Gyroscopic Investing

Wow, 16 pages of hand wringing again in just a bit over two weeks?  I'm not going to even bother reading.

Some people need to get out of the PP.  There's no shame in admitting defeat.  There are less risky portfolios.

MachineGhost wrote: There are less risky portfolios.

Such as?

Stewardship wrote:

MachineGhost wrote: There are less risky portfolios.

Such as?

Burn's Fat Tail Minimization Portfolio.

MachineGhost wrote:

Stewardship wrote:

MachineGhost wrote: There are less risky portfolios.

Such as?

Burn's Fat Tail Minimization Portfolio.

Larry Swedroe?

MachineGhost wrote:

Stewardship wrote:

MachineGhost wrote: There are less risky portfolios.

Such as?

Burn's Fat Tail Minimization Portfolio.

I looked for that briefly and couldn't find it, so does it have any significant amount of gold? If not, I don't consider it low-risk.

Libertarian666 wrote:

MachineGhost wrote:

Stewardship wrote: Such as?

Burn's Fat Tail Minimization Portfolio.

I looked for that briefly and couldn't find it, so does it have any significant amount of gold? If not, I don't consider it low-risk.

MG must mean Swedroe's Fat Tail Minimization Portfolio (Burns is the Couch Potato guy).  Swedroe's Fat Tail Minimization Portfolio is 30% stock (half small cap value and half emerging markets), 35% TIPS, and 35% short term treasuries.  No gold (Swedroe does not like gold).

Libertarian666 wrote: I looked for that briefly and couldn't find it, so does it have any significant amount of gold? If not, I don't consider it low-risk.

+1

Ad Orientem wrote: Harry Browne was a smart guy but he was not infallible. Stating that government never works is just silly.

Well, I guess from that we can say that government works for you.  Bully.

That's great you have an opinion and are not afraid to voice it.  I am happy to allow you your opinion.  My only wish -- it is a simple wish -- is that those of your point of view would allow me to have mine.

Seems only civilized.

But then, perhaps I'm "just silly."

Stewardship wrote: Apologies for the conversation drift.  I'll start a new thread if I want to discuss the different possible options for sewage

On where to hide: if the Permanent Portfolio is performing badly, perhaps the first question to ask should be:

What economic state are we in?

Prosperity?  Recession?  Inflation?  Deflation?

So what is the answer?  If you have no answer to that question, perhaps best to hold off on action until you do have an answer.  Otherwise, you're walking off blindfolded, and in a place with an awful lot of cliffs.

Legendary Vanguard Group founder Jack Bogle warns that there is an "awful lot" to fear in the current stock market and investors have few “good options.”

"This is a hard time to invest because there aren't a lot of good options to stocks, and bond yields are extremely low," he told CNBC.

He said the Federal Reserve’s continued insistence on low interest rates has only artificially boosted stock prices.

"That's a scary thing because it can't stay that way forever," he said. "So, I do advocate a cautious approach to investing."

http://www.newsmax.com/Finance/StreetTa ... id/645782/

Cash anyone?

Reub wrote: Legendary Vanguard Group founder Jack Bogle warns that there is an "awful lot" to fear in the current stock market and investors have few “good options.”

"This is a hard time to invest because there aren't a lot of good options to stocks, and bond yields are extremely low," he told CNBC.

He said the Federal Reserve’s continued insistence on low interest rates has only artificially boosted stock prices.

"That's a scary thing because it can't stay that way forever," he said. "So, I do advocate a cautious approach to investing."

http://www.newsmax.com/Finance/StreetTa ... id/645782/

Cash anyone?

He also mentioned to stay out of long-term treasuries...sure wish he added unless they are part of a well diversified portfolio.

Poor guy...CNBC asked what he would tell the young investor who believes the entire market is manipulated? Mr. Bogle calmly attempted to explain dividends and earnings...I'm certain if any young investors were listening they most certainly would have already tuned out!

buddtholomew wrote: Poor guy...CNBC asked what he would tell the young investor who believes the entire market is manipulated? Mr. Bogle calmly attempted to explain dividends and earnings...

