The GOLD scream room

[Cortopassi]

Budd is laughing all the way to the bank, with his mostly stock portfolio.

Don, the thing is, I am guessing Budd is NOT laughing all the way to the bank. He agonizes over any loss, or any loss of added gain.

I have moved past that. Money used to rule my day to day existence before the PP. Now it doesn't. I don't care that it doesn't return as much as a stock heavy portfolio. It lets me sleep and not worry about it.

I used to trade options for God's sake. Minute by minute stress. Wake up to a company putting out bad news, options drop and stay underwater. Not for me anymore. No options, no timing, no earning reports, no stress.

[boglerdude]

Im pouring one out for BUD and going 0% gold. Need cash for a new car, mine got wrecked :/

I'm overweight real estate, and have a mortgage, thats enough inflation protection. And I dont rebalance anyway.

But will proly get back in after 60 days using https://aaauetf.com/ currently have PHYS

[mathjak107]

realistically for a long term investor , mitigating temporary short term dips with assets that will permanently lower long term returns has little financial logic to it ...but if it keeps them from bad investor behavior then great . all these other assets are what we use when we have time constraints on the money and it is all not committed to the long term .

It depends. Stocks don't always have to go up. I do think that most people, especially younger investors, would benefit from using a VP though. I think that's why the GB has become popular in recent years, since it has a built in VP in it with an increased stock allocation. Let's also not forget that HB also had many other variations of a PP than just 4x25; it's the general principles that matter more than the actual percentages (part of why he also recommended wide rebalancing bands, because the actual percentage breakdowns are not magic). He simplified down to promoting the 4x25 in his later years, but I suspect that was because, as he admitted, he had lost his desire to speculate in his later years, and that when promoting a portfolio to the masses (a lot of which were people that did not really understand investing) it was easier for him to simplify to one 4x25 allocation vs entertaining n number of variations.

The PP is a great framework that is very flexible and can be modified. I think what one needs to be careful of though is modifying it based on the emotions of what the current winners/losers are. If someone emotionally sells the current losing asset to buy the current winning asset, and keeps doing that over time, then they just essentially keep buying high and selling low... which is not a winning strategy. I think its better to set your safety PP percentage, then have a separate VP that they can chase alpha with, instead of trying to keep emotionally varying the PP over time. You can do whatever you want with that VP: set it as a passive stock allocation, run a quant strategy, trade using technical analysis, buy individual stocks, overweight other assets based on the current macro trends, buy crypto, run options strategies, whatever you believe will produce alpha and satisfy that craving to chase returns.

Also, Ray Dalio thinks on a very similar wavelength, and that's why Bridgewater has both the all-weather and the pure alpha funds. They are meant to be used together, where you allocate the "money you can't afford to lose" to the safety of the all-weather, then chase alpha with the rest. I think this makes a lot of sense, and plays to humans innate desires for both safety and chasing returns.

There is nothing wrong with weighting stocks a bit heavier if someone truly believes they will out perform. However, one should be careful about blanket labeling entire asset classes with tags like "good" or "bad" as no asset is good or bad, they all are varying shades of grey with different strengths and weaknesses. There is value in balancing strengths in one asset vs the weaknesses in another. Also, while gold severely underperfomed the last few years while stocks outperformed, one must keep in mind that this is not a permanent state of things. That at any moment in time the coming 10 years will look very different from the last 10 years. Reversion to the mean is also a real thing. Gold was in a bubble in 2011 and had to revert down at some point. Eventually, it will also have to revert up. Stocks are in a bubble now. The bubble indeed can continue on for awhile, but eventually they will revert as well. How quick and easy it is to forget just how much pain and agony stocks can cause.

when you take typical accumulation periods which span decades you would be betting against that house that the winner won't be equities so a long term investor who is mitigating temporary dips would likely have no financial logic to it .. typical periods run 25-40 years ... so mentally , sure it may help but financially it would permanently hurt those long term gains. in fact just rebalancing has been found to hurt returns in conventional portfolio's where what you rebalance in to lacks the ooomph of equities ...that would not apply to the pp because the other asset classesexcept cash do have quite a lot of lift . .

rebalancing away from equities may improve the risk vs reward ratio but .. a 2010 study from Vanguard by Jaconetti, Kinniry, and Zilbering found that rebalancing stock/bond portfolios reduced returns,.

