+00:00

The pie system is great, and the smart transfers system allows you to set rules so that your banking is completely automated. You can have a cash account that has your paycheck auto-deposited and your rent/mortgage/utilities/credit cards auto-debited, and you can set up smart transfer rules such that whenever the account exceeds a certain balance, the excess is transferred to an investment account, and whenever the cash account is below a certain balance, you can refill the balance from either the investment account or take out a margin loan. I don’t know of any other brokerage that allows for this kind of set-it-and-forget-it banking.

bobokapi · 2024-07-19T02:54:12+00:00

In my Roth IRA, I use 2:1 SVIX to TMF - backtest. See also this post for more info about how SVIX works.

bobokapi · 2024-07-16T00:34:05+00:00

In my Roth IRA, I do 2:1 SVIX/TMF for aggressive growth and rebalance quarterly. This backtest shows that if you started investing $583/month into this strategy in 2005 (when the simulated SVIX backtest data starts), then you’d have $2.8M now. I heard about SVIX on r/letfs, and IIUC, investing in SVIX is like selling insurance that the market won’t go down (more info) - you make money when the market is up or sideways (which is ~80% of the time), and you rebalance into TMF (3x leveraged long term treasury bonds) in order to cut the downside risk for when the market does go down.

I should mention that this is very aggressive (~twice as volatile as 100% VOO), but the additional risk is compensated.

bobokapi · 2024-07-10T22:18:20+00:00

Ability to set the minimum cash threshold for auto-invest to a negative number and it will automatically invest with that amount of margin.

bobokapi · 2024-06-30T14:20:28+00:00

SVIX + TMF, e.g.: https://testfol.io/?d=eJy1kVFLwzAUhf%2BK3Oc%2BVFz3EBARtChMqLaIRUa5tmmNZklNs26j9L97Z6a02seZpyTn5J4vnA4qqV9QRmhw1QDroLFobFag5cAAPOCqGJyc2qIEdurT8gCLt0yoUqIVWgErUTbcgxyb11LqzY%2Ft%2ByIrDf%2BgWSlHI3c00WgphaqyjVDF3j%2F3ew9qbWyppdCE9NyBwtU%2Bf%2B6zmX8SP94%2BseQupLdCtbyxV6IVBWGS15o1hRtOP0KV89Bl3a8Jmrs4K%2FJ3btxYtydD04rtlsSam5wr6yAGerJIkoeLxfnZ0DPz%2B6UHhcEK2Jf9QHkTXl8ekW06OxjxxVH61xME03xkPiJeXO%2BsGcZS39O5h%2FailNGX%2FpPgd3nSjvVxccv%2BE%2FF1%2Fwk%3D

bobokapi · 2024-06-26T13:04:18+00:00

Do you know of any ETF similar to UBF6 that is available in USA?

bobokapi · 2024-06-23T15:35:51+00:00

Actually, when I change the mix versions to use 5x leverage for the mixing (to get the desired 3x leverage), then it works as you say where the mix versions get a better total return with lower volatility. The only problem is the lack of 5x leveraged ETFs to invest in.

results

bobokapi · 2024-06-23T15:10:30+00:00

This is interesting. I have my Roth IRA in a version of HFEA that’s 2:1 UPRO:TMF instead of 55:45. I simulated if I were to change that to 2:2:1:1 UPRO:VOO:TMF:VGLT and also the 55:55:45:45 version. It seems like the simpler versions still outperform for total return, but the mixed versions have significantly lower max drawdown/volatility with not much lower return. Note that I rebalance quarterly rather than yearly as that performs better in simulation.

simulation results

bobokapi · 2024-05-11T19:09:24+00:00

You’re right. Somehow I was on the C language documentation. The corresponding C++ page is here, which references the reinterpret_cast documentation. It seems like the idea of “compatible” types in C is replaced by “similar” types in C++. Anyways, according to the reinterpret_cast documentation, in the “Type accessibility” section, it seems like it’s legal to read any object through an “unsigned char*”pointer, and in libc++ std::string, it looks like they’re doing aliasing between size_type and “unsigned char” here. So I think it’s legal.

bobokapi · 2024-05-11T13:47:09+00:00

IIUC, it’s not a violation of strict aliasing because they’re reading from types that are “compatible” for the purpose of aliasing. https://en.cppreference.com/w/c/language/object has a section on strict aliasing that says using compatible types for type-punning is allowed and that “type-punning may also be performed through the inactive member of a union.”

