PP is once again positive YTD

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bedraggled
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Re: PP is once again positive YTD

Post by bedraggled » Tue Nov 03, 2015 5:02 am

Mathjack,

Re: gold.

If you check the 200 day moving average compared to the 50 day moving average, it is obvious that gold is going nowhere.  Budd seems OK here.

Two thoughts:
1) When gold rises above the 200day average all is good, so buy then.

2) When the 50 day averages rises and crosses the 200 day average  ALL is good with gold and may be the best time to buy THEN!!

Both, I guess, could give false signals but we don't want this to be dull.
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Re: PP is once again positive YTD

Post by mathjak107 » Tue Nov 03, 2015 5:46 am

actually the death cross has pretty much been wrong ,  A death cross occurs when the short-term 50-day moving average of an index drops below its longer 200-day
moving average.

death crosses as an indicator of impending doom have a lousy track record! According to Jason Goepfert of Sundial Capital, since 1979 there have been 12 other instances of all four indexes suffering death crosses at the same time.

Three months later the S&P 500 was higher 9 out of 12 times and only one of those losses was significant and that was 2008,. In fact, the S&P has averaged a gain of 5.0% in the subsequent three months  and 8.4% a year later.

The most recent prior case was in August of 2011 (which bears a great deal of resemblance to today). And while stocks were only up 1.3% after three months, they surged 15.8% over six months.

In the current case, three of the indexes have already broken back above their 200-day moving averages (the Russell 2000 is the exception)
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Re: PP is once again positive YTD

Post by bedraggled » Tue Nov 03, 2015 6:01 am

MJ,

OK but when I look at the 50 and 200 day gold averages, it appears gold was tossed in dumpsters behind a building in Lefrak City and won't be coming out soon.

I think I meant that the 50 and 200 day averages tell us it is safe to postpone further gold accumulation for a good while.
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Re: PP is once again positive YTD

Post by mathjak107 » Tue Nov 03, 2015 6:05 am

you are preaching to the choir .  my stance has been there is nothing in place or on the near horizon to make gold sustain anything but a flash in the pan . if anything we have to worry about the dollar getting to strong.

we are way to far out of the ball park at this point for me to want to buy gold yet .
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Re: PP is once again positive YTD

Post by bedraggled » Tue Nov 03, 2015 6:52 am

Not so much preaching to the choir.  More a statement for general edification.

A Divinity degree?  Choir practice?  That takes up a lot of Sunday time.  Better to post here Sunday mornings before 9AM.
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Re: PP is once again positive YTD

Post by mathjak107 » Tue Nov 03, 2015 8:49 am

everything has a bottom  .

since that flash in the pan 3 weeks ago gold is down about 62 bucks an ounce .  i see it is at 1123.00 now .  if it falls below 1100  i would speculate on  a small position . wait for a flash and sell it .
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Re: PP is once again positive YTD

Post by buddtholomew » Tue Nov 03, 2015 9:10 am

Not posting to gloat...just to say gold is completely useless...wasted 4-5 years investing in this POC. If you're going to hold it, hold physical and forget about marking to market.
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Re: PP is once again positive YTD

Post by Reub » Tue Nov 03, 2015 9:23 am

Budd, but how did your overall PP portfolio do in that same time frame?
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Re: PP is once again positive YTD

Post by mathjak107 » Tue Nov 03, 2015 9:26 am

buddtholomew wrote: Not posting to gloat...just to say gold is completely useless...wasted 4-5 years investing in this POC. If you're going to hold it, hold physical and forget about marking to market.
but think of the bright side . any new money you put in equity's the last 5 years would have grown so much you would only have had  to worry about  how to spend it or  possibly  owe taxes .  then you might have had rich people worry's .  ha  ha ha

see there is a silver lining
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Re: PP is once again positive YTD

Post by Cortopassi » Tue Nov 03, 2015 9:28 am

Nasdaq being celebrated again on biz radio and media at 15 year high... well, that means it was at this same level 15 years ago, without inflation factored in.

So go ahead and gloat if you want.  Because a lot of people can say they've wasted 15 years investing in stocks.
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Re: PP is once again positive YTD

Post by mathjak107 » Tue Nov 03, 2015 9:34 am

yep , in a way any old money hit a brick wall in 2000 and in real return is up less than 2% . but most of us  i would bet had only a fraction invested in 2000 compared to today so a whole lot of money went in and grew after 2000  and grew very nicely ..

i had 1/3 my net worth pre 2000 . all the rest was invested and grew  after 2000 .  many of us were contributing to our 401k's  after 2000  so new money since then did fine ,  so again results are very different then singling out 1 year  as a reference .  just  moving 1 year to starting in 2001 has real returns almost 50% greater .
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Re: PP is once again positive YTD

Post by Cortopassi » Tue Nov 03, 2015 9:41 am

mathjak107 wrote: yep , in a way any old money hit a brick wall in 2000 and in real return is up less than 2% . but most of us  i would bet had only a fraction invested in 2000 compared to today so a whole lot of money went in and grew after 2000  and grew very nicely ..

i had 1/3 my net worth pre 2000 . all the rest was invested and grew  after 2000 .  many of us were contributing to our 401k's  after 2000  so new money since then did fine ,  so again results are very different then singling out 1 year  as a reference .
Since you used 2000 as the year in this post, since 1/1/2000 to today:

S&P up 78.68%
T-Bonds up 208.69%
Gold up 290.54%

I would be curious as to your response to this?  Gold flash in the pan?
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Re: PP is once again positive YTD

Post by mathjak107 » Tue Nov 03, 2015 9:44 am

it totally took a beating though if you did not time it right . it isn't time in the markets with gold , it is timing the markets .

