Gyroscopic Investing

Khisanth wrote: Non-PP portfolios are also seeing some downside.

http://www.bogleheads.org/forum/viewtop ... 1&t=117958

Investernoob wrote: How do people stick in the same investments after years of back and forth prices?

No doubt up is more happy.

While accumulating, since I abandoned funds, I can sort of console myself with "getting more shares, getting more shares, getting more shares..."

But definitely the deal maker for me is dividends and specifically increasing dividends.  I watch my total and monthly income increasing.  Those more shares 4 times per year really boost the payout and when share prices are down relative to my last purchase I get more shares.  That makes me happy.  Then next quarter I get more dividends.  That makes me happy.  The company increases their dividend.  I get more shares.  That makes me happy.  I'm getting 10.77% more than after I sold treasuries last June.  That makes me happy.  (When was the last time you received a 10.77% raise for sitting on your butt doing nothing for 99% of the time?)

(Re. funds, funds suck.  Getting more shares of funds never seemed to do any good, but stock...  Any stock worth owning means more shares is better, but more shares of dividend paying stock is great.  Give me more shares!  Watch my average basis/share decline, my yield going up!  Oh yeah!)

So many things about dividends make me happy.  It really helps temper the gloom of falling account/portfolio market value.

systemskeptic wrote:

buddtholomew wrote: All joking aside...I'm starting to get scared. I can't afford to lose this sum of money on a daily basis.

It sounds like you should be investing in yourself rather than others if you are this paranoid about the markets.  There is no asset or investment that does not fluctuate in value.

From your previous posts you have over $1M in assets, which almost irrespective of what you own should be good for $30-40,000 a year...maybe focus on reducing your expense footprint so you can take a deep breath about variability in your NAV?

systemskepticsystemskepticsystemskeptic

what do you mean with "investing in yourself"?

To Buy real solid assets ?

frugal wrote: what do you mean with "investing in yourself"?

https://duckduckgo.com/?t=lm&q=investin ... rself 

Building your career skills, networking, starting a side business, etc.

So the PP is down about 2% for the year and I'm a little nervous.
Looking back to 2008 I see the SPX was down 36% yet the PP was up 4%.
That's the beauty of the PP...

Pointedstick wrote:

frugal wrote: what do you mean with "investing in yourself"?

https://duckduckgo.com/?t=lm&q=investin ... rself 
Building your career skills, networking, starting a side business, etc.

As Pointedstick said, I meant that instead of investing in others (stock market) invest in yourself by creating or investing in your own business, buying houses and becoming a landlord, etc.  Basically if you are that worried about your lack of control in your investments then take direct control yourself.

I think the biggest help would be to crunch some numbers and see what exactly you even need your assets for.  If your expenses are less than 3-4% of your net assets it really doesn't matter how they fluctuate assuming you have even a basic level of diversification. 

I haven't looked at my portfolio in months.

You guys are wasting you time and energy with this fretting.

Every time I come back to this thread I read the same posts over and over. 

The PP goes up sometimes and it goes down sometimes, but the long term trend is decidedly upward.  If it never had any down or sideways periods, though, everyone would use it, and nothing in life is quite that easy.

Pointedstick wrote:

frugal wrote: what do you mean with "investing in yourself"?

https://duckduckgo.com/?t=lm&q=investin ... rself 

Building your career skills, networking, starting a side business, etc.

I don't need more work :-)

But its a interesting way...

systemskeptic wrote:

Pointedstick wrote:

frugal wrote: what do you mean with "investing in yourself"?

https://duckduckgo.com/?t=lm&q=investin ... rself 
Building your career skills, networking, starting a side business, etc.

As Pointedstick said, I meant that instead of investing in others (stock market) invest in yourself by creating or investing in your own business, buying houses and becoming a landlord, etc.  Basically if you are that worried about your lack of control in your investments then take direct control yourself.

I think the biggest help would be to crunch some numbers and see what exactly you even need your assets for.  If your expenses are less than 3-4% of your net assets it really doesn't matter how they fluctuate assuming you have even a basic level of diversification. 

