mathjak107 wrote:
at the risk of sounding like a broken record
That gets my vote for understatement of the year.
I think we've got your point by now. You'd accomplish a lot more good in the investing world by focusing your energies on the much larger group of people who are doing stupid things like wasting their money on market timing, high expense-ratio mutual funds, etc. Us PP people just happen to have a different philosophy than you do, maybe a bit less certain about the future, and willing to put up with lower returns to have better insurance for possible black swan events. I'm not saying that you should leave, but it does get a bit tiresome to hear the same spiel from you every day.
Who are you to tell him to leave? What mathjak107 does is make us reexamine our own preconceived ideas and biases and that's a very healthy function. Thank you, mathjak!
thanks , i forgot , what address do i send the check? lol
stuper1 wrote:
I don't want mathjak to leave. I don't want anybody to leave. I think my post was not worded very well. My bad.
I also don't want to read the same stuff every day, over and over.
How about this...
Every time mathjak complains about stocks outperforming gold and bonds, he has to attach one of those cool photographs of his to the post?
i think it would be easier just to post the link to our website , far to many to post under those terms but i will tell you what . i will post some of the ones here i post on photography websites if ya'll like .
stuper1 wrote:
That gets my vote for understatement of the year.
I think we've got your point by now. You'd accomplish a lot more good in the investing world by focusing your energies on the much larger group of people who are doing stupid things like wasting their money on market timing, high expense-ratio mutual funds, etc. Us PP people just happen to have a different philosophy than you do, maybe a bit less certain about the future, and willing to put up with lower returns to have better insurance for possible black swan events. I'm not saying that you should leave, but it does get a bit tiresome to hear the same spiel from you every day.
Who are you to tell him to leave? What mathjak107 does is make us reexamine our own preconceived ideas and biases and that's a very healthy function. Thank you, mathjak!
especially when the PP has performed better than his personal allocation over the last 15 years, which you would never know from reading his posts.
Maybe the PP is the best diversified portfolio for recessionary times. And one of the worst for all of the others.
...and yet its historical average returns don't fluctuate a lot between recessionary and non-recessionary periods.
except why look at just the last 15 years when equity's had a sluggish run . how about the last 20 or 30 where the balance is 2 to 3x higher than the pp . or even the 5 year .
the fact is all that counts is your own results and what you are averaging with any portfolio over the time frame you have it
Last edited by mathjak107 on Fri Sep 11, 2015 9:02 am, edited 1 time in total.
mathjak107 wrote:
except why look at just the last 15 years when equity's had a sluggish run . how about the last 20 or 30 where the balance is 2 to 3x higher than the pp . or even the 5 year .
the fact is all that counts is your own results and what you are averaging with any portfolio over the time frame you have it
Math -
OK, so from 1/1/95 through yesterday, here is what I get on Peaktotrough.com (annual rebalances & dividends reinvested):
PP - 7.51% CAGR with a maximum drawdown of 14.18% and no other drawdowns greater than 10%. Total ending balance is $41,756.
60/40 S&P 500 & 10-year treasuries - 8.46 CAGR with a maximum drawdown of 29.91% and another of 23.39%. 8 total drawdowns of 10% or greater. Total ending balance is $53,728.
So greater volatility for a better ending bottom line. Back to what you wrote a few months ago, one needs a high "pucker factor" with a more volatile portfolio. Can you accept that most of us that implement a PP or something that is even PP-ish just aren't interested in the drama that comes with riding out those storms? We get that you have done well and you have added a lot to this forum in other areas. As for the PP, maybe its Waterloo is in fact here. We shall see. Maybe stocks are about to plunge or go to the moon. If the latter happens, well at least we own some stocks (and will be overbalanced in them much of the time, so holding more than 25%).
I guess rather than us reading posts that are so similar (I know, I know, I can just ignore them if I like), maybe you should just post the Mathjak 16 (5? 3?) Golden Rules Of Investing somewhere on here.
Last edited by barrett on Fri Sep 11, 2015 3:15 pm, edited 1 time in total.
of course i agree about that fact . but what i disagree with is cherry picking time frames to make the pp compare better to a more aggressive model by singling in the worst period . because while you could pull out the 2000-2015 time frame to compare the big factor is up to 2000 we had one of the greatest stock bull runs ever , with 17 years of almost 14% cagr .
in the end forget these charts . all that matters is what you do and if you are happy .
as soon as i know what those rules are i will let ya'all know .
i only have 1 rule when it comes to investing
"stay flexible and nudge the portfolio like steering a big ship to keep it on course.
there is not a strategy or trading system that does not need to be fined tuned and updated along the way to keep it up with the times which do change .
Buy low and sell high has lost more money for investors than any other mantra.
We all thought low was when markets fell 2000 points in 2008-2009.
Little did anyone know we had 4000 more to go.
