Gyroscopic Investing

hardlawjockey wrote: ↑Fri Jul 27, 2018 3:16 pm When I see a headline like Mark Zuckerburg "losing" the greatest amount of money any human being has ever lost in a single day it only tells me how financially illiterate people are (or else knowingly posting click-bait with a hyperbolic headline).

I'm assuming, of course, that Mr. Zuckerburg didn't sell any of his stock in his own company to lock in the loss, in which case he still owns the same number of shares he did before. Any accountant will tell you there was no "loss".

I don't know, it feels like one kind of loss. You're technically right that he didn't lock in a loss. Still, when the lira was suddenly worth a fraction of its value, my Italian buddy's father was worth far less overnight. It probably never recovered in a significant way before the Euro came along (I didn't check).

Certainly, some stocks go down and never come back up, which is why it's a fallacy to think that we'll be fine as long as we just hold on (to individual stocks). I'm not putting words in your mouth and I know you know this. I'm just putting it here because it's part of my argument.

On the other hand, Zuckerberg is in that rare position of being able to steer the company in which he's invested. He has a chance to actively create value. I don't feel too sorry for him for losing more than I'll ever have.

dualstow wrote: ↑Tue Jul 31, 2018 10:50 am

hardlawjockey wrote: ↑Fri Jul 27, 2018 3:16 pm When I see a headline like Mark Zuckerburg "losing" the greatest amount of money any human being has ever lost in a single day it only tells me how financially illiterate people are (or else knowingly posting click-bait with a hyperbolic headline).

I'm assuming, of course, that Mr. Zuckerburg didn't sell any of his stock in his own company to lock in the loss, in which case he still owns the same number of shares he did before. Any accountant will tell you there was no "loss".

I don't know, it feels like one kind of loss. You're technically right that he didn't lock in a loss. Still, when the lira was suddenly worth a fraction of its value, my Italian buddy's father was worth far less overnight. It probably never recovered in a significant way before the Euro came along (I didn't check).

I've never heard this logic applied to the gains that people have in their investments... that you haven't really "made" money until you sell.

barrett wrote: ↑Tue Jul 31, 2018 4:21 pm

dualstow wrote: ↑Tue Jul 31, 2018 10:50 am

hardlawjockey wrote: ↑Fri Jul 27, 2018 3:16 pm When I see a headline like Mark Zuckerburg "losing" the greatest amount of money any human being has ever lost in a single day it only tells me how financially illiterate people are (or else knowingly posting click-bait with a hyperbolic headline).

I'm assuming, of course, that Mr. Zuckerburg didn't sell any of his stock in his own company to lock in the loss, in which case he still owns the same number of shares he did before. Any accountant will tell you there was no "loss".

I don't know, it feels like one kind of loss. You're technically right that he didn't lock in a loss. Still, when the lira was suddenly worth a fraction of its value, my Italian buddy's father was worth far less overnight. It probably never recovered in a significant way before the Euro came along (I didn't check).

I've never heard this logic applied to the gains that people have in their investments... that you haven't really "made" money until you sell.

Maybe individual investors don't apply this logic in their thinking but the IRS does. Which most of us appreciate at tax time, I'm sure.

hardlawjockey wrote: ↑Fri Jul 27, 2018 3:16 pm When I see a headline like Mark Zuckerburg "losing" the greatest amount of money any human being has ever lost in a single day it only tells me how financially illiterate people are (or else knowingly posting click-bait with a hyperbolic headline).

I'm assuming, of course, that Mr. Zuckerburg didn't sell any of his stock in his own company to lock in the loss, in which case he still owns the same number of shares he did before. Any accountant will tell you there was no "loss".

I'm with Dualstow on this one although I realize it's just a matter of semantics. It's probably more correct to write "Zuckerberg Suffers US$18.8 Billion Portfolio Diminution", or something like that. I just know that if my net worth were down 20% in one day, I'd be freaking out and at least feel "a sense of loss." Or, put another way, Zuckerberg has a lot less that he can convert to T-Bills, gold or whatever (assuming he is OK with taking a rather significant tax hit and upping his cost basis!).

I would have put a billion in each of the PP assets and let the rest ride. Pretty sure my, and the next 200 generations in my family would be ok.

Now for us peons in the PP who don't have that many zeros in their net worth, today is yet another painful day. Getting close for me to the max down % I have had for the year.

It makes me understand the usefulness of the rebalancing bands. I can't tell you how many times I've said to myself, it (GLD/TLT) just can't go any lower, and in a previous life, I would have averaged down, only to see it go lower. The bands are at such painful losses for each asset that they work better than guessing. Same for upside bands, but feels like I will never see that on any asset, except cash.

Cortopassi wrote: ↑Wed Aug 01, 2018 9:14 am I would have put a billion in each of the PP assets and let the rest ride. Pretty sure my, and the next 200 generations in my family would be ok.

Now for us peons in the PP who don't have that many zeros in their net worth, today is yet another painful day. Getting close for me to the max down % I have had for the year.

It makes me understand the usefulness of the rebalancing bands. I can't tell you how many times I've said to myself, it (GLD/TLT) just can't go any lower, and in a previous life, I would have averaged down, only to see it go lower. The bands are at such painful losses for each asset that they work better than guessing. Same for upside bands, but feels like I will never see that on any asset, except cash.

Took the words out of my mouth...

Cortopassi wrote: ↑Wed Aug 01, 2018 9:14 am ..
Now for us peons in the PP who don't have that many zeros in their net worth, today is yet another painful day.
..