Portfolio volatility was reduced as well, but simply because rebalancing reduced the average equity exposure (which otherwise compounded to 80%+ equity portfolios over multi-decade time horizons!).

the pp has asset classes that can be very powerful when it is there day in the sun so i think the pp benefits from rebalancing , especially because assets like gold tend not to have their gains stick around .. they tend to spike and fall back in to the shadows waiting for the next strike like a predator ... as i mentioned in another thread i made a lot of money in gld just riding the wave when it spiked , waiting for the roll back which seems to be like night follows day and repeating .

gold left sitting static with no rebalancing tends to do awful over time but when those spikes can be harvested it can be a different animal .

Im pouring one out for BUD and going 0% gold. Need cash for a new car, mine got wrecked :/

I'm overweight real estate, and have a mortgage, thats enough inflation protection. And I dont rebalance anyway.

But will proly get back in after 60 days using https://aaauetf.com/ currently have PHYS

keep in mind a mortgage is not an inflation hedge ...a mortgage is neutral ..it is what you buy with the mortgage that may be an inflation hedge , or it may not ... real estate with or without the mortgage is the same investment .

but as harry points out real estate is not consistent enough to be used as an inflation hedge ...it is highly localized and depending on other factors it may or may not be an inflation hedge ...in the 1980's high mortgage rates hurt real estate so it was no inflation hedge ... it only did well once inflation came down .

[dualstow]

Im pouring one out for BUD and going 0% gold. Need cash for a new car, mine got wrecked :/

I'm overweight real estate, and have a mortgage, thats enough inflation protection. And I dont rebalance anyway.

But will proly get back in after 60 days using https://aaauetf.com/ currently have PHYS

Getting out at a profit or a loss?
Sorry to hear about your car.

[pmward]

when you take typical accumulation periods which span decades you would be betting against that house that the winner won't be equities so a long term investor who is mitigating temporary dips would likely have no financial logic to it .. typical periods run 25-40 years ... so mentally , sure it may help but financially it would permanently hurt those long term gains. in fact just rebalancing has been found to hurt returns in conventional portfolio's where what you rebalance in to lacks the ooomph of equities ...that would not apply to the pp because the other asset classesexcept cash do have quite a lot of lift . .

rebalancing away from equities may improve the risk vs reward ratio but .. a 2010 study from Vanguard by Jaconetti, Kinniry, and Zilbering found that rebalancing stock/bond portfolios reduced returns,.

Portfolio volatility was reduced as well, but simply because rebalancing reduced the average equity exposure (which otherwise compounded to 80%+ equity portfolios over multi-decade time horizons!).

the pp has asset classes that can be very powerful when it is there day in the sun so i think the pp benefits from rebalancing , especially because assets like gold tend not to have their gains stick around .. they tend to spike and fall back in to the shadows waiting for the next strike like a predator ... as i mentioned in another thread i made a lot of money in gld just riding the wave when it spiked , waiting for the roll back which seems to be like night follows day and repeating .

gold left sitting static with no rebalancing tends to do awful over time but when those spikes can be harvested it can be a different animal .

Yes, when one introduces gold into the fold things are a lot different than just stocks and bonds. Both stocks and bonds pay a return. Gold does not. The volatility in gold over the long term, combined with rebalancing, is what generates golds "yield" for you and pays its rent in your portfolio as a long term holding. Holding gold long term without rebalancing makes absolutely 0 sense to me.

I think the odds are in favor of stocks out performing over any period 25 years and up. But... there is no guarantee it will happen. Look at Japan. Like I said, I think that overweighting stocks for an accumulator can help. But too many people fall victim to their own behavior, and savings rate is by far the most important factor in accumulations. So I still think that it's fine for an accumulator to be more defensive. Returns are not the only factor that one needs to consider. There is a price to pay to chase returns. A stock heavy portfolio has a much larger spread of returns, it may perform well on the long term average, but the difference between the best start years and the worst start years is HUGE. Stock heavy portfolios as such are not very dependable nor are they very consistent. For some people it's worth sacrificing that dependability and consistency to chase returns, for other people it's not. I don't think blanket statements should be made either way. Asset allocation is deeply personal, and there is more than one way to build a good portfolio. I think the PP, and the variations thereof, are a great way to invest, but it's not for everyone.