So all those who thought they were buying low either got stopped out or scared out.
On the other hand buy high and sell higher has made more money than anything else.
An object in motion stays in motion until it hits something.
Odds are if you want to sell you will not be the last man on the line in a
bull market and that the very next move will result in a loss and spiral
downward.
Trying to buy low has not made nearly as much money as buy high and sell higher .
Google it for some interesting thoughts on that as a mantra. Think of gold.
Last edited by mathjak107 on Fri Sep 11, 2015 2:51 pm, edited 1 time in total.
mathjak107 wrote:
of course i agree about that fact . but what i disagree with is cherry picking time frames to make the pp compare better to a more aggressive model by singling in the worst period . because while you could pull out the 2000-2015 time frame to compare the big factor is up to 2000 we had one of the greatest stock bull runs ever , with 17 years of almost 14% cagr .
in the end forget these charts . all that matters is what you do and if you are happy .
The only reason that we pulled the 15 year data was because you presented your 15 year returns as if to show how much better your strategy was than the PP, and yet the PP would have provided you with better returns over that same period.
In general, the PP will give you lower returns and lower volatility than more aggressive allocations, and that's what the PP investor wants--less volatility along with consistently positive real returns. Yes, we are turtle jockeys. That's the kind of ride we like.
Q: “Do you have funny shaped balloons?”
A: “Not unless round is funny.”
you know i agree with that . capital preservation is certainly a good thing .
my only objection is when the charts are created to show how the pp is right up there during only select time frames vs more conventional portfolio's . my example was that i did a lot better than the s&p 500 did the last 15 years as the s&p 500 is only one fund and one segment of the market .
so my point using just an s&p 500 fund the last 15 years would not be representative of what a fully integrated portfolio did with midcaps and small caps with enough weighting so they were not dominated totally by the s&p 500 like a total market fund is ..
it was not a comparison to the pp since it was one of the most sluggish 15 year periods we had . especially since the 15 years prior were some of the best ever for a conventional portfolio so regression to the mean says it has to give back at some point .
mathjak107 wrote:my example was that i did a lot better than the s&p 500 did the last 15 years as the s&p 500 is only one fund and one segment of the market .
So your suggestion is that everybody simply needs to be as lucky as you were?
not at all , what everyone needs to do is just watch their own performance and stop trying to go by what was , or could have been .
if you are happy with it , then that is your benchmark . not the fact you can pull out times that came and went and feel good about them . do i think i will ever see 14% a year ffor so long ? oof course not , in fact right now i see single digit gains .
so i watch the portfolio , i watch the bigger picture and i nudge it as we go along .
mathjak107 wrote:
Buy low and sell high has lost more money for investors than any other mantra....
On the other hand buy high and sell higher has made more money than anything else.
Well, MJ, you will have a great future in your new career endorsing whichever brand of crystal ball you use to come up with your latest "guaranteed miracle forecast" for... tomorrow, but no longer? How about the Joe Granville model? As I recall, Joe was so confident of his forecasting prowess that he predicted a date for the next Big One earthquake, which he said would flatten Los Angeles. (He made that prediction decades ago, by the way.)
no crystal ball needed , they are just nothing special funds both equity's and bonds . at times they may contain reits and commodity's . been 30 years now and never needed a crystal ball .
you do realize there are millions of successful investors who use conventional allocations and do just fine self included .
see this is the problem i have with many pp users who get it in their head that their way is the only way and everything else is speculating . .
fine tuning different types of diversified funds that better fit the time is hardly speculating . the reality is that even if the weighting was off a bit it still doesn't matter much in the long term scheme of things . so as an example i would not use fidelity multinational and export when the dollar is strong but it was a great fund when the dollar was weak . i would swap out some total bond fund for the limited term bond fund now , there are times funds are taken over by better managers , etc . , that is hardly joe granville stuff .
Last edited by mathjak107 on Fri Sep 11, 2015 5:58 pm, edited 1 time in total.
mathjak107 wrote:
fine tuning different types of diversified funds that better fit the time is hardly speculating . the reality is that even if the weighting was off a bit it still doesn't matter much in the long term scheme of things . so as an example i would not use fidelity multinational and export when the dollar is strong but it was a great fund when the dollar was weak . i would swap out some total bond fund for the limited term bond fund now , there are times funds are taken over by better managers , etc . , that is hardly joe granville stuff .
Another way to put this is that you are adjusting your asset allocation according to what you project will do the best in the near future, and extrapolating which trends appear sufficiently durable that that you believe can continue to make money off them for a while longer, and which trends are nearly played out such that they are no longer going to do well. You are not taking an agnostic view; you are using your intuition and experience to forecast what will make more money based on conditions in the present and near future.
In other words, speculating. …Unless you have a very different definition of the term!
Human behavior is economic behavior. The particulars may vary, but competition for limited resources remains a constant.
