Gyroscopic Investing

LazyInvestor wrote:Bogle says expected long term equity returns are ~2% real taking into account overvaluation.

I don't follow this since according to his formula, for example, European market should return the same but if I look at the charts European has under-performed US significantly.

These figures usually come from CAPE ratio analysis...which does not work at all as a timing mechanism but in hindsight usually works out to be a pretty good prediction.

mathjak107 wrote:home prices are very localized . heck , our home in the pocono's is worth 60k less than it was in 2007 .

Ditto for our place in CT. It's still off the purchase price (bought in December of 2007... ouch!) by 20% or so.

As I've mentioned a time or two in other threads, our municipality is so dependent on property taxes for revenue that we have now hit a point where there is a real danger of a further home devaluation as a critical mass of owners are trying to sell their homes to be rid of the recurring tax burden.

If anyone is interested, Shiller's data is available on his website here:

http://www.econ.yale.edu/~shiller/data.htm

Just click on "US Home Prices 1890-Present" but be forewarned that the data is in pdf format.

Another Harry S. Dent clone... Charles Nenner.. says Dow 5000 beginning Q3 2017, total descent will take 3-4 years.

barrett wrote:

mathjak107 wrote:home prices are very localized . heck , our home in the pocono's is worth 60k less than it was in 2007 .

Ditto for our place in CT. It's still off the purchase price (bought in December of 2007... ouch!) by 20% or so.

As I've mentioned a time or two in other threads, our municipality is so dependent on property taxes for revenue that we have now hit a point where there is a real danger of a further home devaluation as a critical mass of owners are trying to sell their homes to be rid of the recurring tax burden.

If anyone is interested, Shiller's data is available on his website here:

http://www.econ.yale.edu/~shiller/data.htm

Just click on "US Home Prices 1890-Present" but be forewarned that the data is in pdf format.

Probably there are different reasons in each of these instances. In one case, the home prices shouldn't ever have increased that much to begin with. There are only so many people who can be supported by the economy of the Poconos.

Barrett, has the town thought about doing something to rein in costs? If the situation is that dire, the council should consider options like cutting school programs, raising fees on the municipal swimming pool and commuter parking lot, closing underpopulated schools, reducing trash pickup days, cutting town employees, renegotiating contracts etc. Not much use having all those wonderful services when there's a mass exodus going on because people can't pay for them. Get a few people together and storm the next open council meeting?

If we get a 10% correction in stocks, who is buying? I'm on the fence. I have new 401(k) money.

Maybe I'd buy some IVV or VOO, but then put a really tight stop on those specific new shares.

[deleted]

InsuranceGuy wrote:

ochotona wrote:If we get a 10% correction in stocks, who is buying? I'm on the fence. I have new 401(k) money.

Maybe I'd buy some IVV or VOO, but then put a really tight stop on those specific new shares.

Not me, I only buy stocks when stocks are going up.

OK, let's say there is a correction, but you still have + trend based on your favorite measure... 10 month MA, 1 year momentum, whatever. Are you a buyer? Or does valuation scare you away?

[deleted]

Good model

InsuranceGuy wrote:

ochotona wrote:

InsuranceGuy wrote:
Not me, I only buy stocks when stocks are going up.

OK, let's say there is a correction, but you still have + trend based on your favorite measure... 10 month MA, 1 year momentum, whatever. Are you a buyer? Or does valuation scare you away?

I am not likely a buyer but not because of the valuation. My model takes into account momentum and volatility, so I would have to see stable upward momentum which is unlikely after
10% drop.

There is some truth here. More money has been lost trying to buy low and sell high than any other mantra.

We all thought low was when we fell 2000 points in 2008-2009. Who knew we had 4000 more to go.

Many investors ended up hitting stop losses or running for the exits.

What makes money more times than not is buying high and selling higher. The trend is your friend as they say.

Trying to time where low is rarely ends well. In fact more money in gains is generally given up waiting for that dip then you gain.

mathjak107 wrote: More money has been lost trying to buy low and sell high than any other mantra.

We all thought low was when we fell 2000 points in 2008-2009. Who knew we had 4000 more to go.

Many investors ended up hitting stop losses or running for the exits.

What makes money more times than not is buying high and selling higher. The trend is your friend as they say.

Trying to time where low is rarely ends well. In fact more money in gains is generally given up waiting for that dip then you gain.

I do have a stop, it's 2070 on the S&P. My gamble, and it is a gamble, is that if we get a stumble, and I can buy the S&P500 index lower than were it is, but still above the stop, then maybe there will be a bounce back and the Trumpmania will resume. The worst case is, it goes down lower, I hit my stop, and I'm out. If I buy at 2170 and sell at 2070, I lose 5% on those shares, of less than 1% of my total portfolio.