Also, for a hyper-accumulator like me, that is investing over 50% of their income every year, it can be very stressful investing that amount of money in a highly volatile portfolio. It's not as painful for someone that's only contributing the standard 15% with many years left before retirement. But when you're contributing .50 of every dollar you make, the thought of going through another decade like the 2000's, 1970s, 1930s, etc in the middle of what is supposed to be the last of my accumulation years is frightening. For behavioral purposes it is better for me personally to keep my stock exposure at it's current 40%. It's not worth the extra *potential* ~1% CAGR to go all stocks and potentially suffer a "lost decade" during my last few years of accumulations before I hit FI. Dependability, consistency, low drawdowns, and low time to recover as a whole are much more valuable to me than chasing a little extra potential return. Especially when you look at stock valuations currently. The odds of the next decade being the same as the last are virtually 0. I mean, does anyone here actually believe we will be attempting S&P 10,000 in 2029? That's what it would have to do in order to have the next 10 years in stocks to be equally as productive as the last. I would be willing to bet that my 80% PP / 20% VP will out perform 100% total stock market in the coming decade. And even if I get proven wrong on that, I will still get a good enough return to reach my FI goal either way, and that is the most important thing. Any money I make in my career from then on is all fun money.

[ochotona]

Also, for a hyper-accumulator like me, that is investing over 50% of their income every year, it can be very stressful investing that amount of money in a highly volatile portfolio. It's not as painful for someone that's only contributing the standard 15% with many years left before retirement. But when you're contributing .50 of every dollar you make, the thought of going through another decade like the 2000's, 1970s, 1930s, etc in the middle of what is supposed to be the last of my accumulation years is frightening. For behavioral purposes it is better for me personally to keep my stock exposure at it's current 40%. It's not worth the extra *potential* ~1% CAGR to go all stocks and potentially suffer a "lost decade" during my last few years of accumulations before I hit FI. Dependability, consistency, low drawdowns, and low time to recover as a whole are much more valuable to me than chasing a little extra potential return. Especially when you look at stock valuations currently. The odds of the next decade being the same as the last are virtually 0. I mean, does anyone here actually believe we will be attempting S&P 10,000 in 2029? That's what it would have to do in order to have the next 10 years in stocks to be equally as productive as the last. I would be willing to bet that my 80% PP / 20% VP will out perform 100% total stock market in the coming decade. And even if I get proven wrong on that, I will still get a good enough return to reach my FI goal either way, and that is the most important thing. Any money I make in my career from then on is all fun money.

We are twins separated at birth.

[Kriegsspiel]

Also, for a hyper-accumulator like me, that is investing over 50% of their income every year, it can be very stressful investing that amount of money in a highly volatile portfolio. It's not as painful for someone that's only contributing the standard 15% with many years left before retirement. But when you're contributing .50 of every dollar you make, the thought of going through another decade like the 2000's, 1970s, 1930s, etc in the middle of what is supposed to be the last of my accumulation years is frightening. For behavioral purposes it is better for me personally to keep my stock exposure at it's current 40%. It's not worth the extra *potential* ~1% CAGR to go all stocks and potentially suffer a "lost decade" during my last few years of accumulations before I hit FI. Dependability, consistency, low drawdowns, and low time to recover as a whole are much more valuable to me than chasing a little extra potential return. Especially when you look at stock valuations currently. The odds of the next decade being the same as the last are virtually 0. I mean, does anyone here actually believe we will be attempting S&P 10,000 in 2029? That's what it would have to do in order to have the next 10 years in stocks to be equally as productive as the last. I would be willing to bet that my 80% PP / 20% VP will out perform 100% total stock market in the coming decade. And even if I get proven wrong on that, I will still get a good enough return to reach my FI goal either way, and that is the most important thing. Any money I make in my career from then on is all fun money.

We are twins separated at birth.

I had the same philosophy when I was hyper-accumulating (TRIPLE TWINS). I think MMM and Jacob Lund Fisker both wrote about how having a high savings rate is much more important than investment returns.

[mathjak107]

Also, for a hyper-accumulator like me, that is investing over 50% of their income every year, it can be very stressful investing that amount of money in a highly volatile portfolio. It's not as painful for someone that's only contributing the standard 15% with many years left before retirement. But when you're contributing .50 of every dollar you make, the thought of going through another decade like the 2000's, 1970s, 1930s, etc in the middle of what is supposed to be the last of my accumulation years is frightening. For behavioral purposes it is better for me personally to keep my stock exposure at it's current 40%. It's not worth the extra *potential* ~1% CAGR to go all stocks and potentially suffer a "lost decade" during my last few years of accumulations before I hit FI. Dependability, consistency, low drawdowns, and low time to recover as a whole are much more valuable to me than chasing a little extra potential return. Especially when you look at stock valuations currently. The odds of the next decade being the same as the last are virtually 0. I mean, does anyone here actually believe we will be attempting S&P 10,000 in 2029? That's what it would have to do in order to have the next 10 years in stocks to be equally as productive as the last. I would be willing to bet that my 80% PP / 20% VP will out perform 100% total stock market in the coming decade. And even if I get proven wrong on that, I will still get a good enough return to reach my FI goal either way, and that is the most important thing. Any money I make in my career from then on is all fun money.

