Gyroscopic Investing

For me, the hope is that the PP avoids big losses and beats inflation by a decent amount. I have a big nest egg too, and the PP gives me a lot of peace of mind. Let's say a person has 10 million hard-earned dollars. Then imagine losing 4 or 5 million of them in a stock market downturn. You could say it's only temporary, ride it out and they will return. Yeah, that's pretty easy to say in abstract. But in real life, hoo boy. I'm down about 800K from the peak early this year. It's a little uncomfortable but I'm not panicking. My 10 year IRR is 6.5% as of today. And for that whole time I've split stocks between US and foreign, and that has cost me.

I will admit to dissonance when a normal stock portfolio beats the PP. It's only natural. The one thing I don't like to see is a negative year. As Budd I think pointed out, there have been more of them lately than advertised. But I think it's because cash has been worthless for several years. To me that is the biggest bug that I have uncovered.

2018 YTD performance:

4x25 PP: 1.9% loss, 5.0% volatility
60/40 All-world benchmark: 3.8% loss, 8.0% volatility

What’s not to like about the PP in the comparison above? Lower loss and lower volatility. I’ll take it!

As others have pointed out, it’ll be fun to watch the influx of new and old members flood into this forum the next time the stock market has a really bad year and the PP surprises the BH community by holding steady or even rising.

Oops, accidentally replied to my post when I meant to edit it. Looks like you can’t delete posts on this forum...

Nonsense, I delete like half my posts. There's a little 'x' in the top right corner of the post, beside the edit pencil.

I must say, after an absence from the forums for a while, I've quite enjoyed reading Budd's posts since coming back.

Budd's negativity towards the PP always forces me to reconsider my thinking and my position. I believe in one of the posts he mentioned groupthink. Budd has forced me to be introspective and really consider whether the PP is the best choice for me. And for me, I still believe it is.

Kriegsspiel wrote: ↑Sun Dec 09, 2018 11:59 am Nonsense, I delete like half my posts. There's a little 'x' in the top right corner of the post, beside the edit pencil.

Weird, on my new posts like this one I do see the ‘x’ delete-post button, but on my previous two posts I don’t. (I’m using the mobile version of the site, for what it’s worth.)

Probably expires.

Tortoise wrote: ↑Mon Dec 10, 2018 2:31 am

Kriegsspiel wrote: ↑Sun Dec 09, 2018 11:59 am Nonsense, I delete like half my posts. There's a little 'x' in the top right corner of the post, beside the edit pencil.

Weird, on my new posts like this one I do see the ‘x’ delete-post button, but on my previous two posts I don’t. (I’m using the mobile version of the site, for what it’s worth.)

My guess is it has to do with activity in the meantime. For example, you can always edit your posts, but if you do it after somebody else has seen it, then the system adds an "Edited on" message.

I bet you can delete posts up until somebody replies.

Had to post these. Yes, my portfolio is at its lowest YTD, dammit. But,

Above S&P return for the year:



and look at the 1 year returns:



For sure, budd and mathjak would say given more time, stocks will come back again and blow the pants off bonds and gold. Probably right. But how many heavy stock holders are watching a >15% downward price swing in only 2.5 months trying not to be nervous?

This is why it never felt right to try something like 100% stocks.
Yay, Team PP! We’re losing the least!

Cortopassi wrote: ↑Wed Dec 19, 2018 8:25 pm Had to post these. Yes, my portfolio is at its lowest YTD, dammit. But,

Above S&P return for the year:



and look at the 1 year returns:



For sure, budd and mathjak would say given more time, stocks will come back again and blow the pants off bonds and gold. Probably right. But how many heavy stock holders are watching a >15% downward price swing in only 2.5 months trying not to be nervous?

They will be right almost certainly over the long run and I could not fault budd for wanting to rebalance out if he hated gold as much as he appeared to. But at least for me, I was/am relatively convinced doing it now is not a good idea. The US market has been on a 9 year absolute tear, was very overbought and for about the last 3 months economic data has been softening. Once the market goes down say 20% or more, OK then you have a reasonable rebalance out scenario. Something super simple is to use momentum, a trend line or a moving average to rebalance out of gold once stocks have turned the corner and are going back up.

By way of stats gold (GLD) is up 7%ish since the August low and my souped up version with UGLD in it is up 20%

Kbg wrote: ↑Thu Dec 20, 2018 8:40 am But at least for me, I was/am relatively convinced doing it now is not a good idea. The US market has been on a 9 year absolute tear, was very overbought and for about the last 3 months economic data has been softening.

