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The Muscular Portfolios Newsletter — No. 31 — Dec. 15, 2020
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And the winner is...
 By Brian Livingston
In my previous newsletter, I revealed that allocating half of your savings to the Papa Bear Portfolio and the other half to the Mama Bear — rebalanced 50/50 every Dec. 31 — had particular benefits for readers of Muscular Portfolios.
To be specific, this “blended” account enjoyed a gain that was about halfway between the Papa’s higher return and the Mama’s lower return. But the blend suffered month-end drawdowns that were not much worse than the Mama’s gentle losses. (The blend was once down 21%, the Mama 20% — an insignificant difference.)
If you didn’t read that report, go back and peruse Newsletter #30 right now. I’ll wait.
As you may have seen in that newsletter, I asked my readers to suggest clever names for the blended approach. If you’d like to skip the sometimes-hilarious proposals and scroll straight down to the name I selected, use this shortcut. But I think you’ll be more than a little amused by what the newsletter’s readers dreamed up.
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Figure 1. Holding the Mama Bear and the Papa Bear in equal proportions has benefits. Photo of polar bear couple with cub in the Canadian Arctic by Outdoorsman/Shutterstock.
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Nothing bearish about this (except the names)
It’s worth knowing why Muscular Portfolios have the names they do. While writing the book, I sought to recommend any savings methods I could find that satisfied the goal of Goldilocks investing: not too risky, not too tame, just great gains. In the same spirit, astronomers seek Goldilocks planets, which are neither too boiling nor too frozen to support life.
To refer to the three low-loss portfolios I discovered, I wanted an easy reminder that one strategy had a small menu, needing only two exchange-traded funds; another used nine; and the final one involved 13. I brainstormed sequences such as the Jack, Queen, and King Portfolios. I had to reject them all. Because the two-fund strategy was originally recommended by the late Vanguard founder Jack Bogle, for instance, calling one of the book’s strategies the Jack Portfolio would have unfairly played on the great man’s name.
The answer was suggested by “Goldilocks investing” itself. Everyone knows the fairy tale: One bowl was too hot, the second was too cold, and the third was just right. The titles Baby Bear, Mama Bear, and Papa Bear immediately convey their small, medium, and large baskets of ETFs.
The fourth strategy in the book has no “bear” in its name — it’s just called the End Game Portfolio. You sock 80% of your assets into income-producing bonds, with the other 20% in a Muscular Portfolio, so your principal grows. This is a traditional 20/80 high-income strategy for people who’ve saved enough to live on. A Muscular Portfolio doesn’t need the word “bear” in its name. Repurposing the Three Bears was just a convenient memory device to help us remember the relative sizes of the baskets.
Using the word “bear” does keep our monikers from being confused with similar-sounding portfolios. As you can imagine, no Wall Street hustlers want the word “bear” in the name of a financial product! But riffing on this word inspired many of the clever names my readers submitted, as you’ll see below.
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One collective noun to rule them all
The very best name (that I didn’t select) was submitted by Todd B.: “The Sleuth Portfolio. According to Dave Fellows of the United States Geological Survey, a group of bears is called a sloth or a sleuth.”
That’s what writers call a collective noun. A Merriam-Webster article titled “A Drudge of Lexicographers” explains that these jocular descriptors have been around since at least 1486, when The Book of Saint Albans was published in England. The section attributed to Dame Juliana Barnes (or Berners) catalogued that era’s terms of venery, which are names for game animals.
This work — the first book published in more than two colors — codified many collective nouns we still use today: a gaggle of geese, a pride of lions, and so on.
The venery term a sleuth of bears derives from the fact that our ursine friends often move slowly. As a Quora article describes sleuth: “The word is equivalent to slow + –th, just as month is equivalent to moon + –th or length is to long + –th.”
Many other collective nouns have been dreamed up since the 15th century, of course. Among them are a whiteout of polar bears (see Figure 1), a scrum of journalists (I resemble that remark), and even a risqué story about some Oxford dons.
As clever as “a sleuth of bears” may be, I didn't adopt it as a name. My minimum requirements, which I call Strategy Sanity in the book (Figure 3-15), state that any portfolio I would recommend must be fully disclosed, with no secret rules or black-box formulas. We don’t want to imply we’re doing anything that’s sleuthy or surreptitious.
