Stock scream room

Discussion of the Stock portion of the Permanent Portfolio

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pmward
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Re: Stock scream room

Post by pmward » Fri Mar 29, 2019 9:29 am

In general, I don't think dividend payers are a bad place to be late cycle. Even if we wind up having another year or two euphoric blow off top, I think you would still do well on the whole. Defensive stocks are a bit pricey now because of all the negativity, I mean the chart of XLU looks like a fighter jet did a max climb take off, haha. But we also might be seeing some late cycle rotation out of tech / cyclicals and into more defensive "value" (ex-financials at least), dividend payers, and other non-cyclicals that have been very unloved in recent years.
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ochotona
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Re: Stock scream room

Post by ochotona » Fri Mar 29, 2019 12:02 pm

pmward wrote:
Fri Mar 29, 2019 9:29 am
In general, I don't think dividend payers are a bad place to be late cycle. Even if we wind up having another year or two euphoric blow off top, I think you would still do well on the whole. Defensive stocks are a bit pricey now because of all the negativity, I mean the chart of XLU looks like a fighter jet did a max climb take off, haha. But we also might be seeing some late cycle rotation out of tech / cyclicals and into more defensive "value" (ex-financials at least), dividend payers, and other non-cyclicals that have been very unloved in recent years.
Put in a limit order for SCHD, just 0.50% below current levels. Might fill next week.
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Re: Stock scream room

Post by pmward » Fri Mar 29, 2019 2:00 pm

Another interesting take: https://www.themacrotourist.com/posts/2 ... ieldcurve/

I can't recall a time I was as unsure about what way the market was going to move as I am right now. I'm literally torn between Jan 2018-Now being a market top distribution cycle, or it being the consolidation period before an irrational exuberance blow off top.
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Re: Stock scream room

Post by ochotona » Fri Mar 29, 2019 4:13 pm

pmward wrote:
Fri Mar 29, 2019 2:00 pm
Another interesting take: https://www.themacrotourist.com/posts/2 ... ieldcurve/

I can't recall a time I was as unsure about what way the market was going to move as I am right now. I'm literally torn between Jan 2018-Now being a market top distribution cycle, or it being the consolidation period before an irrational exuberance blow off top.
For anyone who is paying attention, this stock market is a mess.

If it is like 1998, and we have more of this keg party to go, the thought of being heavily invested and getting out just at the right moment is absolutely terrifying. You would never get out in time, like a smoky fire in a dark nightclub with inadequate or blocked exits. What if ETFs go no bid in a panic situation?

I have said for a long time publicly on this forum that the HBPP would make a great hideout portfolio during the next SHTF, but it wasn't really for me because I needed more growth. But finally, I really believe we are coming up to that era where growth takes a back seat to safety. Like a physician, you have to think "do no harm" to your portfolio.

At age 58 I don't get any do-overs. I already have 10x my salary in retirement assets, I won't get another chance to accumulate this kind of pile if I screw it. If I'm wrong, I got out early and sit out a year or two while a blow off top takes place. So what.
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Re: Stock scream room

Post by pmward » Fri Mar 29, 2019 4:47 pm

Well said. I am personally pretty happy sitting in a golden butterfly, as I'll be reasonably well protected in a downturn, and still be able to participate in an upturn. And, while my goal is FI within 10 years, at 37 it won't really kill me to miss that target date by a couple years (I'm not planning on retiring right away when I hit FI anyways). HBPP and GB are both really good portfolios in times of uncertainty like this. Warren Buffet's first two rules of investing: Rule #1: don't lose money. Rule #2: don't ever forget rule #1. These markets are very confusing and difficult to read right now. It is indeed better to be safe than sorry.
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Re: Stock scream room

Post by ochotona » Fri Mar 29, 2019 8:08 pm

Since Christmas Eve, I was really beating up on myself... and other people on this board didn't help... well, I'm only down 2.5% since my peak wealth September 2018. Bonds took off, and gold a bit since Christmas Eve. I still did better since the peak as compared to an S&P 500 buy-and-holder. I guess it's just a lesson in ignore the peanut gallery and broad diversification across asset classes works.
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Re: Stock scream room

Post by dualstow » Sat Mar 30, 2019 10:37 am

ochotona wrote:
Fri Mar 29, 2019 8:08 pm
Since Christmas Eve, I was really beating up on myself... and other people on this board didn't help...
Didn’t help you adhere to the pp, or...?
Wishing you a good Good Friday
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Re: Stock scream room

Post by Jeffreyalan » Mon Apr 01, 2019 7:35 am

How do you guys stay the course with your portfolios? I have been in the Desert Portfolio for a couple of years and it has done well for me. However, whenever I read about current events (robots taking jobs, Democratic Socialists, Govt Debt, End of the bull market etc) it makes me want to go to all cash and not risk .01 of my hard earned savings. How do you guys stay balanced and not go to the extreme of going to cash?
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Re: Stock scream room

