Gyroscopic Investing

Posted: **Thu Jun 04, 2015 6:24 pm**

Also, Matthew, welcome and congratulations! Yes, it is weird that so many of those here have encouraged you to not get into the PP, when the title of the forum is "Permanent Portfolio Discussion Forum". Well, maybe they have lost confidence in the PP, but you know the real story, having read the book, so again congratulations, and come on in, the water's fine!

Posted: **Thu Jun 04, 2015 8:04 pm**

LC475 wrote: The gold standard is to own the bonds themselves directly.
...
I wish I knew more about solo 401ks. A quick Google search, however, seems to show unequivocally that one *can* indeed purchase bonds in a solo 401k, no problem. And so that is what I would recommend.

Yep, I own some 30-yr bonds in my Fidelity solo 401(k).
I don't know much about Treasury Direct, as I only have a taxable account with them and only hold savings bonds and I-bonds in there. But, the Fidelity holdings feel direct enough.

Posted: **Thu Jun 04, 2015 8:19 pm**

Fidelity also charges no fees for buying and selling Treasury bonds.

Posted: **Thu Jun 04, 2015 10:21 pm**

Thanks for all of the comments everyone. It's a bit hard to believe in any type of market timing after reading the Best Laid Investments book. I mean, I watched Peter Schiff predict the housing market bust and simultaneously lose lots of money for his clients because he didn't understand how the markets would react.

I'm about 70% cash right now with the rest split between miners and foreign stocks. I have about 60k in paper losses on the miners, which absolutely makes me sick considering how hard I have to work for that.

What does everyone use to track their PP as a whole? Iv looked at Google Finance, where you just plug in your buys and get a nice overview.

Posted: **Thu Jun 04, 2015 10:25 pm**

Matthew19 wrote: What does everyone use to track their PP as a whole? Iv looked at Google Finance, where you just plug in your buys and get a nice overview.

I use Quicken, but I would recommend you use: https://www.personalcapital.com/

Posted: **Thu Jun 04, 2015 10:46 pm**

Welcome to the forum Matthew19!

I have a solo 401K at Fidelity, and managing it couldn't be easier. Give them a call and they'll walk you through it. It behaves just like a regular account except that you can't simply transfer money into the account directly. A very nice Fidelity rep helped me set up a billpay to the account from my bank though - brilliant little workaround. You can buy anything you want in it, including Treasury bonds and bills. And I am completely sold on the ability to make "profit sharing" contributions - it's like having an extra large 401K!

Hope the gold miners are in taxable so you can harvest the losses. Good luck with the transition, and feel free to post specific questions. BTW there's a stickied thread on PP spreadsheets that you might want to check out.

Posted: **Thu Jun 04, 2015 10:54 pm**

Thanks Sophie! I'm assuming you're not using a Roth solo 401k since fidelity doesn't offer one? I can't quite wrap my head around if there are benefits to a Roth vs traditional. Btw I only have about 30k in tax sheltered accounts so I need to get some big contributions if possible.

Posted: **Thu Jun 04, 2015 11:08 pm**

That's right, it doesn't. I don't know your situation of course but a Roth 401K doesn't seem to be the best choice for a high income. I played with some numbers once (yes, there's a thread) and tax deferral won big under all scenarios. You can still make your annual "back-door" Roth contributions, once you've rolled your IRAs into the solo 401K.

To be fair, Vanguard and I think other brokerages also have solo 401Ks, and Vanguard has the Roth flavor. If you've got a favorite brokerage already you could certainly call and ask for specifics.

First though, ask a tax attorney or knowledgeable accountant about solos. They aren't ERISA accounts and don't have the same protection from lawsuits, so you should know about that before jumping in.

Posted: **Fri Jun 05, 2015 8:34 am**

Matthew19 wrote: What does everyone use to track their PP as a whole?

I use Personal Capital. It's a Mint-type financial account aggregator to track spending and income, combined with an investment portfolio side. If you own actual Treasury Bills for your cash portion, you may have to e-mail them and ask them to change the categorization of those (but not your long bonds) from bonds to cash. I did. Then you'll get a nice 4X25 pie that you can log in and look at whenever you... want to look at a nice 4X25 pie.

I don't know -- it's reassuring, OK!

They have apps and stuff. Then you can check on your pie and make sure it's still looking beautiful every five minutes with your Apple Watch. What a wonderful world.

