PP Performance for 2016
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Re: PP Performance for 2016
There is another study at Longboard which shows investors kill their bond returns (and alts) even more than their stock returns as a percentage of total return.
We humans really aren't very well wired for this stuff as a general rule.
We humans really aren't very well wired for this stuff as a general rule.
- mathjak107
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Re: PP Performance for 2016
that is because as modern brain imaging equipment taught us humans hate losing money more than making it . when we look at things hypothetically as opposed to with real money on the line the same parts of the brain are not used .
we are prewired for failure as once the stress of having money potentially at a loss hits us our brain hands us very different flawed information .
it is all in jason zweigs book your money your brain .
in fact the same parts of the brain came in to play when there was the fear of losing money that reacted to watching vomiting or smelling dog poop while being scanned .
the funny thing was the rational part of the brain came back in to play once the actual loss was in place . but the fear of that loss was what caused the poor behavior .
that is why there is really little correlation between poor investor behavior being any less from more conservative models . a loss is a loss to the brain ,big or small . once it goes in to that flawed mode the allocation means little .
some of us are just better at dealing with it .
we are prewired for failure as once the stress of having money potentially at a loss hits us our brain hands us very different flawed information .
it is all in jason zweigs book your money your brain .
in fact the same parts of the brain came in to play when there was the fear of losing money that reacted to watching vomiting or smelling dog poop while being scanned .
the funny thing was the rational part of the brain came back in to play once the actual loss was in place . but the fear of that loss was what caused the poor behavior .
that is why there is really little correlation between poor investor behavior being any less from more conservative models . a loss is a loss to the brain ,big or small . once it goes in to that flawed mode the allocation means little .
some of us are just better at dealing with it .
Re: PP Performance for 2016
Sure, because there is an expectation that bonds are "safe". Not really! They are not CDs.Kbg wrote:There is another study at Longboard which shows investors kill their bond returns (and alts) even more than their stock returns as a percentage of total return.
- dualstow
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Re: PP Performance for 2016
Similar to my current sig, which I chose with passive investing in mind.TennPaGa wrote:“All of humanity's problems stem from man's inability to sit quietly in a room alone.”
― Blaise Pascal, Pensées
Sam Bankman-Fried sentenced to 25 years
Re: PP Performance for 2016
Ha! I thought it was a Chauncey Gardiner quote from the movie Being There!dualstow wrote:
Similar to my current sig, which I chose with passive investing in mind.
Re: PP Performance for 2016
so did i....barrett wrote:Ha! I thought it was a Chauncey Gardiner quote from the movie Being There!dualstow wrote:
Similar to my current sig, which I chose with passive investing in mind.
-Government 2020+ - a BANANA REPUBLIC - if you can keep it
-Belief is the death of intelligence. As soon as one believes a doctrine of any sort, or assumes certitude, one stops thinking about that aspect of existence
-Belief is the death of intelligence. As soon as one believes a doctrine of any sort, or assumes certitude, one stops thinking about that aspect of existence
- dualstow
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Re: PP Performance for 2016
You guys are cracking me up!
Well, Chauncey had some mastery of zen, even if he was probably unaware of the word.
Well, Chauncey had some mastery of zen, even if he was probably unaware of the word.
Sam Bankman-Fried sentenced to 25 years
Re: PP Performance for 2016
Desert wrote:Yeah, you're right! And here I thought his biggest contribution to technology was inventing pressure.TennPaGa wrote:I dunno... Looks to me like ol' Blaise is staring into his iPad in the avatar of yours.Desert wrote:
That's a great quote. The entire book is worth reading, for anyone interested in science, philosophy or religion.
By the way, I'm guessing Pascal wouldn't have been thrilled with the advent of smart phones!
No, it was inventing triangles.
Re: PP Performance for 2016
I believe the current method to measure the PP performance is not realistic.
A commonly used method is to go to the ETFReplay website and enter the four ETFs (VTI, TLT, GLD & SHY) with equal weights. This assumes that the 25% equal weighting is carried through every day of the year. Since daily rebalancing is not required nor desired by PP adherents, this approach is meaningless. No rational investor rebalances their portfolio daily.
