Gyroscopic Investing

dualstow,

You can do what Vanguard does. They assume the net in and out flows happened on June 30. I figured that out through reverse engineering.

So using a spreadsheet's IRR function:

1. 01 Jan 2016 balance 01/01/2016 $10000
2. negative of same 01/01/2016 -10000
3. Out (-In) 06/30/2016 -500 (In in this case)
4. 01 Jan 2017 balance 01/01/2017 11000 IRR = 4.86%

IRR formula uses the dates in 2nd column and the values in lines 2-4.
You can just copy those 3 lines over and over as years go by, to the next line, then advance the dates, and input the last two lines' values.

My to do list is to buy more stocks after they crash.
In the mean time, to buy more gold.

Thanks, Shrugged.

I have developed an even simpler method. I merely monitor threads like this.

Just finished rebalancing. Lowered cash to very near my 10% target, and otherwise generally sold stock and bought TLT/GLD/SLV with the proceeds to get everything aligned.

Been a good first day of trading for sure, up half a percent! Better than down!

I mostly use a PP (last year included some 2xPP), but this is IRR of my entire net worth and savings, so it includes some other returns over my entire assets (real estate, cash on hand, etc.).

1 YR - 9.3%
3 YR - 4.8%
5 YR - 5.6%
"lifetime" 4.6%

(CAGR) - it was up to something like 8% lifetime earlier this year. Recent losses really affect my lifetime CAGR I guess.

So overall, not great, but not terrible. I can live with the 5-YR in low inflation, but not if inflation picks up.

lifetime returns are probably about on par with average investors

sophie wrote: It might be that you bought in at the high points, but still that doesn't sound feasible if you played an agnostic lagging asset strategy. Check your math? Also, I use bid prices for the gold coins I hold from the company I bought from (Colorado Gold) to determine their value, not spot gold. That's a few percent difference right there.

It's very possible there's an error in my accounting somewhere. My first pass at sanity-checking hasn't found anything, but I need to look at it over time, rather than just the year-end numbers for further validation. That said, if I look at money moving into the PP in from 7/1 on, it's pretty much (~95%) 30-year bonds and gold, both of which are down ~15% in that time frame. So I would definitely expect that to drag on the yearly returns.

As far as the markup on coins, it looks like APMEX's buy price on Kruggerands is $10 above spot. I think I'll start valuing based on that this year, though I don't expect that will make a huge difference.

dualstow wrote: I suppose I only have a To Don't list, and that has but one item: don't do anything drastic.

Dualstow's Rule #1? I like it!

rickb wrote:My "to do" list is (actually was since I've done this) to pay slightly more attention to the cash portion. I had set up a ladder of 2-year treasuries with most of the cash portion but lazily let these mature into a brokerage MM paying about 0%. As a result, my cash return has lagged SHY by about half (0.35% as opposed to SHY's 0.82%). I've recreated my 2-year ladder.

Hey rickb, Can you please explain how you are doing your treasury ladder? When I think of laddering, I always think of having CDs or treasuries with different maturities. Are you working with a range of, say, one to three years? Also, is this with Fidelity? I am just wondering about any expenses incurred. Looks like SHY has an expense ratio of .15 which I'd like to avoid on cash. Thanks!

barrett wrote:Are you working with a range of, say, one to three years?

If he's using 2-year treasuries, range must be 0 or 1 to 2 years, right Rick?

barrett wrote: Hey rickb, Can you please explain how you are doing your treasury ladder? When I think of laddering, I always think of having CDs or treasuries with different maturities. Are you working with a range of, say, one to three years? Also, is this with Fidelity? I am just wondering about any expenses incurred. Looks like SHY has an expense ratio of .15 which I'd like to avoid on cash. Thanks!

It's with Fidelity. I have 1/8 of the total amount in the ladder in bonds/bills that mature every 3 months. To set it up I just bought this amount of after market Treasuries with maturities at +3 months, +6 months, +9 months, etc. As these mature I'll buy new issue 2-year Treasuries. This means I'll have to issue a buy order every 3 months (this is the step I lazily skipped before - which means the ladder then ends up your brokerage settlement account).

I think Fidelity will actually do this for you if you want. They have an automatic rollover feature where they'll reinvest maturing bonds in something "similar". If anyone's used this (specifically for short term Treasuries), please speak up.

rickb wrote:I think Fidelity will actually do this for you if you want. They have an automatic rollover feature where they'll reinvest maturing bonds in something "similar". If anyone's used this (specifically for short term Treasuries), please speak up.

