PP is once again positive YTD

[koekebakker]

Well, that's a different topic  .
They'll get converted to the new (or old) currencies.
It's hard to predict what will happen, interest rates between the former euro-countries could diverge greatly in such a crisis.
That risk seems pretty remote though. The Greek crisis clearly showed how far politicians are willing to go to protect the euro.
But even if the euro breaks up it doesn't have to mean massive defaults. It might even mean renewed optimism and better growth prospects.

[dutchtraffic]

Well, that's a different topic  .
They'll get converted to the new (or old) currencies.
It's hard to predict what will happen, interest rates between the former euro-countries could diverge greatly in such a crisis.
That risk seems pretty remote though. The Greek crisis clearly showed how far politicians are willing to go to protect the euro.
But even if the euro breaks up it doesn't have to mean massive defaults. It might even mean renewed optimism and better growth prospects.

Except your bonds would be in euros and not in the massively appreciated dmarks, oops!
If you think Germany or any other country is going to convert your euro bonds 1on1 to their new currency, you might want to think again.

You have a slightly higher chance for that if you buy only local bonds, but then you must live in one of the 'solid' countries, and there aren't exactly alot of those..

[MachineGhost]

Germany seemed pretty solid until Merkel adopted the open borders policy...

[koekebakker]

Germany seemed pretty solid until Merkel adopted the open borders policy...

Hopelessly off topic but why would a couple of million refugees break the German economy?
Most refugees are young or of working age and Germany's population is aging and shrinking, so you could just as easily argue that Germany needs those refugees.

[lordmetroid]

Because immigrant has to restart their lives with zero social capital. In Sweden only about 50% of immigrants are employed after 7 years because we live in a knowledge economy. Without any social network, unable to speak the language, the understanding and adaptation to the local social norms and culture and a high education you simply isn't very valuable to a potential employee who will only choose you the statistically less dependable immigrant as a last resort. Even with lower wages in a knowledge economy the team is so important that it doesn't matter. If you hire someone who is disruptive the whole team will fail and your wage even if it was at zero will not compensate for that.

[Pointedstick]

Exactly. The "working-age male" is basically an obsolete concept, a relic from the days when physical skills and a strong body were key parts of your employability. Those sorts of jobs are rapidly disappearing from advanced countries, either because they're being automated by machines, or outsourced to places with lower wages. Those jobs that remain tend not to be very well-paying, so people who work them will probably need substantial public assistance. I can't speak for Germany but this is the case in the USA. Another danger is that since such jobs will probably not be very intellectually enriching, new immigrants working them may start to feel bitter that the prosperity they expected is just a lie reserved for natives.

Immigration is just hard to get right. I'm a member of a multinational, immigrant-heavy team at work and pretty much the only reason it functions is because the non-Americans are nearly all (regardless of ethnic background) Western Europeans or Canadians who have been carefully selected for their high skill and cultural compatibility. All very elite, high skill people with perfect English. The few non-Europeans substantially grew up or were educated in Europe or the USA, so again there's that cultural similarity that's so crucial. They like the USA and do not feel like they've given up anything to work here; they can (and sometimes do) leave to go back home. If we were to have instead taken a bunch of low-skill people with shaky or non-existent English, no prior personal immersion in Western culture, and no home to go back to because it was a war zone, it would be a catastrophe.

[Cortopassi]

And again not positive for the year as every holding gets taken to the woodshed...

God, this whole Fed bullcrap is really old.

[buddtholomew]

And again not positive for the year as every holding gets taken to the woodshed...

God, this whole Fed bullcrap is really old.

Nothing makes sense. Q3 GDP 1.5% so sell your bonds everyone and keep buying stocks. Gold is always useless. If equities don't end up in the green today I will shave my head.

[dualstow]

If equities don't end up in the green today I will shave my head.

I'm getting there, too, but more about thinning hair than equities. 
I'm actually ok with the pp so far.

