Gyroscopic Investing

sophie wrote:OK, so how many people switched to the Golden Butterfly in the past year?

I have a feeling that a very good time to do that is going to be coming up sometime in the near future.

I've gone that way in my retirement accounts. I had sort of a 30/30/30/10 mix but stocks have gone up so much that I was close to 40/25/25/10. Because I want to do some Roth conversions in the coming years, the higher cash allocation will allow me to pull from cash for a couple or three years without having to sell other assets when they are down. I just don't really love 25% gold in a retirement account and am bond shy at the moment.

In taxable (due to my weird "savings bonds with lots of interest gains" issue) I'm foregoing long bonds but finally building up the physical gold. So, if one counts savings bonds as cash, I'll be at something like 30% stocks, 20% gold and 50% cash in that account. Just have to have a bunch of cash in the coming years to live off of and to pay some capital gains on an apartment sale. This is my Cash Butterfly Portfolio, aka the Golden Desert Supreme (hold the onions please).

And in reference to Tyler's last post, the above helps me to spend more time ignoring the markets. It may not be perfect but it seems to be the solution that gives me the fewest issues.

Sophie, please explain why you think a shift to the GB might be a good option. Thanks.

barrett wrote:Sophie, please explain why you think a shift to the GB might be a good option. Thanks.

If I were to guess, she's predicting that a stock correction (or worse) will happen soon, which would be a good time to make the PP->GB shift.

Yes, it was a bit tongue in cheek. There's a lot of sentiment about an upcoming stock market correction, and I'm as vulnerable to that as anyone else.

I also figure that the moment I switch to a golden butterfly, the market will immediately go plunging down!

sophie wrote:Yes, it was a bit tongue in cheek. There's a lot of sentiment about an upcoming stock market correction, and I'm as vulnerable to that as anyone else.

I also figure that the moment I switch to a golden butterfly, the market will immediately go plunging down!

Now you sound like that dude budd.

We all have our Budd moments.

I just can't go through another event like 1999-2000 and 2008, where I lost a lot of ground due to being over-invested in stocks. I've noticed that over on Bogleheads, the sentiment is shifting from 60/40 being a good default portfolio to the ideal being 80/20. Just seems to be a sign that a big market correction is just around the corner.

sophie wrote:We all have our Budd moments.

I just can't go through another event like 1999-2000 and 2008, where I lost a lot of ground due to being over-invested in stocks. I've noticed that over on Bogleheads, the sentiment is shifting from 60/40 being a good default portfolio to the ideal being 80/20. Just seems to be a sign that a big market correction is just around the corner.

Corner being,,,, about now...

sophie wrote:I've noticed that over on Bogleheads, the sentiment is shifting from 60/40 being a good default portfolio to the ideal being 80/20.

In my experience the Bogleheads are still relatively conservative. Having any bonds at all is passe in many financial circles these days, and I do think a lot of young people who started investing after 2009 are going to be in for a rough introduction to their own true risk tolerance pretty soon.

BTW, a prominent poster at Bogleheads recently pointed out how even Vanguard recommended portfolios have crept towards more risk lately. Prior to 2010 or so all of their target date funds included a notable allocation to short-term reserves (cash). But that asset class has mysteriously disappeared from their documentation during the recent stock run.

The volatility is astounding in comparison to last year.
Only stability I see today is in SCV and REIT.
You taking the plunge @Sophie?

Not yet, but what I might do is work gradually up to 40% stocks by buying them preferentially with new contributions, instead of shifting all at once.

I am going the other way. Just lowered to 45%.

Is the market getting hot again?

Gut feelings are welcome

I think it's just in a trading range frankly

Who knows, Happy Man?
I’m still putting in a few hundred dollars every week.

HappyMan wrote: ↑Sat May 12, 2018 4:27 am Is the market getting hot again?

Gut feelings are welcome

I know predictions are not his thing but I wish Tyler would weigh in on this thread. I thought I read a post of his recently that the Shiller CAPE 10 Ratio might not be all it's cracked up to be (or something like that).

