Gyroscopic Investing

murphy_p_t wrote: I find this fascinating. PP 2.0 or PP for QEternity ?

What is your rebalance strategy, if any?

What are the theoretical underpinnings of the portfolio? Or...how did you pick the allocation? Haven't foreign equities and domestic equities largely syncronized so its just one big global market...not completely true, but is this a concern?

For re-balancing,  I imagine I will just balance them periodically in the same way as the PP.  "Foreign equities" is a pretty broad term, so it depends on what specifically you would invest in.  While it is true that a large drop in one market can temporarily affect all markets because of the level of global interconnectedness, if you diversify among enough countries, I think that is sufficient to against a protracted bear market in any given region/country.

Reub wrote: I think that if equities begin to fall that strategy could easily fail. Be careful!

Anything is possible, but here is how I look at it:  Which do I feel more comfortable with, given the current economy/interest rate environment in the U.S?

1. 50% Stocks from 20+ countries/regions around the world + 50% Gold

Or

2. 50% Cash in a single currency [USD] + 50% 30 year bonds from a single country [USG]

Personally, I feel [much] more comfortable in #1, which is why I went that route. 

systemskeptic...2009 would have been a great entry point for this portfolio.

It seems like you reject the philosophy of the PP, in particular the caution against looking at assets in isolation.

I share that temptation, as I expect most investors do. However, seeing the LTT performance in 2008/2009 as well as in 2011, leading up to the debt ceiling / US downgrade, my temptation has been eased.

Have you given due consideration to that guidance (avoid looking at assets in isolation) and found it to be lacking?

murphy_p_t wrote: It seems like you reject the philosophy of the PP, in particular the caution against looking at assets in isolation.

I don't reject the philosophy at all, I just have a different conclusion.  HB acknowledges that there are various market conditions (inflation, recession, deflation, prosperity) within a given economy.  With this I agree. 

The only difference is I am expanding it to a global scope, so that while you may have a recession / monetary crisis in one country, there are other countries which could be experiencing prosperity / sound money. 

It is true that countries with a very large market cap, such as the US, can bring down global markets as in 2008.  That is one risk in an equity-heavy portfolio.  On the other hand, the PP has the risk of holding 75% of it's assets in a single country.  So it really comes down to individual perception of diversification/risk.

TripleB wrote: I'm not surprised at all. Gold has been on a 30 year bull run and Foreign Equities have been on a significant bull run as well.

Gold only reflects relative increases or decreases vs money.  Its inherent value always remains the same.  That being said, its only been in a relative bull market for 12 years.

Until I can pay my bills with gold, the cash allows me to hedge against bills and the long bonds help me hedge my mortgage.

So the 4x25 makes more sense for me due to obligations, where the 50% stock and 50% gold could leave me in a really tight pinch.