Gyroscopic Investing

If you hold an ETF PP consisting of: VTI, GLD, TLT, and SHY you would have found your portfolio down .8% for the day and one of those rare days when all parts of the PP were down.  I'm done.  Well, not exactly.  After further checking, the PP is still up nearly 7% YTD.  Unfortunately, I still check the PP way too often but am starting to move away from the constant checking.  One thing that is certain, down days like today sure prompt a lot of interesting posts on this forum.  All are quite educational.  I guess it just goes to show the benefits of using the PP even on the days it drops in valuel.  I've learned a lot.  Thank You.

I hold VTI, IAU, TLT and SHV instead of SHY. I was down 0.639% today, but who's counting? Meanwhile 2 high flying stock mutual funds I follow were down 1.4% and 1.8%. Even PRPFX was down 1.18% today. I'm happy.  :)

[align=center]THE S&P 500 IS NOT AN APPROPRIATE BENCHMARK TO COMPARE THE PP TO!!![/align]

MachineGhost wrote: [align=center]THE S&P 500 IS NOT AN APPROPRIATE BENCHMARK TO COMPARE THE PP TO!!![/align]

Amen. It's a component of the PP so making it a benchmark is totally ridiculous!

For me the appropriate benchmark is the CPI + 4%. If it is beating the CPI by 4% then I am a very happy camper. If it fluctuates around that level year to year that is okay with me too, but that is my long run benchmark.

hpowders wrote: If it wasn't for emotions, we'd all be multi-millionaires. Buying high and selling low is no joke and is all too common, I bet. William Bernstein states that it takes years to train oneself into being a successful investor. I don't doubt it.

10 years on average.

buddtholomew wrote: Are bonds factored into your calculations? A 60/40 portfolio favored a lot better than 38% during that timeframe.

If you like the risk characteristics of that kind of porfolio -- which is 10% volatility -- then rebalance the PP to maintain a consistent 10% volatility.

There's many ways to skin a cat.

MediumTex wrote: Vanguard Wellington is pretty close to the mix above and it lost about 23% for the year in 2008.

Vanguard Wellesley is close to 60% bonds and 40% stocks and it lost about 10% in 2008.

I just don't like exposure to losses of that size.  I can't deal with them.  I get too freaked out.  I can't think clearly and I start making bad decisions.

Are you being facetious?  How are you going to deal with the PP's exposure to drawdowns of similar magnitude in another 1981 or 2008 style environment?  Just not look at the portfolio?

MachineGhost wrote:

MediumTex wrote: Vanguard Wellington is pretty close to the mix above and it lost about 23% for the year in 2008.

Vanguard Wellesley is close to 60% bonds and 40% stocks and it lost about 10% in 2008.

I just don't like exposure to losses of that size.  I can't deal with them.  I get too freaked out.  I can't think clearly and I start making bad decisions.

Are you being facetious?  How are you going to deal with the PP's exposure to drawdowns of similar magnitude in another 1981 or 2008 style environment?  Just not look at the portfolio?

I thought that the whole point of the PP is that you DON'T experience 10% drawdowns, at least at year end?!  Even when the stock market is down 50%. Are you referring to intra-year performance?

murphy_p_t wrote:

MachineGhost wrote:

MediumTex wrote: Vanguard Wellington is pretty close to the mix above and it lost about 23% for the year in 2008.

Vanguard Wellesley is close to 60% bonds and 40% stocks and it lost about 10% in 2008.

I just don't like exposure to losses of that size.  I can't deal with them.  I get too freaked out.  I can't think clearly and I start making bad decisions.

Are you being facetious?  How are you going to deal with the PP's exposure to drawdowns of similar magnitude in another 1981 or 2008 style environment?  Just not look at the portfolio?

I thought that the whole point of the PP is that you DON'T experience 10% drawdowns, at least at year end?!  Even when the stock market is down 50%. Are you referring to intra-year performance?

Daily peak to daily trough the PP has experienced 20% drawdowns.  The chances that a daily peak or daily trough coincide with the end of a year are very low - assuming random chance, each is about 1/260 so the combination is 1/67600 (and even this assumes no rebalancing event occurs between the run-up to the peak and the fall-off to the trough).  The year end standard deviation is about 8.5%.  Deviations of twice this (+/- 17%) from the average return (about 10%) shouldn't be terribly unexpected (95% of year end returns should be in this interval), so a -7% year end result wouldn't be too surprising.  The max actual drop over the last 40 years is about -4.1% (in 1981). 

