The GOLD scream room

[Kriegsspiel]

You know, I've been seeing a belt whisker contraindicator for gold the past few weeks, but it hasn't triple nippled yet, I'm hoping the dandruff shakes off the head and shoulders for all us gold investors soon, know what I'm saying?

[dualstow]

[PP67]

"A break above the neckline" sounds like a hanging of gold investors... not to be confused with the usual guillotine approach...

[modeljc]

Ray Dalio getting his mind RIGHT:

https://www.zerohedge.com/news/2017-11- ... est-holder

[dualstow]

Gold's teasing us again today.

[eufo]

Gold's teasing us again today.

Don't worry, it'll lose all those gains at the open tomorrow and then chill all day to hold the loss.

[Libertarian666]

Gold's teasing us again today.

Don't worry, it'll lose all those gains at the open tomorrow and then chill all day to hold the loss.

I certainly hope so. I'm waiting for a sizable cashout to buy more!

[buddtholomew]

First hint of inflation and gold runs like a coward.
I’m even eating on a yellow plate at my favorite buffet.
Gold is leading stocks and bonds YTD, but International investments are the winner with the USD falling.
Gold is up 3+% but that’s not very much.

[ochotona]

First hint of inflation and gold runs like a coward.
I’m even eating on a yellow plate at my favorite buffet.
Gold is leading stocks and bonds YTD, but International investments are the winner with the USD falling.
Gold is up 3+% but that’s not very much.

YTD isn't relevant... it's only been a few days. Look at 12 month performance. It's done better than bonds over the last year.

[buddtholomew]

Well can’t say I didn’t tell you so...
First hint of inflation and gold disappears.
Wonderful day for the PP.

Look at her go, thank god I only have 25% in each asset class since they are all going down together...hmm

70/30 down 0.40%
PP down 0.90%
MAGICAL

[Mr Vacuum]

Well can’t say I didn’t tell you so...
First hint of inflation and gold disappears.
Wonderful day for the PP.

Look at her go, thank god I only have 25% in each asset class since they are all going down together...hmm

Told who what now? Last I recall you were voicing unrealistic expectations for gold in light of its actual, well understood relationship to stocks and bonds and a few people were gently reminding you of various facts, such as that zero correlation is not the same thing as the negative correlation you seem to expect, that no one ever promised the assets cancel each other out on a daily basis, that gold is up YTD and for the past year, and that gold was the top asset in two out of the past five decades, one as recently as one decade ago.

By the way, what ever happened to your strategy to buy and sell gold regularly based on its awfulness being so predictable?

[Ugly_Bird]

Well can’t say I didn’t tell you so...
thank god I only have 25% in each asset class

That's the idea, right? :-)

[buddtholomew]

Well can’t say I didn’t tell you so...
First hint of inflation and gold disappears.
Wonderful day for the PP.

Look at her go, thank god I only have 25% in each asset class since they are all going down together...hmm

Told who what now? Last I recall you were voicing unrealistic expectations for gold in light of its actual, well understood relationship to stocks and bonds and a few people were gently reminding you of various facts, such as that zero correlation is not the same thing as the negative correlation you seem to expect, that no one ever promised the assets cancel each other out on a daily basis, that gold is up YTD and for the past year, and that gold was the top asset in two out of the past five decades, one as recently as one decade ago.

By the way, what ever happened to your strategy to buy and sell gold regularly based on its awfulness being so predictable?

If Gold's relationship to stocks and bonds is so well understood, then that is news to me.
Being invested in the portfolio since 2011, I can tell you Gold and LTT's are nothing but a drag on performance.
Even on the occasion that Stocks decline >10%, one should expect Gold and LTT's to go lower as well.
I have had blinders on myself hoping that the PP was the answer, but from experience I can tell you it is not.
You may get lucky and the portfolio saves you during the next crisis but I doubt it.
Chances are you would have already lost a significant amount in the assets you hold for that very scenario.

[buddtholomew]

Well can’t say I didn’t tell you so...
thank god I only have 25% in each asset class

That's the idea, right? :-)

UB, you cut-off the most relevant point...25% in each asset class doesn't save you if they are all falling together.
Case in point, my 70/30 BH allocation only fell .40% today whereas my version of the PP fell .90%

[Ugly_Bird]

my 70/30 BH allocation only fell .40% today whereas my version of the PP fell .90%

Today? Why did you even looked at that today?
If it is not close to any rebalance limits, there is no need to look neither today nor tomorrow. The longer - the better.

