Nick Murray vs IVY Portfolio

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Nov 24, 2009 10:39 am

Nick Murray is still looking for Dow 50000 in 25 years and says
combine Large Cap Value/Growth, Small Cap Value/Growth and INTL for 5 sectors and hold on and rebalance into worst performing annually.( relax , you're never gonna figure it out so don't try, and ETF's never go bust(unlike common stocks))

Ivy Says buy Vanguard All Us stocks 20%, Foreign Stocks 20%,10 year Treas 20%, Reits 20%, Commodity Etf DBC 20%. If any of these sectors fall below10 month simple moving ave. step aside in cash for that sector independently. So not just buy and hold.

Over time which is the better approach in your valued opinion? Thx!

Nov 24, 2009 11:02 am

I'll let you know over time.

Nov 24, 2009 11:07 am

One other thing - try convincing a 65 year-old to go all-in with equities (ala Nick Murray).  I wouldn't personally do it.

However, I have never read exactly what Nick Murray said regarding Asset Allocation, but if he is suggesting using the above methodology just for the equity PORTION of the portfolio, then OK.  But if he is suggesting all-equity all the time, well, count me out.  I know with the IVY strategy, the suggestion is that you use the strategy for the "active" or equity portion of the portfolio, and that the actual allocations to fixed income could be much higher depending on client circumstances (age, need, risk, etc.).
 
I think Nick Murray's philosophy is fine for young people in the accumulation phase.
Nov 24, 2009 11:36 am

Nick Murray's philosophy is to always have 3 years worth living expenses in a money market fund and CD's. He has never said to be 100% in equities.

Nov 24, 2009 12:44 pm
dashover:

Nick Murray is still looking for Dow 50000 in 25 years and says
combine Large Cap Value/Growth, Small Cap Value/Growth and INTL for 5 sectors and hold on and rebalance into worst performing annually.( relax , you're never gonna figure it out so don't try, and ETF's never go bust(unlike common stocks))

Ivy Says buy Vanguard All Us stocks 20%, Foreign Stocks 20%,10 year Treas 20%, Reits 20%, Commodity Etf DBC 20%. If any of these sectors fall below10 month simple moving ave. step aside in cash for that sector independently. So not just buy and hold.

Over time which is the better approach in your valued opinion? Thx!

 
The IVY portfolio of course...(disclosure I am a big IVY fan)
 
US Stocks from 1901-2008
When the market was:
above 10 month MA: 69.88% of the time
below 10 mont MA: 30.12%
Annualized Return when above 14.14%   below 3.03%
Annualized Volatility when above 14.30%  below 24.18%
 
 
Nov 24, 2009 1:24 pm
dashover:

Nick Murray is still looking for Dow 50000 in 25 years and says
combine Large Cap Value/Growth, Small Cap Value/Growth and INTL for 5 sectors and hold on and rebalance into worst performing annually.( relax , you're never gonna figure it out so don't try, and ETF's never go bust(unlike common stocks))

Ivy Says buy Vanguard All Us stocks 20%, Foreign Stocks 20%,10 year Treas 20%, Reits 20%, Commodity Etf DBC 20%. If any of these sectors fall below10 month simple moving ave. step aside in cash for that sector independently. So not just buy and hold.

Over time which is the better approach in your valued opinion? Thx!

 
If I am understanding correctly the Ivy strategy is approaching a tactical move in which the Treasury and Commodity money should be moved to the sideline ?
Nov 24, 2009 2:18 pm

Author made available FYI: Ivy Portfolio
Bonds look like they're getting close to crossing down?

Sideline moves are recommended when a "market" crosses below the 200 day or preferably 10 month (same diff) moving ave.

Seems very delayed slow moving to me ; but the author has done a ton of back-testing and prefers that ave.  I always wonder if there is a better way to catch the move and still provide defense.  The MA(10) monthly on the Dow would have turned positive at about 8700 and you have missed a big chunk of the move?

Nov 24, 2009 3:35 pm

Some variations on the strategy: you can use 10 months EMA to get out, but a shorter duration to get back in (but you need to avoid whipsaws).  You can also use judgement when getting back in.  SO for example, one could have started DCA'ing back into equities sometime in early 2009, even before the market bottomed or crossed the EMA later in the year.  One could have surmised that it was a once-in-a-lifetime chance to get into equities quite low.  It is much more difficult when bears (or just mild downtrends) are muted, as you cannot always clearly see where you are in a cycle unless it is exceptionally high (Bull) or low (Bear).  For example, in 2000-2002, the market dropped, but then just kept on dropping.  In the 70's, we were sideways for quite some time - this period of time is very difficult to navigate with the Moving Average strategy, as you are constantly being whip-sawed back and forth above and below the line.  This is when it makes sense to use a "cooling off" period after the price crosses the trend line - to avoid whipsaws, like at least 1 month or maybe 2.

Nov 24, 2009 3:39 pm
dashover:

Author made available FYI: Ivy Portfolio
Bonds look like they're getting close to crossing down?

Sideline moves are recommended when a "market" crosses below the 200 day or preferably 10 month (same diff) moving ave.

Seems very delayed slow moving to me ; but the author has done a ton of back-testing and prefers that ave.  I always wonder if there is a better way to catch the move and still provide defense.  The MA(10) monthly on the Dow would have turned positive at about 8700 and you have missed a big chunk of the move?

 
I think he tested it, when trying move in and out when it crossed every time and there was just too much short term trading and retracing.
 
 
Nov 24, 2009 3:45 pm
Squash1:
 
The IVY portfolio of course...(disclosure I am a big IVY fan)
 
US Stocks from 1901-2008
When the market was:
above 10 month MA: 69.88% of the time
below 10 mont MA: 30.12%
Annualized Return when above 14.14%   below 3.03%
Annualized Volatility when above 14.30%  below 24.18%
  
 
Squash, can you clarify what you mean?  I'm just not following your logic.
Are you saying US stocks have been above the trend line 70% of the time and below the line 30% of the time since 1901? 
I don't get the next part.  I assume you mean returns are 14% when price has been above trend, and 3% when price is below trend? (similar for volatility).
If that's what you're saying, that makes sense - if you average the two, that comes out to about 11% annually (obviously there are lots of variables).
 
Do you employ some sort of strategy like this? 
 
 
Nov 24, 2009 6:30 pm
B24:
Squash1:
 
The IVY portfolio of course...(disclosure I am a big IVY fan)
 
US Stocks from 1901-2008
When the market was:
above 10 month MA: 69.88% of the time
below 10 mont MA: 30.12%
Annualized Return when above 14.14%   below 3.03%
Annualized Volatility when above 14.30%  below 24.18%
  
 
Squash, can you clarify what you mean?  I'm just not following your logic.
Are you saying US stocks have been above the trend line 70% of the time and below the line 30% of the time since 1901?   YES
I don't get the next part.  I assume you mean returns are 14% when price has been above trend, and 3% when price is below trend? (similar for volatility). YES
If that's what you're saying, that makes sense - if you average the two, that comes out to about 11% annually (obviously there are lots of variables).
 
Do you employ some sort of strategy like this?  Maybe