I'm like John D Rockefeller. The only thing that gives me pleasure is to see my dividends coming in.

It’s always GLD and TLT taking the beating.
No one ever mentioned the pitfalls of GLD and TLT cannobalizing each other...

buddtholomew wrote: ↑Wed Aug 01, 2018 2:34 pm It’s always GLD and TLT taking the beating.
No one ever mentioned the pitfalls of GLD and TLT cannobalizing each other...

Budd, it's always mentioned, in the form of "The assets are not designed to all move in the same direction."

dualstow wrote: ↑Wed Aug 01, 2018 3:08 pm

buddtholomew wrote: ↑Wed Aug 01, 2018 2:34 pm It’s always GLD and TLT taking the beating.
No one ever mentioned the pitfalls of GLD and TLT cannobalizing each other...

Budd, it's always mentioned, in the form of "The assets are not designed to all move in the same direction."

Haha, see the irony in that statement with everything down today. Just venting...just sad that we sit for 8 years waiting for either GLD or TLT to rally enough to rebalance. Now that stocks are feeling some pain, they still go down. Hmmm..

Not that it makes anyone feel better, but gold got slammed in 2008 as stocks were getting hit, while bonds kind of treaded water before popping, so this is not unusual.

Desert wrote: ↑Wed Aug 01, 2018 7:54 am It's definitely a loss. Mark to market is the most honest accounting method, because we don't know what the future holds. We only know the value of an asset in the present. It might go up or down in the future, nobody knows.

My Dad never invested a single penny in the stock market and thought I was foolish to do so. Whenever there was a big market crash like the one in 1987, he would always ask me how much money I lost. My answer was always the same - not a penny - I still own all the stock I had before and none of the companies went bankrupt.

So that's basically where my head is at when it comes to the word "loss".

And in addition to the IRS rules, there is the very definition of the word "investment" - In general, to invest is to allocate money in the expectation of some benefit in the future . Given that, it seems to me that what is meant by "loss" in this one-day context, is really that my investments don't look so good on paper today as they did yesterday. If you want to call this a "loss", that is only in your mind - unless you decide to lock it in, of course.

Or your ETF manager locks in a loss for you?

https://www.bogleheads.org/forum/viewto ... 6#p4037666

buddtholomew wrote: ↑Wed Aug 01, 2018 3:12 pm

dualstow wrote: ↑Wed Aug 01, 2018 3:08 pm

buddtholomew wrote: ↑Wed Aug 01, 2018 2:34 pm It’s always GLD and TLT taking the beating.
No one ever mentioned the pitfalls of GLD and TLT cannobalizing each other...

Budd, it's always mentioned, in the form of "The assets are not designed to all move in the same direction."

Haha, see the irony in that statement with everything down today. Just venting...just sad that we sit for 8 years waiting for either GLD or TLT to rally enough to rebalance. Now that stocks are feeling some pain, they still go down. Hmmm..

Maybe we should amend it to, unless the direction is down.

MangoMan wrote: ↑Fri Aug 03, 2018 4:27 pm Why isn't anyone whining that all 3 assets are in the same direction (UP) today?

Human nature is weird, isn't it?

Who tunes into the news expecting to hear something positive?

All time high on SCHX, presumably S&P500 also.

Just reached 35.03% in PP equities with 55/45 SP500 and SCV. No other assets are out of tolerance but future contributions will go to Gold. Just haven’t decided whether to exchange from SCV or Cash.

ochotona wrote: ↑Tue Aug 07, 2018 9:50 am All time high on SCHX, presumably S&P500 also.

The S&P 500 PR (price only) is just below its January 26th 2018 high.

The S&P 500 TR did indeed hit a new all-time high (the January high was 5606 and today's close was just shy of 5635) so it makes sense that the ETF would hit an all-time high since it includes reinvested dividends as well.

Can someone theorize why SCV is outperforming even with a weaker USD? Isn’t the narrative a stronger USD is more competitive for the Domestic small company?

I'm not sure this observation really holds anymore.

- Big companies are pretty good at being global which lessens the currency impact

- It's not hard to be a small company and sell globally anymore

If I were to guess, it's a simple rotation into something that has been lagging for quite a while, meanwhile larger stocks are super pricey.

Business sentiment is good cuz Trump (deregulation). But who knows, speculative money flows around asset classes.

But is SCV cheap? SmallCap 600 Value ETF, PE = -25
https://www.etf.com/RZV

As a broad generalized statement, nothing in the US market is cheap.

Politico -

Wall Street pros often talk about a potential relief rally if Trump departs the White House early.

The underlying economy would remain strong, and a hypothetical President Mike Pence would likely continue Trump’s policy of low taxes and fewer regulations without all the wild tweeting and investigations and persistent trade wars.

“I’m not sure the market would be all that upset by Trump being forced to leave,” said Jim Paulsen, chief investment strategist at the Leuthold Group. “Many Republicans might welcome it, and if Pence moves in, the basic low regulation, low tax nature of the presidency would be the same, only without the constant self-induced volatility, and maybe ‘trade wars' would diminish.”

CNBC had some trader on two days ago who was projecting an upside of 3400-3500 on the SP500, and that would be the top of the rally from March 2009. 20% more... if true, another few years?

ochotona wrote: ↑Thu Aug 23, 2018 11:46 pm a hypothetical President Mike Pence would likely continue Trump’s policy of low taxes and fewer regulations without all the wild tweeting and investigations and persistent trade wars.

Sounds good! I would welcome a hypothetical Mike Pence into the White House. The real one, I'm still a little leery of, heh heh.