We are twins separated at birth.

I had the same philosophy when I was hyper-accumulating (TRIPLE TWINS). I think MMM and Jacob Lund Fisker both wrote about how having a high savings rate is much more important than investment returns.

the best is do both... a high savings rate is you working for your money , while the investment returns are your money working for you...there is power there in unity .... i ver made a high salary for nyc so i had to count on my investing

[Kriegsspiel]

I had the same philosophy when I was hyper-accumulating (TRIPLE TWINS). I think MMM and Jacob Lund Fisker both wrote about how having a high savings rate is much more important than investment returns.

the best is do both... a high savings rate is you working for your money , while the investment returns are your money working for you...there is power there in unity .... i ver made a high salary for nyc so i had to count on my investing

Well, yes that would be the best, and if I knew what was going to have the best returns over the next few decades I wouldn't use the PP at all. My PP and my VP have been generating returns since I started investing back in 2011 or so. JLF has mentioned that he was putting his money into a very low interest savings account for the first several years of his working life while he learned about investing and he reached FI in like 5 years because of his savings rate.

[pmward]

We are twins separated at birth.

I had the same philosophy when I was hyper-accumulating (TRIPLE TWINS). I think MMM and Jacob Lund Fisker both wrote about how having a high savings rate is much more important than investment returns.

the best is do both... a high savings rate is you working for your money , while the investment returns are your money working for you...there is power there in unity .... i ver made a high salary for nyc so i had to count on my investing

Yes, but there is a cost to pursing extra returns. If risk doesn't matter, and returns are all that matters, why not just go 100% SPY leap options? If the stock market will always go up, and returns are that much more important than risk, then why not lever up to high hell? Fear and greed are tricky monsters. There really is a such thing as "enough" money and return. There's a point where the cost in risk is not worth the potential extra return. I think most people in the current market environment are unknowingly assuming more risk than they are truly willing to pay.

Also, I'm finding this board, like bogleheads, to be a very good contrarian indicator. You can see the fear setting in on the board at the times to be greedy, and the greed setting in at the times to be fearful. I find the earlier post about capitulating on gold to be a promising sign for those of us that hold a PP or some variation thereof. The more weak hands capitulate, the more likely we get the next bull leg up. Bull markets don't start when people start buying, they start when the last person that is going to sell sells.

[ochotona]

Also, I'm finding this board, like bogleheads, to be a very good contrarian indicator.

+1

[boglerdude]

Getting out at a profit or a loss?
Sorry to hear about your car.

My 05 Taurus was parked when someone mixed up the pedals and pushed it down an embankment. Their insurance (AAA) handled it pretty well, I was worried it would turn into a legal scuffle. They gave me $4500 which is decent. Same mileage (45k) would be 5k from a dealer. I made a mistake of just looking at KBB and not what it would actually cost to buy again. Always check with the markets! I'll probly get a new Ford Fiesta, but its gonna hurt writing a check for $20k :/

Started my PP in 2016 with gold around $1330/oz. I like risk parity, but am still wondering about gold. For millennia it was a tool needed to conduct commerce. That practical function continues to decline, especially with crypto and epayments rising. The dollar only needs to be stable enough to get you through the transition from selling one asset and getting into another.

[mathjak107]

I had the same philosophy when I was hyper-accumulating (TRIPLE TWINS). I think MMM and Jacob Lund Fisker both wrote about how having a high savings rate is much more important than investment returns.

the best is do both... a high savings rate is you working for your money , while the investment returns are your money working for you...there is power there in unity .... i ver made a high salary for nyc so i had to count on my investing

Yes, but there is a cost to pursing extra returns. If risk doesn't matter, and returns are all that matters, why not just go 100% SPY leap options? If the stock market will always go up, and returns are that much more important than risk, then why not lever up to high hell? Fear and greed are tricky monsters. There really is a such thing as "enough" money and return. There's a point where the cost in risk is not worth the potential extra return. I think most people in the current market environment are unknowingly assuming more risk than they are truly willing to pay.