MachineGhost wrote:

hpowders wrote: If it wasn't for emotions, we'd all be multi-millionaires. Buying high and selling low is no joke and is all too common, I bet. William Bernstein states that it takes years to train oneself into being a successful investor. I don't doubt it.

10 years on average.

I've been investing since 1982 and I'm still nowhere close to where I want to be as a "successful investor." Jack Bogle writes of an investor of modest means, never earning more than $25k a year, who began investing in 1974 with $500 here and there, who kept accumulating stocks and funds and NEVER sold. He followed Mr Bogle's advice to "stay the course". In 2004, his accumulated assets were worth $1,391,407. There's the role model.

hpowders wrote: I've been investing since 1982 and I'm still nowhere close to where I want to be as a "successful investor." Jack Bogle writes of an investor of modest means, never earning more than $25k a year, who began investing in 1974 with $500 here and there, who kept accumulating stocks and funds and NEVER sold. He followed Mr Bogle's advice to "stay the course". In 2004, his accumulated assets were worth $1,391,407. There's the role model.

To be fair, 1974-2004 lets you take advantage of the biggest sustained stock market boom in U.S. history. An investor starting in 1950 and ending in 1980 would not have done nearly as well.

Pointedstick wrote:

hpowders wrote: I've been investing since 1982 and I'm still nowhere close to where I want to be as a "successful investor." Jack Bogle writes of an investor of modest means, never earning more than $25k a year, who began investing in 1974 with $500 here and there, who kept accumulating stocks and funds and NEVER sold. He followed Mr Bogle's advice to "stay the course". In 2004, his accumulated assets were worth $1,391,407. There's the role model.

To be fair, 1974-2004 lets you take advantage of the biggest sustained stock market boom in U.S. history. An investor starting in 1950 and ending in 1980 would not have done nearly as well.

Yes, but there were many scary little dips along the way screaming "SELL!!". In 1973 the S&P 500 was down 14.6% and in 1974, -23.9%. So if he began investing toward the end of 1974, it was a great time to start. However if he began investing toward the beginning of 1974, he could have easily been shaken out. In 1975, the S&P 500 was up 37.2% and in 1976, +23.84%; enough gains to fool one into thinking "Holy S___T, I must be an investing genius!!"

Wish I could have started going all in on March 10, 2009, the mother of all great buying opportunities after the Great Depression, but nobody in my neighborhood rang the bell.

hpowders wrote: I've been investing since 1982 and I'm still nowhere close to where I want to be as a "successful investor." Jack Bogle writes of an investor of modest means, never earning more than $25k a year, who began investing in 1974 with $500 here and there, who kept accumulating stocks and funds and NEVER sold. He followed Mr Bogle's advice to "stay the course". In 2004, his accumulated assets were worth $1,391,407. There's the role model.

I'm sorry.  I should have said 10-years on average to become a successful trader.  A hobbyist investor is unlikely to ever grok it without sustained and serious overeffort.

For me, $1.3 million after 30 years is woefully insufficient.  After adjusting for inflation, that is worth only
$364,314.43 in 2004 dollars.  But then I have higher ambitions than to be "an investor of modest means".

MachineGhost wrote:

hpowders wrote: I've been investing since 1982 and I'm still nowhere close to where I want to be as a "successful investor." Jack Bogle writes of an investor of modest means, never earning more than $25k a year, who began investing in 1974 with $500 here and there, who kept accumulating stocks and funds and NEVER sold. He followed Mr Bogle's advice to "stay the course". In 2004, his accumulated assets were worth $1,391,407. There's the role model.

I'm sorry.  I should have said 10-years on average to become a successful trader.  A hobbyist investor is unlikely to ever grok it without sustained and serious overeffort.

For me, $1.3 million after 30 years is woefully insufficient.  After adjusting for inflation, that is worth only
$364,314.43 in 2004 dollars.  But then I have higher ambitions than to be "an investor of modest means".

To me it's all play money since I have a very good monthly pension plus SS and no debt.

