Gyroscopic Investing

like the stock market rally's we have seen , a blip  up and then 2 steps back  again a week later . we are getting conditioned not to react emotionally good or bad  at this point .

Exactly.  I see gold is already rolling over.  Nice spike, but nothing has held for years.  I am numb to it.

TLT is also up a nice bit today.  Mathjak is right - it doesn't mean this isn't a blip that will reverse in a few days.  But I stick to my original theory - what we're seeing is the market having no clue which direction it's going in.  It will eventually pick and the asset that will do well will shine - enough to outperform the losers and make a nice return.  Not as high as if you just picked the winner and weighed it heavier, but enough to be satisfied with when you consider the relative safety we're currently enjoying from the swings in assets and emotions if we were trying to guess right now - it's just not for me.

I'm sticking with 25% gold for now.  I don't rule out a spike that sticks.  People were talking earlier that the theory is that threats to the dollar are what drives gold.  I don't know for sure, but that seems fairly logical to me.  I think there are more threats than just inflation and I think THREATS are all it takes to cause fear - if the threat comes to frutition or not.  I think people could very well get nervous about the dollar in global markets. 

I can understand the hesitation to getting into the gold game if you're just starting and thinking 25% is too much.  I've been there since it was $500/oz, so to me it makes sense to stick to it.

i think at least for the next five years getting any trend going may be a tough call.  bonds run up may be only temporary , stocks show single digit gains  at best based on dividends and interest rates  and gold looks like a fish out of water .

so i think for the next 5 years  we may have to pick out what you think will be the lead horse , cut  down the opposition some what from the other choice and reduce thems down and  hope your pick runs with the ball . my horse would be stocks since i think they can do okay  regardless of rates or inflation kicking up .

i think trying to cover all the bases equally will not only stifle gain but may make even turning positive much will be tough as assets get in each others way .

I think I know what your crystal ball thinks it says, but hope is not a good strategy.  I'd rather take my chances with being covered with all assets then overallocate to one that I hope will do best.

mathjak107 wrote: so i think for the next 5 years  we may have to take pick out what you think will be the lead horse , cut the opposition from th other choices down and  hope your pick runs with the ball .

i think trying to cover all the bases equally will not only stifle gain but may make even turning positive much will be tough as assets get in each others way .

And if you pick wrong?

I'd rather hedge my bets and get some of the upside (along with some of the downside), rather than go all-in and pick wrong, getting 100% of the downside.  Many have already said this, but that's the whole point of lazy portfolios like the PP - the point is to not have to try to pick the winner.

well isn't the pp hoping for a strong enough trend to over come the pull from opposing assets ? if it can't it stays bogged down at a loss for who knows how long .  no difference .

drumminj wrote:

mathjak107 wrote: so i think for the next 5 years  we may have to take pick out what you think will be the lead horse , cut the opposition from th other choices down and  hope your pick runs with the ball .

i think trying to cover all the bases equally will not only stifle gain but may make even turning positive much will be tough as assets get in each others way .

And if you pick wrong?

I'd rather hedge my bets and get some of the upside (along with some of the downside), rather than go all-in and pick wrong, getting 100% of the downside.  Many have already said this, but that's the whole point of lazy portfolios like the PP - the point is to not have to try to pick the winner.

if i pick wrong bonds still produce interest and it just may take stocks longer but they will do it . if i didn't think so i wouldn't be an investor at all  , i would sit in the bank .

anyone want to make a friendly bet that it is once again equity's that leads the charge out of this funk ?

mathjak107 wrote:if i pick wrong bonds still produce interest and it just may take stocks longwer but they will do it . if i didn't think so i wouldn't be an investor at all  , i would sit in the bank .

Ah!  Okay then.  Would you harangue people sitting in the bank for that reason?  That's what we're doing.  We don't think stocks will necessarily "do it".  We'll keep some stocks (25%) in case they do.

you just have to bet that the other guys on your team don't grab them by the shirt collar  and yank them back every time they are about to score .  you are taking the same risk as to a trend whether you think so or not .  you need a  much stronger trend  in something to have it pave the way then i would .  i can be positive on single digit equity returns even if rates hurt bonds  , the pp may not be able to  at this point in time if that is the case . . .

you have different risk , not nooooo risk .

mathjak107 wrote:you need a  much stronger trend  in something to have it pave the way then i would .

Yes, but then you need to be right about which asset class is going to take off, and we don't.

But the asset class that takes off will always be stocks...

not any less risk then you  betting on a strong enough trend to move something when opposing assets hold it back .  my bet is much less of a trend needed but on the most likely asset .

Cortopassi wrote: But the asset class that takes off will always be stocks...

usually  is that way  with fewer exceptions .

mathjak107 wrote: not any less risk then you  betting on a strong enough trend to move something when opposing assets hold it back .

Can you back that up quantitatively?

sure,  take any long term accumulation period of the typical 30 or 40 years  or the typical retirement time frame  of 35-40 years and what asset class has always produced the highest returns ? 

is it bonds ---no    is it gold -  noooooo

so if you want to bet the odds what do the odds say ?    do you really think that ownership in  the largest company's in the world  will not stand the best chance in the long term ?

That stocks have been on an unprecedented historic run which is unlikely to recur and which might have a major correction.

well right up to this minute nothing has changed  and the long term highest  outcomes are still equity's . . so do you want to bet what asset class  leads the  charge out of this ?

remember -thinking this time is different has been very costly .

mathjak107 wrote: well right up to this minute nothing has changed  and the long term highest  outcomes are still equity's . . so do you want to bet what asset class  leads the  charge out of this ?

No, I absolutely don't.  That's why I'm in the PP.

so then here is the deal .

your bet is that we are going to have very strong trends in assets so they can over come the weight  of strong  opposing assets .  my bet is a 50/50  mix that bets  stocks will have weak but positive returns  and the portfolio will move a head on that .

don't think for one second you are not betting on a particular outcome , you just are requiring a lot more gains in a non specified asset to work out . if returns are weak you lose . if returns in equity's are weak i can win  if not i lose . if returns are weak in all asset classes the pp loses as well . they need  higher gains to overcome that negative weight before moving forward on anything .

mathjak107 wrote: so then here is the deal .

your bet is that we are going to have very strong trends in assets so they can over come the weight  of strong  opposing assets .  my bet is a 50/50  mix that bets  stocks will have weak but positive returns  and the portfolio will move a head on that .

don't think for one second you are not betting on a particular outcome , you just are requiring a lot more gains in a non specified asset to work out .

I'm not attempting to shoot the moon here.  I don't want to risk losing everything in order to have a chance at winning big.  I want to not lose what I have.  I want to have steady gains which beat inflation.  I want low volatility.

Why do you assume everyone has the same goals you do?

risk losing eveything ?  when has a 50/50 mix ever lost money over even a 10 year , 20 year  tiime frame ?  forget about losing everything , , that is nonsense .

don't let the visions fill your head with what if's that are as remote as getting hit with lightning . you stand a better chance dying in an accident then a 50/50 mix going to zero with the largest corporations in the world . that didn't even happen in  any time frame containing world war ii in this country .

50/50?  You're here arguing against having "losing" assets pulling down winning assets.  Just earlier on this page you said "is it bonds ---no".

So which is it?  Do you believe in diversifying asset classes to hedge your bets or do you want to bet on the winner?

well i use a 50/50 mix . intermdiate term bonds will certainly not be the lead horse over the long term , equity's will . at times i hold reits too . no reason yet to veer , never was .

mathjak107 wrote: forget about losing everything , , that is nonsense .

I had you nominated already for dumbest comment of the year, but this one beats it.