Gyroscopic Investing

Wow the Bogleheads sure went from "100% VTSAX 4 LYFE" to "The Great Depression round 2" really fast didn't they?

pmward wrote: ↑Thu Mar 19, 2020 6:26 pm Wow the Bogleheads sure went from "100% VTSAX 4 LYFE" to "The Great Depression round 2" really fast didn't they?

As the famous philosopher Mike Tyson once said, "Everyone has a plan until they get punched in the mouth.".

The young Tyson's impeccable blend of defensive bobbing and weaving and insane punching power was very PP-like.

Libertarian666 wrote: ↑Thu Mar 19, 2020 6:28 pm

pmward wrote: ↑Thu Mar 19, 2020 6:26 pm Wow the Bogleheads sure went from "100% VTSAX 4 LYFE" to "The Great Depression round 2" really fast didn't they?

As the famous philosopher Mike Tyson once said, "Everyone has a plan until they get punched in the mouth.".

Ain't that the truth. People really don't understand what a deep drawdown feels like until they actually go through one. It feels much different than it looks on a backtest. It probably also doesn't help that they are all feeding off each others fear and worry.

The thing about the backtests is that everyone can see there was an eventual recovery. And in recent drops the recovery tended to be quite quick.

The difference is that when you're experiencing one, you don't know anything about either of those variables.

That is very true. The fear of the unknown. We all know this will likely be done and over quicker than most people expect, but fear can overpower logic quite easily. But the sad thing is for the corner to turn we need the capitulation to happen. The quicker the capitulation, the quicker the recovery. Markets turn up at the very point of max pessimism, by the time the news starts to get promising and public sentiment is that it is safe to go back out into the waters again, it will be too late and they will have missed out on the quickest and most powerful part of the recovery. Stocks are a leading indicator, not a trailing indicator.

Libertarian666 wrote: ↑Thu Mar 19, 2020 6:19 pm https://www.bogleheads.org/forum/viewto ... 2#p5113582

Great thread.

Smith1776 wrote: ↑Thu Mar 19, 2020 6:31 pm The young Tyson's impeccable blend of defensive bobbing and weaving and insane punching power was very PP-like.

Hmm, it never occurred to me earlier, but perhaps Mike was talking about the PP?

"My style is impetuous, my defense is impregnable."

"How dare they challenge me with their somewhat primitive skills?"

Funnily enough, Craig said it in 2013:
↳ viewtopic.php?f=1&t=5048&p=74801&hilit= ... son#p74801

dualstow wrote: ↑Fri Mar 20, 2020 5:46 am Funnily enough, Craig said it in 2013:
↳ viewtopic.php?f=1&t=5048&p=74801&hilit= ... son#p74801

Great minds think alike.

dualstow wrote: ↑Fri Mar 20, 2020 5:46 am Funnily enough, Craig said it in 2013:
↳ viewtopic.php?f=1&t=5048&p=74801&hilit= ... son#p74801

Did you specifically search in the forum for that?

Or did you just remember that 7 some odd years ago Craig said that?

Smith1776 wrote: ↑Fri Mar 20, 2020 3:54 pm

dualstow wrote: ↑Fri Mar 20, 2020 5:46 am Funnily enough, Craig said it in 2013:
↳ viewtopic.php?f=1&t=5048&p=74801&hilit= ... son#p74801

Did you specifically search in the forum for that?

Or did you just remember that 7 some odd years ago Craig said that?

I remembered that either he or Medium Tex had said it in the early days and then I specifically searched so I could link it.

dualstow wrote: ↑Fri Mar 20, 2020 4:05 pm I remembered that either he or Medium Tex had said it in the early days and then I specifically searched so I could link it.

Really impressive memory. And here I thought I had good knowledge of the history of the dialogue around here.

Smith1776 wrote: ↑Fri Mar 20, 2020 4:08 pm

dualstow wrote: ↑Fri Mar 20, 2020 4:05 pm I remembered that either he or Medium Tex had said it in the early days and then I specifically searched so I could link it.

Really impressive memory. And here I thought I had good knowledge of the history of the dialogue around here.

Familiarize yourself with Mark Leavy’s idea of storing gold in a wine bottle storage facility and also his mentioning cooking a pig in a hot tub. If I were to ever compile a gyro forum quizbook, those would be wort way more points than charts, graphs, or the best ETF for cash.

dualstow wrote: ↑Thu Mar 19, 2020 6:52 pm

Libertarian666 wrote: ↑Thu Mar 19, 2020 6:19 pm https://www.bogleheads.org/forum/viewto ... 2#p5113582

Great thread.

I read about 3 posts and thanked God I found Craig's podcast 10 years ago.

AdamA wrote: ↑Fri Mar 20, 2020 7:13 pm

dualstow wrote: ↑Thu Mar 19, 2020 6:52 pm

Libertarian666 wrote: ↑Thu Mar 19, 2020 6:19 pm https://www.bogleheads.org/forum/viewto ... 2#p5113582

Great thread.

I read about 3 posts and thanked God I found Craig's podcast 10 years ago.

There's a pretty feisty PP debate going on in that thread.

One of the posters there brought up a point that I've been thinking about, namely, that we're going to have a lot of pent up demand if this quarantining goes on for a long time. Combine that with Trump's policies and it's not implausible that that demand is satisfied by American companies and products (or other countries, as many seem to be on this train) like after WW II.

MangoMan wrote: ↑Sat Mar 21, 2020 7:56 am But will there be any small businesses left to fill that demand? Or will there be any money to spend? See Vinny's WSJ article in the CV thread.

That’s a vast thread to wade through. Do you know what page it’s on?