In 2013, I took a little bit of profits from vp stocks, just a little. Anytime the market went down, I got nervous. Why didn’t I take more profits?! The market’s overbought! And then....it went up for five more years. (shrug)

dualstow wrote: ↑Thu Dec 20, 2018 8:49 am

Kbg wrote: ↑Thu Dec 20, 2018 8:40 am But at least for me, I was/am relatively convinced doing it now is not a good idea. The US market has been on a 9 year absolute tear, was very overbought and for about the last 3 months economic data has been softening.

In 2013, I took a little bit of profits from vp stocks, just a little. Anytime the market went down, I got nervous. Why didn’t I take more profits?! The market’s overbought! And then....it went up for five more years. (shrug)

Nothing is certain, but it's helpful to buy and sell financial assets like you do cars, computers etc. Buy when cheap, sell when expensive. For some reason we like to do the exact opposite with financial assets. I think that's why W.B has been so successful.

WB?

Warren buffet?

drumminj wrote: ↑Thu Dec 20, 2018 8:34 pm Warren buffet?

Ah, of course.

Need to post the comparison again. Also, now with cash paying 2+% again, I see the wisdom of HB esp. when cash paid 5%. 25% cash for the past couple months would have been nice, vs. the 10% I am at.

Cortopassi wrote: ↑Mon Dec 24, 2018 12:35 pm25% cash for the past couple months would have been nice, vs. the 10% I am at.

Yeah, I was a bit bummed being 4x25 earlier (vs golden butterfly-ish) in the year as stocks out-performed, but right now am happy to be 25% cash

Cortopassi wrote: ↑Mon Dec 24, 2018 12:35 pm Need to post the comparison again. Also, now with cash paying 2+% again, I see the wisdom of HB esp. when cash paid 5%. 25% cash for the past couple months would have been nice, vs. the 10% I am at.

The LTT's I bought when I first started the PP have been throwing off a relatively nice return of about 3.5% on average, deposited twice a year into my IRA's. As interest rates rise and fall, the market value will affect the overall value of my portfolio one way or the other but I don't look very often because this is one thing that has helped to convince me that taking a snapshot of your portfolio at any given point in time is a somewhat meaningless exercise for any other reason than to re-balance. They call them LTT's for a reason.

PP's doing its thing lately, guys.

dualstow wrote: ↑Thu Jan 03, 2019 10:40 am PP's doing its thing lately, guys.

Well I'll be darned

The purpose of the PP is this, seen at the Museum of Fine Arts Houston yesterday, as part of the Norman Rockwell: American Freedom exhibition (which was fantastic). The purpose is to serve as the investor's antidote to being conditioned to ".... certain habits, certain ways of thinking" (AKA "recency bias" and "herding").



Carl Mydans (May 20, 1907 – August 16, 2004) was an American photographer who worked for the Farm Security Administration and Life magazine.

Ill Housed, Ill Clad, Ill Nourished, 1936,
printed 1976

Gelatin silver print

The Museum of Fine Arts, Houston
Museum purchase funded by
Mr. and Mrs. Alvin S. Romansky
76.410

Influenced by Stuart Chase, an American economist who advocated for more government intervention to help solve the Great Depression, Franklin D. Roosevelt campaigned on a "New Deal" for the public. Chase clearly stated the problem facing the country: "Here is a nation of some 75 million adult citizens, conditioned to certain habits, certain ways of thinking, he argued. "The economic system they have known is collapsing under them. They are bewildered, afraid."

Thanks for posting this, Ochotona.

Amazing stuff. I think the PP can indeed be an antidote to thinking along standard lines. (American businesses will grow without limit, stocks always go up, etc.)

I suppose a given person can be conditioned and overly attached to any given way of thinking, including the PP. However, given the diversity of assets and the agnostic perspective on the future, it's probably less susceptible to such foibles than most.

I think someone mentioned this before but I use the GB for peace of mind. It’s nice to detach from the financial economy once the GB / HBPP is in place, especially if you are middle aged.

in my opinion that still remains to be seen once the trend in rates is back up and not just a speed bump like we have seen for 40 years . if i had to guess , i will say that is kryptonite to the pp . we have no modern day history at all with a sustained rise.

markets are very different today with 90% of trad-able assets bought and sold via machines daily with no human logic