- CEO Nwabudike Morgan
You mean like throwing good money after bad year after year speculating on gold that some event will make it go up and hopefully over the next 40 years do better than a t-bill like the last 40 failed to do ?
I mean call a spade a spade. If you want to call adjusting a portfolio slightly with different types of funds ,holy cow what do you call this .
Yeah i know you call it insurance that way you don't have to acknowledge the fact you have a lot of money riding on a speculation in gold.
Last edited by mathjak107 on Fri Sep 11, 2015 7:06 pm, edited 1 time in total.
mathjak107 wrote:
You mean like throwing good money after bad year after year speculating on gold that some event will make it go up and hopefully over the next 40 years do better than a t-bill like the last 40 failed to do ?
I mean call a spade a spade. If you want to call adjusting a portfolio slightly with different types of funds ,holy cow what do you call this .
Yeah i know you call it insurance that way you don't have to acknowledge the fact you have a lot of money riding on a speculation in gold.
PP investors don't speculate in gold. They just hold it and buy or sell according to the PP rebalancing guidelines.
Even during the 1982-2000 bear market for gold, there were years when it was the best performer in the portfolio, and it helped smooth out the poor performance of the other assets in those years.
Gold is just a tool; it's not a religion.
Q: “Do you have funny shaped balloons?”
A: “Not unless round is funny.”
As MT just said, it is the component volatility in gold that is used, and the rebalancing takes advantage (longer term) of that.
For my investing career, starting in 1989, if I were in the PP following the 35/15 rebalancing bands, I would have rebalanced 7 times in 27 years:
2 times because T-bills hit the 35% mark
2 times because S&P hit the 35% mark
2 times because gold hit the 35% mark
1 time because gold hit the 15% mark
So no one is letting it ride on gold. As long as rebalancing is done on some consistent basis, over time the peaks and valleys in certain components get transferred from/to the others.
It's not like all PPers invested in gold at $1900 and are screwed because it has been going down forever. Increases in gold were effectively passed to other components during rebalancing.
Of course I would rather see an upslope on all components, but if gold hits 15% I'll have no problem allocating others to bring it back up. Haven't decided if I will rebalance annually or 35/15 though.
mathjak107 wrote:
You mean like throwing good money after bad year after year speculating on gold that some event will make it go up and hopefully over the next 40 years do better than a t-bill like the last 40 failed to do ?
I mean call a spade a spade. If you want to call adjusting a portfolio slightly with different types of funds ,holy cow what do you call this .
Yeah i know you call it insurance that way you don't have to acknowledge the fact you have a lot of money riding on a speculation in gold.
When you are a pro at investing, why do you need a fund manager at all? Just costs you extra money. Btw. momentum investing only works until it doesn`t and when it fails, it fails big time. You don`t want to bet your whole portfolio on that one strategy.
so putting more and more money as it falls in to what has been the worst investment in history is not speculation even though you are waiting for some unique event to make it go up which it has not done so yet . but weighting a portfolio towards lower rates when the fed tells you this is what it is doing or the dollar strengthening is speculating .
i think you guys need to take a step back and realize you have more danger and weight in that gold than anything i have ever done weighting a portfolio for what the economic conditions warrant .
because you disguise the fact by claiming you are not betting on a thing by the very nature you have money in an investment that has been historically so poor and undependable as far as what it reacts to you are speculating on it .
you can't call what my portfolio strategy has been for 30 years speculating without calling this investment in gold even more speculative . my weighting has never cost me more than a percent or two when wrong not 40-50% of my money , certainly no where near the damage gold has done .
Last edited by mathjak107 on Sat Sep 12, 2015 3:27 am, edited 1 time in total.
mathjak107 wrote:
so putting more and more money as it falls in to what has been the worst investment in history is not speculation even though you are waiting for some unique event to make it go up which it has not done so yet . but weighting a portfolio towards lower rates when the fed tells you this is what it is doing or the dollar strengthening is speculating .
i think you guys need to take a step back and realize you have more danger and weight in that gold than anything i have ever done weighting a portfolio for what the economic conditions warrant .
You are offering a criticism of one asset in the PP without a lot of substance to your criticism beyond the asset had an 18 year bear market.
If you want to criticize the structure of the PP, do that, but singling out one PP asset and saying it's a foolish asset to hold tells us nothing about whether the overall portfolio is a good allocation method.
I could argue that LT treasuries are an even riskier asset to hold than gold, but it would be a meaningless argument in the context of the PP because the PP isn't depending on LT treasuries doing well for the overall portfolio to perform well.
I know you believe that the three volatile assets have nowhere to go but down (except equities maybe), but that's just your belief, and our beliefs about a volatile asset are always speculative.
People always think one or two of the PP's volatile assets are dumb investment (usually gold and LT treasuries), but owning an asset when people think it's dumb is often the best time to own it, even if it doesn't look that way at the time.