[buddtholomew]

my 70/30 BH allocation only fell .40% today whereas my version of the PP fell .90%

Today? Why did you even looked at that today?
If it is not close to any rebalance limits, there is no need to look neither today nor tomorrow. The longer - the better.

You might as well hold 100% stocks if you never look, it has the highest expected return.

[eufo]

You might as well hold 100% stocks if you never look, it has the highest expected return.

Put everything in AAPL. It's the largest market cap stock out there but has crushed the overall market for years.

Seriously, though, the PP is about as stable an allocation as one could ever hope for. Day to day moves mean zilch. If you look at the 4 prongs from Jan 24th through today, Cash is the leader, with Gold in second. Sorry it fell today, but it's still beating both stocks and bonds during this correction.

You need to chill, dude.

[Mr Vacuum]

Budd, you frequently tout with confidence statistics and historical perspectives showing the superior long run performance of stocks as justification for their proper use in a portfolio. Have you asked yourself why you have such trouble accepting statistics on gold that form the long term basis for its inclusion in the PP?

It's one thing to come in here and complain about gold: this is the scream room for that. But it's another thing to insist that the portfolio is broken because it goes down some days. Gold is the most volatile asset in the portfolio. It is not correlated with the other assets. It is going to go down at times that are inconvenient.

Perhaps we have no recourse but to convince Fidelity to release a newsletter stating the probability of different assets going down in the same day, month, and year to prove that it’s possible and expected.

[sophie]

Budd, I think you are confusing day to day fluctuations with meaningful trends. There is a reason why momentum investors use histories of 3 or 6 months to determine trend lines. That's the length of time needed to obtain a stable curve.

Please please please, for your sanity (and ours), stop checking prices every day. Check your portfolio every 3 months, and enjoy the rest of your life in the meantime!

[buddtholomew]

I have 200K to add to the portfolio.
I’m having a difficult time deciding between 70/30 and the PP.
All I have witnessed in my investing life which started in 2008 is stocks out-performing all other assets with minimal/short-lived declines.
While psychologically I like the PP, I have yet to witness the portfolio zigging when stocks zag.
It’s stocks up, PP up; stocks down, PP down.

[flyingpylon]

All I have witnessed in my investing life which started in 2008...

Well that explains a lot.

[stuper1]

Budd, what is your time horizon for possibly needing to withdraw money from your portfolio?

[buddtholomew]

Budd, what is your time horizon for possibly needing to withdraw money from your portfolio?

PP in taxable serves primarily as an emergency fund with a short timeframe and if not used is part of my overall retirement portfolio (70/30, tax deferred). Don’t expect to touch those assets for 20 years.

[stuper1]

If your PP is your emergency fund, then maybe that is why you are so worried about short-term dips. Historically, the PP as an overall portfolio has had drawdowns as much as 20% or more, so I'm not sure that a PP is meant to be an emergency fund. On the other hand, it should be okay to view the cash in your PP as your emergency fund.

For example, if your monthly expenses are $5k, and you want a 6-month emergency fund of $30k, then you need a PP of at least $120k, so that the cash in your PP can be your $30k emergency fund. As long as you have enough cash in your PP to serve as your emergency fund, don't worry about short-term PP dips. They will come back a lot faster than they would with most other portfolios (if backtesting is to be believed).

And if you don't expect to touch those assets for 20 years, then sure, it makes sense to over-weight stocks a bit, as long as your employment prospects are good (although some of us may tend to be overly optimistic about such things). But make sure you know your risk tolerance, so that you won't panic and sell when stocks go into a downturn. And make sure you have a re-balancing plan in place ahead of time, along with a plan to taper the stocks down as you get closer to retirement. Use robust backtesting to test your plan. Follow the plan. If you try to follow your gut, you will likely end up buying and selling at the wrong times and losing money.

[iwealth]

Budd, you've known for years that the PP does not do what you want it to do. You want it to zig while stocks zag on an intraday basis. It does not do that. And it's creating a massive drag on your returns during one of the greatest and longest bull markets in history.

Why would you allocate any of that 200k to gold or long bonds?