Gold / Stock / Bonds at highs or near highs?

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Tyler
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Re: Gold / Stock / Bonds at highs or near highs?

Post by Tyler » Tue Oct 08, 2019 12:57 pm

I hear ya. It's true that we don't have a lot of data for rising rates. But we do have a full decade of truly skyrocketing rates. And during that time the PP still stayed right within its normal band of returns.

Personally, I don't think the PP was driven by falling rates any more than it was driven by gold coming off the gold standard or the record stock bubble in the 90's. With any portfolio, one can point out reasons to doubt any individual asset. To me, the beauty of the PP is that it truly internalizes this doubt and doesn't place its bets on any of them. And that's exactly how it is so stable over time even in the face of market turmoil.
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ochotona
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Re: Gold / Stock / Bonds at highs or near highs?

Post by ochotona » Tue Oct 08, 2019 2:41 pm

pugchief wrote:
Mon Oct 07, 2019 1:36 pm
ochotona wrote:
Sun Oct 06, 2019 11:26 am
sophie wrote:
Sun Oct 06, 2019 10:18 am
Another strategy: wait until the PP as a whole goes through a negative performing couple of months and then buy in.
This is a great idea.
I disagree. I think this is a terrible idea. What if the next time the PP has sustained negative returns is 10 years from now? You think waiting 10 years for that event is better than just jumping in or DCA?
Didn't mean to try to wait years before jumping in. I meant start buying when everyone on the forum is complaining, which is several times a year.

End of 2015. End of 2016. One year ago. Those times. Did you forget already? Usually coincident with whats-his-name "Budd" being an ash.
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Kbg
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Re: Gold / Stock / Bonds at highs or near highs?

Post by Kbg » Tue Oct 08, 2019 3:44 pm

This isn't unique to the PP but every time the PP has had a bad year, the next year has been one of its best years. However, given the DDs experienced historically I don't see any point to waiting to invest.
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Re: Gold / Stock / Bonds at highs or near highs?

Post by Pet Hog » Wed Oct 09, 2019 9:41 am

Tyler wrote:
Tue Oct 08, 2019 12:57 pm
I hear ya. It's true that we don't have a lot of data for rising rates. But we do have a full decade of truly skyrocketing rates. And during that time the PP still stayed right within its normal band of returns.

Personally, I don't think the PP was driven by falling rates any more than it was driven by gold coming off the gold standard or the record stock bubble in the 90's. With any portfolio, one can point out reasons to doubt any individual asset. To me, the beauty of the PP is that it truly internalizes this doubt and doesn't place its bets on any of them. And that's exactly how it is so stable over time even in the face of market turmoil.
I wonder what would be the result if we modeled the PP going back in time from today. My gut instinct is that it wouldn't be too bad, even though stock and bond prices would go pretty much downhill all the way. Rebalancing and reinvestment of higher dividends might save the day. Tyler, is that something easy for you to try modeling?
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Re: Gold / Stock / Bonds at highs or near highs?

Post by Tyler » Wed Oct 09, 2019 1:43 pm

Pet Hog wrote:
Wed Oct 09, 2019 9:41 am
I wonder what would be the result if we modeled the PP going back in time from today. My gut instinct is that it wouldn't be too bad, even though stock and bond prices would go pretty much downhill all the way. Rebalancing and reinvestment of higher dividends might save the day. Tyler, is that something easy for you to try modeling?
Interesting idea. I'll have to think about it. My first impression is that calculating bond returns with reversed interest rate movements isn't too hard, but I have major doubts that the exercise would meaningful without also finding some way to account for how a prolonged period of rising rates might have also affected the stock and gold markets. Assets don't operate in a vacuum.
Last edited by Tyler on Wed Oct 09, 2019 4:24 pm, edited 2 times in total.
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ochotona
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Re: Gold / Stock / Bonds at highs or near highs?

Post by ochotona » Wed Oct 09, 2019 1:55 pm

Kbg wrote:
Tue Oct 08, 2019 3:44 pm
This isn't unique to the PP but every time the PP has had a bad year, the next year has been one of its best years. However, given the DDs experienced historically I don't see any point to waiting to invest.
The volatility is so mild relative to other options, timing the purchase is really a palliative step. It's psyching yourself out in a good way.
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