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Brett Arends's ROI

May 14, 2022, 6:59 p.m. EDT

Markets making you queasy? These simple, low-cost retirement portfolios are holding up well

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By Brett Arends

Not everyone is having a terrible year.

While stocks and bonds have all plummeted since Jan. 1, a few simple, low-cost, all-weather portfolios are doing a much better job of preserving their owners’ retirement savings.

Best of all, anybody can copy them using a handful of low-cost exchange-traded funds or mutual funds. Anyone at all.

You don’t need to be clairvoyant and predict where the market is going.

You don’t need to pay for high fee hedge funds (which usually don’t work anyway).

And you don’t need to miss out on long-term gains by just sitting in cash.

Money manager Doug Ramsey’s simple “All Asset No Authority” portfolio has lost half as much as a standard “balanced” portfolio since Jan. 1, and a third as much as the S&P 500. Meb Faber’s even simpler equivalent has held up even better.

And when combined with a very simple market timing system that anyone could do from home, these portfolios are nearly break-even.

This, in a year when almost everything has plummeted, including the S&P 500 /zigman2/quotes/210599714/realtime SPX +3.06% , the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +3.34% , Apple /zigman2/quotes/202934861/composite AAPL +2.45% , Amazon /zigman2/quotes/210331248/composite AMZN +3.58% , Meta , Tesla /zigman2/quotes/203558040/composite TSLA +4.52% , bitcoin /zigman2/quotes/31322028/realtime BTCUSD +0.20% (I know, shocking, right?), small-company stocks, real-estate investment trusts, high-yield bonds, investment grade bonds, and U.S. Treasury bonds.

This is not just the benefit of hindsight, either.

Ramsey, the chief investment strategist at Midwestern money management firm Leuthold Group, has for years monitored what he calls the “All Asset No Authority” portfolio, which is sort of the portfolio you’d have if you told your pension fund manager to hold some of all the major asset classes and make no decisions. So it consists of equal amounts in 7 assets: U.S. large-company stocks, U.S. small-company stocks, U.S. real-estate investment trusts, 10 Year U.S. Treasury notes, international stocks (in developed markets like Europe and Japan), commodities and gold.

Any of us could copy this portfolio with 7 ETFs: For instance the SPDR S&P 500 ETF trust /zigman2/quotes/209901640/composite SPY +3.18% , the iShares Russell 2000 ETF /zigman2/quotes/209961116/composite IWM +3.10% , Vanguard Real Estate /zigman2/quotes/202931846/composite VNQ +2.13% , iShares 7-10 Year Treasury Bond /zigman2/quotes/202862654/composite IEF -0.35% , Vanguard FTSE Developed Markets ETF /zigman2/quotes/202394679/composite VEA +2.97% , Invesco DB Commodity Index ETF /zigman2/quotes/205569319/composite DBC +0.95% , and SPDR Gold Trust /zigman2/quotes/200593176/composite GLD -0.10% . These are not specific fund recommendations, merely illustrations. But they show that this portfolio is accessible to anyone.

Faber’s portfolio is similar, but excludes gold and U.S. small-company stocks, leaving 20% each in U.S. and international large-company stocks, U.S. real estate trusts, U.S. Treasury bonds, and commodities.

The magic ingredient this year, of course, is the presence of commodities. The S&P GSCI /zigman2/quotes/210598561/delayed XX:SPGSCI +1.95% has skyrocketed 33% since Jan. 1, while everything else has tanked.

The key point here is not that commodities are great long-term investments. (They aren’t. Over the long term commodities have either been a mediocre investment or a terrible one, though gold and oil seem to have been the best, analysts tell me.)

The key point is that commodities typically do well when everything else, like stocks and bonds, do badly. Such as during the 1970s. Or the 2000s. Or now.

That means less volatility, and less stress. It also means that anyone who has commodities in their portfolio is in a better position to take advantage when stocks and bonds plunge.

/zigman2/quotes/210599714/realtime
US : S&P US
3,911.74
+116.01 +3.06%
Volume: 3.46B
June 24, 2022 5:05p
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/zigman2/quotes/210598365/realtime
US : Nasdaq
11,607.62
+375.43 +3.34%
Volume: 8.68M
June 24, 2022 5:16p
loading...
/zigman2/quotes/202934861/composite
US : U.S.: Nasdaq
$ 141.66
+3.39 +2.45%
Volume: 89.12M
June 24, 2022 4:00p
P/E Ratio
23.03
Dividend Yield
0.65%
Market Cap
$2292.79 billion
Rev. per Employee
$2.51M
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/zigman2/quotes/210331248/composite
US : U.S.: Nasdaq
$ 116.46
+4.02 +3.58%
Volume: 69.87M
June 24, 2022 4:00p
P/E Ratio
56.17
Dividend Yield
N/A
Market Cap
$1184.91 billion
Rev. per Employee
$297,107
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/zigman2/quotes/203558040/composite
US : U.S.: Nasdaq
$ 737.12
+31.91 +4.52%
Volume: 31.92M
June 24, 2022 4:00p
P/E Ratio
100.02
Dividend Yield
N/A
Market Cap
$763.66 billion
Rev. per Employee
$626,347
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/zigman2/quotes/31322028/realtime
US : CoinDesk
21,263.98
+42.10 +0.20%
Volume: 0.00
June 26, 2022 1:59p
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/zigman2/quotes/209901640/composite
US : U.S.: NYSE Arca
$ 390.08
+12.02 +3.18%
Volume: 98.05M
June 24, 2022 4:00p
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/zigman2/quotes/209961116/composite
US : U.S.: NYSE Arca
$ 175.09
+5.26 +3.10%
Volume: 37.14M
June 24, 2022 4:00p
loading...
/zigman2/quotes/202931846/composite
US : U.S.: NYSE Arca
$ 93.12
+1.94 +2.13%
Volume: 4.66M
June 24, 2022 4:00p
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/zigman2/quotes/202862654/composite
US : U.S.: Nasdaq
$ 101.15
-0.36 -0.35%
Volume: 5.13M
June 24, 2022 4:15p
loading...
/zigman2/quotes/202394679/composite
US : U.S.: NYSE Arca
$ 41.58
+1.20 +2.97%
Volume: 18.52M
June 24, 2022 4:00p
loading...
/zigman2/quotes/205569319/composite
US : U.S.: NYSE Arca
$ 27.70
+0.26 +0.95%
Volume: 3.51M
June 24, 2022 4:10p
loading...
/zigman2/quotes/200593176/composite
US : U.S.: NYSE Arca
$ 170.09
-0.17 -0.10%
Volume: 6.14M
June 24, 2022 4:00p
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/zigman2/quotes/210598561/delayed
XX : S&P GSCI
735.03
+14.04 +1.95%
Volume: 0.00
June 24, 2022 4:00p
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