Gyroscopic Investing

MangoMan wrote: ↑Thu Feb 28, 2019 1:00 pm

Libertarian666 wrote: ↑Thu Feb 28, 2019 11:20 am

pmward wrote: ↑Thu Feb 28, 2019 10:55 am

What are their prices and fees like?

Basically 50 basis points a year with a minimum of $25/quarter.

Plus the ridiculous bid/ask spread on physical gold.

Currently about 4% on Eagles, less on some bars, if you have a wholesale account anyway.

And if you hold for 10 years, you can divide that by 10 per year, obviously.

Same story as last decade, sell Gold and LTT’s...no one wants them. 15% each is still too high...

buddtholomew wrote: ↑Fri Mar 01, 2019 10:15 am Same story as last decade, sell Gold and LTT’s...no one wants them. 15% each is still too high...

In 1999 15% LTT's and gold would have seemed too high as well. Anything less than 100% stock seemed silly. Look at the decade that followed. Gold and LTT's out performed. Not saying a repeat is going to happen, but I think that we have more in common with 1999 at the moment than 2009. In hind site, sure 15% to gold and LTT's was not great over the last decade, but that may be exactly why it may be prudent in the coming years. The moment holding a specific asset class seems the silliest is usually the very best time to be holding it.

In hindsite, if you could go back to 1999 you would be selling completely out of equities and going into treasuries and gold at the time when equities were the hot ticket. In 2009, when nobody wanted equities, you would have been backing up the van. Well we are not blessed with the ability to see the future, but the contrarian bet is as likely to play out as it was in both 1999 and 2009 (as a side note, isn't it ironic that the years ending in 9 have tended to be major turning points in the market the last couple decades?).

pmward wrote: ↑Fri Mar 01, 2019 11:01 am

buddtholomew wrote: ↑Fri Mar 01, 2019 10:15 am Same story as last decade, sell Gold and LTT’s...no one wants them. 15% each is still too high...

In 1999 15% LTT's and gold would have seemed too high as well. Anything less than 100% stock seemed silly. Look at the decade that followed. Gold and LTT's out performed. Not saying a repeat is going to happen, but I think that we have more in common with 1999 at the moment than 2009. In hind site, sure 15% to gold and LTT's was not great over the last decade, but that may be exactly why it may be prudent in the coming years. The moment holding a specific asset class seems the silliest is usually the very best time to be holding it.

I’ve heard this countless times...don’t buy into it.

Those who won't learn from history are doomed to repeat it.

At the end of the day, I'm feeling more bearish than bullish on equities over the next decade. Even still, I have 42% of my total portfolio in equities (60/40 in my 401k and Golden Butterfly in my larger taxable accounts and IRA's) because I may be wrong. Of course, I do look at the small caps in the GB as a variable portfolio, so if I get proven right, I may re-allocate some of that accordingly. But we will see. While I have a bearish view over the next 10 years, in the short and medium term I don't currently feel very strongly either way. I think the odds of new highs are equal to the odds of December being the beginning a new sustained downtrend. It's kind of a coin flip. I'm kind of just in wait and see mode, and letting the balanced portfolio sort out the rest. At least with this allocation I'm mentally able to stay fully invested come what may, and I have 20% of my portfolio that is currently bullishly aligned that I have the freedom to flex around should I start to feel strong bearish convictions in the short to medium term.

stuper1 wrote: ↑Fri Mar 01, 2019 11:09 am Those who won't learn from history are doomed to repeat it.

Heard that too...
You will only see the light when you remove the PP shackles.

Yeah, same old song and dance. Gold back under $1300. Who could have guessed. I really thought this time it was to the moon. Really this time.

Cortopassi wrote: ↑Fri Mar 01, 2019 12:04 pm Yeah, same old song and dance. Gold back under $1300. Who could have guessed. I really thought this time it was to the moon. Really this time.

Yes, well if you look at the full picture this week the dollar has been falling alongside gold... which is not normal. So you could still be proven right. If the dollar continues to fall, gold will go up. At the very least, technically gold was extended and due for at least a short term pull-back. The pull-back could just be a consolidation to finally push through that big $1350 resistance level. It also could be a short term market top. We will see. I'm not surprised the rally ran out of gas right at that major resistance level, I wouldn't have expected anything less matter of fact. That doesn't mean the war is over, sometimes it takes a few weeks to shake out the weak hands prior to finally conquering a major resistance level. I wouldn't place too much emphasis on one single weeks action either way. Gold, equities, bonds, currencies... everything seems to be very technically unsure of what direction it wants to go in right now. Pretty much every market across the board appears to be losing momentum.

pmward wrote: ↑Fri Mar 01, 2019 12:30 pm

Cortopassi wrote: ↑Fri Mar 01, 2019 12:04 pm Yeah, same old song and dance. Gold back under $1300. Who could have guessed. I really thought this time it was to the moon. Really this time.