Buying houses and land is also not interesting for me 

Difficult to know what to do with savings. I think I have the problem that I don't know how to spend it.

MediumTex wrote: I haven't looked at my portfolio in months.

You guys are wasting you time and energy with this fretting.

Every time I come back to this thread I read the same posts over and over. 

The PP goes up sometimes and it goes down sometimes, but the long term trend is decidedly upward.  If it never had any down or sideways periods, though, everyone would use it, and nothing in life is quite that easy.

Right , right BOSS!

But we are always imagining if a 10 years DOWNTREND is starting to develope in PP




REgards to all

frugal wrote: But we are always imagining if a 10 years DOWNTREND is starting to develope in PP

The human mind always wants to project current conditions into perpetuity and weep or celebrate depending on what is happening today.

The truth, of course, is that everything changes constantly and the tendency to project current conditions into perpetuity is just a quirk within the human mind that unfortunately leads us to make all sorts of bad decisions.

MediumTex wrote:

frugal wrote: But we are always imagining if a 10 years DOWNTREND is starting to develope in PP

The human mind always wants to project current conditions into perpetuity and weep or celebrate depending on what is happening today.

The truth, of course, is that everything changes constantly and the tendency to project current conditions into perpetuity is just a quirk within the human mind that unfortunately leads us to make all sorts of bad decisions.

you inspire all us

I have to finish reading your book

thank you, one thing I already changed, I don't want to see the numbers $$$ of my PP everyday

I don't mean to be disrespectful but this discussion is incomprehensible to me, it's borderline silly. My PP is 100bps positive ytd but I'm sure folks have different circumstances and could be experiencing a 200bps paper loss. If you can't absorb a 2% paper loss then you should really be in T Bills, CD's and I Bonds in my humble opinion. Before undertaking any kind of investment plan you must understand your risk tolerance and it seems there are more investors than I would have guessed who haven't done the required introspection that investing demands.

My guess is that the PP attracts a lot of people who are very conservative with their money, but who underestimate the portfolio's true volatility. The PP may be conservative compared to 100% stocks or even a stock/bond mix, but if your point of reference is savings accounts, bank CDs, or T-bills, then you'll have to be prepared to accept a bit more volatility than you might be used to.

Everyone should also keep in mind that historically the PP has had 2 drawdowns where in real terms the portfolio was down over 20%. That doesn't show up in the annual data, you have to look intra year for that.

If something has already happened in the past, you should be ready for it to happen again because you know that it is in the realm of possibility.

Robert wrote: I don't mean to be disrespectful but this discussion is incomprehensible to me, it's borderline silly. My PP is 100bps positive ytd but I'm sure folks have different circumstances and could be experiencing a 200bps paper loss. If you can't absorb a 2% paper loss then you should really be in T Bills, CD's and I Bonds in my humble opinion. Before undertaking any kind of investment plan you must understand your risk tolerance and it seems there are more investors than I would have guessed who haven't done the required introspection that investing demands.

That's what I'm saying as well.

BTW, welcome to the forum.

Honestly, I don't think folks' concern is about the absolute return but the performance relative to a typical Boglehead portfolio. (If stocks were down 40%, a boggleheads portfolio down 20%, and the PP down 2%....)

I understood this going in, but it seems like folks are talking past each other.

It also seems like we are in a new position for the PP - 50% of the portfolio went up A LOT the last 10+ years and is doing a bit of "mean reversion". 25% is flat. Then the press keeps trumpeting how great the other 25% is doing and it doesn't feel like we're participating in the exhuberance (doesn't matter if rational or not at this time.)

So it seems a better response is not to focus on the absolute return, but the relative - yes, there will be times where returns do NOT align with the (stock) market. It's this same lack of correlation the we count on the next time the market gives up 40-80%. Might be tomorrow, might be 5 years or more.... And over the mid/long term, the PP has historically had a positive real return.

