I don't think you would be saying that living through that 108 week drawdown. DCA is the best way to deal with sequence of returns risk, epsecially the dismal 2013 and 2015.Kbg wrote: With a PP I'm not sure dollar cost averaging or spacing out purchases makes a whole lot of sense...it is a pretty good bet one of the three assets will oinking and another flying...remember the assets are meaningless, it is the portfolio construction that matters.
PP humming along again
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- MachineGhost
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Re: PP humming along again
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes
Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet. I should not be considered as legally permitted to render such advice!
Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet. I should not be considered as legally permitted to render such advice!
Re: PP humming along again
Come on MG you KNOW that's a bad argument to make unless you think you can predict the future. I'll make you a pride of I told you so bet that if we make the bet starting Jan 16 and go through Dec 17 that DCA will be the exact wrong thing to have done.MachineGhost wrote:I don't think you would be saying that living through that 108 week drawdown. DCA is the best way to deal with sequence of returns risk, epsecially the dismal 2013 and 2015.Kbg wrote: With a PP I'm not sure dollar cost averaging or spacing out purchases makes a whole lot of sense...it is a pretty good bet one of the three assets will oinking and another flying...remember the assets are meaningless, it is the portfolio construction that matters.
The efficacy of DCA is entirely time series dependent and the ONLY reason it is superior is because it lowers average price. It is by no means a good risk mitigation strategy. I can see it for a single asset to avoid sequence risk (which will work ONLY if price goes down), but not for a PP.
Either you buy into HBs premise that the future can't be predicted or you don't. You saying DCA is a good thing is the same as you predicting the PP is going down and on an annual returns basis is a very poor bet to make.
Lest I go all theoretical on us, if I had a very large chunk of money I was going to roll into a PP I would spread it out over year, but using PP historical returns this most likely will prove to not be beneficial to the bottom line.
Re: PP humming along again
I'm up 8.39% YTD and extremely happy about that. S&P 500 up only 2.78%. Happy I never wavered (not that I really considered it).
Re: PP humming along again
Actually, one of the data mining hobbyists with access to daily data (Tyler?) could quantify how likely this "most likely" is and what the range of the long term penalty might be.Kbg wrote: Lest I go all theoretical on us, if I had a very large chunk of money I was going to roll into a PP I would spread it out over year, but using PP historical returns this most likely will prove to not be beneficial to the bottom line.
Just guessing, I'd expect on a daily basis going all in ends up better something like 70-80% of the time and, even if you lose, the long term loss (measured against a 12 monthly DCA where you keep the uninvested portion in cash - which earns more than nothing) is never more than about 10%.
- MachineGhost
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Re: PP humming along again
You're worried about the returns. I'm worried about the risk. The risk is the PP has had 108-week in a row of of being underwater. That is a fact. DCA is a way to mitigate that risk if it reappears. The returns will more than take care of themselves -- that's why we invest in the PP after all, right?Kbg wrote: Either you buy into HBs premise that the future can't be predicted or you don't. You saying DCA is a good thing is the same as you predicting the PP is going down and on an annual returns basis is a very poor bet to make.
But if it's "market timing", then investing a lump-sum all at once in the PP at this juncture seems riskier than normal because you're relying on several things continuing to happen: extremely overvalued stocks continue to go up, extremely overvalued bonds continue to go up and gold is not going to fall victim to the deflationary forces that would finally consume us all if either/both of the first two finally mean-revert and because the central banks QEternity has finally lost their magical and illusionary power on the masses. The context of that 108-week drawdown isn't so dissimilar to where the PP is at the moment.
A year or 108 weeks, its all the same DCA.Lest I go all theoretical on us, if I had a very large chunk of money I was going to roll into a PP I would spread it out over year, but using PP historical returns this most likely will prove to not be beneficial to the bottom line.
108-weeks might actually be too long if you're new and don't have sufficient gold exposure. I do already so I'm less worried about it.