Also, I'm finding this board, like bogleheads, to be a very good contrarian indicator. You can see the fear setting in on the board at the times to be greedy, and the greed setting in at the times to be fearful. I find the earlier post about capitulating on gold to be a promising sign for those of us that hold a PP or some variation thereof. The more weak hands capitulate, the more likely we get the next bull leg up. Bull markets don't start when people start buying, they start when the last person that is going to sell sells.

there is always a cost to everything but higher returns does not always mean higher risk ... i used the fidelity insight growth model for more than 30 years . it is a 100% equities model but it strives to beat the s&p 500 but with a smaller beta .. it has done that very well.. after 30 years the difference between 100k invested in the s&p and the growth model is about 400k and it it did it with about 5-10% less volatility ..



also risk and volatility are not the same thing .... the natural cycles of a broad market over the long term has volatility but little risk .. risk comes when you bet on a particular stock and try to beat the markets at their own game instead of just accepting what the market cycles give you with perhaps a bit of alpha ,. ....

volatility can become risky when you mismatch time frames for the money . but going out the typical 25-40 year accumulation periods all you really have is volatility ..there is little risk of loss unless you turn it in to risk by speculating or really trying to beat the markets at their game.

as the time frames became more defined and shorter i moved away from 100% equities and in to the 40-50% range , but i would certainly do it again the same exact way if we had do overs .

not being a very high earner and living in nyc i needed to max out my money working for me as efficiently as i could .

a penny saved may be a penny earned but that penny will always be a penny , actually less with taxes and inflation , unless it sees good compounding . so i always worked at being a better investor to capitalize on that compounding .

don't forget when rates were rising the pp acted like a huge equity allocation with 3 out of 4 assets moving in the same direction with 3 very powerful asset classes so volatility certainly can pick up ..

so i stopped equating risk ,volatility and returns a long time ago ... the 3 can be all over the map . just look at AT&T , the stock once recommended for widows and orphans .. it has moved the equal of 1000 plus points in a day , provided poor performance for years and can be very risky dividend or not .

rather i try to match the money to the time frames i will need it .

[Kriegsspiel]

Getting out at a profit or a loss?
Sorry to hear about your car.

My 05 Taurus was parked when someone mixed up the pedals and pushed it down an embankment. Their insurance (AAA) handled it pretty well, I was worried it would turn into a legal scuffle. They gave me $4500 which is decent. Same mileage (45k) would be 5k from a dealer. I made a mistake of just looking at KBB and not what it would actually cost to buy again. Always check with the markets! I'll probly get a new Ford Fiesta, but its gonna hurt writing a check for $20k :/

Did you buy it new in 2005? If yes, you should be looking to buy a used car since you don't put a lot of miles on them.

[sophie]

If you use the car that rarely, what about just not replacing it and using rideshare apps or car services instead?

Increasingly, people are happily ditching the car with all its associated costs and maintenance demands, not to mention the timesink that driving is, and relying on ridesharing. And no more worries about speed traps, getting caught using a cell phone, having to find parking etc. I just talked to a new member of my coop who retired and moved here from Virginia. He said the biggest thrill was getting rid of their two cars - "I was so over it!", direct quote.

[ochotona]

I want to ditch my car after I'm not working and even in the 'burbs here I can use an e-bike. The weather is mild here. If If need to go into Houston proper I can Uber to the METRO surburban park & ride station. Once you're on the METRO grid, you can get places, albeit slowly, and I guarantee I'm the richest man riding the vehicle, maybe the entire system, at that moment.

[pmward]

there is always a cost to everything but higher returns does not always mean higher risk ... i used the fidelity insight growth model for more than 30 years . it is a 100% equities model but it strives to beat the s&p 500 but with a smaller beta .. it has done that very well.. after 30 years the difference between 100k invested in the s&p and the growth model is about 400k and it it did it with about 5-10% less volatility ..



also risk and volatility are not the same thing .... the natural cycles of a broad market over the long term has volatility but little risk .. risk comes when you bet on a particular stock and try to beat the markets at their own game instead of just accepting what the market cycles give you with perhaps a bit of alpha ,. ....

volatility can become risky when you mismatch time frames for the money . but going out the typical 25-40 year accumulation periods all you really have is volatility ..there is little risk of loss unless you turn it in to risk by speculating or really trying to beat the markets at their game.

as the time frames became more defined and shorter i moved away from 100% equities and in to the 40-50% range , but i would certainly do it again the same exact way if we had do overs .

not being a very high earner and living in nyc i needed to max out my money working for me as efficiently as i could .

a penny saved may be a penny earned but that penny will always be a penny , actually less with taxes and inflation , unless it sees good compounding . so i always worked at being a better investor to capitalize on that compounding .

don't forget when rates were rising the pp acted like a huge equity allocation with 3 out of 4 assets moving in the same direction with 3 very powerful asset classes so volatility certainly can pick up ..

so i stopped equating risk ,volatility and returns a long time ago ... the 3 can be all over the map . just look at AT&T , the stock once recommended for widows and orphans .. it has moved the equal of 1000 plus points in a day , provided poor performance for years and can be very risky dividend or not .

rather i try to match the money to the time frames i will need it .