(As I've mentioned elsewhere, I don't have a true PP by any means, but with my intl exposure, basically flat even with my lower Gold and LTT allocation)

Thank you Med for the welcome and  I've very much appreciated reading these boards. Very thoughtful and articulate contributors all of you. Cheers

melveyr wrote: Everyone should also keep in mind that historically the PP has had 2 drawdowns where in real terms the portfolio was down over 20%. That doesn't show up in the annual data, you have to look intra year for that.

If something has already happened in the past, you should be ready for it to happen again because you know that it is in the realm of possibility.

This thread is 17 pages long with the PP being basically flat for the year so far...I wonder how long it will get if we see one of these 20% drawdowns!

AdamA wrote:This thread is 17 pages long with the PP being basically flat for the year so far...I wonder how long it will get if we see one of these 20% drawdowns!

I think Dieter is right in that the issue is performance relative to stocks.  I'm guessing (could be wrong!) that when the PP is down 20%, the stock market is down that much, and likely more.  In that case, the mood here won't be "what's wrong", it'll be "look how much worse it could have been".

A scenario where stocks are way up and the PP is treading water is probably one of the worst scenarios for this kind of angst.

Xan wrote: A scenario where stocks are way up and the PP is treading water is probably one of the worst scenarios for this kind of angst.

Yes.

The question is whether stocks are currently in the midst of a cyclical bull market against the backdrop of an ongoing secular bear market, OR are we in the early stages of a new secular bull market for stocks?

When I look at the long term effects of deleveraging, the overall demographic profile in our country and the political incompetence of our leaders, I tend to think that the secular bear market for stocks has a bit farther to go, but I could be wrong.

melveyr wrote: Everyone should also keep in mind that historically the PP has had 2 drawdowns where in real terms the portfolio was down over 20%. That doesn't show up in the annual data, you have to look intra year for that.

If something has already happened in the past, you should be ready for it to happen again because you know that it is in the realm of possibility.

20% will be very hard to see, I don't want to see the numbers

I will stop watching the PP account.

Pointedstick wrote: My guess is that the PP attracts a lot of people who are very conservative with their money, but who underestimate the portfolio's true volatility. The PP may be conservative compared to 100% stocks or even a stock/bond mix, but if your point of reference is savings accounts, bank CDs, or T-bills, then you'll have to be prepared to accept a bit more volatility than you might be used to.

Yes volality is the problem, stay in the course without watching the day result

But how do you know when you have to rebalance?

Dieter wrote: Honestly, I don't think folks' concern is about the absolute return but the performance relative to a typical Boglehead portfolio. (If stocks were down 40%, a boggleheads portfolio down 20%, and the PP down 2%....)

It's exactly what Bernstein said about the huge potential tracking error of the PP vs a more 'standard' portfolio. I don't think many novice investors can handle long periods of underperformance. This thread proves him right.

Another fact seems to be that the PP attracts lots of 'scared to lose money' folks who don't understand the volatility of this allocation.

The PP is a thing of beauty, but it's not for the risk-adverse....

The Permanent Portfolio doesn't fluctuate in value. Everything else fluctuates in value relative to the Permanent Portfolio.

It's like the Chuck Norris of portfolios.

Tortoise wrote: The Permanent Portfolio doesn't fluctuate in value. Everything else fluctuates in value relative to the Permanent Portfolio.

It's like the Chuck Norris of portfolios.

Hi,

can you explain better please.

frugal wrote:

Tortoise wrote: The Permanent Portfolio doesn't fluctuate in value. Everything else fluctuates in value relative to the Permanent Portfolio.

It's like the Chuck Norris of portfolios.

Hi,

can you explain better please.

Chuck Norris doesn't explain things. He scares them into explaining themselves.

Pointedstick wrote: Chuck Norris doesn't explain things. He scares them into explaining themselves.

Chuck Norris doesn't scare things.  He scares them into scaring themselves.

i don't look at my permanent portfolio and worry..... i worry it might be looking at me..