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The hilarity just keeps on coming
Readers suggested the following other names for the blended strategy:
Karan M. wrote: “If we’re doing baby names and Baby Bear is taken — Teenage Bear? LOL.” He added, “I don’t see the benefit of this [blend] over a Papa Bear if it reduces returns, but that’s just me.” Blending is perfectly optional, so go ahead and take it or leave it. Either way is OK as far as I’m concerned.
I replied, “Maybe the Barbie Portfolio, since Barbie is always in the center of the action.” Karan shot back: “That is OUTSTANDING! hahaha.” Thanks for the vote of confidence, but I can’t really promote a portfolio with the same name as a pneumatic doll that has a phalanx of lawyers.
James H. says, “My vote on a blend name is the Muscular Couch Potato!” That’s a good one, but the Couch Potato Portfolio is the name of a two-fund strategy promoted since 1991 by Dallas Morning News columnist Scott Burns. (See Chapter 3 of the book.)
Glenn B. writes, “The California Dreaming Portfolio. Get it?” That’s a nice allusion to the 1970 ditty by The Mamas and The Papas. People under the age of 60, however, might go, “Huh?”
Ebert M.: The Growing Bear Portfolio.
Atul S.: The Nana Bear Portfolio. He explains, “In Hindi, Nana = Maternal Father.”
Greg B.: The Two Bears Portfolio. (I might have gone for this if you’d offered me two beers.)
Jey P., David L., and Hoops-Crazy all submitted The MaPa Bear Portfolio. Just 11 minutes after Jey’s email message arrived, Robert K. suggested the reverse: The PaMa Bear Portfolio.
Rekanten sent in “The Smokey Bear Portfolio.” His water bucket would help you avoid burning through your money in volatile investments!
Fred F. writes: “My suggestion for the name would be the Spouse Portfolio.” Now we’re getting close to the heart of the matter. (See below.)
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Immediate family members aren’t eligible to win
The greatest number of proposed names from a single reader came from my own wife, the Fulbright Scholar and internationally exhibited artist Margie Livingston.
Back in the late ’80s and early ’90s, she was an art director in the New York headquarters of Ogilvy & Mather. It was at that time arguably the largest ad agency in the world, according to a 1989 New York Times article.
As a creative with that firm and others, Margie worked with some of the best copywriters in the business. One of them came up with Ikea’s tagline: “It’s a big country. Someone’s got to furnish it.” That may explain the 24 branding ideas she submitted.
Mindful of the axiom “happy wife, happy life” — a familial relationship that’s confirmed by a 2014 Rutgers study — I hereby publish all of her 24 suggestions:
Momma Poppa Split, Momma Poppa Team, Momma Poppa Package, Momma & Poppa Forever, Momma Poppa Team Up, Momma Poppa Team Work, Momma Poppa Merge, Momma and Poppa Fund, Momma and Poppa Strategy, Momma and Poppa Tactic, Momma and Poppa Method, Momma and Poppa Approach, Momma and Poppa Technique, The Momma and Poppa Way, The Momma and Poppa Method, Momma and Poppa Together Forever, Momma Poppa Booster, Momma Poppa Plus, Momma Poppa Maximized, Momma Poppa Enhanced, Momma Poppa Improved, Momma Poppa Upgrade, Team Mom & Pop, Mom and Pop Blend.
To her credit, Margie also revealed a Google search result she found: “The term ‘mom-and-pop’ also refers to inexperienced investors who casually play the market.”
That kind of argues against using Mom & Pop in the name. Sorry, dear.
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Figure 2. Margie Livingston was selected to be the artist in residence at the 2019 Festival of Music & Art (FOMA) in Australia. She dragged varicolored art boards face down through cities and forests, inscribing interesting patterns that she calls Extreme Landscape Painting. Source: Two-screen video by Luke Reid, commissioned and exhibited by the festival.
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Meet the new portfolio name
After considering all of the above, I settled on the following: the Power Couple Portfolio.
This name recognizes the power of the blended strategy: (1) The formula has a better expected performance than the Mama Bear, with drawdowns that are not significantly worse. (2) But to get its benefit, there’s extra “housekeeping” that’s required — you must hold six different ETFs each month rather than just three.
That requirement for attentiveness makes the blended strategy a good one for couples. Each partner can take a turn, ensuring that at least one person or the other is actually making the necessary trades every month.