Yes, well if you look at the full picture this week the dollar has been falling alongside gold... which is not normal. So you could still be proven right. If the dollar continues to fall, gold will go up. At the very least, technically gold was extended and due for at least a short term pull-back. The pull-back could just be a consolidation to finally push through that big $1350 resistance level. It also could be a short term market top. We will see. I wouldn't place too much emphasis on one single weeks action either way. Gold, equities, bonds, currencies... everything seems to be very technically unsure of what direction it wants to go in right now.

I don't disagree with you at all. All I want to get across is that gold has been one frustrating asset. Whether that's just how it works, or it is manipulated, it still causes an unnecessary emotional response from me!

Cortopassi wrote: ↑Fri Mar 01, 2019 12:33 pm

pmward wrote: ↑Fri Mar 01, 2019 12:30 pm

Cortopassi wrote: ↑Fri Mar 01, 2019 12:04 pm Yeah, same old song and dance. Gold back under $1300. Who could have guessed. I really thought this time it was to the moon. Really this time.

Yes, well if you look at the full picture this week the dollar has been falling alongside gold... which is not normal. So you could still be proven right. If the dollar continues to fall, gold will go up. At the very least, technically gold was extended and due for at least a short term pull-back. The pull-back could just be a consolidation to finally push through that big $1350 resistance level. It also could be a short term market top. We will see. I wouldn't place too much emphasis on one single weeks action either way. Gold, equities, bonds, currencies... everything seems to be very technically unsure of what direction it wants to go in right now.

I don't disagree with you at all. All I want to get across is that gold has been one frustrating asset. Whether that's just how it works, or it is manipulated, it still causes an unnecessary emotional response from me!

It's nothing specific to gold, it's just the way markets work in the short term. Every volatile asset can be just as frustrating in the right time periods. When someone focuses exclusively on the one asset in a balanced portfolio that's underperformed to the exclusion of all others, it's going to be frustrating and emotional. I made a very large purchase of gold and long term treasuries a few weeks back. I'm under water on both right now. It sucks, but I think that's just kind of how this thing works. My portfolio as a whole is still up in that time frame. If there weren't one or two assets I was frustrated with at any given time it would mean I wasn't truly diversified.

pmward, none of us here are attending their first rodeo.
I too used to defend this portfolio, but after removing myself by selling Gold and LTT’s to 15% can clearly see that the portfolio “sounds” great, but it’s not. It’s a cowards portfolio and a poor one at that.

buddtholomew wrote: ↑Fri Mar 01, 2019 12:43 pm pmward, none of us here are attending their first rodeo.
I too used to defend this portfolio, but after removing myself by selling Gold and LTT’s to 15% can clearly see that the portfolio “sounds” great, but it’s not. It’s a cowards portfolio and a poor one at that.

If you really feel that way, I don't understand why you don't just sell it all and be done with it? If you really truly believe that the portfolio as a whole can be judged by the behavior of a couple of its assets over a short period of time, then just free yourself from the stress of it all and move on. What keeps you from selling the rest of the gold and LTT's? What allocation do you feel is better and why? What do you define as an acceptable return? What do you define as an acceptable drawdown in worst case scenarios? How would your better asset allocation accomplish your definitions of acceptable returns balanced against risk/drawdowns? How would your better asset allocation fit your specific need and ability to take risk better than something like a PP, GB, all weather portfolio, etc.

Read my history if you care to for an understanding.
My 70/30 is up 1.4 million YTD
My PP is up < 300K YTD

Why the HUGE variance?
Gold and LTT’s that’s why.
Now extrapolate this for the last 10 years and tell me why the PP is not worth the time...

buddtholomew wrote: ↑Fri Mar 01, 2019 1:06 pm Read my history if you care to for an understanding.
My 70/30 is up 1.4 million YTD
My PP is up < 300K YTD

Why the HUGE variance?
Gold and LTT’s that’s why.
Now extrapolate this for the last 10 years and tell me why the PP is not worth the time...

I have read your history, as I have read through a good chunk of the topics on this board over the last few months. That being said, I don't think comparing two portfolios returns over a 2 month time frame, or even over a 10 year timeframe, really paints the full picture.

