Gyroscopic Investing

Gold has demolished stocks over the past 20 years. (Yeah, yeah start date sensitivity. Whatever.)

8.69% CAGR for gold vs 5.62% CAGR for the US stock market. Similar standard deviation while gold has had superior drawdown and worst year metrics.

Dividends included?

whatchamacallit wrote: ↑Mon May 18, 2020 6:17 pm Dividends included?

Yes that's portfoliovisualizer which takes all dividends and expense ratios into consideration.

Smith1776 wrote: ↑Mon May 18, 2020 4:57 pm Gold has demolished stocks over the past 20 years. (Yeah, yeah start date sensitivity. Whatever.)

8.69% CAGR for gold vs 5.62% CAGR for the US stock market. Similar standard deviation while gold has had superior drawdown and worst year metrics.

goldvsstocks.png

My plan for world domination is working. Muhahaha!

Libertarian666 wrote: ↑Mon May 18, 2020 6:36 pm My plan for world domination is working. Muhahaha!

More and more I think of you as the unassuming guy in the disaster movie who you find out was behind the incident all along.

I have actually also discovered that the result is remarkably start date insensitive.

Gold still wins a couple years either side of the year 2000.

Smith1776 wrote: ↑Mon May 18, 2020 6:42 pm

Libertarian666 wrote: ↑Mon May 18, 2020 6:36 pm My plan for world domination is working. Muhahaha!

More and more I think of you as the unassuming guy in the disaster movie who you find out was behind the incident all along.

This may be of interest....
https://www.youtube.com/watch?v=mxFokOZYd34

Funny how evil genius's are not interested in cryptos, shares etc but only physical items like gold
https://www.youtube.com/watch?v=4u2QR2XuYRk

i show stocks beat gold the 5 and 10 year periods so while it is true for 15 and 20 years it is not true for the last 5 and 10 years as of last time i looked.

one thing i cant emphasis enough is that the returns of an asset by themselves mean little .

the size of the investment at the time the action took place is what matters .

it may be all well and good a chart shows gold beat stocks over a 20 year period BUT HOW MUCH you have invested during that 20 year period and at what stages of that 20 year period is the determining factor as to outcome

the last 20 years our investments grew more and more . certainly the results the last 10 years or 5 years carry far more weight then 20 years ago did on our portfolios ..

in fact any portfolio action today on my portfolio when my fuel tanks are full is a big up or down .


so these kinds of results really mean little because it is portfolio size that matters at the period this action took place.. it is usually the most recent action over time that is going to far outweigh action decades ago or even years on our money.

in this case it is all well and good that gold beat stocks the last 20 years , but that is of very little importance to me , what counts way way more is the last 10 , 5 and current years out of those 20 since that is where i have the most money invested compared to 20 years ago ..

size matters and without considering size , the returns on a chart don't mean much to us over extended periods of time where wealth is accumulating .

any action on my large gold position today easily wipes out any action from 10-20 years ago when i had 10-15x less invested in it .

Mathjak, I'm not sure I'm understanding the point of your statements.

You're arguing that what matters is how much you had invested at any given time, and how well those investments did. But in fact that is what matterED (past tense), not what matters now. In fact that's what you constantly remind us, that the only thing that matters (present tense) at the start of an investing day is what assets you have, not how long you've had them or whatever.

So what's the point of looking in the past? It seems that it's one of two things (there may be more):
* To assign a "score" to each asset to tell you how much in benefited you to own it. This seems to be your assumption of the reason to look in the past, and I would argue that it's pointless anyway.
* To see how assets have performed in the past in order to attempt to debunk or confirm your theories about how it can perform in the future. For this you need things like the chart that Smith posted.

You're saying the only useful chart would be one that contained how much an individual had invested in each of his assets and how they did. I think that simply reduces to the dollar amount in the brokerage account, no chart necessary (or helpful).

my point is as the time frame gets longer and longer the past returns become less meaningful in our calculation and what happens near term matters so much more .

so as an example it was all well and good we can look at returns on asset class the last 20 years but if i had 10k invested early on, the fact those 20- year returns are made up mostly of the better returns 10 and 15 years ago is a moot point when i put hundreds of thousands of dollars in the last 5 and 10 years ,

it is the now , 3, 5 and 10 year return that are going to matter not the fact returns were great 15 , 20 years ago . so even though i owned that asset 20 years ago the fact is the return is different the last 10 years then my numbers would reflect .

this is why averages don't work in retirement calculations and sequence rules your outcome.

averages became almost meaningless when we add money and spend money because it then becomes a weighted average .

