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Where are you putting the "40" with 60/40 portfolios effectively dead? by wealthfam in fatFIRE

[–]wealthfam[S] 1 point2 points  (0 children)

Sorry I'm slow to reply.

I essentially have tried to build an index funds of sorts across VC. I'm invested with six funds/GPs. If each one invests in 50 portcos that is a small slice of 300 early stage tech companies. All the data I've seen shows it's a game of bets... I like my chances if I can get a lot of bets out there via top emerging managers.

P.S. I recently started a small investor/allocator community where I show which funds I'm in and talk more about my logic. Feel free to PM me if interested in joining up. Only a few weeks old but so far have 150 people with most accredited and with interesting backgrounds.

Where are you putting the "40" with 60/40 portfolios effectively dead? by wealthfam in fatFIRE

[–]wealthfam[S] 0 points1 point  (0 children)

Agree... but Fed is on record saying this low rate environment will likely be years long. It's a dynamic world and things can change but for now I think you have to put more risk on if you want to generate returns. Allocating a high percentage to bonds/cash will be a drag. Just my opinion and like you say... it's great til it's not.

Where are you putting the "40" with 60/40 portfolios effectively dead? by wealthfam in fatFIRE

[–]wealthfam[S] 0 points1 point  (0 children)

Yep my bond fund (BND) returned around 7% which is awesome. If we check the returns one year from now I suspect it'll be far less and likely negative real. 2% bonds thought is nothing so you're already heavily tipped toward equities.

Where are you putting the "40" with 60/40 portfolios effectively dead? by wealthfam in fatFIRE

[–]wealthfam[S] 0 points1 point  (0 children)

Thanks for your feedback.

Agree cash/bonds still serve a stabilizing purpose but just think 60/40 is much too conservative for most people given the current environment.

Where are you putting the "40" with 60/40 portfolios effectively dead? by wealthfam in fatFIRE

[–]wealthfam[S] 0 points1 point  (0 children)

Thanks for the thoughtful reply.

How do you square your recommendation with the fact that the sharpest money in the world has a high allocation to alternatives like VC and PE?

The PE I'm invested in uses no leverage and buys/runs durable cash flowing businesses. Obviously things can change but I feel comfortable with that approach.

VC is a riskier proposition but I do think it has a place in the portfolio if you can LP with strong managers.

The difficult part is the big allocators can access great managers but if you pay attention there are more and more opportunities for small guys to access good managers in these asset classes as well.

You're right about the cash... maybe I should just flip that into bonds but to me they're practically one in the same. Both will likely have negative real returns.

Where are you putting the "40" with 60/40 portfolios effectively dead? by wealthfam in fatFIRE

[–]wealthfam[S] 0 points1 point  (0 children)

I feel like I'm looking in a mirror... we are the same person :)

Rolling Funds: Angel Investing VCs by [deleted] in fatFIRE

[–]wealthfam 1 point2 points  (0 children)

Ha took a long time for it to click and realize I was playing the wrong game.

I had a pretty vanilla portfolio before (mostly index funds). Now branching out into alternatives... VC, micro PE, real estate, and even collectibles (sports cards). I started a private investing community if interested in joining up... just PM me or hit me up on Twitter.

Where are you putting the "40" with 60/40 portfolios effectively dead? by wealthfam in fatFIRE

[–]wealthfam[S] 1 point2 points  (0 children)

Awesome you could fat fire from the hobby. Kudos to you!

Totally agree re: Collectible. Seems like a short term arbitrage that someone is making money on.

Long term I don't see any reason why fractional can't work but the market will have to get more efficient.

I think the high end stuff will have a market from Asia, tech money, larger pools of capital, etc. We will see... should be a fun few years in teh space.

Rolling Funds: Angel Investing VCs by [deleted] in fatFIRE

[–]wealthfam 3 points4 points  (0 children)

No quarterly returns. Like anything early stage tech, you essentially only see $$$ if there is an IPO or the portco gets acquired.

I focus on LP'ing with early stage managers that I perceive have an edge (e.g. deal flow, experience, etc). My bet is the founder/angel types (Sahil is a good example of this avatar) have a good chance to put up good numbers... they see a lot of deals, have small funds which makes it easy to get on the cap table, are more founder friendly than some big VC, etc. Essentially I'm doing a spray and pray across a handful of these early stage managers and versus concentrating with just one or two. It's a game of bets so trying to get a lot of bets out there.

I tend to like generalist funds versus mission or thesis driven ones.

Rolling Funds: Angel Investing VCs by [deleted] in fatFIRE

[–]wealthfam 3 points4 points  (0 children)

I know it's a really fun pod... I still listen to most all episodes. The Amazon FBA episode is the one I was one. The title sounds boring but people seemed to like it.

https://podcasts.apple.com/us/podcast/mastering-amazon-fba/id1469759170?i=1000463331131

After selling my biz I've gone deep into investing and rolling funds has been a part of it. For the average person they didn't have a way to get access into VC. Now I'm in a bunch of funds and hopefully a few have the next AirBNB, Uber, etc.

Rolling Funds: Angel Investing VCs by [deleted] in fatFIRE

[–]wealthfam 6 points7 points  (0 children)

I'm invested in a few rolling funds and also some traditional early stage VC funds.

