Dec

5

I wonder if I can ask you to weigh in on the robo-advisers that have basically automated asset allocation. Is it worthwhile to learn much more about allocation above and beyond the basic algorithms used in wealthfront or betterment?

Thank you for your suggestions.

Bill Rafter writes:

We tend to think of the robo advisors as the broken clock that is correct twice a day. There will be times when they make the correct decisions. Can you live with their bad decisions, however, especially when you have no idea as to how those decisions have been made? That is, who programmed them and are the inputs and decision processes logical?

Regarding your final question, any decision to allocate time to a project has to be viewed in terms of reward to cost. A basic allocation method may be good enough if the cost and effort of doing better is onerous. To find that out, define your goals and you will see. As an example, let us suppose that someone's goal is to be out of equities in major declines and to outperform the indices by 20 basis points per day when we in. That is, the effort is a daily one, which necessitates active attention to detail. However if someone else's goal was more casual, then the effort can be backed-off considerably. 

Ed X. writes in:

The Robos have zero advantage over just going to the Vanguard website  [ https://personal.vanguard.com/us/funds/tools/recommendation ] and doing their simple, self guided process. Robos are 95% sales funnel plus 5% minor tweaks of little practical significance.


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3 Comments so far

  1. Ed on December 5, 2016 11:53 pm

    The Robos have zero advantage over just going to the Vanguard website and doing their simple, self guided process. Robos are 95% sales funnel plus 5% minor tweaks of little significance.

  2. Andre on December 7, 2016 10:44 am

    Everyone thinks they’re going to print money with a trading algo written in python including me. But now I’m remembering Turf Betting and now I’m looking around the table and realizing we’re all suckers.

  3. Andre on December 7, 2016 10:48 am

    how do you bet against system traders? Figure out what the most recent pattern is in given commodity and trade for it to break?

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