The GOLD scream room

[mathjak107]

wrong . the balance has no relationship to success rate .

drawing 4% inflation adjusted is mathematically the exact same success rate regardless of the amount . it is a percentage of draw based .

you can throw any balance you want in to firecalc and you will see it does not change . mathematically it can't .

what might determine what you do safely is the ratio of discretionary to non discretionary spending in your budget .

that is not wealth dependent either , it is just budget and expense related ..

if you ever needed to cut back because things were worse than the worst case scenario's planned around you may have to take a pay cut . if you planned a budget where everything is a need and not a want you can be in trouble .

in fact we have a very size-able portfolio and when we made our retirement plan we planned around staying in queens in nyc . i was able to do a budget that was almost 50% discretionary so if need be we can comfortably cut back if unexpected expenses hammer us .

on the other hand we could have taken the same budget and draw and lived in manhattan but that would have cut the ratio to a level i was not comfortable with and did not leave a good margin for cutting back .,. so in either case the lifestyle is based on the same budget but the flexibilty is what varies .

those with no discretionary spending should not be in equities at all for that matter regardless of wealth .

[mathjak107]

These are interesting thoughts that I have not heard before and find to be let's say non-intuitive. I'm more familiar with phrases like "if you suffer a 50% decline, you then need a 100% increase to break even".

Do you have any good references to point me to that discuss what you're saying?

Thanks.

michael kitces looked in this



EXECUTIVE SUMMARY

The 4% rule has been much maligned lately, as recent market woes of the past 15 years – from the tech crash of 2000 to the global financial crisis of 2008 – have pressured both market returns and the portfolios of retirees.

Yet a deeper look reveals that if a 2008 or even a 2000 retiree had been following the 4% rule since retirement, their portfolios would be no worse off than any of the other “terrible” historical market scenarios that created the 4% rule from retirement years like 1929, 1937, and 1966. To some extent, the portfolio of the modern retiree is buoyed by the (only) modest inflation that has been occurring in recent years, yet even after adjusting for inflation, today’s retirees are not doing any materially worse than other historical bad-market scenarios where the 4% rule worked.

Ultimately, this doesn’t necessarily mean that the coming years won’t turn out to be even worse or that the 4% rule is “sacred”, but it does emphasize just how bad the historical market returns were that created it and just how conservative the 4% rule actually is, and that recent market events like the financial crisis are not an example of the failings of the 4% rule but how robustly it succeeds!

https://www.kitces.com/blog/how-has-the ... al-crisis/

[Libertarian666]

I can't believe that the price is about where I sold a bunch in March. What is wrong with "those people?"

[mathjak107]

i bought back today what i sold at a good couple of thousand dollar difference a few weeks ago . .

wash and repeat .

[Cortopassi]

mj,

You should be posting in the "I'm a closet daytrader forum..."

[mathjak107]

ha ha ha , when it comes to gold -yep , i am a dirty lil timer .

so far so good too. gold has been my biggest winner this year just darting in and out . up multiple 5 digits . selling in a rise and rebuying a few thousand lower putting the difference each time in my other models .

[dualstow]

mj,

You should be posting in the "I'm a closet daytrader forum..."

It's funny how every once in a while mathjak breaks out with some good common sense, the way people say "I went to a fight and a hockey game broke out." Ok, a lot of common sense lately. But I shudder when newcomers ask questions and get answers rife with timing.

[Cortopassi]

mj,

You are:

1) Bragging. Fine, everyone gets to if they want. I have friends who do it all the time, or used to when I listened, about how much they just made on the latest penny stock.

2) Poisoning minds. I'm not trying to be funny here. You are like the latest and greatest stock newsletter scam. Yes, you too can make 10,000+ a month trading gold with little to no risk. I KNOW that's not what you are intending, but that's exactly what is playing in the minds of a lot of people reading your response. Even to me. The first thing that went through my mind is "Damn, he made more in the past couple months than I can hope my PP makes all year. Maybe I can try trading again." Bullshit. 99% of the people in the market cannot do the kind of trading you are doing and handle the losses or protect themselves accordingly. I put myself up as a prime example.

[mathjak107]

i can only tell you what i do , i don't expect anyone to follow suit . but more and more i just find gold is not a buy and hold forever like stocks or bonds . to really make good use of it , it seems you have to nail your profits when these temporary conditions present themselves and buy it back when they don't .

others can buy and hold gold , it is just something i choose not to do and never did . i own it frequently but only until i can sell it and repeat .

[dualstow]

That's exactly what Will Rogers did with stocks!

[Cortopassi]

i can only tell you what i do , i don't expect anyone to follow suit . but more and more i just find gold is not a buy and hold forever like stocks or bonds . to really make good use of it , it seems you have to nail your profits when these temporary conditions present themselves and buy it back when they don't .

others can buy and hold gold , it is just something i choose not to do and never did . i own it frequently but only until i can sell it and repeat .

Fair enough, I don't recall if you ever outlined what you did in 2001 and 2008, -- you held stocks all the way through? Didn't try to time as you do with gold? If not, why? Seems like you could have made a killing and could have smelled it coming a mile away? Or are the gold ups/downs just more obvious to you? And if so, you need to start a newsletter...

Or maybe you did and I missed it.

