Is there a more perfect "bunker" in light of Coronovirus?

[Kevin K.]

There's been a bit of discussion about the simultaneous tanking of long-term Treasuries, stocks and gold last week but nothing extensive. From what I can tell the reasons for this relatively rare situation are complex and include insufficient liquidity in the Treasury market, massive redemptions from funds being forced to sell every type of asset class and probably a lot of other things beyond my pay grade to understand.

This article makes a pretty compelling case that we're just in the very early stages of what could be a a minimum a couple of years of an economic downturn that may well be more severe and global than anything anyone alive has experienced:

https://www.independent.co.uk/voices/co ... 94891.html

Personally I've been running a pure Golden Butterfly for the past few years while I've put an elderly family member who isn't comfortable with gold in a variation of the Larry Swedroe portfolio (70% intermediate (5 year) Treasuries, 10% each EM, SCV and TSM). It's been interesting to see the LP experiencing half the drawdown of the GB over the past couple of weeks, but I guess I'm wondering what short of going to 100% cash is really the most defensive strategy for riding out what's happening now for folks like myself who are retired and not in a position to ride out a long-term major drawdown.

[ppnewbie]

I was thinking of dumping the entire portion of my GB stocks into cash. I am very concerned about a global depression. And was thinking that rather than watch my stock portion sink horribly I could put it in cash and buy back in on the next rebalance. I would view it as insurance basically paying the cost of any short term run up on stocks.

[Hal]

Good Morning Kevin,

While not being able to answer your question directly (as I am asking myself the same question) , you may wish to revisit the fundamentals as per the link.

https://web.archive.org/web/20120104214 ... gspot.com/

Also, if you are talking >500K USD, perhaps consider Tony Dedens Edelweiss Holdings.

https://edelweissjournal.com

You are thinking one step ahead of the herd who are currently buying a years worth of toilet paper

Hal

[dualstow]

I was thinking of dumping the entire portion of my GB stocks into cash. I am very concerned about a global depression. And was thinking that rather than watch my stock portion sink horribly I could put it in cash and buy back in on the next rebalance. I would view it as insurance basically paying the cost of any short term run up on stocks.

Anything’s possible, but I remember well Benoit Mandelbrot and his protege Roubini in 2009 talking about how terrible things were going to get. Mandelbrot said things were not just going to be as bad as this or that, but the worst thing we’ve seen since the American Revolution. (Yes, said revolution was good, but it was also a looong time ago. I think that’s what he meant).
“I hope I’m wrong”, he said.
He was. We’ve had an amazing recovery.

Anything’s possible, so I will remain agnostic.
Full disclosure: I am not in retirement/drawdown phase.

[pmward]

I would honestly say a short U shaped recovery is likely, and a V shaped recovery is possible. You would not catch me selling stocks at this point... matter of fact I want to buy more.

[Smith1776]

I missed 2008 in an investing sense. And this is starting to “smell” a lot like it.

I agree with dualstow that simply rebalancing and trusting your I̶r̶o̶n̶ ̶m̶a̶n̶ ̶s̶u̶i̶t̶ pp/gb allocation to protect you is the way to go. If you were 60/40 I’d say all bets were off.

[mathjak107]

The problem getting out of stocks is getting in ....the biggest run ups happen way before anything changed ..

By the time you decide it is not a suckers rally you missed the biggest moves or are no higher than you got out ...

Hell if we can miss the worst days to own stocks we would beat buffets record ...but not only can’t we miss the worst days we can’t even miss the worst time frames .....

But not missing the relatively few great days we have which are like 3 a year on average is easy ..just stay invested

University of Michigan Professor H. Nejat Seyhun analyzed 7,802 trading days for the 31 years from 1963 to 1993 and concluded that just 90 days generated 95% of all the years’ market gains — an average of just three days per year

[mathjak107]

There's been a bit of discussion about the simultaneous tanking of long-term Treasuries, stocks and gold last week but nothing extensive. From what I can tell the reasons for this relatively rare situation are complex and include insufficient liquidity in the Treasury market, massive redemptions from funds being forced to sell every type of asset class and probably a lot of other things beyond my pay grade to understand.