[mathjak107]

so far the models i post every friday are nicely positive .  i will update my thread tomorrow as to any changes and the ending numbers . funds like fidelity contra and blue chip growth are up about 7- 8% ytd  as of last night .  intermediate term and short term bond funds are  still up 1 to 2 %

[Jack Jones]

so far the models i post every friday are nicely positive .  i will update my thread tomorrow as to any changes and the ending numbers . funds like fidelity contra and blue chip growth are up about 7- 8% ytd  as of last night .  intermediate term and short term bond funds are  still up 1 to 2 %

Wrong thread.

[mathjak107]

for a while gold looked pretty good , like something was going to start . i had my fingers crossed for you guys  , i saw the other day on the pp model i track it actually made back  the 45k it was down and was up 250 bucks . now it shows down 10k again as of this moment .  my model had been down at one point more than the 45k  the pp was but as of this moment it is up  57k ,.

this has been a tough year for all assets .

[goodasgold]

Today is shaping up to be the WORST day I can ever remember for the PP. 

It's a good thing I believe in focusing on long-term results, but still... 

[Cortopassi]

Yep, thanks for the crossing fingers..but I've drunk the PP Koolaid and can't see the error of my ways...I've been blindly following the PP like a lemming...

Whether intentional or not, you do realize your posts are very good at sticking it to people who follow the PP.

Sure, the Contra is up 7%, blue chip is not up 7-8%, more like 1.xx%, but regardless, as it is, your assertion that stocks always pop back faster is holding pretty true right now, and has for the past 6 years.

I'm not particularly looking for it to end because 25% of my net worth is in broad stock market assets, but I tell you, if the latest market drop and the latest recovery on virtually no good economic news is not smoke and mirrors, I don't know what is.

Stocks go up when the Fed doesn't raise rates, because of more cheap money.  Stocks go up because the Fed might raise rates because the economy is doing better... it currently seems to be a no-lose, or only lose for a few weeks, situation for stocks. 

Will this end badly?  Probably.  In 3 weeks, 3 months or 3 years?  Well, that's the million dollar question. 

All I do know is that for me, all these discussions have gotten old.  I've got friends who've been predicting the end of the US for 6 years.  Others who are oblivious to it all.  I am somewhere in the middle.  Which is pretty much where the PP lives.

[dualstow]

Whether intentional or not, you do realize your posts are very good at sticking it to people who follow the PP.

I agree. MJ, a lot of the posts are mildly passive aggressive and mildly condescending, but it probably is unintentional.

[dragoncar]

If equities don't end up in the green today I will shave my head.

I'm getting there, too, but more about thinning hair than equities. 
I'm actually ok with the pp so far.

Move all your money to Bic

[dualstow]

The ballpoint pen maker?

[MachineGhost]

this has been a tough year for all assets .

Hell, it's been a tough 5 years.  Capital has has concentrated into U.S. equities and traditional correlations among diversified assets have broken down.  It's the QEternity legacy.  It'll end eventually.

With the JOBS Act Part III being implemented as early as today and the rest of the world awash in USD-denominated debt that will blow up when the Fed finally raises rates, this third U.S. equity bubble isn't looking to end anytime soon.

[mathjak107]

i had a great 5 years thankfully . not a bad thing to have  right before retiring .  now there is a cushion for the plunge  ha ha ha

[mathjak107]

Yep, thanks for the crossing fingers..but I've drunk the PP Koolaid and can't see the error of my ways...I've been blindly following the PP like a lemming...

Whether intentional or not, you do realize your posts are very good at sticking it to people who follow the PP.

Sure, the Contra is up 7%, blue chip is not up 7-8%, more like 1.xx%, but regardless, as it is, your assertion that stocks always pop back faster is holding pretty true right now, and has for the past 6 years.

I'm not particularly looking for it to end because 25% of my net worth is in broad stock market assets, but I tell you, if the latest market drop and the latest recovery on virtually no good economic news is not smoke and mirrors, I don't know what is.