2000 was a decade with 2 back to back recessions , why should equity's have done anything else but lag for a while .

look at a  typical accumulation period or retirement  of 30 or 40 years and the big picture is another story vs just some poor time frame temporarily  for an asset .

gold has had a pretty poor 40 or 30 years  in comparison.

certainly any new money added the last 5 years took a beating .

don't forget as time goes on and you accumulate more and more the effect on your wealth becomes greater and greater  from poor performance or good performance . .

the last 5 years  at peak accumulation had i been in gold would have been extremely painful . on the other hand the growth in equity's i saw at near peak accumulation was spectacular .
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Re: PP is once again positive YTD

Post by Cortopassi » Tue Nov 03, 2015 9:55 am

As we've covered a lot in these discussions, it is never a single static investment point in time where you are dumping all your money in.  It is over a long time, yes, 30-40 years.  As rebalancing shows, gold had more time rebalanced out of it because it hit 35% than any other asset, so it is apparently the most volatile, and the gains were captured by the PP and distributed to the other lagging assets. 

Whether you believe it is a poor 30-40 years or not, the gains in it, at the appropriate times, were taken and rebalanced to others.


<<from previous post:

If you run 1975-now, with 35/15 bands, specifically looking at what rebalanced the portfolio (there were 13 rebalances):

**1 time stocks to 15%
**1 time bonds to 15%
**1 time bonds to 35%
**2 times stocks to 35%
**3 times gold to 15%
**5 times gold to 35%
>>
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Re: PP is once again positive YTD

Post by mathjak107 » Tue Nov 03, 2015 10:13 am

all that matters is the dollars and cents  at the end , not how many times you bought a lagging investment .

you can't just look at numbers , you need to look at numbers with your own rate of savings and growth .

like i said having poor performance on only 1/3 of my assets since 2000 and then  having better growth from that point on and spectacular growth  since 2008 while i was able to add more and more money and the tanks s were at their fullest ever is a very different outcome had i used gold  as an example the last 5 years and missed 100% in gains on equity's  on maximum savings . .

on the other hand i had very little accumulated yet in the 1980's when we had 17 years averaging 14% a year cagr .
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Re: PP is once again positive YTD

Post by Cortopassi » Tue Nov 03, 2015 10:32 am

It is not just dollars and cents, it is surviving drawdowns without getting scared out.

A 60/40 from 1975 on has had 21 drawdowns in excess of 10%, a PP had 5.

Granted, a 60/40 in the end had 2.2x the amount of money the PP did, but the PP drawdowns would also have been something I could have mentally managed easier.

I will say certainly that 25% cash, paying nothing, is suspect as still being a useful portion of the PP.  It limits drawdowns, but otherwise doesn't add much in my view.  25% gold is plenty security since it can always be exchanged for cash on short notice.

I may gravitate toward a 40/20/25/15 or similar over the next year or so....less cash and gold exposure and increased stock exposure.  But not convinced that I wouldn't be doing that at the most possible inopportune time!
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Re: PP is once again positive YTD

Post by buddtholomew » Tue Nov 03, 2015 12:04 pm

Just look at today...so typical of the PP. Coming up on the losing end as usual. Stocks up, gold and treasuries hammered. What a surprise!
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Re: PP is once again positive YTD

Post by Kbg » Tue Nov 03, 2015 12:21 pm

buddtholomew wrote: Just look at today...so typical of the PP. Coming up on the losing end as usual. Stocks up, gold and treasuries hammered. What a surprise!
Gees. Either bag it or do a rotational top 1, 2 or top 3 PP assets depending on if you consider cash part of your rotational scheme or a fixed anchor. Just be prepared for more volatility of returns.

Truly you are not surprised that LTTs and Stocks normally move opposite each other on a day to day basis are you?
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Re: PP is once again positive YTD

Post by mathjak107 » Tue Nov 03, 2015 12:23 pm

Cortopassi wrote: It is not just dollars and cents, it is surviving drawdowns without getting scared out.

A 60/40 from 1975 on has had 21 drawdowns in excess of 10%, a PP had 5.

Granted, a 60/40 in the end had 2.2x the amount of money the PP did, but the PP drawdowns would also have been something I could have mentally managed easier.

I will say certainly that 25% cash, paying nothing, is suspect as still being a useful portion of the PP.  It limits drawdowns, but otherwise doesn't add much in my view.  25% gold is plenty security since it can always be exchanged for cash on short notice.