Posted: **Fri Jun 05, 2015 9:09 am**

Welcome Matthew,

When to begin the PP always presents a dilemma. One or more of the asset groups may seem overvalued while other asset groups are tanking and looking for a bottom. I just jumped in December 2014 and allotted my 25% to the four asset groups and I have not looked back. I checked this morning and I am down -1.5%. TLT and IAU are down for me. This doesn't mean the PP is faulty and asset groups going up and down are to be expected.
Others on the forum have been with the PP a lot longer than I have. But the issue of timing the market is anathema to the PP philosophy. What I do is put additional cash in my PP weekly and when the cash portion of my PP hits 35% then I will reallocate to the original 25% for each asset group. This keeps the spirit of the PP alive. The great plus of Harry's philosophy is that no one can time the market consistently. I believe this. That's why the PP has a valuable place in my overall financial scheme.
Good luck. No one knows what will happen in the years ahead. The PP has weathered financial shocks before and it will do it again.

Posted: **Fri Jun 05, 2015 9:17 am**

Run as far away as fast as possible...I could not be more sincere. This portfolio is not what they make it out to be. This is the 7th day of straight losses...the money you can't affort to lose...my a$$

Posted: **Fri Jun 05, 2015 9:21 am**

Thanks for the tips on the personal capital app. If I didnt have a good way to zoom out and see the portfolio as a whole it would be harder to accept and implement.

I feel like I understand everything except the cash portion. Is a treasury note ladder a pain to manage and would I be better with a money market fund?

Posted: **Fri Jun 05, 2015 9:26 am**

buddtholomew wrote: Run as far away as fast as possible...I could not be more sincere. This portfolio is not what they make it out to be. This is the 7th day of straight losses...the money you can't affort to lose...my a$$

I'm sorry for the losses but I really don't plan to run. I can appreciate that this is a strange market and while it adjusts the PP will have some short term stagnation. I don't plan to look at it daily or even weekly, I run a business and have a family, I'd rather enjoy life.

Posted: **Fri Jun 05, 2015 9:47 am**

Matthew19 wrote:
buddtholomew wrote: Run as far away as fast as possible...I could not be more sincere. This portfolio is not what they make it out to be. This is the 7th day of straight losses...the money you can't affort to lose...my a$$
I'm sorry for the losses but I really don't plan to run. I can appreciate that this is a strange market and while it adjusts the PP will have some short term stagnation. I don't plan to look at it daily or even weekly, I run a business and have a family, I'd rather enjoy life.

Boom. Exactly the right attitude!

Posted: **Fri Jun 05, 2015 9:49 am**

Matthew19 wrote:
buddtholomew wrote: Run as far away as fast as possible...I could not be more sincere. This portfolio is not what they make it out to be. This is the 7th day of straight losses...the money you can't affort to lose...my a$$
I'm sorry for the losses but I really don't plan to run. I can appreciate that this is a strange market and while it adjusts the PP will have some short term stagnation. I don't plan to look at it daily or even weekly, I run a business and have a family, I'd rather enjoy life.

That is the correct perspective and your philosophy aligns well with the composition of the portfolio.

Posted: **Fri Jun 05, 2015 10:50 am**

buddtholomew wrote: Run as far away as fast as possible...I could not be more sincere. This portfolio is not what they make it out to be. This is the 7th day of straight losses...the money you can't affort to lose...my a$$

Are you being sarcastic? Think long-term, not short-term. Nothing is PERFECTLY non-correlated to each other 24/7.

Posted: **Fri Jun 05, 2015 10:54 am**

Matthew19 wrote: I feel like I understand everything except the cash portion. Is a treasury note ladder a pain to manage and would I be better with a money market fund?

CD's would have an edge in laddering due to the available maturity dates (out to 10-years in some cases). If you can handle remembering to buy a new T-Bill every 90 days, then liquidity is a big concern for you, otherwise just stick to 1-year. There's no autorollover for T-Bills akin to CD's at TreasuryDirect AFAIK but maybe Fidelity has an option like that.

Posted: **Fri Jun 05, 2015 11:03 am**

Matthew19 wrote: I'm about 70% cash right now with the rest split between miners and foreign stocks. I have about 60k in paper losses on the miners, which absolutely makes me sick considering how hard I have to work for that.

What does everyone use to track their PP as a whole? Iv looked at Google Finance, where you just plug in your buys and get a nice overview.

The best day to start a PP is always the present day! IMHO, you're also in great shape even from a tax perspective, especially if capital losses on the miners would offset any gains in the foreign stocks for tax purposes.