Post by pmward » Mon Apr 01, 2019 9:17 am

Jeffreyalan wrote:
Mon Apr 01, 2019 7:35 am
How do you guys stay the course with your portfolios? I have been in the Desert Portfolio for a couple of years and it has done well for me. However, whenever I read about current events (robots taking jobs, Democratic Socialists, Govt Debt, End of the bull market etc) it makes me want to go to all cash and not risk .01 of my hard earned savings. How do you guys stay balanced and not go to the extreme of going to cash?
If you have a diversified portfolio (which you do) then none of those things matter, because you have specifically chosen assets that will respond favorably to all of the above. You always will have an asset that will be in a bull market. If you go to cash it defeats the purpose, especially since your defensive allocations are probably all down, you would be locking in losses and stripping them from their chance to shine. Most of these macro-economic environments and trends are cyclical, like a pendulum that swings back and forth over many years and even decades in some cases (like deflation to inflation). If you stick to your allocation and rebalance accordingly you will always be selling the in favor assets high to buy the out of favor assets low, so you will always be loaded up on the out of favor assets just in time for the pendulum swing and the roles to reverse.

Going to cash is also not a decision to take lightly, look at how hard of a time Ocho has been having trying to decide whether or not to get back in. Actively managing a portfolio is very stressful. Getting out is a much easier choice to make than getting back in. Until you've been in that position, you don't really understand. I lost a lot of sleep after going to cash in the past, trying to decide whether or not I should get back in, it's not fun. Look at the people on the Bogleheads forum that have been in cash since like 2015, and are still sitting there waiting for "the big one" that seems to never happen to get back in (and even when it does eventually come, will they really pull the trigger??? Will they even be able to get back in lower than they got out???) Don't take the decision to go to cash lightly. You have chosen a defense first portfolio, I would personally just sit back and let it do it's job.

Also, I sometimes find solace going back on the bogleheads forum and reading the posts from the 2008/2009 timeframe. If you could go back and purchase stocks at 2009 prices would you? I know in hind site I personally would be borrowing money any way I could to throw into the market. However, when you read what people were actually saying... you read comments about how the market was "expensive". During the best buying opportunity in my lifetime people thought the market was expensive... You read all kinds of logical reasons why the world was going to end and the market was going to go back down, all of which sounded plausible but either didn't happen or didn't play out like people suspected (I mean who would have thought that QE, 0% interest rates, and low inflation could all co-exist for almost a decade???). At any period of time there are always potential headwinds. There is always an argument that can be made that the market is "expensive", that the government is going to screw everything up, and that doom and gloom is the only possible outcome. Likewise an argument can always be made that the markets have nowhere to go but up. But at the end of the day, the markets tend to move in the way that fools the maximum amount of people possible. Markets had people capitulating on bonds to buy stocks the last couple of years... and bonds have in turn been the best performing asset. The market is not a logical or rational thing, especially in the short term. So nobody knows what will happen. It's best for most people to pick a balanced portfolio and just stick to it come what may.
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Re: Stock scream room

Post by Xan » Mon Apr 01, 2019 10:25 am

Jeffreyalan wrote:
Mon Apr 01, 2019 7:35 am
How do you guys stay the course with your portfolios? I have been in the Desert Portfolio for a couple of years and it has done well for me. However, whenever I read about current events (robots taking jobs, Democratic Socialists, Govt Debt, End of the bull market etc) it makes me want to go to all cash and not risk .01 of my hard earned savings. How do you guys stay balanced and not go to the extreme of going to cash?
You're assuming cash is the asset to be in... A lot of other smart people have the same struggle with "why am I not 100% in stocks" and "why am I not 100% in gold". (I don't think anybody has this problem with LTTs but I could be wrong!)

We hold everything because our "why am I not in" is very likely to be wrong.
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Re: Stock scream room

Post by Jeffreyalan » Mon Apr 01, 2019 11:16 am

The case for 100% cash is a lot stronger than 100% Gold or Stocks IMO. 100% stocks could easily lose you 50% in a year and make take many, many years to recover. Cash will not ever do that to you unless you are talking about runaway inflation. Correct me if I am wrong on that.

When I say I think about going to cash, I don't mean for a certain period of time and then trying to jump back in. I am thinking of going to cash permanently. I often think instead of putting my money at risk (even if it is a small risk) squeezing a 4-6% return out of the Desert Portfolio, why don't I just keep my money in 2.5% bank accounts and Treasury bills and focus on trying to save more, cutting my cost of living, having no debt, buying things in bulk, taking advantage of special bank offers of promotional rates, working an extra hour of overtime each week? Those would be certain returns instead of hopeful returns.
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Re: Stock scream room

Post by dualstow » Mon Apr 01, 2019 11:25 am

The U.S. dollar seems safer than most other currencies, but you could still see your purchasing power destroyed one day.
Wishing you a good Good Friday
Vanguard auction is open for 2-year notes, 1-year bills -
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