Rebalancing gold

[doodle]

Gold has had an incredibly strong move to the upside (about 15% in one month) by my calculations. Is anyone getting close to rebalancing a little bit or buying puts? I remember when silver had a similar big move a few months ago and quickly came crashing down.

[steve]

I am at 29.19 percent gold as of last evening, GTU premium was also about 5.5% according to GTU web site home page. I guess I will be watching it a little closer.  I would prefer to rebalance close to 35% or if an asset hits the low 15% band
Just thought I would update previous post
Now that it is Aug 10 my gold is close to  32%
update Aug 18, gold is still about 32% and GTU premium is now around 11.1%, it seem like a short while back there was hardly and premium.

[moda0306]

If you guys are keeping your gold in a taxable account, I'd maybe consider a partial rebalance (ie, 35 to 30 or 30 to 27.5).

This will help avoid too much in capital gains being syphened off your returns, but still pare you back into a more acceptable spot within your band.

I enact partial rebalance bands whenever it involves recognizing a taxable event.

[dualstow]

Not buying puts, but I am getting close to 35% in gold.
With a little help from my AA- make that my AU sponsor, MediumTex, I have refrained from selling too soon.

[l82start]

at 30% with some available for re-balance in tax advantaged account as of today, i am starting to watch it closer as well. i am also looking to catch nice premiums on GTU when i do a 35% re-balance or possibly a partial re-balance earlier. i haven't come to any conclusions yet on the partial re-balance idea...

[melveyr]

For my parent's IRA (all of the assets are encapsulated in this account) I have them scheduled for 20/30 rebalancing bands. No taxes and no commissions makes life easier. Tighter bands make it easier to manage risk, and with no taxes its a no brainer.

Equities broke below the 20% threshold in the last week and selling gold will be a necessary part of the rebalance 

I'm still rooting for the 35% level for my taxable account, although I am not excited about paying the collectibles gain.

[buddtholomew]

Continuing to watch the gains in GLD disappear. Wish there was a better plan to capture some of those gains without incurring taxes. This is a horrible experience...

[MediumTex]

Continuing to watch the gains in GLD disappear. Wish there was a better plan to capture some of those gains without incurring taxes. This is a horrible experience...

buddtholomew,

It's painful to read your posts over time.  I feel you suffering, but I think most of it is unnecessary.  I understand that there are certain emotional aspects of investing that are hard to shake, but there is so much more to life than having market action dictate your emotional states.

The PP is intended as a remedy to this endless process of worrying about what is going to happen next.  If possible, I would try to embrace it more fully, because it is one of the most important benefits to using the PP in th first place.

It looks like the PP is down about 1.40% today.  So what?  It's had a great run the last few weeks and it's having a fantastic year so far.  Anyone who has watched the recent gold run and drop in treasury yields could have easily spotted overbought markets that were going to pull back at some point.  IMHO, it's nothing all that unusual and certainly nothing to get upset about.

Only you know how you feel inside, but one of Harry Browne's points in his writings on freedom is that we should do things that bring us the maximum amount of what he called "a mental state of well being."  One of the things I have learned the more I have lived is that having an anxious/fearful/freaked out internal mental environment can become a habit that is hard to break, no matter what the external conditions of life may be.  Once identified as simply a bad habit, such an exhausting set of mental configurations can gradually be turned into calmer and less taxing states of mind, no matter what is unfolding around you.

Just some food for thought....hopefully soothing thought.

[buddtholomew]

Thanks MediumTex. I realize that I am too emotionally invested in the gyrations of the portfolio on a day-to-day basis and would like nothing more than to tune out the noise. I transitioned from a 65/35 Boglehead portfolio for the PP and its reduced volatility, but have found that large moves in one direction or another occur quite frequently. Maybe, over time, I will come to accept these movements as part of being invested in the market.

Thanks for your kind words and insight.

All the best-
Budd

[Tortoise]

This is why I really hope a low-expense-ratio (< 0.3%, say) HB PP ETF or mutual fund is offered someday (PRPFX is okay, but its expense ratio is much higher than it needs to be, and it's not the pure HB PP).

The DIY approach is fun for a lot of folks--including me--but for most people it simply produces too much of a temptation to look at what the four individual assets are doing on a day-to-day basis. We've seen repeatedly on this forum that the mottos "just tune out the market noise" and "focus on the package, not the individual pieces" are much easier said than done for most people.

In most real-life situations (not just investing), there's a strong case to be made for abstracting away details where they are unnecessary or, even worse, potentially counterproductive. Details can often be extremely distracting.

[Lone Wolf]

Thanks MediumTex. I realize that I am too emotionally invested in the gyrations of the portfolio on a day-to-day basis and would like nothing more than to tune out the noise.

