Gyroscopic Investing

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.

Budd,

So, yes, you are right the PP is a "coward's portfolio". I'd rather be a smart coward, than have my family be starving and shivering in the streets along with the other "brave" stock/bond investors after that solar flare hits.

Yes, that's hopefully extremely hyperbolic imagery. But the point is that having some "hard" assets to complement an electronic stock/bond portfolio won't look dumb or cowardly if something extreme happens (solar flare, nuclear war, economic meltdown, etc.).

stuper1 wrote: ↑Fri Mar 01, 2019 3:31 pm Budd,

So, yes, you are right the PP is a "coward's portfolio". I'd rather be a smart coward, than have my family be starving and shivering in the streets along with the other "brave" stock/bond investors after that solar flare hits.

Yes, that's hopefully extremely hyperbolic imagery. But the point is that having some "hard" assets to complement an electronic stock/bond portfolio won't look dumb or cowardly if something extreme happens (solar flare, nuclear war, economic meltdown, etc.).

I’m with you on having an allocation to these assets but 25% is ludicrous. Down to 15% and perhaps that’s the sweet spot for me but man this show is on repeat over and over and over.

stuper1 wrote: ↑Fri Mar 01, 2019 3:31 pm Budd,

So, yes, you are right the PP is a "coward's portfolio". I'd rather be a smart coward, than have my family be starving and shivering in the streets along with the other "brave" stock/bond investors after that solar flare hits.

Yes, that's hopefully extremely hyperbolic imagery. But the point is that having some "hard" assets to complement an electronic stock/bond portfolio won't look dumb or cowardly if something extreme happens (solar flare, nuclear war, economic meltdown, etc.).

I had to go back a ways in this thread to find any thing like the PP being called a "coward's portfolio" and maybe I didn't go back far enough to find it or just missed it.

What half-way reasonable investor, except for maybe the very young and stupid, would give the slightest thought to such an accusation of being a "coward" in the way they manage their life savings?

jacksonM wrote: ↑Fri Mar 01, 2019 3:40 pm

stuper1 wrote: ↑Fri Mar 01, 2019 3:31 pm Budd,

So, yes, you are right the PP is a "coward's portfolio". I'd rather be a smart coward, than have my family be starving and shivering in the streets along with the other "brave" stock/bond investors after that solar flare hits.

Yes, that's hopefully extremely hyperbolic imagery. But the point is that having some "hard" assets to complement an electronic stock/bond portfolio won't look dumb or cowardly if something extreme happens (solar flare, nuclear war, economic meltdown, etc.).

I had to go back a ways in this thread to find any thing like the PP being called a "coward's portfolio" and maybe I didn't go back far enough to find it or just missed it.

What half-way reasonable investor, except for maybe the very young and stupid, would give the slightest thought to such an accusation of being a "coward" in the way they manage their life savings?

There are various “coward” portfolios around and the term is not derogatory. It implies spreading your bets across a variety of assets as to not place a bet on a single asset.

buddtholomew wrote: ↑Fri Mar 01, 2019 4:08 pm

jacksonM wrote: ↑Fri Mar 01, 2019 3:40 pm

stuper1 wrote: ↑Fri Mar 01, 2019 3:31 pm Budd,

So, yes, you are right the PP is a "coward's portfolio". I'd rather be a smart coward, than have my family be starving and shivering in the streets along with the other "brave" stock/bond investors after that solar flare hits.

Yes, that's hopefully extremely hyperbolic imagery. But the point is that having some "hard" assets to complement an electronic stock/bond portfolio won't look dumb or cowardly if something extreme happens (solar flare, nuclear war, economic meltdown, etc.).

I had to go back a ways in this thread to find any thing like the PP being called a "coward's portfolio" and maybe I didn't go back far enough to find it or just missed it.

What half-way reasonable investor, except for maybe the very young and stupid, would give the slightest thought to such an accusation of being a "coward" in the way they manage their life savings?

There are various “coward” portfolios around and the term is not derogatory. It implies spreading your bets across a variety of assets as to not place a bet on a single asset.

So, according to that definition, all of us who follow the PP are cowards. They probably need to update the definitions of economic terms to make this clear because those of us who only go by simple English still think of "coward" as a derogatory term.

In your opinion then, is this form of cowardice a good thing or a bad thing?

jacksonM wrote: ↑Fri Mar 01, 2019 4:40 pm

buddtholomew wrote: ↑Fri Mar 01, 2019 4:08 pm

jacksonM wrote: ↑Fri Mar 01, 2019 3:40 pm

I had to go back a ways in this thread to find any thing like the PP being called a "coward's portfolio" and maybe I didn't go back far enough to find it or just missed it.

What half-way reasonable investor, except for maybe the very young and stupid, would give the slightest thought to such an accusation of being a "coward" in the way they manage their life savings?

There are various “coward” portfolios around and the term is not derogatory. It implies spreading your bets across a variety of assets as to not place a bet on a single asset.

So, according to that definition, all of us who follow the PP are cowards. They probably need to update the definitions of economic terms to make this clear because those of us who only go by simple English still think of "coward" as a derogatory term.

In your opinion then, is this form of cowardice a good thing or a bad thing?