I do want to point out that there is a very liberal use of assumptions being presented as fact in this argument.

Ask a Japanese investor whether markets are riskless over a 25-40 year period. Stock markets do not have to go up.

Risk is the chance of your investments not meeting your expectations (or, in the most extreme, that you lose money). The need to take risk is the most important factor to consider. It sounds like in your unique personal situation you live in a HCOL area with a low salary. So in your case you had no choice but to assume high amounts of risk. Luckily, you also picked a good time frame to assume that risk and it worked out well for you. The people investing today don't have as opportune of a time frame ahead of them. So those that feel that have no choice but to assume high amounts of risk likely won't be treated as well as you were. The past does not equal the future. You cannot project your one datapoint infinitely out into the future and say that everyone should follow your example because it worked out for you. It simply doesn't work that way. Let's take a look at Tyler's site for the total stock market. Take a look at both the start date sensitivity and the portfolio growth charts. Look at how big of a difference there is! Some people, like you, got a great ride out of 100% stocks. Others languished. The spread between the best and the worst investment years are huge, thus there is low consistency and dependability: https://portfoliocharts.com/portfolio/t ... ck-market/

For comparison sake, let's look at the stats on the PP, look at how much tighter the spread of returns and start date sensitivity is: https://portfoliocharts.com/portfolio/p ... portfolio/

And, lets also look at the GB, all seasons, and 60/40 just to get a good mix for comparison, the data speaks for itself I don't even need to comment further on this topic:
https://portfoliocharts.com/portfolio/golden-butterfly/
https://portfoliocharts.com/portfolio/a ... portfolio/
https://portfoliocharts.com/portfolio/classic-60-40/

"Matching money to the timeframe you need it" sounds great and catchy on paper, but it's subjective, meaningless, and full of assumption that can be proven wrong at any moment. One can certainly match their liquidity needs in the short term, but it's impossible to predict the future. Nobody can plan for what any individual asset will do 10 years down the road. Anyone who thinks they can is fooling themselves.

If someone has no choice but to assume high amounts of risk for whatever reason then they have no choice and they have to do what they have to do. It does not mean it's the ideal route for all. It also does not mean it should be a generalized recommendation. Like I have already mentioned, asset allocation is a deeply personal thing. Different people have different wants, needs, and biases, and that means that there is more than one investment style that is viable.

[Cortopassi]

I am getting this mid-drive e-bike motor kit today.

https://www.bafangusadirect.com/bafang- ... t-p/12.htm

I live 4 miles from work, and I always want to bike here, but I hate that I get sweated up. This motor will allow me to get here without that, so at least I can do it more than I do now, which is basically 1-2 times/year.

[dualstow]

E-bikes are so neat. I wouldn't want to ride one (or anything) in mixed traffic, so I'm kind of waiting for the apocalypse, something on the level of The Stand. Of course, then I'd find it difficult to procure one.

[sophie]

If you use the car that rarely, what about just not replacing it and using rideshare apps or car services instead?

Increasingly, people are happily ditching the car with all its associated costs and maintenance demands, not to mention the timesink that driving is, and relying on ridesharing. And no more worries about speed traps, getting caught using a cell phone, having to find parking etc. I just talked to a new member of my coop who retired and moved here from Virginia. He said the biggest thrill was getting rid of their two cars - "I was so over it!", direct quote.

Ditching your car and using ridesharing is great if you live in a major city where parking is expensive and impractical. Unfortunately, it is not a viable option if you live in the suburbs, rural, or even many smaller cities.

Au contraire!!!

There are plenty of rideshare drivers in small cities and many suburbs - in fact those are probably the best places for them because taxi service in those places is often nonexistent, so unlike big cities there's no political urge to stifle the competition.

A sampling of such places where I've gotten a rideshare with a wait time of <10 minutes: Suburban NJ, New Orleans (city and suburb), Palo Alto CA, Minneapolis, western Massachusetts (Northampton area), Berkeley CA, Pasadena CA.

Ochotona, sounds like a typical non NYC/DC metro that I wouldn't waste my time with either. Let the Uber take you all the way to your destination. It'll still work out cheaper than a car.

[flyingpylon]

I am getting this mid-drive e-bike motor kit today.

https://www.bafangusadirect.com/bafang- ... t-p/12.htm

I live 4 miles from work, and I always want to bike here, but I hate that I get sweated up. This motor will allow me to get here without that, so at least I can do it more than I do now, which is basically 1-2 times/year.

I put a Bafang BBSHD on an Electra Townie... love it! Good luck with the eBike conversion.