An indicator of some sort is even sweeter! Let the guy know we are ears around here

[deleted]

with 91% of companies reporting earnings for 1st quarter , they are up 26% over last year . that sits well for equities . inflation is low and so far the pessimism is high . bull markets have never ended with this much pessimism .

i warned for years that long term bonds and gold could be problems going forward . it has generally been stocks that run with the ball and i could not see having LT bonds and gold putting so much pressure on whatever gains stocks were able to muster.

i run a 50/50 mix being retired but the bond funds i do use are diversified with most of it not all that interest rate sensitive so they have been holding up okay .

as most know i use the fidelity insight models , have been for decades .

so far ytd the conservative income model which is 23% equities is down 1%. that was up 7% last year.

the growth and income model 60/40 is up 3% . that was up 17% last year

and the growth model is up 6% , that was up 24% last year .

so even if we fall a bit there is quite a lot of cushioning because the past years were so good .

1. Don't believe anybody who tells you they are retired and then reports 0% cash in their portfolio.

2. No one knows for sure, but I have to think the stock market is reaching dangerous territory when stock bugs tell us how happy they are with their 100% stock portfolios. I can hear the howling even now, but before you reach for the return button, consider this:

-What would you think of someone who was 100% in cash?

-What would you think of someone who was 100% in 30 year Treasury bonds??

-What would you think of someone who was 100% in gold???

mathjak107,

What percent of your portfolio do you hold as gold?

jhogue wrote: ↑Mon May 14, 2018 10:08 am -What would you think of someone who was 100% in cash?

-What would you think of someone who was 100% in 30 year Treasury bonds??

-What would you think of someone who was 100% in gold???

I would consider 100% T-Bills super conservative but not insane if one were older and using a low withdrawal rate. Or were these question rhetorical?

stuper1 wrote: ↑Mon May 14, 2018 10:57 am mathjak107,

What percent of your portfolio do you hold as gold?

zero , no gold . 50% equities /46% assorted bond funds and about 4% cash.been supporting us for years .

mathjak107 wrote: ↑Mon May 14, 2018 3:37 am with 91% of companies reporting earnings for 1st quarter , they are up 26% over last year .

Hi,

Where can one find these statistics?

Also, is there a way to track hit-or-miss of forecast on earnings? In other words, when they forecast earnings of a company, is there statistics whether they hit or miss?

mathjak107,

You don't believe in long bonds for times of deflation, and you don't believe in gold for inflation and uncorrelated diversification. I am curious, why do you like to read and post on this forum, which is set up around an investing strategy that believes in both of those things?

stuper1 wrote: ↑Mon May 14, 2018 9:57 pm mathjak107,

You don't believe in long bonds for times of deflation, and you don't believe in gold for inflation and uncorrelated diversification. I am curious, why do you like to read and post on this forum, which is set up around an investing strategy that believes in both of those things?

i don't believe gold and long term bonds are the place to be for the last few years . i only post in the variable forum . the mods removed my ability to post in the other forums when i warned a year ago about hanging on to high positions in gold and long term bonds in rising rates . the equal weightings have anything but an equal chance of playing out , especially when rates rise and the economy is growing .

for 30 years i have always used a dynamic portfilio that changes as the big picture changes as well as my needs . deflation is sure not an issue and rising rates are a game changer . so at this point i have had no use for either.

the portfolio's i use have done very well , grew a lot of money over the years and have not been a problem . they range from 40 to 60% equities in retirement , currently 50%.prior to retiring i was always 100% equities .

prior to retiring i never saw the logic to mitigating temporary short term dips when you have a long term perspective , why permanently hurt long term returns to mitigate temporary short term dips . it never made sense to me until i needed more shorter term money in retirement .

there is no correlation that going with less equities keeps you in the game longer . those who opt for more conservative models are typically going to have lower bad behavior points and still exhibit the same bad investor behavior .

in fact you see in the pp forum all the time the high fiving and back slapping because they side stepped a dip in equities but those dips they missed are down to levels that are still way higher than they would be following a very conservative model .

it is like my 25% income model is still down about .75% ytd . the growth and income model i run which is 60/40 is up 3% and the 100% equity growth model up 6% . so yeah the growth model fell more but it fell from levels the income model would never have seen .

Ok, I've read all of that info that you just posted many times in the past. It's almost like you have it on auto-repeat or something. Anyway, you still didn't answer my question on why you like to read and post in this forum that is set up around a very different viewpoint than yours?