So he didn't answer the question?

buddtholomew wrote:

Reub wrote: Legendary Vanguard Group founder Jack Bogle warns that there is an "awful lot" to fear in the current stock market and investors have few “good options.”

"This is a hard time to invest because there aren't a lot of good options to stocks, and bond yields are extremely low," he told CNBC.

He said the Federal Reserve’s continued insistence on low interest rates has only artificially boosted stock prices.

"That's a scary thing because it can't stay that way forever," he said. "So, I do advocate a cautious approach to investing."

http://www.newsmax.com/Finance/StreetTa ... id/645782/

Cash anyone?

He also mentioned to stay out of long-term treasuries...sure wish he added unless they are part of a well diversified portfolio.

Poor guy...CNBC asked what he would tell the young investor who believes the entire market is manipulated? Mr. Bogle calmly attempted to explain dividends and earnings...I'm certain if any young investors were listening they most certainly would have already tuned out!

The PP really sucks recently! Is it yesterday's news?
As I said once before, the place to hide is in cash.

LC475 wrote:


What economic state are we in?

Prosperity?  Recession?  Inflation?  Deflation?

deflation

Deflation, and no help from bonds!

LC475 wrote: What economic state are we in?

Prosperity?  Recession?  Inflation?  Deflation?

Since 2008 we are in the midst of a massive deleveraging which I think so far is generally deflationary.

ochotona wrote: Deflation, and no help from bonds!

Yes, not in the short term but bonds performed strongly in 2008, 2011 & 2014. I'm not ready to dump mine yet. Ride them when they are doing well, take some profits, endure some bond pain, and (hopefully) repeat.

I Shrugged wrote:

LC475 wrote:


What economic state are we in?

Prosperity?  Recession?  Inflation?  Deflation?

deflation

Ding, Ding, Ding, we have a winner imho.

I think without the manipulation of markets through interest rates, this would be painfully obvious to all.  This central planning that adjusting interest rates to move markets, and might even place rules making items such as gold to be less appealing to the masses, makes it even more difficult to analyze markets and profit from an active management approach. 

This makes the PP's agnostic approach even more appealing imho.  For those believing they can time the market and fearful of losses, cash is likely a good place to be.  For how long is the question?  I have come to doubt my ability to time markets, and as such am still fascinated w PP as an option.  Not to say VPs aren't also a viable way to augment one's investment strategy, if used wisely, i.e. with money you won't need soon (afford to loose might be the common description, but imo who has money to loose?)

Reub wrote:

buddtholomew wrote:

Reub wrote: Legendary Vanguard Group founder Jack Bogle warns that there is an "awful lot" to fear in the current stock market and investors have few “good options.”

"This is a hard time to invest because there aren't a lot of good options to stocks, and bond yields are extremely low," he told CNBC.

He said the Federal Reserve’s continued insistence on low interest rates has only artificially boosted stock prices.

"That's a scary thing because it can't stay that way forever," he said. "So, I do advocate a cautious approach to investing."

http://www.newsmax.com/Finance/StreetTa ... id/645782/

Cash anyone?

He also mentioned to stay out of long-term treasuries...sure wish he added unless they are part of a well diversified portfolio.

Poor guy...CNBC asked what he would tell the young investor who believes the entire market is manipulated? Mr. Bogle calmly attempted to explain dividends and earnings...I'm certain if any young investors were listening they most certainly would have already tuned out!

The PP really sucks recently! Is it yesterday's news?
As I said once before, the place to hide is in cash.

Hello everyone!

I am new here.
I just recently went all in by investing in the PP on 4/22/15.

As of today I am -7.27 on long term treasuries
                        -0.48 on short term treasuries
                        -1.05 stocks
                        -1.27 gold

I have lost 2.52 % of my investment in just a bit over a month.

I feel like there is really no place to hide and all the components are going down simultaneously.

I did not expect this at all. I am not sure what kind of environment we have in the economy because the data provided by govt are very suspicious. I do not know what to do from here on, but I am certainly racking up losses pretty steeply.

Any comments would be appreciated.
                       