[Cortopassi]

I am getting this mid-drive e-bike motor kit today.

https://www.bafangusadirect.com/bafang- ... t-p/12.htm

I live 4 miles from work, and I always want to bike here, but I hate that I get sweated up. This motor will allow me to get here without that, so at least I can do it more than I do now, which is basically 1-2 times/year.

I put a Bafang BBSHD on an Electra Townie... love it! Good luck with the eBike conversion.

Got it on. Best money I have spent in a long time! Just to see, got to 28MPH on a straight stretch. Lowest pedal assistance, into a strong headwind was nothing, and going 15MPH.

But of course it is going to freaking snow this weekend and I can't go out!

[mathjak107]

there is always a cost to everything but higher returns does not always mean higher risk ... i used the fidelity insight growth model for more than 30 years . it is a 100% equities model but it strives to beat the s&p 500 but with a smaller beta .. it has done that very well.. after 30 years the difference between 100k invested in the s&p and the growth model is about 400k and it it did it with about 5-10% less volatility ..



also risk and volatility are not the same thing .... the natural cycles of a broad market over the long term has volatility but little risk .. risk comes when you bet on a particular stock and try to beat the markets at their own game instead of just accepting what the market cycles give you with perhaps a bit of alpha ,. ....

volatility can become risky when you mismatch time frames for the money . but going out the typical 25-40 year accumulation periods all you really have is volatility ..there is little risk of loss unless you turn it in to risk by speculating or really trying to beat the markets at their game.

as the time frames became more defined and shorter i moved away from 100% equities and in to the 40-50% range , but i would certainly do it again the same exact way if we had do overs .

not being a very high earner and living in nyc i needed to max out my money working for me as efficiently as i could .

a penny saved may be a penny earned but that penny will always be a penny , actually less with taxes and inflation , unless it sees good compounding . so i always worked at being a better investor to capitalize on that compounding .

don't forget when rates were rising the pp acted like a huge equity allocation with 3 out of 4 assets moving in the same direction with 3 very powerful asset classes so volatility certainly can pick up ..

so i stopped equating risk ,volatility and returns a long time ago ... the 3 can be all over the map . just look at AT&T , the stock once recommended for widows and orphans .. it has moved the equal of 1000 plus points in a day , provided poor performance for years and can be very risky dividend or not .

rather i try to match the money to the time frames i will need it .

I do want to point out that there is a very liberal use of assumptions being presented as fact in this argument.

Ask a Japanese investor whether markets are riskless over a 25-40 year period. Stock markets do not have to go up.

Risk is the chance of your investments not meeting your expectations (or, in the most extreme, that you lose money). The need to take risk is the most important factor to consider. It sounds like in your unique personal situation you live in a HCOL area with a low salary. So in your case you had no choice but to assume high amounts of risk. Luckily, you also picked a good time frame to assume that risk and it worked out well for you. The people investing today don't have as opportune of a time frame ahead of them. So those that feel that have no choice but to assume high amounts of risk likely won't be treated as well as you were. The past does not equal the future. You cannot project your one datapoint infinitely out into the future and say that everyone should follow your example because it worked out for you. It simply doesn't work that way. Let's take a look at Tyler's site for the total stock market. Take a look at both the start date sensitivity and the portfolio growth charts. Look at how big of a difference there is! Some people, like you, got a great ride out of 100% stocks. Others languished. The spread between the best and the worst investment years are huge, thus there is low consistency and dependability: https://portfoliocharts.com/portfolio/t ... ck-market/

For comparison sake, let's look at the stats on the PP, look at how much tighter the spread of returns and start date sensitivity is: https://portfoliocharts.com/portfolio/p ... portfolio/

And, lets also look at the GB, all seasons, and 60/40 just to get a good mix for comparison, the data speaks for itself I don't even need to comment further on this topic:
https://portfoliocharts.com/portfolio/golden-butterfly/
https://portfoliocharts.com/portfolio/a ... portfolio/
https://portfoliocharts.com/portfolio/classic-60-40/

"Matching money to the timeframe you need it" sounds great and catchy on paper, but it's subjective, meaningless, and full of assumption that can be proven wrong at any moment. One can certainly match their liquidity needs in the short term, but it's impossible to predict the future. Nobody can plan for what any individual asset will do 10 years down the road. Anyone who thinks they can is fooling themselves.