kitces wrote an article on this very subject .

the years leading in to retirement starting about 10 years out are what he calls the red zone .

the reason is because as your portfolio gets larger and larger , so does the effect of what markets inflict on you ..... great gains early on on little money can be wiped away by poor returns later on when those dollars have grown .

so you need to look at the glide path when going out long periods of time ... that asset in this case may have beaten equities when your resources were little in that asset .... but as you glide into the 10 and 5 year periods it may have lagged badly on a much larger sum of money , which in this case it did lag .... gold picked up again in the 3 year and 1 year .

so results are going to be varied with a diversified portfolio over longer periods of time depending what happened in your case when the amounts invested were highest .

https://www.kitces.com/blog/managing-po ... -red-zone/

So, kind of a sequence of returns thing then. I'm reminded of the Norstad page which, as far as I know, is correct.

yes ... we all actually have a weighted average over time as the market acts on more and more money ...the past become least important and the recent most important .

i was invested in the 1980's in the biggest bull in history .... but i had not much invested in those days compared to now ... its great the equities market averaged almost 14% from 1987 to 2003 ... but so what ... my big dollars did not happen and go in to the investments in a meaningful way until well after that .. so for me to quote an 11% return for 30 years is true but in reality my weighted average saw something very different and 1987 to 2003 was actually a moot point in the scheme of things , what counted more was the lost decade for stocks .

today whatever happens has the biggest effect on these kinds of dollars over shadowing much of the past

Smith1776 wrote: ↑Mon May 18, 2020 6:42 pm

Libertarian666 wrote: ↑Mon May 18, 2020 6:36 pm My plan for world domination is working. Muhahaha!

More and more I think of you as the unassuming guy in the disaster movie who you find out was behind the incident all along.

I feel more like the guy who figured it out early and no one listened to him.

mathjak107 wrote: ↑Tue May 19, 2020 9:34 am my point is as the time frame gets longer and longer the past returns become less meaningful in our calculation and what happens near term matters so much more .

so as an example it was all well and good we can look at returns on asset class the last 20 years but if i had 10k invested early on, the fact those 20- year returns are made up mostly of the better returns 10 and 15 years ago is a moot point when i put hundreds of thousands of dollars in the last 5 and 10 years ,

it is the now , 3, 5 and 10 year return that are going to matter not the fact returns were great 15 , 20 years ago . so even though i owned that asset 20 years ago the fact is the return is different the last 10 years then my numbers would reflect .

this is why averages don't work in retirement calculations and sequence rules your outcome.

averages became almost meaningless when we add money and spend money because it then becomes a weighted average .

Okay, but then, so what? As in, what chart of past performance WOULD be useful, and what would it be useful for?

I started the PP about 12 years ago so I don't have a 20 year history to report.

Since 2008 however, my gold is up 26% but only after spending many years in the red. Stocks bought at the same time (VTI) - up 119%.

Libertarian666 wrote: ↑Tue May 19, 2020 10:36 am I feel more like the guy who figured it out early and no one listened to him.

I know exactly who you are then.

You’re Pierce Brosnan in Dante’s Peak — except even more dashing!

Xan wrote: ↑Tue May 19, 2020 11:07 am

mathjak107 wrote: ↑Tue May 19, 2020 9:34 am my point is as the time frame gets longer and longer the past returns become less meaningful in our calculation and what happens near term matters so much more .

so as an example it was all well and good we can look at returns on asset class the last 20 years but if i had 10k invested early on, the fact those 20- year returns are made up mostly of the better returns 10 and 15 years ago is a moot point when i put hundreds of thousands of dollars in the last 5 and 10 years ,

it is the now , 3, 5 and 10 year return that are going to matter not the fact returns were great 15 , 20 years ago . so even though i owned that asset 20 years ago the fact is the return is different the last 10 years then my numbers would reflect .

this is why averages don't work in retirement calculations and sequence rules your outcome.

averages became almost meaningless when we add money and spend money because it then becomes a weighted average .

Okay, but then, so what? As in, what chart of past performance WOULD be useful, and what would it be useful for?

No chart is really useful ....isn’t that why pp users use the portfolio? Because not always is the past a good indicator of the future but also in use you have to many variables to make it worth a darn On our personal levels ....all we need to know is assets go up and they go down .

In fact when the market sell off happened in equities for reasons not on the charts we had both Tlt and Gld take a nasty hit .


So driving and looking in the rear view mirror is not a great idea ...... market averages can be like yesterday’s weather.