I know you don't really have a need to take risk. So I guess my mentality is that I try to put myself in your shoes, and if I were already in "won the game" territory, that I wouldn't just look at capitol appreciation blindly without considering capitol preservation. My first priority would be in ensuring that I stayed in "won the game" territory, then beyond that if I had a desire to take extra risk I could (and would) do so with a variable portfolio where I could take risk and use discretion till' my hearts content. Which to me, since you lowered your allocation to PP sounds exactly what you're doing.

So I guess I wonder where the contradiction is in there? Where you are so frustrated with the PP, yet you still hold 75% of your portfolio in it? I personally think that you just misjudged the amount of money that you can't afford to lose, and that your mentality desired a bit more risk, so in your specific case a full on 100% PP was not a good fit. You needed a VP. I don't think that makes the PP a "cowards portfolio" or a portfolio that should not be recommended to others. I think it's just a warning stamp that people should think long and hard about finding the right balance between how much money they need to protect vs how much they need to risk in order to stay happy and live a stress free life. If the PP were not a sound philosophy I think you would have eliminated it altogether, as opposed to just exchanging some PP for some VP. Am I wrong in these assumptions in any way? Is there something I'm missing or an angle I'm not considering here?

Budd, you're debating someone whose screenname means "in the direction of precious metals."
Or, maybe it's a coincidence. Is your name P.M. Ward?

dualstow wrote: ↑Fri Mar 01, 2019 1:39 pm Budd, you're debating someone whose screenname means "in the direction of precious metals."
Or, maybe it's a coincidence. Is your name P.M. Ward?

Haha, that's my name.

buddtholomew wrote: ↑Fri Mar 01, 2019 1:06 pm Read my history if you care to for an understanding.
My 70/30 is up 1.4 million YTD
My PP is up < 300K YTD

Why the HUGE variance?
Gold and LTT’s that’s why.
Now extrapolate this for the last 10 years and tell me why the PP is not worth the time...

Past performance is no guarantee of future returns.

If it was, we'd obviously all drop the PP and go with your very impressive 70/30.

Good name!

Budd has not yet been sufficiently scared by a major market crash, that's really all there is to it.

I’ve sat through a decline in Gold on par with any market crash. I also had about 900K invested in 2008 so I think I qualify as living through a market crash.

Budd,

I think you have the wrong relationship with gold. Sometimes gold works as a diversifier to a portfolio (think the years 2000 to 2010). More often though gold is an insurance product (much more preferably physical gold) against serious black swan events that could shut down an economy for months on end and maybe wipe out computerized wealth (think giant solar flares, which apparently have happened within the past few hundred years, and if directed at earth could cause serious problems).

If I had as much money as you, I would want say 10% or more gold, just as an insurance product. If it helps your portfolio at certain times (like 2000 to 2010), that is just a bonus. If it doesn't help, then don't worry about it. And if a solar flare (or whatever) never hits, then be even happier. But if a solar flare does hit, you may be much better off than many other people who thought that stocks/bonds make up a truly diversified portfolio.

Yes, personally, I would rather not see gold outperform the other assets in my lifetime, because it would mean that something was seriously wrong. The best case scenario is that gold just slowly chugs along and over the course of my lifetime it just equals inflation. I get some volatility to buy low and sell high every few years as kind of a dividend of sorts. But it never out performs stocks and functions essentially like an insurance policy that I pay over the course of my life but never actually make a claim on. That's the best case scenario.

buddtholomew wrote: ↑Fri Mar 01, 2019 2:53 pm I’ve sat through a decline in Gold on par with any market crash. I also had about 900K invested in 2008 so I think I qualify as living through a market crash.

The way the PP handled the market crash in gold was one of the things that helped convince me to stay with the PP. I think the overall portfolio was only down around 2% when that happened, at least for me. When I was in a stock heavy portfolio and stocks crashed, it was a lot more devastating.

These are good comments on Au.
I was recently at 17.5% in Gold and post 1330 sold 2.5% down to 15% total.
Same applied to LTT’s as I had a TLT batch at 124 that I sold at 122. Gold and LTT sales washed using SpecID.

I am going to market time Gold and sell when it is up to buy when it is down. Holding indefinitely is too difficult watching the asset sell when the crisis of the moment doesn’t materialize.

Down to 5% duration for LTT and STT’s.

32/15/15/38 which leaves 3% to move to stocks if and when they pull-back again.