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Figure 3. For those who have the perseverance to hold both the Mama and the Papa each month — six ETFs, not just three — the Power Couple Portfolio is a great strategy. Photo by Liderina/Shutterstock.
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Please don’t judge me harshly for not selecting any of the suggestions shown above. Rest assured that each nomination influenced the final choice.
I don’t plan to trademark or market the name Power Couple Portfolio. (By contrast, the Mama Bear, Papa Bear, and Baby Bear are trademarked to prevent unscrupulous commercial exploitation.) For now, “power couple” is just a quick, shorthand way for us to refer to this slightly more complex and marginally more time-consuming strategy.
I’ve updated the website’s FAQ page to document the new name, in case anyone searches for it in the future. However, the site doesn’t need to add a separate page that shows the “top six” ETFs. Remembering to hold the top three ETFs in the Mama and Papa each month should be easy enough for anyone to handle.
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Folio shifting users to Interactive Brokers
Readers of the book Muscular Portfolios know that it recommends the brokerage firm Folio Investing. Its easy user interface allows you to divide your portfolio into halves, thirds, or any percentages you like with a single instruction. No need to calculate the number of shares to buy or sell!
Unfortunately, as Folio’s CEO Steve Wallman announced in September, the company has been acquired by Goldman Sachs. Full disclosure: My book criticizes Goldman for its high fees and the poor performance of its house funds. (See Figure 11-5.)
On Dec. 3, Folio sent an email message to its users, saying it was ending its services to individuals (also known as retail investors). Folio’s new owners plan to concentrate on growing its custodial services for RIAs (registered investment advisors).
Any retail Folio account as of Jan. 8, 2021, will be transferred by Jan. 13 to Interactive Brokers (IB), a separate but well-respected brokerage firm. By coincidence, I myself have used accounts at both Folio (to hold Muscular Portfolios) and at IB (to hold a family trust I administer) for more than a decade.
If you have a Folio account but don’t want it transferred to IB, you can authorize a different brokerage firm to transfer your securities into its custody instead. A broker-to-broker transfer — which involves no sales transactions — should not expose you to any capital-gains taxes.
Folio says it won’t immediately transfer accounts that hold any of approximately 100 mutual funds that IB doesn’t yet support. Folio provides a list of these funds.
To stave off the transfer temporarily, you might be able to purchase a few shares of a security that’s on the list. One possible choice is the FundX Conservative Upgrader Fund (RELAX). That “fund of funds” holds a mix of equity, balanced, and bond securities to provide fairly smooth growth. Note: RELAX requires a $1,000 minimum purchase.
I’ll have a complete report on Folio’s transfer policies, and recommendations on any actions you can take, in the next newsletter, which will be published prior to Dec. 31. —Brian Livingston
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Get the book that frees you from Wall Street
Every investor needs a copy of Muscular Portfolios, which reveals the best investing strategies for 401(k)s, IRAs, and every other kind of savings plan — without your paying a penny to “financial advisers.”
Once you know the secret, you can use the Muscular Portfolios website to see the best investing signals at any time, free of charge.
Order the book from Amazon, B&N, or many other booksellers.
“I know of no book for a general investment audience that is more thoroughly researched and backed up by hard data.”
—MARK HULBERT, founder of the Hulbert Financial Digest
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About the author: Brian Livingston is a successful dot-com entrepreneur, an award-winning business journalist, a contributor to MarketWatch and StockCharts, and the author of Muscular Portfolios (2018, BenBella Books). He is also the author or co-author of 11 books in the Windows Secrets series (1991–2007, John Wiley & Sons), with over 2.5 million copies sold. From 1986 to 1991, he worked in New York City as the assistant IT manager of UBS Securities; as a consultant for Morgan Guaranty Trust (now JPMorgan Chase); and as technology adviser for Lazard Ltd. He was the weekly Windows columnist for InfoWorld magazine from 1991 to 2003. During portions of that period, he was also a contributing editor of CNET, PC World, eWeek, PC/Computing, Datamation, and Windows magazine, and the editor of E-Business Secrets. In 2003, he founded the Windows Secrets Newsletter, which grew from zero to 400,000 email subscribers. He served as its editorial director until he sold the business in 2010. He is president emeritus of the Seattle regional chapter of the American Association of Individual Investors (AAII). Stipple illustration by The Wall Street Journal.
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