We had the greatest bull market in history in stocks only to be followed up by the lost decade

Backtesting can't prove a theory correct, but it can disprove it, and if something occurs in history, it's at least possible for it to occur again.

I don't see the purpose in sniping at Smith's chart when he shows that gold can outperform stocks over a 20 year period. I don't understand saying "That's not useful because you don't know how much you have invested". If you want to say "Charts are useless and nobody should ever look at them because the future is unpredictable" then that's at least coherent, but probably nobody will agree with you that charts are useless.

Xan wrote: ↑Tue May 19, 2020 2:21 pm Backtesting can't prove a theory correct, but it can disprove it, and if something occurs in history, it's at least possible for it to occur again.

I don't see the purpose in sniping at Smith's chart when he shows that gold can outperform stocks over a 20 year period. I don't understand saying "That's not useful because you don't know how much you have invested". If you want to say "Charts are useless and nobody should ever look at them because the future is unpredictable" then that's at least coherent, but probably nobody will agree with you that charts are useless.

History never repeats itself ..only historians repeat themselves ....each time things play out just different enough that what happened last time is not the trigger or reason the next time ....

First Iraq war We plunged , 2nd Iraq war we soared .

So while the business cycles are with us , the triggers ,the reasons and what we thought ,generally do us no good the next time it happens..... the fact if I bought gold 15 or 20 years that because that price point beat equities today has zero to do with anyone who bought within that 20 year period but bought the last 10 years of that 20 year period .....equities Blew gold away over the last 10 years of the twenty year period so that is my point.

It would be like having an amazing year for an asset , and then stating for 20 years that asset beat xyz .....except for the other 19 years it did not beat it ......does that make sense?

mathjak uses charts when they suit his purpose.

His favorite is a chart showing the decline of 30 year T-bond interest rates that is supposed to prove that interest rates have nowhere to go but up.

jhogue wrote: ↑Tue May 19, 2020 2:48 pm mathjak uses charts when they suit his purpose.

His favorite is a chart showing the decline of 30 year T-bond interest rates that is supposed to prove that interest rates have nowhere to go but up.

That assumption is wrong ...it merely shows we have not had a true bear market in bonds in 40 years ....it says nothing about rates have to go up ,big difference between the two .... it does not say bonds beat stocks for 40 years either..
There may be segments in the 40 year period where someone beat equities but that does not mean for 40 years bonds beat stocks

Smith1776 wrote: ↑Tue May 19, 2020 1:06 pm

Libertarian666 wrote: ↑Tue May 19, 2020 10:36 am I feel more like the guy who figured it out early and no one listened to him.

I know exactly who you are then.

You’re Pierce Brosnan in Dante’s Peak — except even more dashing!

I can neither confirm nor deny that.

mathjak107 wrote: ↑Tue May 19, 2020 2:54 pm

jhogue wrote: ↑Tue May 19, 2020 2:48 pm mathjak uses charts when they suit his purpose.

His favorite is a chart showing the decline of 30 year T-bond interest rates that is supposed to prove that interest rates have nowhere to go but up.

That assumption is wrong ...it merely shows we have not had a true bear market in bonds in 40 years ....it says nothing about rates have to go up ,big difference between the two .... it does not say bonds beat stocks for 40 years either..
There may be segments in the 40 year period where someone beat equities but that does not mean for 40 years bonds beat stocks

Just a lot of words rationalizing an incoherent position. Are historical charts meaningful or not?

Xan wrote: ↑Tue May 19, 2020 3:32 pm

mathjak107 wrote: ↑Tue May 19, 2020 2:54 pm

jhogue wrote: ↑Tue May 19, 2020 2:48 pm mathjak uses charts when they suit his purpose.

His favorite is a chart showing the decline of 30 year T-bond interest rates that is supposed to prove that interest rates have nowhere to go but up.

That assumption is wrong ...it merely shows we have not had a true bear market in bonds in 40 years ....it says nothing about rates have to go up ,big difference between the two .... it does not say bonds beat stocks for 40 years either..
There may be segments in the 40 year period where someone beat equities but that does not mean for 40 years bonds beat stocks

Just a lot of words rationalizing an incoherent position. Are historical charts meaningful or not?

Depends for what purpose ........for saying a particular asset beat another over a long period of time ? Nooooo , not unless you limit it to just starting that year .......is it useful for seeing how something reacted to events in a certain period ? Sure but that does not mean they will repeat.

If you started a year later results over the remaining 19 years may be quite different when comparing to another asset.

You know how long golds one peak at 850 influenced its trailing returns making it look better going forward then it was .