We are strong proponents of using low cost, diversified index funds and spending time on what you can control and have an impact on like tax planning, tax efficient withdrawal strategies, etc. We have a video here that gets into it a little deeper on the active vs index topic: ruclips.net/video/hnqUoWeBHeU/видео.html
Hello, thanks for watching and for the question. The webinar compares JEPI to SPY because the S&P 500 is the benchmark listed on the fund's factsheet and the funds says it's goal is " Seeks to deliver a significant portion of the returns associated with the S&P 500 Index." I see the argument that JEPI's strategy should have lower volatility than the standard index, but investors should at the very least have an idea of that long term cost associated with achieving that lower volatility. And then there is a second example with QYLD that is compared to QQQ for the same reason, since both are benchmarked to the NASDAQ-100. What would be a better benchmark for these funds in your opinion?
@@ArnoldMoteWealthManagement Thanks for the reply. I think a more appropriate benchmark is a 60/40 portfolio (VOO/BND). I see JEPI as an income tool so apply a monthly withdrawal. You do this for a living so please correct me if I’m thinking about it wrong. I’ll also add these type of funds are not for everyone especially the single stock covered call funds.
@@analyticsx3 Expecting returns closer to a 60/40 seems much more realistic for sure. JEPI's history is short, but has done better than a 60/40 over the last 3 years. Though that includes one of the worst years in history for BND... For some longer history - With just a quick look at QYLD vs a portfolio of 60% QQQ and 40% BND shows pretty significant underperformance by QYLD over a 10-year period. In general we favor a total return approach to investing rather than trying to match up income need by dividends or interest. Anytime you add expenses, derivatives, frequent trading, etc it tends to impact long term returns. There's rarely a wrong answer when it comes to investing, so I'd just say if you are comfortable with the prospect of less volatility but lower returns than it is ok. Just don't think that JEPI is some magic investment that does everything.
@@ArnoldMoteWealthManagement your absolutely right. I think long term there’s too much upside loss. From what options traders have said when interest rates come down more premium is generated on selling puts rather than calls (possibly anecdotal). If that’s true the yield and appeal for these funds will come down. The timing of the funds popularity and rates hikes could be coincidental but it’s sufficient as a short term income instrument.
I don't know what's going on with your numbers at 28:40, but they are completely wrong. Gold was up 15% in the tech bubble and 8% in the subprime crisis. The treasuries column is wrong too. Treasuries were up during those time periods too. Did you use portfoliovisualizer to make that table? The "Historical Market Stress Periods" is slightly misleading. It uses a rolling all time high as a reference point rather than the start of the period. If an asset goes up 10% then down 5%, it would show it as having a drawdown, even if it is up relative to the start. From a modern portfolio theory perspective, gold is incredibly useful. It has a zero correlation to stocks and bonds, and it has a positive return. It has compounded at 6% for the last 50 years. That's why Bridgewater, the largest hedge fund in the world, owns gold in its portfolio.
Hi Chuck, thanks for watching and for the comment. The table does show drawdowns, so sorry for the confusion if I said returns in the webinar and it implied something else. Though I don't think that negates the argument - An asset that is supposed to be such a strong store of value shouldn't drop 25% in a banking crisis and have 40+ year periods where investors have not had returns that matched inflation. As far as Bridgewater and owning gold. First, I would say the average retiree shouldn't (and can't) invest like a multi-billion dollar hedge fund like Bridgewater. There's a lot more going on there than buying and storing gold bars in a vault for his clients. I can find other investors, with more assets than Bridgewater, that don't own gold, too. In general, the average retiree trying to build a portfolio off the strategy of a billionaire is probably a recipe for disaster. We did a longer webinar just on gold investing here, in case it is helpful: ruclips.net/video/DVE8jS7duSk/видео.html
The principles of modern portfolio theory apply regardless of account size. Diversifiers like gold can help retirees through stagflationary periods. On its own, gold isn't a great asset, but it is a great diversifier to a portfolio of stocks and bonds. Energy stocks can fill a similar purpose to gold, since they have also done well in inflationary periods. However, they have a variety of regulatory risks, and the last 10 years have been something of a lost decade for them. All assets have their downsides. Even "risk free" treasuries are 35% down from their all time highs.
so, what long-term strategies you recommend?