Does it matter what I think? Do a simple Google search for coward portfolios and see for yourself. If you must know, I consider the PP the ultimate cowards portfolio as it allocates 25% to each economic condition. If an investor in the PP is also considered a coward by investing in such a portfolio then that’s you saying that and not me.

buddtholomew wrote: ↑Fri Mar 01, 2019 4:49 pm

jacksonM wrote: ↑Fri Mar 01, 2019 4:40 pm

buddtholomew wrote: ↑Fri Mar 01, 2019 4:08 pm

There are various “coward” portfolios around and the term is not derogatory. It implies spreading your bets across a variety of assets as to not place a bet on a single asset.

So, according to that definition, all of us who follow the PP are cowards. They probably need to update the definitions of economic terms to make this clear because those of us who only go by simple English still think of "coward" as a derogatory term.

In your opinion then, is this form of cowardice a good thing or a bad thing?

Does it matter what I think? Do a simple Google search for coward portfolios and see for yourself. If you must know, I consider the PP the ultimate cowards portfolio as it allocates 25% to each economic condition. If an investor in the PP is also considered a coward by investing in such a portfolio then that’s you saying that and not me.

Well, now we are getting somewhere. Yes, it matters what you think because you are a long time member of the forum and probably most of us would like to have the amount of money you have. Whether it would make us happier or not in the long run is an interesting and debatable question.

cow·ard...

a person who lacks the courage to do or endure dangerous or unpleasant things.
"they had run away—the cowards!"

So tell us what you really think.

If you want to change the definition of the word in economic parlance feel free to have at it.

I take it you didn’t look it up.
Coward’s Portfolio - William Bernstein?
Heard of him?

The interesting thing is seeing when the scream room gets active. Been pretty quiet for a while, and late last year until early this, stocks were getting hammered. Now they’ve recovered a lot, and gold seems to have temporarily peaked. And this room gets active again!

Cortopassi wrote: ↑Fri Mar 01, 2019 6:20 pm The interesting thing is seeing when the scream room gets active. Been pretty quiet for a while, and late last year until early this, stocks were getting hammered. Now they’ve recovered a lot, and gold seems to have temporarily peaked. And this room gets active again!

I think what happens is stocks recover and Gold/LTT’s sell-off over and over again. The pattern is uncanny..last time this happened I swore to take profit in these assets before the decline starts. I used to falsely believe that I needed the protection in case stocks sold off again. Now I take profits and wait for stocks to decline. I buy into the decline and sell Gold and LTT’s after the recovery,

The "cowards portfolio" is one specific portfolio, not a group of portfolios. It also does not resemble the PP at all. I don't think that taking a neutral stance on a portfolio is an act of cowardice. I also think that putting that implication here on a forum of people that invest this way is not great etiquette. I chose to re-allocate my portfolio in this manner because it allows me to be at peace with my investments. It allows me to get through the day without having to spend hours staring at charts and checking my balances. That's not an act of cowardice, that's allowing me to live my life and place my focus on things that matter more than my investments.

It sounds like you are not at peace with your investments. I wish that you would just sell it off, go full on 70/30, and call it a day. I mean gold and LTT's have one bad week, after performing rather well for quite some time, and it generates this much stress and emotion in you. That's not a healthy response. I think it's time to swap away from the PP and move on. Odds are you'll do just fine in the end. And you'll at least be at peace with your portfolio in the short term, and be able to quit obsessing over what gold and LTT's are doing on day to day basis. I want you to be at peace with your investments. I don't think the PP is for you. You probably swapped over at the worst possible time in decades, and it was a frustrating ride, and it's probably time to just cut the losses and move on to greener pastures. Even if things changed tomorrow and the great bear market finally came upon us and gold and LTT's came to the rescue, I still don't think you would appreciate the portfolio. I think the bad taste is stuck and there's no going back until you finally just sell it all and move on.

pmward wrote: ↑Fri Mar 01, 2019 7:25 pm The "cowards portfolio" is one specific portfolio, not a group of portfolios. It also does not resemble the PP at all. I don't think that taking a neutral stance on a portfolio is an act of cowardice. I also think that putting that implication here on a forum of people that invest this way is not great etiquette. I chose to re-allocate my portfolio in this manner because it allows me to be at peace with my investments. It allows me to get through the day without having to spend hours staring at charts and checking my balances. That's not an act of cowardice, that's allowing me to live my life and place my focus on things that matter more than my investments.

It sounds like you are not at peace with your investments. I wish that you would just sell it off, go full on 70/30, and call it a day. I mean gold and LTT's have one bad week, after performing rather well for quite some time, and it generates this much stress and emotion in you. That's not a healthy response. I think it's time to swap away from the PP and move on. Odds are you'll do just fine in the end. And you'll at least be at peace with your portfolio in the short term, and be able to quit obsessing over what gold and LTT's are doing on day to day basis. I want you to be at peace with your investments. I don't think the PP is for you. You probably swapped over at the worst possible time in decades, and it was a frustrating ride, and it's probably time to just cut the losses and move on to greener pastures. Even if things changed tomorrow and the great bear market finally came upon us and gold and LTT's came to the rescue, I still don't think you would appreciate the portfolio. I think the bad taste is stuck and there's no going back until you finally just sell it all and move on.

Some people just like to complain no matter how their portfolios perform.