I was told today by a fixed income guy at Fido that it can be set up in a taxable account but not in an IRA. Also, you apparently have to manage a two-year ladder yourself until you get to the point where you are actually holding all two-year bills. Once you have a ladder that contains all two year bills, it can be set to automatically rollover.

sophie wrote:How did you all do investing-wise this year?
PP (standard 25x4): 5.88%

I guess SigFig is rounding the hundredth and shows 5.9% for my PP (25x4)
Part of the stocks and bonds form PP are in Vanguard IRA.
It is somewhat Bogleheadish: 31%Stocks and 69% LTTs. In 2016 it performed to 4.7%

Andrei.

Although the inflation numbers are only through November so it isn't quite final, I finally have official returns numbers through 2016. For reporting purposes on the site, it looks like the PP made 3.96% real.

PP vanille:
Equities (40%), LT Bonds (30%), Gold (20%), Cash (10%) with a bandwidth balancing of 10%.

Performance 2016: 10,6 %. Thx to the rising of the $ to the €. And I sold some covered calls.
Since 2002: 6,9 %.

See my sloppy website:
http://www.verstandig-beleggen.nl/index.php?paginaid=7

Thomas Hoog wrote:See my sloppy website:
http://www.verstandig-beleggen.nl/index.php?paginaid=7

Hi Gerard,

Great to get a glimpse of how a Dutch PP has done. We don't see much data over here on Europe (well, at least data pertaining to the PP). Looks like your "sloppy" website shows a Dutch 4X25 PP returning 6.4% since 2002. Do you know what the after-inflation number is there in Holland?

Ah, it looks like inflation there has averaged between 1.6% and 1.7%. Here is my source:

http://www.inflation.eu/inflation-rates ... lands.aspx

So, maybe a real return of 4.7% or so?

It sounds like Gerard is holding a USD PP, and that some of the return this past year was the dollar increasing against the euro.

That worked out well this year, but you've taken on some currency risk that may not be necessary. The gold component is enough currency risk, since its price in local currency will reflect its value (high or low). I can understand wanting to hold US Treasuries rather than German long bonds, but are you also holding the cash allocation in dollars?

sophie wrote:It sounds like Gerard is holding a USD PP, and that some of the return this past year was the dollar increasing against the euro.

That worked out well this year, but you've taken on some currency risk that may not be necessary. The gold component is enough currency risk, since its price in local currency will reflect its value (high or low). I can understand wanting to hold US Treasuries rather than German long bonds, but are you also holding the cash allocation in dollars?

Well, here is the breakdown from his site:

Cash: (25%): iShares Euro Government Bond 1-3yr
Gold: (25%): ETFS Physical Gold (EUR) (PHAU)
Bonds: (25%): ISHARES E GOV15-30
Equities:(25%) : iShares MSCI World UCITS ETF DIST

Hey, I know it won't last... but feeling good about the rebalance out of some stocks and into gold/TLT on Tuesday.

My PP is up 1.92% already for the year. Hmmm... 2% a week would sure be nice!

Cortopassi wrote:Hey, I know it won't last... but feeling good about the rebalance out of some stocks and into gold/TLT on Tuesday.

Damn, you made me check out what's going on in the markets. Another New Year's resolution out the damn window!

Dollar is weakening, yields are falling and gold as well as stocks are rising.
Isn't it supposed to work that way

C'mon budd, you've been here long enough to know the drill; 3 steps forward, 2.88 steps back.

Retirement (4x25 with stocks about 15 TSM, 10 SCB): 5.1%.

It was a little cash heavy at the beginning of the year and missed a percent of the initial run-up. I had contributed some money but just hadn't rebalanced yet!

College savings (25 stocks, 13 LTT, 12 total bond, 30 cash, 20 gold): 5.0%.

Brokerage (85 PRPFX, 15 TLT): 9.9%.

To-do: migrate the retirement portfolio to Golden Butterfly and add a bit of international to the extended market stocks allocation.

Finished the year at about 5.6% gain
Last time I re- balanced was Dec 4 2015 4/25

Ugly_Bird wrote:SigFig is rounding the hundredth

Apt.

Kriegsspiel wrote:C'mon budd, you've been here long enough to know the drill; 3 steps forward, 2.88 steps back.

Oh I know the drill well...