[mathjak107]

2001 i was fully invested in the growth model but it wasn't too bad since the model avoided tech and dot coms . yeah we were down but retirement was still way off in the future so we just took it in stride. in fact it worked out great because we were making good money in the real estate partnership and investing it through the 2,000's . 2008 we sold two co-ops so the money went right in .

2007 i started to shift over to my retirement model as we just bought the house in the pocono's and i was thinking i would retire very early on .

so i was pretty much at about 40% equities and used a combo of the growth and income model and the income model and no gold .

[mathjak107]

i used a combo of the insight growth and income model and income model starting in 2007 , growth model prior .

today i use a mix of the 3 as i can fine tune the time frames better than with just 2 of the models ..

the growth model runs from 90-100% equities , the growth and income model varies from 60-70% equities , the income model has holdings vary , right now equities 23% .

these are the model results
of course 2000 to 2015 were pretty crappy stock years but the models still did okay considering . in fact you didn't need stocks at all in hind site , the 30 year bond would have beaten them ,.

growth model

2000 minus 10.80
2001 minus 6.40
2002 minus 17.1
2003 +46.10
2004 +12.4
2005 +11.20
2006 15.70
2007 +7.30
2008 minus 42.7
2009 +31.80
2010 +17.7
2011 minus 1.70
2012 +16
2013 +26.50
2014 +9.70
2015 +1
2016 +6.70..

growth and income returns

2000 +2.7
2001 +1.3
2002 minus 6.4
2003 +33
2004 +11.50
2005 +8.20
2006 +13.7
2007 +6.1
2008 minus 33
2009 +28.1
2010 + 12.28
2011 +.30
2012 +13.40
2013 +20.30
2014 +9.30
2015 +1
2016 +8.20
income model

2000 +.30
2001 +1.30
2002 +5.40
2003 +8.40
2004 +4.20
2005 +3.60
2006 + 6.90
2007 +4.00
2008 minus 18
2009 +20
2010 +12.29
2011 +6.30
2012 +10.70
2013 +2.90
2014+7.10
2015+ .1
2016 +6.70

2 years cash

[Cortopassi]

i bought back today what i sold at a good couple of thousand dollar difference a few weeks ago . .

wash and repeat .

Bought too soon....

[mathjak107]

a little bit but i sold quite a bit so much higher . i only bought a fraction of the position so if we go over a 1% drop i will add back another piece .

i missed it this morning when i was at the gym .

it is crazy how much i made in gold since nov just buying it , never capturing the peak of course , selling it and rebuying again lower and repeating .

[Libertarian666]

a little bit but i sold quite a bit so much higher . i only bought a fraction of the position so if we go over a 1% drop i will add back another piece .

i missed it this morning when i was at the gym .

it is crazy how much i made in gold since nov just buying it , never capturing the peak of course , selling it and rebuying again lower and repeating .

I'm sure you'll let us know when you start to make big losses. Right?

[mathjak107]

you will know .... we all watch the same investments . if gold falls from here , what i own is down . if it goes up and i sell it i will tell ya .

[Libertarian666]

you will know .... we all watch the same investments . if gold falls from here , what i own is down . if it goes up and i sell it i will tell ya .

But if it goes down you won't sell it, so you won't have lost anything.

Why didn't I think of this plan? It seems foolproof!

[mathjak107]

you are correct ! i will just hold it until i can sell it and repeat . .

been doing this for years with gold off and on.

[Cortopassi]

But not with stocks -- those are buy and hold...right?...or tweaked into different models...all the time...

I like your thoughts mj, but you are obviously much more of an active trader than most people here want to be.

[mathjak107]

i am only active with the variable portion of my portfolio . the fun part as i call it . the main models i use have stuck to the plan for 30 years ,.sure the funds may change here and there over time but the plan is still the plan .

as i mentioned a few times , i am not happy being average at anything . so at heart i am a tinkerer , a dirty lil trader . so i use the newsletter to keep me from myself and it has worked very well that way .

i don't have to plan or even think about the bulk of our investments , i just follow the script . but i keep a little money to feed my addiction on the side . but over the years i have been very lucky at my fun trading but nothing i would consider doing with my serious money ..

[dualstow]

i am not happy being average at anything

Sigh, the standard slur of the active investor & the paid advisor.

[Smith1776]

i am not happy being average at anything

Sigh, the standard slur of the active investor & the paid advisor.

It is indeed counterintuitive, but totally true in investing, that being average is actually quite excellent.

[dualstow]

i am not happy being average at anything

Sigh, the standard slur of the active investor & the paid advisor.

It is indeed counterintuitive, but totally true in investing, that being average is actually quite excellent.

Right!

And mathjak, no offense, but did you notice Medium Tex would always call his shots on the same day that he made them? He would post, "I bought some Intel today." Don't you think it's a bit tacky saying, after the alleged fact oh, I made so much money on trading gold because I'm so damn clever ? If you call in advance it might be fun to watch, I'll concede that.

[mathjak107]

well last gold buy was wed and then some more yesterday so i will tell you when i sell again . holding 125k with 100k on wed and 25k yesterday .

still down a bit .

letting it ride until the next rise . i usually try to capture a few hundred each trade in and out . i sell , it drops a few thousand and i buy and repeat .

if it goes up instead , i will wait for the first sizable drop and buy and repeat . been doing this for years now .



.