I think the better approach is to assume an equal 25% investment on day one of every year and then track daily performance throughout the year. Here you would only rebalance when any asset falls outside the 15%-35% rebalancing bands, as stated by Harry Browne. The yearend balance is then measured against the starting balance to determine overall return.
I think this is a more meaningful and realistic approach to reporting the annual PP performance.
A commonly used method is to go to the ETFReplay website and enter the four ETFs (VTI, TLT, GLD & SHY) with equal weights. This assumes that the 25% equal weighting is carried through every day of the year. Since daily rebalancing is not required nor desired by PP adherents, this approach is meaningless. No rational investor rebalances their portfolio daily.
I think the better approach is to assume an equal 25% investment on day one of every year and then track daily performance throughout the year. Here you would only rebalance when any asset falls outside the 15%-35% rebalancing bands, as stated by Harry Browne. The yearend balance is then measured against the starting balance to determine overall return.
I think this is a more meaningful and realistic approach to reporting the annual PP performance.
Re: PP Performance for 2016
booooooTennPaGa wrote:So he cloned himself 99,999 times and invented... wait for it...
The Bar.
Re: PP Performance for 2016
You are correct. Here is a reply to my question to ETFReplay:TennPaGa wrote:FWIW, I think ETF Replay does the calculations as you describe in the second paragraph (i.e. the portfolio composition is set on Day 1, and there is no rebalancing), and *not* as you describe in your first paragraph.
One way to verify is to simply check that the portfolio return is a weighted average of the individual fund returns.
"You enter the STARTING weight and then yes, the weights will drift as performance differs between the securities vs the starting amount.
There is a rebalancing option as well for subscribers in a drop-menu on the right."
I stand corrected.
- geaux saints
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Re: PP Performance for 2016
Interesting, thanks for the info.TennPaGa wrote:FWIW, I think ETF Replay does the calculations as you describe in the second paragraph (i.e. the portfolio composition is set on Day 1, and there is no rebalancing), and *not* as you describe in your first paragraph.EdwardjK wrote:A commonly used method is to go to the ETFReplay website and enter the four ETFs (VTI, TLT, GLD & SHY) with equal weights. This assumes that the 25% equal weighting is carried through every day of the year. Since daily rebalancing is not required nor desired by PP adherents, this approach is meaningless. No rational investor rebalances their portfolio daily.
I think the better approach is to assume an equal 25% investment on day one of every year and then track daily performance throughout the year. Here you would only rebalance when any asset falls outside the 15%-35% rebalancing bands, as stated by Harry Browne. The yearend balance is then measured against the starting balance to determine overall return.
One way to verify is to simply check that the portfolio return is a weighted average of the individual fund returns.
Re: PP Performance for 2016
Seems pretty good to me!Kbg wrote:The PP is not a good grow your assets over the long term portfolio.
Very good!
Stupendously good!!
It's been a smashing success during its entire existence, since it was invented. I don't know what else you could ask from a portfolio. Seriously.
Now if you're going to be comparing actually-existing portfolios to imaginary-backtested portfolios.... indeed: ALAS! You shall always be pining for the gains what might have been.
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Re: PP Performance for 2016
Only 100% equity? Why limit yourself so?mathjak107 wrote:I would say if you are in your 20-30's that is young,even 40's today could go 100% equity and have enough growth and recovery time. The real determining factor is your own pucker factor. I ran 100% until about 55 . Retired at 62 and even ran in to 2008 on the way
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Re: PP Performance for 2016
So we do know how to improve investor psychology!Kbg wrote:My apologies if this has been posted in this thread or else where. Fidelity did a study a few years back on their best performing accounts and they found that the best performing accounts had a couple of characteristics. One, The account holder was found to be deceased. Two, the account holder forgot they had the account.
Re: PP Performance for 2016
Indeed! Lame sauce. Get the 3X fund. Obviously.Libertarian666 wrote:Only 100% equity? Why limit yourself so?mathjak107 wrote:I would say if you are in your 20-30's that is young,even 40's today could go 100% equity and have enough growth and recovery time. The real determining factor is your own pucker factor. I ran 100% until about 55 . Retired at 62 and even ran in to 2008 on the way
Stupid conservative investors being stupidly conservative.
Are there any 10X funds around yet? (If not, why not? )