Gyroscopic Investing

mukramesh wrote:

ochotona wrote: Why bother donning a winter coat in summer, just because we know winter is coming? Enjoy the summer, but know where the coat is.

Maybe one can find a good deal on a winter coat in the summer because no one else is buying?

mathjak107 wrote: maybe if they live in the bahamas they shouldn't be buying a winter coat before they actually see signs of winter in the bahamas

Wait a sec, when did the analogy change to the Bahamas!? You keep changing the goalposts man! I assumed 

Hilarious! 

my answer was buying a lot of gold now is not  like buying a winter coat on sale before the winter . it is more like buying a winter coat on sale when you live in the bahamas .  with zero signs on the horizon  that is positive for gold at this point owning so much of it is  likely not warranted .

there was not one situation in the last 40 years that was not bested by another asset class  rather than gold in any rolling 30 year time frame representing a retirement period or accumulation period  ever .

so like buying that winter jacket on sale when you live in the bahammas you may be buying something that you really are likely not to need . if you do , it is still likely to be bested by guns and bullets .


so the question is why devote as much money to that remote chance as you do to the most likely chance ?    hey if it makes sense to you do it , but if it doesn't you better re-think your plan .

frugal wrote: My friends,

This is a US forum.

I live in Europe and I have a EUPP.

I am a little bit more concerned because all I hear about Europe end.

Don't be a deer frozen in headlights.  Open your US PP today!

For anyone wanting to make their own chart like the one above, the tool is now up.  Compare away. 

http://portfoliocharts.com/portfolio/envy/

MachineGhost wrote:

frugal wrote: My friends,

This is a US forum.

I live in Europe and I have a EUPP.

I am a little bit more concerned because all I hear about Europe end.

Don't be a deer frozen in headlights.  Open your US PP today!

Hello!

As I know Fidelity and Schwabb stopped creating new european acconts!

Where do you recommend?

Thank you!

mathjak107 wrote: my answer was buying a lot of gold now is not  like buying a winter coat on sale before the winter . it is more like buying a winter coat on sale when you live in the bahamas .  with zero signs on the horizon  that is positive for gold at this point owning so much of it is  likely not warranted .

You never want to buy anything when signs are on the horizon; it will be bid up faster than you can snap your fingers.  That's why buying off-season is cheaper, although gold is now entering its bullish seasonal cycle.

I think you may be somewhat delusional about the systemic risks coming over the next few years, such as the dethroning of the USD and loss of confidence in Treasuries (can you handle a maturity swap default).  What is your plan to deal with this risk?

frugal wrote: As I know Fidelity and Schwabb stopped creating new european acconts!

Really, why? 

MachineGhost wrote: I think you may be somewhat delusional about the systemic risks coming over the next few years

Understatement of the year here.

I'm honestly still thinking mathjak107 is just a forumtroll, whoever doesn't see trouble ahead is blind AND deaf.

MachineGhost wrote:

frugal wrote: My friends,

This is a US forum.

I live in Europe and I have a EUPP.

I am a little bit more concerned because all I hear about Europe end.

Don't be a deer frozen in headlights.  Open your US PP today!

I have a euro PP as well, and share the same worries.

But what makes you think the US is in any better shape...? I somewhat feel the same about the US at the moment..

dutchtraffic wrote: But what makes you think the US is in any better shape...? I somewhat feel the same about the US at the moment..

It's not about absolutes, but relatives.  The USA will be the last man standing as the rest of the world blows up.  That's the advantage of being "Rome" (which died a slow death by deflation over a thousand years).  The USA will have the easiest transition to the New World Order.

MachineGhost wrote:

mathjak107 wrote: my answer was buying a lot of gold now is not  like buying a winter coat on sale before the winter . it is more like buying a winter coat on sale when you live in the bahamas .  with zero signs on the horizon  that is positive for gold at this point owning so much of it is  likely not warranted .

You never want to buy anything when signs are on the horizon; it will be bid up faster than you can snap your fingers.  That's why buying off-season is cheaper, although gold is now entering its bullish seasonal cycle.

I think you may be somewhat delusional about the systemic risks coming over the next few years, such as the dethroning of the USD and loss of confidence in Treasuries (can you handle a maturity swap default).  What is your plan to deal with this risk?

actually you do want to buy once the trend is happening . buy high and sell higher has made far and away more money then trying to fight the trend , catch a falling a knife and buy low and sell high  which rarely ends up working out well .

trying to fight the fed also is a no no .

there is no basis for sinking so much money  money in to an asset so long before it is time . if there is basis for  a trend they run years .  if it is a flash in the pan then be happy you missed it .

unless you think financial Armageddon is right around the corner youare hurting your self more trying to insure against something that may never happen just as it has not happened the last  century .


all this insurance is causing the pp today to get stuck in the mud .  you see it happen now every big equity rally .

market up 200 plus points and pp down .  usual culprit -gold

mathjak107 wrote: actually you do want to buy once the trend is happening . buy high and sell higher has made far and away more money then trying to fight the trend ,

You really just don't get it do you, a trend...? You think your retail trading platform is even going to allow you to execute any trades when things get really rough? 

do i even think things here will ever get that tough ?  not likely .  do i think if things are that bad and no one has money that gold will be worth much ?  unlikely . but arguing about the visions in your head  are futile as you will have you opinion and i will have mine . no one knows who is right .  but if pp'ers like going by the past charts  then no the odds of it happening here in my lifetime  when it has not happened here in 200 years is slim .

aflac the insurer has made billions selling remote possibility insurance . they insure against single diseases , accidents , all kinds of stuff  they drum up visions in folks  heads that can happen  but likely never does .

not all of us are willing to bet so heavy that the sky is falling .

mathjak107 wrote:
not all of us are willing to bet so heavy that the sky is falling .