My real pain is if I get stopped out, and them some bozo central banker then announces "free ice cream!" and markets reply, "huzzah" and the bubble inflation begins anew... then I'm whipsawed. But, I will ultimately have the last laugh (cry).

I have considered buying puts, but I have never made use of my options application, even to sell covered calls.

dualstow wrote:I have considered buying puts, but I have never made use of my options application, even to sell covered calls.

I just don't like the idea of options expiring worthless.

ochotona wrote:

dualstow wrote:I have considered buying puts, but I have never made use of my options application, even to sell covered calls.

I just don't like the idea of options expiring worthless.

Me neither, unless I'm selling covered calls.
Better to just have the right, i.e. comfortable, pp/vp stock allocation.

dualstow wrote:

ochotona wrote:

dualstow wrote:I have considered buying puts, but I have never made use of my options application, even to sell covered calls.

I just don't like the idea of options expiring worthless.

Me neither, unless I'm selling covered calls.
Better to just have the right, i.e. comfortable, pp/vp stock allocation.

Even trend-followers need a "sleep well at night" allocation, because you're possibly one calendar month away from the exit, and lots of sh** can happen in a month.

ochotona wrote:

dualstow wrote:

ochotona wrote:
I just don't like the idea of options expiring worthless.

Me neither, unless I'm selling covered calls.
Better to just have the right, i.e. comfortable, pp/vp stock allocation.

Even trend-followers need a "sleep well at night" allocation, because you're possibly one calendar month away from the exit, and lots of sh** can happen in a month.

The above is why running separate tranches of the same portfolio is a good idea if you can...some of your stuff will be out immediately and you slowly unwind as well as dial back in. But the biggest benefit is it reduces start day/timing risk which can be amazingly high for some systems.

there really may not be a sleep well allocation for most folks .

losing money is losing money and even conservative portfolio's show no better results when the crap hits the fan as far as folks not exhibiting bad investor behavior .

do you really think if someone was looking for a nice sleep easy portfolio after brexit and bought in to the pp that they would not be pressured to flee when they were possibly down almost double digits by years end ?

study after study has shown as a group investors do just as badly compared to what the fund got whether it is a balanced fund or growth fund .

some balanced funds showed worse behavior because it is the more skittish folks who are in them in the first place. i can tell you dollar wise sometimes the gb makes moves on par with about 70% stocks when you get those days where all assets move up or down together . especially because a small cap value fund moves like it is leveraged at 2 to 3x the s&p moves .

dualstow wrote:I have considered buying puts, but I have never made use of my options application, even to sell covered calls.

If ONLY I never made use of my options application 20+ years ago, I would be so much better off financially. Don't do it! My opinion.

Even the "safe" covered calls. The minute you sell those, your stock will either rocket up, putting you in a much smaller gain position and losing your underlying, or it will fall drastically, putting you in a nervous position of writing calls at strikes below what you paid.

I hear you. My friends enjoy it, (selling calls that expire), but I've always just held the investment.

I don't think they ever did what you wrote in your last line, but they may have bought their own calls back at times.

dualstow wrote:I hear you. My friends enjoy it, (selling calls that expire), but I've always just held the investment.

I don't think they ever did what you wrote in your last line, but they may have bought their own calls back at times.

Oh, yeah, I did that too. Buy the call back, at a higher price, because I didn't want to lose the underlying.

I started writing calls before 2008. Went great for ~ a year. Then the crash. All my underlyings were underwater significantly. Trying to write a $21 strike call that paid out a measly $200 on a stock I paid $30 for that was now at $18 was impossible. Everything was so volatile, the premiums were reasonably high, but more often than not, I'd either keep the premium, because my stock was getting killed even more, or the stock would rise so much I'd buy the call back because I didn't want the underlying called at a loss. It was a terrible time for me.

I barely look at my holdings 2x a week now with the PP. What a relief.

regardless of your allocations you should not look at your investments to frequently .

but most of us with an interest do

All I can say about today is WOW. They love The Drumpf!

Quite an amazing honeymoon considering it sounds like all he is going to do is put the US into even more debt than before.

That would have been my confirmation bias answer if I were not in the market and still only in gold and miners. Now that I am diversified in the PP, I don't care. Bring it on. Dow 25k. High inflation. Trade wars. Interest rate hikes. Crazy PE ratios. Whatever.

Cortopassi wrote:Quite an amazing honeymoon considering it sounds like all he is going to do is put the US into even more debt than before.

That would have been my confirmation bias answer if I were not in the market and still only in gold and miners. Now that I am diversified in the PP, I don't care. Bring it on. Dow 25k. High inflation. Trade wars. Interest rate hikes. Crazy PE ratios. Whatever.

here here!

I would also take it on 6% interest.