Hi budd, consider trying an experiment where you check on the portfolio no more than once per month.  Don't worry what the individual assets are doing.  If you catch yourself starting to wonder about it or worry, just gently correct yourself into a new train of thought.  I still chuckle inwardly when I'll feel this sudden urge to "check on things" when I hear that the market tanked or that gold is doing something crazy.

Consider that if you did nothing more than check aggregates once a month, you'd have looked today to see that your portfolio was slightly up.  Then you'd perhaps spend a few minutes making sure that nobody is stealing money from your brokerage accounts and after that... on to whatever else you need to do or would love to do with that extra time.

Going to a once-per-month system was much easier than I expected.  When I gave up the constant checking, the only thing it cost me was anxiety.  Feels great.  Give it a try for a month and spend that time doing something that you love!  I hope you enjoy it as much as I did.

[steve]

I posted this on whats up with GTU the other day:
I was getting ready to rebalance my Gold and the Market just seem to turn on me. So I will rebalance another day but this was my thought:
Conviction to stick with a plan
When I decided to follow the PP my plan was to rebalance between 33 and 35 percent. My thinking was the 35 band was Ideal but if I were getting anxious the 33 band was a compromise.  I also want to be somewhat flexible to take advantage of opportunities for example a high premium on a GTU sale. I agreed to make a little further comprise with myself and rebalance at 32 if the premium was 8% or better. At some point you have to stand firm.
Sometimes I have missed opportunities by not acting fast enough but I like to take my time and make sure what I do is right for me and in the long run this has worked out for me very well.
To elaborate further the only real reasons for getting anxious is wanting to do other things other then having to watch my portfolio.
My logic is the following:
I rebalance a little early and get a small bonus on GTU premium and buy the declining asset slightly higher and the end result is good.
I rebalance at 35% without bonus on premium and buy declining asset at a lower price and the end result is good.
The market reverses and my 35% rebalance band is not hit and I do not rebalance and the end result is good.
The bottom line is it is all good.

[craigr]

The portfolio total value is still up 10% according to Morningstar YTD. A 60/40 portfolio is negative for the year. Don't look at assets in isolation. Only total portfolio value matters.

[6 Iron]

Continuing to watch the gains in GLD disappear. Wish there was a better plan to capture some of those gains without incurring taxes. This is a horrible experience...

I saw this post, and I can see you checking GLD's performance multiple times today (I am assuming it took a big hit). You seem tortured by the individual asset volatility. I saw Lone Wolf's advice, and I strongly concur, but perhaps even try it for a week. If you cannot stop checking and torturing yourself, I would suggest going to PRPFX/EDV. Because, it seems to me that you feel like 25% of your portfolio is on a mission to torture your peace of mind, rather than the market letting you know what is on sale.

Good luck.

[MediumTex]

If you cannot stop checking and torturing yourself, I would suggest going to PRPFX/EDV. Because, it seems to me that you feel like 25% of your portfolio is on a mission to torture your peace of mind, rather than the market letting you know what is on sale.

I don't think that will work.

I think it was PRPFX driving budd crazy a few months back that moved him into the HB PP to start with.

As far as not watching the markets so much, I wold start with trying to only look once per day, and build from there.

[buddtholomew]

Thank you all for your valuable insight and recommendations. I have been working on viewing the portfolio as a whole and not scrutinizing the performance of each of the individual components. However; the recent movements in GLD has focused my attention on the impact a single holding can have on the overall portfolio. I know that I am not the only one paying attention to these gyrations as several threads were started on the topic of rebalancing GLD to lock in gains before the 35% threshold was reached.

I'm in for the long haul and welcome feedback on how to better manage my emotions moving forward.

Best-
Budd

[dragoncar]

You're not alone, budd. I have been watching the entire portfolio, as opposed to assets in isolation, an guess what?  The entire portfolio is down.  viewing the portfolio as a Package doesn't change that fact or make it easier to handle the swings.

Speculation about gold pulling down the portfolio is inevitable

[dualstow]

I'm in for the long haul and welcome feedback on how to better manage my emotions moving forward.

One thing that helps me is to see how much I'm not losing, since the pp got me to buy gold, treasuries and cash investments.
It's easy to see, b/c my mostly-stock vp is still losing, but the pp sure as made things smoother. Well worth a reminder that gold will not go up every single day.

[RickV42]

Once and a while, I get a daily swing that can be tough.  But during those days I think - if I don't like it, then I should do something about it or shut up/not worry.

Which then leads me to remember, that I can't find anything better. 

While the PP is a very smooth ride, you still have to be able to accept SOME gyrations if you want a decent return over time.

[MarySB]

Somewhere I read that GLD is back down to where it was last week. If that is true, I, for one, can handle that much volatility. I have been with PP for 16 months and can tell you I would much rather be in PP than stocks and bonds right now. So, just hang in there as the other wise posters have said.