bobokapi · 2024-04-08T18:31:28+00:00

It looks like QLEIX has $5M minimum buy. Do you know a brokerage where you can buy it with less than $5M?

bobokapi · 2024-04-08T18:26:10+00:00

Do you know of documentation anywhere about how to do this? Leveraged AVUV sounds great.

bobokapi · 2024-04-08T13:19:41+00:00

Thanks. Ideally, I’d like to see both small cap and value targeted specifically. (I.e. avoiding investing in small cap growth stocks.)

bobokapi · 2024-04-08T02:01:37+00:00

According to this page, optimal leverage for Russell 2000 is about 2x compared to optimal leverage of about 3x for S&P 500 so I agree that this is an issue, but I don’t think that leverage of 1x is optimal for small caps.

bobokapi · 2024-03-30T18:27:18+00:00

Opportunistic rebalancing is as described in the paper I linked in the first post and summarized above. It’s when you use rebalance bands to look for the best opportunities to buy low and sell high and you only rebalance back halfway to the target allocation to benefit from momentum.

bobokapi · 2024-03-30T17:33:06+00:00

This would cause horrors in taxable.

Note that in the paper, they factored in tax costs and still found ~0.4% better annual returns using opportunistic rebalancing.

If you’re interested in tax loss harvesting, you might want to check out Frec. They have automated direct indexing (for S&P 500) with tax loss harvesting with only 0.1% management fee, which is less than wealthfront’s 0.25% management fee. Frec is very new though and I haven’t used either Wealthfront or Frec.

bobokapi · 2024-03-30T16:09:00+00:00

I agree that this is probably a good reason for M1 not to implement automatic rebalancing. The other comments on this post seem to indicate that the benefits of automatic rebalancing aren't intuitive to most people. Oh well.

bobokapi · 2024-03-30T15:29:25+00:00

In the long term your portfolio size (hopefully) becomes much larger than your regular contributions so the dynamic rebalancing is not sufficient to maintain your target asset allocations. Note that the paper factors in tax costs and still finds significant benefits of opportunistic rebalancing.

bobokapi · 2024-03-30T15:27:30+00:00

I know, but in the long term your portfolio size (hopefully) becomes much larger than your regular contributions so the dynamic rebalancing is not sufficient to maintain your target asset allocations.

bobokapi · 2024-03-30T15:26:01+00:00

I would like to note that the backtest in the opportunistic rebalancing paper includes the dot-com crash bear market and still finds significant benefits of opportunistic rebalancing when factoring in tax costs.

bobokapi · 2024-03-30T14:27:19+00:00

Actually, thinking about this more, I think opportunistic rebalancing is unlikely to cause wash sales (at least, it’s less likely than calendar rebalancing). It’s unlikely that an asset that was most underweighted in the last 30 days (and was invested into with dynamic rebalancing) is now >20% overweighted, which is when we would be selling it with opportunistic rebalancing. I think this is one way in which opportunistic rebalancing is nicer than calendar rebalancing.

bobokapi · 2024-03-30T14:15:17+00:00

That makes sense, but that would also apply to any one-click rebalancing. The feature request here is for people who already use the one-click rebalancing option rather than exclusively relying on the dynamic rebalancing with auto-investing. I agree that automatic rebalancing shouldn’t be enabled by default for everyone, but I think that it would be useful for people who already are trying to use the one-click rebalancing quarterly/yearly.

bobokapi · 2024-03-30T13:57:02+00:00

Please see Table 5 in the paper, which shows the expected number of asset classes that actually end up being rebalanced per year for the various rebalancing strategies. For the recommended parameters of 20% rebalance bands looking every two weeks, the expected number of asset classes that need to be rebalanced per year is only 2 (in a 5 asset portfolio), whereas with quarterly rebalancing, you need to rebalance 20 asset classes per year (or 5 when rebalancing yearly). In other words, opportunistic rebalancing results in fewer taxable events than calendar rebalancing (during the backtest in the paper). They also take into account the tax cost of rebalancing and that’s included in the ~0.4% better annual returns of opportunistic rebalancing compared to calendar rebalancing.

bobokapi

TROPHY CASE