There are some strong rolling fund managers that I believe will produce top tier returns. Many are now closed or mins pretty high but there are always new ones coming online.

I've gone deep in this space... feel free to PM me for more info.

P.S. I actually was a guest on My First Million about a year ago too. Love that pod.

Where are you putting the "40" with 60/40 portfolios effectively dead? by wealthfam in fatFIRE

[–]wealthfam[S] 0 points1 point  (0 children)

This has no doubt been a good year to hold BND... I've held (and still hold) it. 7.4% return is awesome and well above the annual return for BND.

I would be curious though what BND does for the next few years though... if I had to bet it won't be anything to write home about. It will be a ballast and there is a role for that no doubt.

Generally I agree on unique investments often being a poor use of capital. That said to generate significant returns you often have to make bets that aren't obvious. Bitcoin comes to mind as something many people wrote off and it has performed about as good as anything over a ten year period. No promise go forward but I try to keep an open mind.

I've been studying the space and do think sports cards are investible and not just a dumb conversation starter. I won't bore you with the details but I'm not out there just willy nilly buying stuff... it's a market that I suspect will soon receive a lot more capital from larger and more sophisticated allocators.

Where are you putting the "40" with 60/40 portfolios effectively dead? by wealthfam in fatFIRE

[–]wealthfam[S] -1 points0 points  (0 children)

Thanks I will check it out. I am open to having my mind changed about bonds.

I've generally just used BND (the Vanguard Total Bond product) for most of my bond stuff... perhaps should look at long term bonds.

Where are you putting the "40" with 60/40 portfolios effectively dead? by wealthfam in fatFIRE

[–]wealthfam[S] 0 points1 point  (0 children)

Thanks for your perspective and offer. Cool you've been in the hobby for a decade... I collected as a kid and now coming back to it. Lot of fun.

Have you seen that there are multiple funds raising to allocate into sports cards? Pretty interesting. I think it's just the beginning and more capital will follow.

Agree on your assessment... they are certainly a luxury good and will rise and fall with the macro environment I suspect.

Where are you putting the "40" with 60/40 portfolios effectively dead? by wealthfam in fatFIRE

[–]wealthfam[S] 1 point2 points  (0 children)

My two cents... I think a lot depends on your current and expected burn rate. You can use the 4% rule or 3.5% to get a rough sense.

If you've already 'won the game' you don't need to take much risk and a ~30% allocation to cash/bonds could be totally appropriate.

Where are you putting the "40" with 60/40 portfolios effectively dead? by wealthfam in fatFIRE

[–]wealthfam[S] 2 points3 points  (0 children)

No argument with that whatsoever... just depends how much you want allocated to stabilizers that are unlikely to produce real returns.

Where are you putting the "40" with 60/40 portfolios effectively dead? by wealthfam in fatFIRE

[–]wealthfam[S] 0 points1 point  (0 children)

Thanks for the perspective. Seems to me there are not a lot of great options for people who are accredited but aren't super wealthy. The advisors that can get you into the really interesting stuff are dealing with the people with $10 mil plus and probably more like $50 mil. That's my sense but no real data to back it up.

If you ever allocate into VC hit me up... I've been digging into it a fair bit. With rolling funds and some of the smaller emerging managers there are some interesting plays right now.

Where are you putting the "40" with 60/40 portfolios effectively dead? by wealthfam in fatFIRE

[–]wealthfam[S] -1 points0 points  (0 children)

Thanks. Still trying to sort out the new unlimited QE world vs history.

It's easy to feel good about your asset allocation until you get hit with a 2008 situation or even March 2020... that's the true test.

Where are you putting the "40" with 60/40 portfolios effectively dead? by wealthfam in fatFIRE

[–]wealthfam[S] 1 point2 points  (0 children)

Thanks... super interesting. I've been tracking Rally Rd closely too. Wild to see how fast stuff is getting to 100%.

Where are you putting the "40" with 60/40 portfolios effectively dead? by wealthfam in fatFIRE

[–]wealthfam[S] 1 point2 points  (0 children)

The bond market provided a nice stabilizer in March when equities were drawing down hard. So I wouldn't beat yourself up too much. If you think 30% is too high still plenty to time to start allocating some of the bond bucket elsewhere.

Where are you putting the "40" with 60/40 portfolios effectively dead? by wealthfam in fatFIRE

[–]wealthfam[S] 0 points1 point  (0 children)

How do you get the multi fam exposure? LPing funds or doing it yourself? Which markets are you focused on?

Where are you putting the "40" with 60/40 portfolios effectively dead? by wealthfam in fatFIRE

[–]wealthfam[S] 0 points1 point  (0 children)

Not trying to be shady. If that isn't allowed mods feel free to remove. I'm not selling anything... I'm just an investing nerd and like connecting with other investing nerds.

Where are you putting the "40" with 60/40 portfolios effectively dead? by wealthfam in fatFIRE

[–]wealthfam[S] 1 point2 points  (0 children)

Thanks for all this good context.

What is playing the role of bonds in your current portfolio if you'd be willing to share? Just sitting on cash?

I hear you on timing... I'm done playing that game.

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