Gyroscopic Investing

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buddtholomew wrote: Is BAC on sale? Its current NAV is 85% below the purchase price in 1991.

Sorry about the delay.  We're driving cross country and my ability (and willingness) to get online is iffy at times.

About BAC:  It could be a "closeout" sale. Or to listen to anti-bankster commentators, it could be a "going out of business" sale. 

ahhrunforthehills wrote: aren't pants a commodity? 

Only if they can't be mistaken for chaps. 

6 Iron wrote: I will panic (or more accurately, reassess) if/when assets stop behaving as they are designed, for protection of the portfolio over the long haul. 3 days of portfolio performance is meaningless noise.

A little over two years ago, I started the portfolio and bought gold at 1154. Within a month it had dropped almost 10% and it was a little painful to almost immediately buy more at 1060. Now, that move feels like genius, but it did not at the time. That has played out over and over again. My last purchase of TLT was at 88 or 89 dollars a share, but that was much less painful, a year later, despite what Bill Gross was saying around that time. The portfolio will tell you what to do if you will let it. But it will never guarantee days or weeks or months (18, I believe is the record) without loss. You just have to learn what to listen to and what to tune out.

Great post. I think everyone should read it, nervous or not.

Well guys, I guess I missed out on this entire emotional experience.

I have not looked at my PP in a while and thus I was not aware that it had a few bad days.

I think it is part of the process of getting acclimated to the PP to worry about it a lot early on.  

It's sort of like what would happen if every girlfriend/boyfriend you ever had had treated you very poorly, cheated on you, took you for granted, etc.  With such experiences in your background, if you met the perfect mate you would still probably have a period of being suspicious, jealous, hovering, etc. when you first got together.  Eventually, you would just relax and learn to enjoy a healthy relationship, though it would probably annoy you that so many others had treated you so poorly.  

Of course, even the perfect mate is going to have bad days, but it's much easier to love someone when you don't secretly believe that their true goal is to eventually take everything you have. 

I wonder what people have invested in before if this sort of movement would cause them to panic?

The volatility of the PP is far less than the 100% stock allocation plus some speculative LEAP positions I've used in the past.  The PP seems rather tame/boring to me, which causes me to tinker around the edges a bit... probably to my detriment.

amp wrote: The PP seems rather tame/boring to me, which causes me to tinker around the edges a bit... probably to my detriment.

That's what the variable portfolio is for.  Harry never said speculative investing was bad.  Just that you need to follow the rules. 

1. Never speculate with money you can't afford to lose.
2. Never dip into the PP to replenish losses from speculative investments that went bad.
3. Never speculate using leverage or any other method that could leave you owing more than you originally invested. (This last one is Craig's rule but I fully agree and suspect Harry would too.)

Oh, I'm well aware of the rules, just haven't internalized them at this point.  And I do believe they are good rules and appreciate the reminder, thank you.  

The problem is my little nest egg was made very actively by breaking some rules (bought bad paper others wouldn't touch, fixed it, sold it until the credit market crash in 2007).  It was a good gig while it lasted, I got out of the way before it collapsed, and I might dive back in some day.

Hard to change my spots, reading this site is my therapy.