Gyroscopic Investing

70% of my IRA plus non retirement portfolio is in the PP. The remainder is in a VP which consists of VWINX.  This leaves me with a total of 30/35/16/19 (stocks, bonds, gold, cash). I use 30/20 rebalancing bands for the PP which is completely separate.

buddtholomew wrote:

Pointedstick wrote: And here's the thing… it's an investment portfolio, not a religion. You should use it if you like it, and use something else if you like that better. The PP is clearly not for everyone, and, like all investment portfolios, its characteristics make it better-suited for some than others.

Agreed. Let's take a closer look at your portfolio - PP and VP included.

Depending on the PP to VP ratio, equities and fixed income are > 25% and Gold is < 25%. Only you can tell us whether the deviation is material. My question is whether your entire retirement nest egg is invested in the 4x25 allocation? I want to hear from those people and their experiences over the last few years.

So what? Like I said, it's a portfolio, not a religion. For the record my VP is about 10% of my total portfolio. But I don't see what difference it makes. Liking the PP doesn't require that you use it for 100% of your investments. It's just an investment portfolio…

My PP deviation is in the VP section of the board. My way around the relatively low returns of a PP with several of the benefits.

We're 100% invested in a 4x25 PP and have been for several years.  My experience has been great -- it has been nice and steady through ups and downs.  I have the benefit of remembering when the PP stood firm while various components tanked (including stocks, which freaked out everyone else) and can compare that to previous experiences before I got into the PP, so I have context to fall back on when it struggles for short periods.  I'll add that in my personal situation the PP is fantastic from a tax and liquidity perspective compared to other investment options which makes it even more appealing.  Right now I can't imagine a better portfolio for my personal needs.  Trust me -- I've looked.  And if one ever comes along, I'll happily share it with everyone here. 

For all the hand-wringing about short-term PP performance compared to whatever is hot at the moment, I have yet to find any better way to invest especially once I balance the life tradeoffs for tinkering all the time.  My eventual choice to follow the PP, walk away with my hands off, and turn my financial attention to minimizing my spending and maximizing my savings rather than stressing over markets I can't control was the best financial decision I've ever made.  The opportunity cost of fancying myself an active investor held me back for years by distracting me from the real financial opportunities in life, and I've watched friends and family repeat the same mistakes over and over.

My best advice: The next time markets let you down, don't ask how you should invest differently.  Stop thinking like a victim or a financial pawn.  Ask whether investments are really your best and only opportunity for securing financial freedom.  Find a reasonable "good enough" investment method you can stick with and largely ignore (PP or not -- it really doesn't matter), and take charge of things you can actually control.  Walk away from the message boards and stock tickers and ask for a raise.  Look at your credit card statement and calculate how much more money you'd have in ten years if you actually learned to cook and stopped eating out every day.  Sell your stupid large house and buy a smaller one closer to work.  Laugh with your wife.  Play with your kids.  There's more to life (and wealth!) than CAGR. 

Good advice, Tyler.  I have a question for you, but I understand you may not want to share too much.  How do you handle gold?  Do you mind telling us how much is physical and how much is in ETF/CEF form?  I hope I'm not prying.  It's just that gold is the oddball that may not be handled electronically, and I'm still trying to come to terms with it.

My gold allocation is 100% IAU right now.  But I think holding some physical gold is a great idea and I plan to buy some in the future when rebalancing requires it. 

I'm a natural optimizer so I messed around with various funds and vehicles while generally over-thinking things my first year.  Analysis paralysis started to cost me, so settling on a simple VTI/TLT/IAU/SCHO portfolio was my compromise to let myself chill out and not sweat the small stuff.  It's already light years better than how I used to invest, and I have plenty of time to improve on the foundation as I go. 

Never let the search for theoretical long-term perfection block you from a positive tangible near-term improvement. 

I also do my best to use the full HB PP whenever possible, but options do limit full implementation.

I have about 50% of my entire investment portfolio in the PP, but that's mostly because my 401k does not offer PP assets.  So my portfolio is split up like so:
taxable/rothira => 50% of total investment portoflio (All in HB 4x25 PP)
401k = > 50% of total investment portfolio (in a 50/50 stock/bond mix)

You can bet that as soon as I can roll over my 401k to an IRA that I'll be moving all of those assets towards a 4x25 HB PP.

Tyler wrote: My gold allocation is 100% IAU right now.  But I think holding some physical gold is a great idea and I plan to buy some in the future when rebalancing requires it. 

I'm a natural optimizer so I messed around with various funds and vehicles while generally over-thinking things my first year.  Analysis paralysis started to cost me, so settling on a simple VTI/TLT/IAU/SCHO portfolio was my compromise to let myself chill out and not sweat the small stuff.  It's already light years better than how I used to invest, and I have plenty of time to improve on the foundation as I go. 

Never let the search for theoretical long-term perfection block you from a positive tangible near-term improvement.