We are strong proponents of using low cost, diversified index funds and spending time on what you can control and have an impact on like tax planning, tax efficient withdrawal strategies, etc.
We have a video here that gets into it a little deeper on the active vs index topic: ruclips.net/video/hnqUoWeBHeU/видео.html
Why do you compare alternative income funds like JEPI vs a growth fund?
Hello, thanks for watching and for the question. The webinar compares JEPI to SPY because the S&P 500 is the benchmark listed on the fund's factsheet and the funds says it's goal is " Seeks to deliver a significant portion of the returns
associated with the S&P 500 Index."
I see the argument that JEPI's strategy should have lower volatility than the standard index, but investors should at the very least have an idea of that long term cost associated with achieving that lower volatility.
And then there is a second example with QYLD that is compared to QQQ for the same reason, since both are benchmarked to the NASDAQ-100.
What would be a better benchmark for these funds in your opinion?
@@ArnoldMoteWealthManagement Thanks for the reply. I think a more appropriate benchmark is a 60/40 portfolio (VOO/BND). I see JEPI as an income tool so apply a monthly withdrawal. You do this for a living so please correct me if I’m thinking about it wrong. I’ll also add these type of funds are not for everyone especially the single stock covered call funds.
@@analyticsx3 Expecting returns closer to a 60/40 seems much more realistic for sure. JEPI's history is short, but has done better than a 60/40 over the last 3 years. Though that includes one of the worst years in history for BND...
For some longer history - With just a quick look at QYLD vs a portfolio of 60% QQQ and 40% BND shows pretty significant underperformance by QYLD over a 10-year period.
In general we favor a total return approach to investing rather than trying to match up income need by dividends or interest. Anytime you add expenses, derivatives, frequent trading, etc it tends to impact long term returns. There's rarely a wrong answer when it comes to investing, so I'd just say if you are comfortable with the prospect of less volatility but lower returns than it is ok. Just don't think that JEPI is some magic investment that does everything.
@@ArnoldMoteWealthManagement your absolutely right. I think long term there’s too much upside loss. From what options traders have said when interest rates come down more premium is generated on selling puts rather than calls (possibly anecdotal). If that’s true the yield and appeal for these funds will come down. The timing of the funds popularity and rates hikes could be coincidental but it’s sufficient as a short term income instrument.
I don't know what's going on with your numbers at 28:40, but they are completely wrong. Gold was up 15% in the tech bubble and 8% in the subprime crisis. The treasuries column is wrong too. Treasuries were up during those time periods too.
Did you use portfoliovisualizer to make that table? The "Historical Market Stress Periods" is slightly misleading. It uses a rolling all time high as a reference point rather than the start of the period. If an asset goes up 10% then down 5%, it would show it as having a drawdown, even if it is up relative to the start.
From a modern portfolio theory perspective, gold is incredibly useful. It has a zero correlation to stocks and bonds, and it has a positive return. It has compounded at 6% for the last 50 years. That's why Bridgewater, the largest hedge fund in the world, owns gold in its portfolio.
Hi Chuck, thanks for watching and for the comment.
The table does show drawdowns, so sorry for the confusion if I said returns in the webinar and it implied something else.
Though I don't think that negates the argument - An asset that is supposed to be such a strong store of value shouldn't drop 25% in a banking crisis and have 40+ year periods where investors have not had returns that matched inflation.
As far as Bridgewater and owning gold. First, I would say the average retiree shouldn't (and can't) invest like a multi-billion dollar hedge fund like Bridgewater. There's a lot more going on there than buying and storing gold bars in a vault for his clients.
I can find other investors, with more assets than Bridgewater, that don't own gold, too. In general, the average retiree trying to build a portfolio off the strategy of a billionaire is probably a recipe for disaster.
We did a longer webinar just on gold investing here, in case it is helpful: ruclips.net/video/DVE8jS7duSk/видео.html
The principles of modern portfolio theory apply regardless of account size. Diversifiers like gold can help retirees through stagflationary periods. On its own, gold isn't a great asset, but it is a great diversifier to a portfolio of stocks and bonds. Energy stocks can fill a similar purpose to gold, since they have also done well in inflationary periods. However, they have a variety of regulatory risks, and the last 10 years have been something of a lost decade for them. All assets have their downsides. Even "risk free" treasuries are 35% down from their all time highs.