This article makes a pretty compelling case that we're just in the very early stages of what could be a a minimum a couple of years of an economic downturn that may well be more severe and global than anything anyone alive has experienced:

https://www.independent.co.uk/voices/co ... 94891.html

Personally I've been running a pure Golden Butterfly for the past few years while I've put an elderly family member who isn't comfortable with gold in a variation of the Larry Swedroe portfolio (70% intermediate (5 year) Treasuries, 10% each EM, SCV and TSM). It's been interesting to see the LP experiencing half the drawdown of the GB over the past couple of weeks, but I guess I'm wondering what short of going to 100% cash is really the most defensive strategy for riding out what's happening now for folks like myself who are retired and not in a position to ride out a long-term major drawdown.

I won’t put a lot of money in the pp at this point ....we saw the same drops in gold ,long term treasuries and equities last week and all for different reasons . I believe gold and long term treasuries are headed for a lot of pain once this fear pulls back and equities are at lower prices ....they already demonstrated wild moves down with the fear

With machine selling and in leveraging in all assets there is no safety .....while I couldn’t resist buying some Tlt and SQOL on Friday after a 8-9% fall last week I am hoping for a quick pop..

My own plan had me taking profits in more than half my bonds , just short term , intermediate and some high yield ....equities are at 25% and I have started adding little by little to the equities, eventually working on getting them back up to about 40% ......

[Kevin K.]

Some sage (and quite funny, provided you don't mind some wry black humor) commentary on the current situation from Jonathan Clements:

https://humbledollar.com/2020/03/grin-and-bear-it/

[dualstow]

Some sage (and quite funny, provided you don't mind some wry black humor) commentary on the current situation from Jonathan Clements:

https://humbledollar.com/2020/03/grin-and-bear-it/

Well said. Finally heard his voice in the bogleheads podcast last year.

[Smith1776]

dualstow, your sig reminds me of Tom Hanks' character Robert Langdon in the movie Inferno.

An underrated movie IMO.

[Kevin K.]

OK normally I avoid cross-posting between this forum and others but this is pretty irresistible. Real all the way through as it's the reference to the performance of Dalio's "All Weather" portfolio (which of course is very PP-esque) vs. his actively-managed fund that's the kicker.

https://www.bogleheads.org/forum/viewto ... 04d86b282a

[Kriegsspiel]

OK normally I avoid cross-posting between this forum and others but this is pretty irresistible. Real all the way through as it's the reference to the performance of Dalio's "All Weather" portfolio (which of course is very PP-esque) vs. his actively-managed fund that's the kicker.

https://www.bogleheads.org/forum/viewto ... 04d86b282a

In truth, Dalio, who helps oversee the $160 billion hedge fund, has been ringing alarm bells about what he has described as a market where investors are flush with cash because of monetary policy but haven’t been discerning about investment strategies.

Last November, he said the system is broken and warned that investors were “buying dreams rather than earnings and stocks.”

then

Back in January, he told CNBC “cash is trash,” on the sidelines of the World Economic Forum in Davos, Switzerland. His urging for investors to buy stocks echoed badly timed comments he made in 2018 that preceded another sharp tumble for stocks.

[Kevin K.]

And meanwhile the Fed cut interest rates to zero tonight (must've not had anything better to do on a Sunday) and the futures markets responded by indicating opening limit down.

What's the old curse about living in interesting times?

[drumminj]

I won’t put a lot of money in the pp at this point ....we saw the same drops in gold ,long term treasuries and equities last week and all for different reasons . I believe gold and long term treasuries are headed for a lot of pain once this fear pulls back and equities are at lower prices ....they already demonstrated wild moves down with the fear

With machine selling and in leveraging in all assets there is no safety .....while I couldn’t resist buying some Tlt and SQOL on Friday after a 8-9% fall last week I am hoping for a quick pop..

My own plan had me taking profits in more than half my bonds , just short term , intermediate and some high yield ....equities are at 25% and I have started adding little by little to the equities, eventually working on getting them back up to about 40% ......

Mathjak, I feel like it'd be a service to others for you to preface your posts by stating you're not a PP adherent, and actually an active trader, and as such your opinions may not be applicable.

Most folks here aren't looking to trade "pops" or small swings in the market. I assume most here are looking for a passive strategy.

[mathjak107]

correct ... my variable portfolio is the pp... i grab the gains when i can in gold and tlt as they are more like flash in the pains and the gains seem to only be there until they arent far to often .

but i do have my core portfolio ... but it has been dynamic for 33 years ...it changes slightly with the bigger picture .... my trading though is just fun money mostly