I’m an unabashed proponent of portfolio diversification, and enjoy sharing examples of how thinking beyond over-simplified “stocks” and “bonds” can create an asset allocation greater than the sum of its parts. Like a wall built of many smaller bricks, it’s the strength of the big picture that truly counts and no one individual brick tells the full story.
What, then, would happen if one really took diversification to heart and just bought a little bit of every asset? Judging by the numbers of the Merriman Ultimate Buy-and-Hold portfolio (new in the Portfolios section), apparently you get a really great asset allocation!
Of course, I’m kidding about the “just buy a little bit of everything” comment. The most compelling thing about the Merriman Ultimate portfolio is not simply the high returns and low volatility, or even the very impressive withdrawal rates.
What really seems to draw people in is the thorough and thoughtful explanation that Paul Merriman provides to justify each and every holding in the portfolio.
To be clear, I don’t personally endorse every point he makes nor do I agree with every conclusion. For example, I believe conflating “risk” with “standard deviation” misses the point. And I think his over-the-top salesmanship (“One of the most important things you’ll ever read” — Really?) is kinda lame and detracts from his better points. But on-balance I do appreciate the thought process and find the end result to be well-diversified with nice results.
So rather than speak too much about the asset allocation, I’ll simply encourage everyone to read Merriman’s detailed explanation and then return here to compare the portfolio performance to other options. One key characteristic of a robust portfolio that transcends the hype is that the results speak for themselves.
UPDATE: This charts were updated on 9-28-2016 with up-to-date data and modified withdrawal rate terminology.