Q: “Do you have funny shaped balloons?”
A: “Not unless round is funny.”
i am only criticizing it because of the fact of what was said to me about speculating because of a slight tilt in a portfolio which in itself causes no harm but has seen a good amount of added value over the decades added . but yet when it comes to the pp any actions are never speculative in nature even when they certainly are ..i didn't say it was foolish to hold the gold i said whether you like it or not that was speculating
kind of a case of the emperors new clothes . in effect you have lots of money riding on the fact an event may or may not ever happen so you want to be there if it does . just by definition having money allocated to something that may never happen that money is committed to a speculation . . which by the way does far more harm to the portfolio's performance than a slight weighting in an already diversified fund .
i think those pp users that call what i do speculating need to take a hard look at their own strategy before casting stones . just by nature of betting on the long shot with gold or the underdog you are speculating on that outcome far more than i am on mine . . or are you not speculating on interest rates taking a huge gamble with that part of your money as to which way bond rates go .
while you call it a strategy you are really pre-buying before something may play out possibly wasting money for years . my strategy is at least wait for some of the more concrete signs of it being there .
as Bernstein says about the pp the PP' attempts to insure equally against economic conditions that are anything but equally likely to occur.
could i give up some of the initial gains ? sure i could but i likely made way more by not getting in as part of my strategy and having my money doing nothing for years or decades that wasn't done far better with a another asset .
the proof is in the pudding as they say since the strategy which i use has grown 3x the balance over my investing lifetime than the pp although with more volatility , but so what , if we are talking losing money from the risk of speculating the pp was the loser over many time frames , to the point even conservative wellesly beat the pants off it the last 30 years .. but volatility and loss from speculation are two different things . volatility is just riding the market's natural cycles . it does not mean more risk
investing in cash instruments has low volatility but to a retirement it is the highest risk as an example since it has failed the most time frames ..
the point is while you may not think so the pp is a bigger speculation on more remote events playing out than what i do . because if they don't large chunks of money are dead in the water for quite a long time .
so if you call what i do speculative then what you do is far more speculative because not only do you run the risk of having money in an asset class that may not respond but at the expense of not having it in a better choice of asset class .
the fact you created a low volatility range for your speculation does not make it better or more rewarding financially it may only have smaller swings and a smaller return .. .
equal dollars placed on not equal outcomes is weighting , like it or not .
Last edited by mathjak107 on Sat Sep 12, 2015 8:00 am, edited 1 time in total.
All we're doing is quibbling over terms, though. I'm simply doing is using Harry Brown's own definitions of the words: investing is accepting the market return of an asset through thick and through thin; speculating is trying to beat the market return of an asset through any kind of strategy that involves timing, tilting, leverage, selective purchasing, etc.
According to these definitions, buying stocks is investing, and speculating is when you buy stocks when valuations are low, or when you predict that valuations can go still higher, or when you switch in and out of different classes of stocks according to the valuations of each, or when you pick individual stocks that you believe will beat market indices, etc. Buying gold is investing; speculating is when you buy gold according to interest rates, inflation rates, world demographics, etc. Buying 30 year treasury bonds is investing; speculating is when you buy 30 year treasury bonds when you perceive that interest rates are high and bound to go lower.
Your entire premise seems to be, "investing is stupid; speculation is smart and can make you more money." And, you may be right! It certainly works for some people. There it nothing wrong with speculating. But, like all higher-risk-higher-reward strategies, it's easy for the winners to say that everyone should follow in their footsteps, ignoring the losers who, for their trouble, came out worse than those who chose simpler, lower-risk-lower-return strategies.
But telling everyone that they ought to be speculating instead of investing strikes me as akin to trying to tell everyone that they ought to own their own small business because working for a paycheck is stupid and won't make you a multi-millionaire. Maybe so, but such advice ignores the very important reality that small business ownership requires a particular set of temperaments and talents that not everyone possesses. So too with your own advice. You're preaching about the value of buying a $6,000 Nikon D4S to a bunch of amateur photographers perfectly content with their smartphone cameras.
Human behavior is economic behavior. The particulars may vary, but competition for limited resources remains a constant.
- CEO Nwabudike Morgan
i think the problem is i consider swapping out different type funds at different times no more speculating than you in the pp weighting money wise equally when chances of outcomes are quite unequal . that my friend is the definition of weighting .. even if i am wrong the odds are i may not beat market returns but get market returns . which is why at this point 30 years later the growth model from fidelity insight -fidelity monitor has beaten the market by almost 500k on a 100k investment .
so i so don't consider that speculating but investing the same as anyone else who invests and does not speculate .
Last edited by mathjak107 on Sat Sep 12, 2015 9:10 am, edited 1 time in total.
…Unless you have a very different definition of the term!