But MJ, doesn't your frequent adoption and rapid abandonment of various investment schemes contradict this statement?

Many of us would welcome a statement from you as to your changes in investment philosophy over time, since you first became interested in personal finance.

And I have not yet seen you factor in the expenses involved in shifting from one investment philosophy to another.

To paraphrase Bill Bernstein, you seem to chase investment returns the way dogs chase cars.

Please correct me if I am wrong, but this is the impression I have of your ever-shifting investment approaches.

nothing really has changed much , especially in philosophy

i have always preferred  over time making small changes to some of the funds as the times and world changes changes .

it has worked very well for decades  .  i used the fidelity insight  growth model right up until i thought i would be retiring and made the change a few years ago to a 50/50 mix rather than the 90% growth model  . we have seen 100k in the growth model in 1987 grow to 2.3 million  with no other money added , fully documented year by year on the website .

the 50/50 i chose to go with  utilized 2/3's the growth and income model and 1/3 the conservative income and capital preservation model instead of the 90% equity growth model  .


but the problem was the combined two portfolio's were  to cumbersome to work with since it had over lap between funds .

so when i retired i thought i would give the pp a shot but i realized it wasn't for me  for a number of reasons  , all which i expressed here already . .

so in june i decided to create my own 50/50 model instead of using the two separate portfolio's from the newsletter to arrive at a 50/50 mix .

that is pretty much almost 30 years of investing right there so little has changed except allocations .  my own model stays flexible too and as the bigger picture unfolds small changes will be made just as they always were .

mathjak107 wrote:
not all of us are willing to bet so heavy that the sky is falling .

I'm assuming this statement is intended to imply that owning gold is a bet on the sky falling.  Why do you think all the central banks of the world still have so much gold?

Tom wrote:

mathjak107 wrote:
not all of us are willing to bet so heavy that the sky is falling .

I'm assuming this statement is intended to imply that owning gold is a bet on the sky falling.  Why do you think all the central banks of the world still have so much gold?

Ah yeah, I've been meaning to ask MachineGhost this as well.

Tom wrote:

mathjak107 wrote:
not all of us are willing to bet so heavy that the sky is falling .

I'm assuming this statement is intended to imply that owning gold is a bet on the sky falling.  Why do you think all the central banks of the world still have so much gold?

central banks hold lots of various things and change from time  to time . years ago when the dollar was weak central banks around the gold were not buying gold . they were selling dollars and buying us treasury inflation proof security's.

just like us they diversify but they also shift allocations with the times .

CENTRAL BANKS ARE NO INTERESTED IN MAKING MONEY OR LIVING OFF THEIR PORTFOLIO'S.  they need to hold something that hedges their own printing of money .

Tom, MJ,

The chart below shows gold holdings of central banks.  Why have they been accumulating?  Are they on the wrong side of this?  Why are they increasing holdings and does that factor into your assessment of gold?

It does seem they have generally been on the wrong side of the trade for most of the 2000s.  Interesting...

not in my assessment of gold and from the price  and action of of gold not many others in the world either .

you really can't compare central banks goals  to investors goals . look at 2010-2014 .  as an investor what good would gold have done you following the central banks  when equity's tripled  ?.

that would have been the wrong place to be as an investor m, but central banks have different reasons and needs .

mathjak107 wrote:

Tom wrote:

mathjak107 wrote: they need to hold something that hedges their own printing of money .

I think you answer the question correctly here.  We aren't just hedging for Armageddon, we also hold gold against reckless government policies, be it fiscal, monetary, wars, etc.

5-10% covers that need just fine and it may be something one day i will add off in the future .,  25% in gold today  ?  not on your life  at this stage or the past few years . just to far off the radar for that in my opinion for what it is worth ..

i don't believe in trying to be the first one at the party . to many times the guests don't show and my time is  better spent elsewhere ..

mathjak107 wrote:

Tom wrote:

mathjak107 wrote:
not all of us are willing to bet so heavy that the sky is falling .

I'm assuming this statement is intended to imply that owning gold is a bet on the sky falling.  Why do you think all the central banks of the world still have so much gold?

central banks hold lots of various things and change from time  to time . years ago when the dollar was weak central banks around the gold were not buying gold . they were selling dollars and buying us treasury inflation proof security's.

just like us they diversify but they also shift allocations with the times .

CENTRAL BANKS ARE NO INTERESTED IN MAKING MONEY OR LIVING OFF THEIR PORTFOLIO'S.  they need to hold something that hedges their own printing of money .

The gold allocation in the PP is also intended as a hedge, not as a mechanism for growth (although at times the price does inflate due to jitters and can create growth that gets locked in by rebalancing).  That's too much for you and I think that's understandable.  I can also see how it's not for others.

well for 40 years it has been a crappy hedge .  a t-bill performed as a  hedge  better  then gold  .because  if gold tracks inflation which it did then any fund  fees  or storage and insurance fees  would have had  the gold  lagging inflation .  so as a hedge it either had nothing to hedge against over the long term since it returned about 4 .50% cagr  , and as an inflation hedge a rolled over t-bill did better .

that 175 buck per ounce gold in 1975  is worth 1116 today .  the same in  a 60/40 mix is about 18k . the t-bill about 1200.00

was that hedge worth the price of that insurance ?  how much could you lose and still be ahead ?

so i would be careful with gold as a hedge . unless there were definitive signs  that it is golds turn in the sun over weighting it compared to the likely outcome is likely a waste of money holding it long term and not as a speculation . .  while stocks are not about timing the markets, but time in the markets , gold and commodities have been all about  timing the markets not time in the markets it seems . ,

if gold is truely in a trend , like all other assets you have years to make money  after getting in later . buy high and sell higher has been where money is really made .