PP up .59% today.

Anyone see the pattern here?

MediumTex wrote: PP up .59% today.

Anyone see the pattern here?

Take gold out of the equation the past few days and we all have a lot less gray hair? I kid, of course.

iwealth wrote:

MediumTex wrote: PP up .59% today.

Anyone see the pattern here?

Take gold out of the equation the past few days and we all have a lot less gray hair? I kid, of course.

Take gold out of the equation the past few years and we all have a lot more gray hair.

As we note in the book, for a PP investor gold is a tool, not a religion.

Gumby wrote: ↑Wed Mar 14, 2012 5:48 pm Budd, you may find it helpful to take a look at your comments the last time you got nervous...

See: Sep 26, 2011: Weather the Storm...
...and: Sep 28, 2011: Hey Look...
...and: Aug 11, 2011: Nauseous

We all remember what happened after August, last year. The PP turned out to be the one of the best portfolios in the market right after you posted that.

It all comes down to the fear/elation factor...

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I've obviously been reading lots of old posts in this Forum and have learned certain things about certain people.

Budd started this Topic almost 8 years ago. As Gumby pointed out above this had already been a recurrent theme with Budd. Budd seems to have remained active until nearly a year ago. Therefore, another 7 years passed from when Budd started this Topic. From memory it seems that this continued to be a recurring theme with Budd?

If all I've said is true, then would Budd be the "Doubting Thomas" of this Forum? Although my analogy fails when I cannot name who is the "Jesus" in this Forum who successful stopped Budd from doubting.

Vinny

Yea budd was definitely a Doubting Thomas. I think he did settle on an allocation that worked for him (he was a pretty successful dude).

yankees60 wrote: ↑Mon Jan 20, 2020 11:23 am
I've obviously been reading lots of old posts in this Forum and have learned certain things about certain people.

Budd started this Topic almost 8 years ago. As Gumby pointed out above this had already been a recurrent theme with Budd. Budd seems to have remained active until nearly a year ago. Therefore, another 7 years passed from when Budd started this Topic. From memory it seems that this continued to be a recurring theme with Budd?

If all I've said is true, then would Budd be the "Doubting Thomas" of this Forum? Although my analogy fails when I cannot name who is the "Jesus" in this Forum who successful stopped Budd from doubting.

Vinny

I don't think anyone quite stopped him from having his doubts and worries about the PP -- particularly gold.

He unfortunately was banned, so that's why you don't see any lamentations coming from him anymore.

yankees60 wrote: ↑Mon Jan 20, 2020 11:23 am If all I've said is true, then would Budd be the "Doubting Thomas" of this Forum?

His posting conduct was more troublesome than that. He clearly had a lot of critiques of the PP, which is fine, but he posed them in an accusatory combative way. He was asked a few times, if you hate the PP so much, why don't you just stop using it and leave us alone? He'd ignore that and go back to needling. I'm not sure whether it was trolling, or if he found it therapeutic to beat up on volunteer forum members.

A recurring theme was a strawman argument where he'd say the PP failed because it didn't do X, where X is something that was never actually promised. E.g. he seemed to believe that it should never have a down day, then on every down day come in and post a sky-is-falling rant. No one ever claimed the PP is immune to down days, just that it has relatively low volatility. Etc.

Mathjak did the same thing before his (temporary) ban. It appears that the ban has been lifted and his tone has changed, which I'm happy to see. Mathjak what brought on the change of heart?

Budd’s posts began as contrarion takes on the HBPP performance, but ended up as personal attacks. Our moderator gave him every opportunity to retract, but he refused.

Mathjak posted prolifically all over the place. Some people felt he was hijacking conversations. That problem seems to have been resolved when he was given his own thread in the Variable Portfolio section.

I got nervous when I saw this this morning.

sophie wrote: ↑Thu Feb 06, 2020 8:01 am Mathjak did the same thing before his (temporary) ban. It appears that the ban has been lifted and his tone has changed, which I'm happy to see. Mathjak what brought on the change of heart?

I simply brought facts , data and a view from the outside to the forum ..I still do as I am not convinced rising rates as a trend will not eventually be kryptonite to the pp in the modern day investing world .....so nothing changed

I use it more as my variable portfolio