I may gravitate toward a 40/20/25/15 or similar over the next year or so....less cash and gold exposure and increased stock exposure.  But not convinced that I wouldn't be doing that at the most possible inopportune time!
who you are as an investor will be determined by  your pucker factor  for volatility , your appetite for risk and the amount of money that is involved .

all three interrelate .

so as an example when i started out accumulating money i had a high pucker factor . draw down and the normal market cycles moving up and down didn't bother me at all .

i had a medium tolerance for risk .  while i could deal with market risk  , i didn't swing for the fences putting all my money in to finding the next microsoft as that is not volatility but a genuine risk of money .

but as time went on and the assets grew larger and larger there reaches a point where percentages down means little and dollars down mean a whole lot .

while in 2000 if i was down a lot  it was no big deal since in dollars the amount down was not all that much .  i only had 1/3 of what i have today back then .

but today being down just 5% represents 9 years of maxing out my 401k at not just max but catch up .

there is a big difference in my pucker factor today vs 2000 because of the dollars and cents . as well as big difference today in what markets being up or down can do to my assets . which is why i said what happened in 2000 to stocks does not concern me as much as the gains the last 5 years which are on 2/3's more money . .

so while i was very comfortable with market volatility and 90% equity's while accumulating money ,  today i am not . so 40-60%  equity's is more in a range that puts things back in to a perspective that i can deal with .
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Re: PP is once again positive YTD

Post by Cortopassi » Tue Nov 03, 2015 12:55 pm

I follow your logic for the most part, except the part about % matters less than $.  If I have 100k, 5% down is 5k, and 5k is 5k, so they are equivalent to my mind.  Somehow they were not to you?

I was the 90% guy, burned by 2008, then I was the all in on gold guy, burned by the 3 years following 2011.  Which is why I am here since 2014.  Even mix is suiting me for now. 

Everyone is different.  Sure.  It is a lot based off past experiences.  I still have a hard time believing the stock market should be where it is at.  But I hold my nose and buy.  Same with gold.
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Re: PP is once again positive YTD

Post by mathjak107 » Tue Nov 03, 2015 12:57 pm

Being  down 5%  on 100k is 5k , lets put that in perspective , it is one years ira contribution you are down, not terrible  .    .  being 5% down on 3 million is 150k .  that is being down 30 years of contributions.

which do you think will give you more angst .

mentally there is a big difference  seeing a 5k drop vs 150k drop  even though percentages are the same . it is more about what the dollars can buy or represent then the  balances itself .

i see days where we move 25k in one session even being in a fairly conservative mix .  when you start going that is almost 2 years of my wifes income when she was working that is a different ball game  from just the small percentage up or down .
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Re: PP is once again positive YTD

Post by MachineGhost » Tue Nov 03, 2015 12:58 pm

buddtholomew wrote: Just look at today...so typical of the PP. Coming up on the losing end as usual. Stocks up, gold and treasuries hammered. What a surprise!
The warnings signs of underperformance were a ETF being released and a book being published.  Crowded trade.
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Re: PP is once again positive YTD

Post by Cortopassi » Tue Nov 03, 2015 1:18 pm

Underperformance signs -- one huge thing that started popping up when gold was peaking were Cash for Gold stores.  Now I see quite a few are shuttered.

Inverse correlation there?  Why would these places spring up like roaches when gold was peaking?  Seems that would have been the best time for the seller.  Sure maybe the shop's margins would be higher with a higher gold price, but you'd think there would be just as many, if not more, sellers now, trying to unload their pet rocks before gold goes to zero?  :-)
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Re: PP is once again positive YTD

Post by MediumTex » Wed Nov 04, 2015 3:21 pm

MachineGhost wrote:
buddtholomew wrote: Just look at today...so typical of the PP. Coming up on the losing end as usual. Stocks up, gold and treasuries hammered. What a surprise!
The warnings signs of underperformance were a ETF being released and a book being published.  Crowded trade.
You really think the PP is a crowded trade?

Most people have never even heard of it.

One book doesn't bother me.  As I recall, Harry Browne wrote a book about the PP in 1987 and the strategy worked just fine in the years following its publication.

I'm also pretty sure that Harry Browne's 1987 book sold a lot more copies than the more recent PP book (though people say the recent PP book is pretty good).
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Re: PP is once again positive YTD

Post by MWKXJ » Wed Nov 04, 2015 6:58 pm

Cortopassi wrote: Underperformance signs -- one huge thing that started popping up when gold was peaking were Cash for Gold stores.  Now I see quite a few are shuttered.
Not to diverge from gold, but a broad-market underperformance sign would be the resurgence of human billboards sometime during the last decade.  They recall the placarded "Eat at Joe's" tramps from the Hoover era, and their numbers have steadily grown since the Y2K crash. That it's apparently market-efficient to pay a working age adult to stand on a street corner holding a sign in 105 degree Arizona sun, sometimes wearing a furry mascot costume, speaks volumes about the state of the American economy.
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