Stocks go up when the Fed doesn't raise rates, because of more cheap money.  Stocks go up because the Fed might raise rates because the economy is doing better... it currently seems to be a no-lose, or only lose for a few weeks, situation for stocks. 

Will this end badly?  Probably.  In 3 weeks, 3 months or 3 years?  Well, that's the million dollar question. 

All I do know is that for me, all these discussions have gotten old.  I've got friends who've been predicting the end of the US for 6 years.  Others who are oblivious to it all.  I am somewhere in the middle.  Which is pretty much where the PP lives.

but think about it , all the crap in the world is likely already reflected in the markets numbers because on an inflation adjusted basis large caps are barely up the last 15 years . so there is an awful lot already built in to  where we are

[dragoncar]

The ballpoint pen maker?

Well, they are a diversified company:

[barrett]

Today is shaping up to be the WORST day I can ever remember for the PP. 

It wasn't pretty but we've had already four days YTD where the PP was down more than 1%, including two in a row August 25 & 25. Looks like today was down about .7% or so.

[Ugly_Bird]

The ballpoint pen maker?

Well, they are a diversified compan?

http://www.bicsportwindsurf.com

[rocketdog]

Not only that, for the moment it's beating a 100% total stock market index portfolio and a conservative 55% bond Boglehead portfolio. All assets but stocks are once again positive YTD. Could turn around tomorrow, but it's at least a good reminder of how tough a year this has been for investments.

Um... no.  I would like to know what you're basing those results on?  I monitor 3 different iterations of a 4x25 PP on Yahoo! Finance that I set up on 1/1 every year based on the opening price on the first trading day of the year.  I do not rebalance, just to see what happens as the year unfolds.  None of my sample portfolios has been positive for at least 6 months.  Here they are as of 10/31:



Then I thought maybe the PP was briefly positive on the date you posted (10/14), so I went back and checked the closing prices on that day and calculated the PP returns YTD at that point, and the results were even worse:



As you can see, only cash and gold were positive on the date you posted, whereas today (10/31) only cash and stocks are positive on the year.  So again, how did you come up with positive numbers for a PP based on YTD numbers as of 10/14?

[koekebakker]

Exactly. The "working-age male" is basically an obsolete concept, a relic from the days when physical skills and a strong body were key parts of your employability. Those sorts of jobs are rapidly disappearing from advanced countries, either because they're being automated by machines, or outsourced to places with lower wages. Those jobs that remain tend not to be very well-paying, so people who work them will probably need substantial public assistance. I can't speak for Germany but this is the case in the USA. Another danger is that since such jobs will probably not be very intellectually enriching, new immigrants working them may start to feel bitter that the prosperity they expected is just a lie reserved for natives.

Immigration is just hard to get right. I'm a member of a multinational, immigrant-heavy team at work and pretty much the only reason it functions is because the non-Americans are nearly all (regardless of ethnic background) Western Europeans or Canadians who have been carefully selected for their high skill and cultural compatibility. All very elite, high skill people with perfect English. The few non-Europeans substantially grew up or were educated in Europe or the USA, so again there's that cultural similarity that's so crucial. They like the USA and do not feel like they've given up anything to work here; they can (and sometimes do) leave to go back home. If we were to have instead taken a bunch of low-skill people with shaky or non-existent English, no prior personal immersion in Western culture, and no home to go back to because it was a war zone, it would be a catastrophe.

For some reason Europe is different from the US. The US had to deal with millions of uneducated Mexicans and it didn't make a difference at all. But for some reason a couple of million Syrians will basically end the European Union. I don't see why. Europe has always benefited from immigration and I see no reason why this time its different. Europe needs immigrants. Even if only half of them finds a job it will be positive as only about 50% of europeans have jobs anyway...  Short term there will be problems but long-term there's a good chance the current crisis will turn out to be a blessing.