Kriegsspiel wrote: ↑Sat Mar 21, 2020 6:38 am One of the posters there brought up a point that I've been thinking about, namely, that we're going to have a lot of pent up demand if this quarantining goes on for a long time. Combine that with Trump's policies and it's not implausible that that demand is satisfied by American companies and products (or other countries, as many seem to be on this train) like after WW II.

This is similar to what I was saying in the stock scream room a couple weeks ago. This thing will eventually pass... and when it does, there's a whole lot of dry kindling laying out there from the unprecedented levels of stimulus they've deployed and will continue to deploy. Not only that, but the recession we are bound to be in will leave us with a very low bar to beat once the virus is finally under control. We don't know when that will be, but when it happens it won't take much of a spark to really get the economic fire burning hot.

This isn't 2008 though. In 2008 all the stimulus went to the banks. Now we are getting fiscal stimulus, and the bar for fiscal seems to be getting raised every day, and has bi-partisan support. Fiscal is a whole different animal altogether. We are literally testing out MMT as we speak, as the central banks globally are all providing liquidity at the same time as the governments are providing massive fiscal stimulus. The fact that this is a global synchronized effort and not just the U.S. also makes the potential for economic explosion in the recovery all the more likely.

Now I will say that like 2008, there will be a lot of changes in the post-crisis world. Any crisis like this, be it the financial crisis, 9/11, etc all leave a lasting mark. There will be some businesses that fail, there will be lots of new regulations and laws, there will likely also be a change in leadership in the stock market as well as a general reduction in valuations as people become a bit more risk averse. But, economically speaking, since all anyone looks at is short term quarter to quarter, the first couple quarters of the recovery are bound to be very explosive. I also think that coming out of this might be the time when inflation finally starts showing it's face again. We are already seeing supply side disruptions, a lot of talk about de-globalization, and a move not just from the left but also from the right to support MMT style stimulus and spending. So you are right that things will be much different in 2021 and forward than they were in 2009-2019. Like all bear markets, this is a pivotal time of change (and why does it seem these pivotal times always seem to hit around the decade marker???). But, I do think that the recovery will be swift and explosive. The real question is when? How long will this drag out for? Is it going to come back in the fall?

pmward wrote: ↑Sat Mar 21, 2020 10:09 am This isn't 2008 though. In 2008 all the stimulus went to the banks. Now we are getting fiscal stimulus, and the bar for fiscal seems to be getting raised every day, and has bi-partisan support. Fiscal is a whole different animal altogether. We are literally testing out MMT as we speak, as the central banks globally are all providing liquidity at the same time as the governments are providing massive fiscal stimulus. The fact that this is a global synchronized effort and not just the U.S. also makes the potential for economic explosion in the recovery all the more likely.

Of course you are assuming that MMT is valid.
What if it isn't?

Libertarian666 wrote: ↑Sat Mar 21, 2020 10:23 am

pmward wrote: ↑Sat Mar 21, 2020 10:09 am This isn't 2008 though. In 2008 all the stimulus went to the banks. Now we are getting fiscal stimulus, and the bar for fiscal seems to be getting raised every day, and has bi-partisan support. Fiscal is a whole different animal altogether. We are literally testing out MMT as we speak, as the central banks globally are all providing liquidity at the same time as the governments are providing massive fiscal stimulus. The fact that this is a global synchronized effort and not just the U.S. also makes the potential for economic explosion in the recovery all the more likely.

Of course you are assuming that MMT is valid.
What if it isn't?

It is valid in the short to medium term. I totally believe the day will eventually come that they paint themselves in the corner (hence why I have a 20% gold allocation and believe that gold will be the best returning PP asset of the next decade). But monetary stimulus alone carried us for 10 years. MMT certainly should be able to carry us for a few more years at least (maybe even another decade... or two), especially done in a global fashion. The bill has to be paid eventually. But they can kick that can down the road much longer than anyone can think possible. Back in 2009, nobody thought that monetary stimulus could go on and carry us for 11 years like it has with no inflation. Keep an open mind is all I'm saying. Common sense and logic left the room a long time ago.

pmward wrote: ↑Sat Mar 21, 2020 10:27 am

Libertarian666 wrote: ↑Sat Mar 21, 2020 10:23 am

pmward wrote: ↑Sat Mar 21, 2020 10:09 am This isn't 2008 though. In 2008 all the stimulus went to the banks. Now we are getting fiscal stimulus, and the bar for fiscal seems to be getting raised every day, and has bi-partisan support. Fiscal is a whole different animal altogether. We are literally testing out MMT as we speak, as the central banks globally are all providing liquidity at the same time as the governments are providing massive fiscal stimulus. The fact that this is a global synchronized effort and not just the U.S. also makes the potential for economic explosion in the recovery all the more likely.

Of course you are assuming that MMT is valid.
What if it isn't?

It is valid in the short to medium term. I totally believe the day will eventually come that they paint themselves in the corner (hence why I have a 20% gold allocation and believe that gold will be the best returning PP asset of the next decade). But monetary stimulus alone carried us for 10 years. MMT certainly should be able to carry us for a few more years at least (maybe even another decade... or two), especially done in a global fashion. The bill has to be paid eventually. But they can kick that can down the road much longer than anyone can think possible. Back in 2009, nobody thought that monetary stimulus could go on and carry us for 11 years like it has with no inflation. Keep an open mind is all I'm saying. Common sense and logic left the room a long time ago.

I certainly have an open mind about when the whole thing will blow up.
No one can know that with any degree of accuracy, because the timing is partly psychological.
And timing is always the hardest thing to get right.
I just think this is the big one.