The beatings will continue until morale improves.


Honestly, if I was starting out with cash to invest, I'd sit on it and wait for some blood in the streets.  I know that is not what any top notch long term passive investment plan says to do.  But that's what I would do at this time. 

Hi Flagator, welcome to the board.

I began my PP just over two years ago, after about 15 years with no firm investing philosophy.  I had doubled my money as a newbie during the dotcom era, then lost about 80% of that using a combination of stupidity, ignorance, inexperience, and blind trust.  Eventually resorted to CDs, gold, and TIPS to protect my remaining "wealth," then discovered the PP, which got me back into stocks.  I completed my PP in mid-May 2013.  I took an instant hit of about 6% by the end of June 2013.  But by the end of 2013, I was back at breakeven.  And last year I was up 10%.  This year, slightly down.  So overall, I am up about 9% nominal in two years; about 2% real CAGR.

My experience with the PP was just like yours: a significant loss within the first six weeks.  But I was (still am) convinced of the track record of the PP, having read this forum for at least a year before implementing it, having crunched a lot of numbers, and having been amazed by its consistent real performance over 40+ years.  I cannot think of a better strategy for someone who doesn't want to see big losses, wants real growth, and who doesn't want to make emotional investing decisions.

A loss of 2.52% in six weeks sure does suck, but it is hardly "steep."  Such losses are quite common with this portfolio.  Also, bear in mind that we were up 4% in January, so you will also experience steep rises!

My gut feeling is that now is an average, or somewhat favorable, time to be starting a PP.  I think gold is fairly priced considering its trajectory over the last 10 years, a 30-year treasury yield of 3.11% seems reasonable considering its trajectory since the early 80s, and the SP500 has been hovering above 2000 for over nine months with no major hiccups.  Perhaps stocks have considerable room to fall from their recent all-time high, but something is always overvalued with this portfolio.  It's the nature of having non-correlated volatile assets.

My advice would be to stick with the PP for at least a year before complaining, or rejoicing, about its performance.  In fact, don't get emotional about it for at least three years.  You should have real gains by then.

Flagator,

Here's what you do:  just ride it out, and don't worry about it.  Whatever you do, don't sell at a loss and lock in your losses.  Look back at the PP performance over a multi-year time frame, not just year-to-date.  You're in it for the long-haul, not the short term.  You'd be in just as bad a position if you were in a 60/40 stock/bond blend.

When I started my PP in 2013, gold took a major beating almost right afterwards, and I was wondering what I'd gotten myself into, but then everything turned around in 2014.  2015 doesn't look so great right now, but that can change.  Every portfolio has volatility.  The PP just happens to not have as much volatility as many portfolios, and it still produces good gains on average.  The real beauty of the PP is that you now have a system to follow, rather than just making blind emotion-fueled guesses that end up lowering your rate of return dramatically.

There is no reason to go all in if you don't want to. Possibly for you 25% or 50% of your overall portfolio might be the ideal PP percentage. Possibly none. Have you explored the Boglehead approach, other investing styles? If you do decide to invest in the PP I would recommend dollar cost averaging in over, say a year. I would even say to enter slowly over a 2 year period in equal amounts. The rest can be parked in a 1% FDIC money market fund for safety in the interim.

“I’ve given you a great gift, George;” said Clarence, “the chance to see what the world will be like now that QE has driven the prospective return of every risky asset class to zero.”

http://www.hussmanfunds.com/wmc/wmc150608.htm

If 40 years of performance is what made the PP attractive to you, I wouldn't let six weeks of performance shake your confidence too badly.

Just let it do its thing.  Looking all the time is very tempting, but it's not productive.

Averaging in over three years might be prudent since that is the longest flat period.

Thank you for all your responses so far. I really appreciate them.

For those who recommended gradually investing in the PP over the next year or two or three, would you suggest I book my losses now, and then ease back in?

I am already fully invested.

Moreover, I am already semi retired so to speak, so in all likelihood, I am not going to be adding any more funds in the portfolio in the foreseeable future. This makes it a bit more challenging I believe.

Again, thank you very much for your input.