I personally use Mint to track my net worth and total investment account balances, and the Yahoo Finance app to glance at daily ETF movements. The investment side of Mint isn't that great for detailed tracking, but I kinda like it that way. I prefer to stay out of the weeds as much as possible, and will login to my brokerage when I need to to check the bands occasionally.

Welcome to the forum!

Posted: **Fri Jun 05, 2015 11:08 am**

Matthew19 wrote: I feel like I understand everything except the cash portion. Is a treasury note ladder a pain to manage and would I be better with a money market fund?

Fidelity has a nice tool for building a treasury ladder, and I believe you can even automate repurchasing new treasuries when they expire. That said, I personally went with a simple STT ETF for convenience. When I needed cash for a down payment on a house, selling a chunk of SCHO seemed easier than figuring out how to dissect a ladder.

Posted: **Fri Jun 05, 2015 1:20 pm**

Matthew19 wrote:
buddtholomew wrote: Run as far away as fast as possible...I could not be more sincere. This portfolio is not what they make it out to be. This is the 7th day of straight losses...the money you can't affort to lose...my a$$
I'm sorry for the losses but I really don't plan to run. I can appreciate that this is a strange market and while it adjusts the PP will have some short term stagnation. I don't plan to look at it daily or even weekly, I run a business and have a family, I'd rather enjoy life.

If the PP were a 10 hour international flight, budd would be the guy sitting next to you who turns to you every 30 minutes and says: "I'm pretty sure the plane is about to crash."

Posted: **Fri Jun 05, 2015 1:26 pm**

Matthew19 wrote: I feel like I understand everything except the cash portion. Is a treasury note ladder a pain to manage and would I be better with a money market fund?

On most brokers it is dead simple. At least it is on Fidelity. They will probably send you notices every single time a rung rolls over, which is a bit silly but not a problem. I have T-Bills and so just a one-rung "ladder", and every few months I get a message about how they're expiring and how I have thousands and thousands of gov't and commercial bond options available that I should roll it into, ha, ha. I think they finally stopped sending me the physical letters in the mail. Maybe. Or maybe I just tune it out now. Set it up and it just automatically does its thing.

Posted: **Fri Jun 05, 2015 1:26 pm**

MediumTex wrote:
Matthew19 wrote:
buddtholomew wrote: Run as far away as fast as possible...I could not be more sincere. This portfolio is not what they make it out to be. This is the 7th day of straight losses...the money you can't affort to lose...my a$$
I'm sorry for the losses but I really don't plan to run. I can appreciate that this is a strange market and while it adjusts the PP will have some short term stagnation. I don't plan to look at it daily or even weekly, I run a business and have a family, I'd rather enjoy life.
...and now that the plane has crashed, what do you say Mr. T?

If the PP were a 10 hour international flight, budd would be the guy sitting next to you who turns to you every 30 minutes and says: "I'm pretty sure the plane is about to crash."

Posted: **Fri Jun 05, 2015 1:27 pm**

buddtholomew wrote:
Matthew19 wrote:
buddtholomew wrote: Run as far away as fast as possible...I could not be more sincere. This portfolio is not what they make it out to be. This is the 7th day of straight losses...the money you can't affort to lose...my a$$
I'm sorry for the losses but I really don't plan to run. I can appreciate that this is a strange market and while it adjusts the PP will have some short term stagnation. I don't plan to look at it daily or even weekly, I run a business and have a family, I'd rather enjoy life.
That is the correct perspective and your philosophy aligns well with the composition of the portfolio.

See, he was just testing you! You passed.

Posted: **Fri Jun 05, 2015 1:36 pm**

buddtholomew wrote:
MediumTex wrote:
Matthew19 wrote: I'm sorry for the losses but I really don't plan to run. I can appreciate that this is a strange market and while it adjusts the PP will have some short term stagnation. I don't plan to look at it daily or even weekly, I run a business and have a family, I'd rather enjoy life.
...and now that the plane has crashed, what do you say Mr. T?

If the PP were a 10 hour international flight, budd would be the guy sitting next to you who turns to you every 30 minutes and says: "I'm pretty sure the plane is about to crash."

I didn't realize the plane had crashed. What makes you say that?

Is there something unusual about the PP's recent performance?

Posted: **Fri Jun 05, 2015 1:58 pm**

If your definition of "financial plane crashing" is "portfolio ever declines in value," then I suppose I can see how a YTD 0.5% nominal loss is a plane crash.

Gyroscopic Investing

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