If someone has no choice but to assume high amounts of risk for whatever reason then they have no choice and they have to do what they have to do. It does not mean it's the ideal route for all. It also does not mean it should be a generalized recommendation. Like I have already mentioned, asset allocation is a deeply personal thing. Different people have different wants, needs, and biases, and that means that there is more than one investment style that is viable.

nothing is ever going to be 100% guaranteed . but there are things that make sense ..

the comparison to japan is a poor one . not only are we not japan but had someone in japan bought a global fund or invested in other countries their outcome would be very different ..

matching time frames to money has never been a problem...118 -30 year cycles show a 50/50 mix has a 96% success rate of being spent down successfully over 30 years ... my 50/50 mix if i maintain the allocation can go a long long time without selling equities ... in fact over any 10 or 20 year period a 50/50 has never been down .. so risk and volatility are very different things .

so at different points in our lives matching money to the time frame has never been a problem ..could it be ? sure it could , just like a long period of rising rates can be kryptonite to the pp ...

my investment philosophy for 33 years now has always been to go with what worked well , what still works well , and what has a reasonable chance of continuing ....

for the record at this moment i do hold gold and long term treasuries with some of my bond allocation money.

but if i still had a few decades left , no way would i be trying to mitigate short term dips as a long term investor , volatility does not bother me when i have no near term use for that money ..

[pmward]

nothing is ever going to be 100% guaranteed . but there are things that make sense ..

the comparison to japan is a poor one . not only are we not japan but had someone in japan bought a global fund or invested in other countries their outcome would be very different ..

The comparison to Japan is not a poor one, because if it can happen to them it is *possible* it could happen to us. And since right now, it's a global trend of deflation, international diversification likely would not work if we went down that route.

matching time frames to money has never been a problem...118 -30 year cycles show a 50/50 mix has a 96% success rate of being spent down successfully over 30 years ... my 50/50 mix if i maintain the allocation can go a long long time without selling equities ... in fact over any 10 or 20 year period a 50/50 has never been down .. so risk and volatility are very different things .

Having a 50/50 portfolio is *NOT* matching time frames to money. I repeat, having a 50/50 portfolio is *NOT* matching time frames to money. It is holding a passive 50/50 portfolio. The two things are very different. I suggest you do some research in the strategy of matching timeframe to holdings, this is generally done as a bucket approach.

but if i still had a few decades left , no way would i be trying to mitigate short term dips as a long term investor , volatility does not bother me when i have no near term use for that money ..

The false assumption is that all dips are short term. This is simply not true. Now, if someone is 20 years old, has no money invested, and has a low to average savings rate (0-15%) then even in a Japan-like situation, it's not really going to effect them that much in the grand scheme. So sure, if they want to take a gamble on 100% stocks to see if the luck of the starting point will work for them, sure. They have so little invested that it really doesn't matter what they do.

But for someone that is retiring or hitting FI in the next 10-20 years, someone that has a high savings rate, someone that has a large chunk of money invested, etc... if they have no *need* to gamble, then it seems pretty silly to gamble with their entire savings, right? Even if they have a desire to gamble, they could still do it in a way that is responsible by using both a PP and VP. Humans are known to behave badly in periods of high volatility. I think it's safer to assume that the average person will not be able to hold through a market crash, since all the current behavioral finance research shows this to be the case. The average person sells at or near the bottom and then doesn't get back in for years, after they've missed the entire recovery. So if someone has enough money that their behavior can ruin them, would it not be irresponsible and potentially very harmful to recommend that they go all in 100% in stocks? They can still chase alpha, but it's better off allocating a percentage to a VP directly for that purpose, imo.

Now if the person is a general stock bug then that VP can just be a passive stock allocation. Hell, for someone like Budd with 13M I see no reason why he couldn't go something like 20% PP 80% stock VP since he is such a stock bug. His 20% that would be safe would still be enough to last him for the rest of his life (~2.5 mill), so he could afford to gamble on the 80% if he wanted to, lose it all, and still be fine. This is why I say these things are individual and there are many inputs that need to be considered. There is no black and white generalized best case for everyone. Even trying to generalize portfolio recommendations using age as the sole input is a very poor way to go about things.

A wise man once said to first protect the "money you can't afford to lose" then you can chase return after that. I personally think this is great advice. I think that human psychology has some short comings though, where coming out of a crisis like 2008 human psychology would tend to favor being defensive and protecting money, and in 2019 human psychology would rather favor being offensive and risking money. The thing is that human psychology is usually wrong. So the line in the sand for what is "money you can't afford to lose" and what is money you can chase alpha with probably needs to be calculated in an objective manner, as using subjective feelings are probably going to lead an investor down the wrong path (i.e. being super defensive in 2009, and being super offensive today).

[Cortopassi]

Trade war fears again, but sigh, no love for gold with this fear.