Thanks for the info.  If you're looking to diversify your gold position a bit, be aware (just in case you're not already) that GTU is selling at a significant discount right now (and has been for quite a while, but presumably that will change at some point).  The expense ratio is higher than IAU, but to me it's worth it to not have one firm holding all my gold.

And then the PP has a day like today, and all is right with the world...

Just kidding, of course...have a nice weekend everyone.  It is refreshing to have found this forum last year, with calm, rational, understandable people!

Cortopassi wrote: And then the PP has a day like today, and all is right with the world...

Just kidding, of course...have a nice weekend everyone.  It is refreshing to have found this forum last year, with calm, rational, understandable people!

Yup, couldn't ask for a better day for the PP :-)  I agree this forum is great.  Its allows us vent with one another when the PP is in the crapper, and rejoice on days like today.

Please don't count your chickens before they hatch...the PP will disappoint...I guarantee it.

buddtholomew wrote: Please don't count your chickens before they hatch...the PP will disappoint...I guarantee it.

Only the people with unrealistic expectations.

buddtholomew wrote: Please don't count your chickens before they hatch...the PP will disappoint...I guarantee it.

Then short it if you are so sure.

dutchtraffic wrote:

buddtholomew wrote: Please don't count your chickens before they hatch...the PP will disappoint...I guarantee it.

Then short it if you are so sure.

This!

We need an inti-PP.

Some mix of industrial commodities, world stock and world bond positions.

Oh wait... with the exception of Greece and Iraq, they're all in a "bull market" too.   JK.

Just messing around gentlemen...I'm not a complete anti-social 

Yes I was pleased to see the PP rebound today. The portfolio was flat on the week with higher volatility than expected. Equity centric portfolios with exposure to international stocks saw gains after today's rally.

Much ado about nothing...got to stay out of the weeds and focus more on the bigger picture.

It sure looks like treasuries have ended their long term bull market. Friday's treasury bounce back after its recent free fall was fairly tepid.

Reub wrote: It sure looks like treasuries have ended their long term bull market. Friday's tepid treasury bounce back after its recent free fall was fairly tepid.

I'm guessing you say this in jest.

[img width=800]http://i62.tinypic.com/2w6xq9e.png[/img]

iwealth,

Nice chart.

It is interesting.  8 to 4% took about 20 years.  If 4 to 2% takes 20 years, that would keep the bull going to 2030.  It does seem there is much more speed of things happening in the past decade though, so it seems it would get to 2% faster.

Or spike back to 8% because of loss of confidence.

Who knows?

There is a lot wrong with the PP and the justifications for it going forward.  Market intervention, investment bankster cronyism, currency and commodity manipulation, etc. But I have no better idea in terms of a passive investment plan.  If I had a new lump sum to invest today, I'd have considerable problem with putting into the top of the markets in a 60/40.  My experience tells me to invest in whatever is trash.  Cash is trash, gold is trash.  Put your money there if you want to speculate over the medium term.  Advice worth what you paid.

At the risk of repeating myself a few times a year here, I don't look at my PP very often.  Right now it seems I am up 3.8% one year, and a bit over 2% YTD.  My non-HB-approved international tilt must be paying off!   Which is good, cause it held me back last year.  In this environment, any return above zero is a win.  Remember, to succeed and retire in comfort, the absolute number does not matter.  What matters is how you do compared to the masses.

I Shrugged wrote: Remember, to succeed and retire in comfort, the absolute number does not matter.  What matters is how you do compared to the masses.

This is a good point, and something I think about a lot.  Every "nobody is saving for retirement" article makes me feel a little better and more thankful about my own situation. 

Of course then I think about how those of us that save will probably end up funding the retirement of those that didn't, but there's not a lot we can do about that.

Same thing happened to many on the Gulf Coast who had been responsible and paid /massive/ amounts in insurance premiums over the years, only to watch people who hadn't get bailed out anyway.

Xan wrote: Same thing happened to many on the Gulf Coast who had been responsible and paid /massive/ amounts in insurance premiums over the years, only to watch people who hadn't get bailed out anyway.

Yes.  This is annoying to me.  I don't mind rescuing people from a disaster zone.  I don't even mind setting them up within traditional, broad-based safety net programs.

But creating special "funds" available to just those victims is ridiculous.  I'd also add, perhaps insensitively, I really don't like things like the 9/11 victim's fund:

1) These people should have had life insurance.

2) Massive numbers of people die every year from surprise events that devastate their family financially due to improper planning and bad luck.  Why should these people get special treatment?

I think the term we are looking for here is "moral hazard."

Ad Orientem wrote: I think the term we are looking for here is "moral hazard."

I don't even know if it is that, as it seems that these events have to be of a size and scale well beyond a single property loss to get special federal assistance.  That doesn't necessarily create a moral hazard, as there are still a ton of reasons to insure against just my house burning down or just me dying.

It's just dumb on principle to give people such unique special treatment when we have social safety nets out there to help poor people.