Last edited by MachineGhost on Wed Apr 20, 2016 1:39 pm, edited 1 time in total.
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes
Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet. I should not be considered as legally permitted to render such advice!
Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet. I should not be considered as legally permitted to render such advice!
- MachineGhost
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Re: PP humming along again
Let's get this debate settled!!! Maths has a way of being objectively and factually truthful.rickb wrote: Just guessing, I'd expect on a daily basis going all in ends up better something like 70-80% of the time and, even if you lose, the long term loss (measured against a 12 monthly DCA where you keep the uninvested portion in cash - which earns more than nothing) is never more than about 10%.
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes
Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet. I should not be considered as legally permitted to render such advice!
Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet. I should not be considered as legally permitted to render such advice!
- dualstow
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Re: PP humming along again
Off-topic note: for the longest time, MG, I thought you were American. The avatar, for starters. But, you just have to have grown up with a British education. "Maths." "Colo(u)red people." Right?
- MachineGhost
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Re: PP humming along again
dualstow wrote: Off-topic note: for the longest time, MG, I thought you were American. The avatar, for starters. But, you just have to have grown up with a British education. "Maths." "Colo(u)red people." Right?
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes
Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet. I should not be considered as legally permitted to render such advice!
Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet. I should not be considered as legally permitted to render such advice!
- MachineGhost
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Re: PP humming along again
Okay, I went to boarding school in England for a few years...dualstow wrote: No?
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes
Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet. I should not be considered as legally permitted to render such advice!
Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet. I should not be considered as legally permitted to render such advice!
Re: PP humming along again
Excellent call, Dualstow! I caught the "Maths" thing too but I thought MG was just putting on airs (or that maybe he was from India!).MachineGhost wrote:Okay, I went to boarding school in England for a few years...dualstow wrote: No?
- dualstow
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Re: PP humming along again
Or Singapore.
Re: PP humming along again
My net worth is at an all-time high at the moment and has recently reached a significant milestone. But seeing how this portfolio gyrates over time, I'm expecting a plunge any day now.
Oh, such a beautiful tarmac. Look how smooth it is. See how smooth it is? And it's warm, and it's hard. - Charley Boorman Long Way Round
- dualstow
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Re: PP humming along again
A plunge in the portfolio as a whole, or just one asset?
Re: PP humming along again
Low overall volatility is why most of use the PP so I guess you would have to define what you mean by "gyrate". If you are talking about daily fluctuations then I think it is pointless to even pay attention to those.ZedThou wrote: My net worth is at an all-time high at the moment and has recently reached a significant milestone. But seeing how this portfolio gyrates over time, I'm expecting a plunge any day now.
I'm getting ready to retire next year and am also hitting all-time highs so I hope your post doesn't turn into a self-fulfilling prophecy.
Re: PP humming along again
I'm guessing he means gyrate like a gyroscope. A gyroscope in which you invest. Dot comcurlew wrote:Low overall volatility is why most of use the PP so I guess you would have to define what you mean by "gyrate". If you are talking about daily fluctuations then I think it is pointless to even pay attention to those.ZedThou wrote: My net worth is at an all-time high at the moment and has recently reached a significant milestone. But seeing how this portfolio gyrates over time, I'm expecting a plunge any day now.
I'm getting ready to retire next year and am also hitting all-time highs so I hope your post doesn't turn into a self-fulfilling prophecy.
Re: PP humming along again
Perhaps oscillate would've been a better word. Anyway, it's just my nature to be pessimistic. It certainly doesn't mean anything other than that I'm a nervous nelly.
Oh, such a beautiful tarmac. Look how smooth it is. See how smooth it is? And it's warm, and it's hard. - Charley Boorman Long Way Round
- buddtholomew
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Re: PP humming along again
There was a swoon in the portfolio around the time of this posting, but the assets have recovered nicely to keep the momentum intact.
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.