Stock scream room

Discussion of the Stock portion of the Permanent Portfolio

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drumminj
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Re: Stock scream room

Post by drumminj » Mon Jun 10, 2019 9:03 pm

Tortoise wrote:
Mon Jun 10, 2019 8:17 pm
But because I also bought bonds and gold to diversify, I'll sleep well tonight.
This is part of why I struggle with buying the lagging asset when contributing. Feels like betting on one asset vs buying another "share" in the portfolio.

May need to start contributing to cash and then buying all assets when I get enough to justify purchasing each...
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dualstow
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Re: Stock scream room

Post by dualstow » Tue Jun 11, 2019 7:07 am

I think Sophie did some backtesting that showed buying the lagging asset produced, well, a lagging total compared to the other methods.
The guy in the latest gold commercials pronounces it “goad.” They couldn’t find someone who pronounces the “L”?
I do identify with Fredo. My brother is the smart one.
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Re: Stock scream room

Post by pmward » Tue Jun 11, 2019 11:53 am

dualstow wrote:
Tue Jun 11, 2019 7:07 am
I think Sophie did some backtesting that showed buying the lagging asset produced, well, a lagging total compared to the other methods.
I would be curious to see the results of that. I've always wondered which was the best way to accumulate, but I'm not aware of any tools I can use to automate this so it would require either hand coding a tool or hand testing, nether of which I've had the motivation to do, haha.
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Tortoise
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Re: Stock scream room

Post by Tortoise » Tue Jun 11, 2019 12:51 pm

I remember Sophie’s backtest. However, I recall the difference in measured performance was not huge and might have been due simply to statistical variation within the historical data set. Even if the difference were real, there’s no guarantee it would persist going forward.

Whether you buy the lagging asset, buy equal amounts of all assets, or contribute to cash until you hit a rebalance band, the net effect is very similar. In all three cases, you’re effectively buying more of the cheaper assets and less of the pricier ones.
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dualstow
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Re: Stock scream room

Post by dualstow » Tue Jun 11, 2019 2:03 pm

pmward wrote:
Tue Jun 11, 2019 11:53 am
dualstow wrote:
Tue Jun 11, 2019 7:07 am
I think Sophie did some backtesting that showed buying the lagging asset produced, well, a lagging total compared to the other methods.
I would be curious to see the results of that. I've always wondered which was the best way to accumulate, but I'm not aware of any tools I can use to automate this so it would require either hand coding a tool or hand testing, nether of which I've had the motivation to do, haha.

I remembered wrong. Lagging asset method does well. Tortoise remembers right: not a huge difference between #1 and #2.
viewtopic.php?f=1&t=9393&p=169302#p169386

I was unable to find the original post, but the link above is Sophie's summary of her findings.

ADDED: here's a 2013 thread on the topic. viewtopic.php?f=1&t=4452
The guy in the latest gold commercials pronounces it “goad.” They couldn’t find someone who pronounces the “L”?
I do identify with Fredo. My brother is the smart one.
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Re: Stock scream room

Post by pmward » Tue Jun 11, 2019 3:33 pm

Thanks. I've been doing the buy the lowest asset plan, and looks like the difference is small enough to not warrant any real consideration of change.
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Re: Stock scream room

Post by sophie » Wed Jun 12, 2019 6:44 am

I think we ended up deciding that buying the lagging asset is a good strategy for taxable accounts because it avoids the tax costs of rebalancing. That did better than the cash accumulation method which is another way of accomplishing same.

The best performance came from distributing new contributions equally (or in accordance with target asset proportions), which is what you do in a 401K. We'd been talking about the hit you take from commissions especially for gold ETFs, so I was actually kind of surprised by the result. I didn't model the effects of taxes though.

Also, with the stock market gyrating up and down in response to Trump-isms, it's been pretty easy lately to time stock purchases to juice returns. I just got a 5% boost from a stock purchase thanks to the Mexico tariff affair. Normally I'd be not in favor of this sort of thing, but the sequence of events is so laughably predictable it's hard not to.
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Re: Stock scream room

Post by Kbg » Wed Jun 12, 2019 9:58 am

For taxable, I doubt anything would do better than buying the lagging asset (eg avoiding taxable events).

Similar to Sophie but with gold, I’ve been rebalancing at the current support resistance bands.
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Re: Stock scream room

Post by ochotona » Thu Jun 20, 2019 11:49 am

SPY total return is 18%, we're at the year-end targets many of the pundits set at the beginning of 2019, I think it just goes in a trading range or down, and I don't care to buy any more equities because bonds and gold are roaring.
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Re: Stock scream room

Post by pmward » Thu Jun 20, 2019 12:47 pm

I think we do have potential to go higher. However, it's clear we are looking at late cycle dynamics as it's the defensives that are driving the market higher right now, not the growth stocks. So it's not a question of whether it can go higher, it's for how much longer?
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Re: Stock scream room

Post by ochotona » Mon Jul 01, 2019 10:16 am

I thought bonds were going to get killed today with the stock melt-up. Apparently not. Bonds ain't buying the "everything is awesome" narrative.

Later... bonds are down!
Last edited by ochotona on Mon Jul 01, 2019 1:07 pm, edited 2 times in total.
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Re: Stock scream room

Post by dualstow » Mon Jul 01, 2019 10:25 am

ochotona wrote:
Mon Jul 01, 2019 10:16 am
I thought bonds were going to get killed today with the stock melt-up. Apparently not. Bonds ain't buying the "everything is awesome" narrative.
I never realized that a melt-up = a rise, but I just looked it up and it does. I guess it's just a weird back-formation from meltdown? I always erroneously took it as more melt than up, as in, "She's breaking up, Captain!"
The guy in the latest gold commercials pronounces it “goad.” They couldn’t find someone who pronounces the “L”?
I do identify with Fredo. My brother is the smart one.
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