Gyroscopic Investing

Posted: **Wed Nov 05, 2014 3:23 pm**

I don't see much crying, Reub, esp. in a thread called "The gold scream room."
And Lowe wrote:

I understand that part of the deal with the PP is that one of the assets should be performing badly

Posted: **Wed Nov 05, 2014 3:40 pm**

#@$$&**@@ !!!

Posted: **Wed Nov 05, 2014 3:55 pm**

It sure sounds like crying to me.

Posted: **Wed Nov 05, 2014 4:15 pm**

I think the "crying" or angst comes from the fact that 85% of us probably entered into the PP somewhere between 2010-2013 and haven't exactly seen it shine.

To commit to a portfolio strategy like the PP, or any for that matter, you have to be married to it over time.

I have no doubt, that over 30 years, the PP will work as intended.

When you look at it over the course of a year or a month, etc, you will always find times where it performs badly.

Posted: **Wed Nov 05, 2014 4:17 pm**

buddtholomew wrote:
Lowe wrote: You know, back in the 70's there was a good demographic reasons for a run up in the price of consumable goods. Namely, the baby boom. Babies born in the late 40s and the 50s were entering adulthood, and starting to buy cars, gas, and land. It would be interesting to see the relationship between nominal rates and inflation in that period, which as we know brought about gold's all time peak.

Is there a comparable demographic cause for the more recent run up in gold? What was the reason that people were buying houses in greater numbers, anyway?

...

For three years, every time I have rebalanced into gold, I have gotten burned (in that asset). I understand that part of the deal with the PP is that one of the assets should be performing badly. However at this point I feel like I am walking into a trap that I know is there. I don't expect to see gold prices rise till I am gray. I am happy that my 401k, at least, is in a Boglehead portfolio.
Lowe, we are living the same life. Tax-deferred assets entirely in a BH portfolio. I've been buying gold since 2011 and currently am down almost 25% on this asset. I keep telling myself to look at the PP as a whole, but a CAGR of almost 4% isn't too reassuring either.

Funny how the portfolio that is supposed to allow me to sleep at night is the one that keeps me wide awake...

Yeah, you've mentioned it before, maybe in this thread. It's truer every time.

Just a while back, I said I was considering putting new taxable funds into a BH portfolio. Of course I did not do that, but continued buying the whole PP.

Getting away from gold is making more and more sense, each time I come back to the issue. My half-cocked theory about demographics driving the rise of physical assets 2000 - 2011 even makes some sense. There is a bulge in the US demographic pyramid (smaller and later than the Baby Boom) which would have been walking into age ~18 years around 10 years ago.

http://www.indexmundi.com/united_states ... cture.html

For several years, the number of people entering adulthood would have been seen to increase. And adults buy more food, gas, and gold. The cohorts have begun shrinking since then. So the theory goes, until we get a new crop of babies, or immigrants, we can't expect another meteoric rise in gold.

Posted: **Wed Nov 05, 2014 4:26 pm**

My Variable is all in GDX and GDXJ. Still holding but losing money in hard bunches. I know a way to get it to reverse...sell it.

Posted: **Wed Nov 05, 2014 5:21 pm**

If stocks were in the midst of a 50% correction, there'd be a lot of cheering around here about the PP holding its ground while those crazy stock-heavy investors got what was coming to them. Now gold is in the midst of a 50% correction or so, and there's gnashing of teeth and anger over low single-digit CAGRs. It's easy to overlook that relative to a 100% gold portfolio, (or a 60% gold/40% whatever portfolio) the PP is holding its ground.

I've concluded that it's nearly impossible to contently hold this portfolio if your comparison index of choice is the SP500 or a 60/40 stock/bond portfolio...have to be happy with beating inflation by a few ticks over the years or move on to something more "risky".

Posted: **Wed Nov 05, 2014 5:36 pm**

Lowe, Are you the next great gold swami or are you just thinking out loud here?

Speaking of population pyramids, I found this funky site where you can check out the whole world or individual countries:

http://www.worldlifeexpectancy.com/worl ... on-pyramid

It starts in 1950 and plays through the present, then projects to 2050. Pretty cool. Don't know what the heck it might have to do with the future direction of the price of gold.

iwealth wrote: I've concluded that it's nearly impossible to contently hold this portfolio if your comparison index of choice is the SP500 or a 60/40 stock/bond portfolio...have to be happy with beating inflation by a few ticks over the years or move on to something more "risky".

So true, iwealth. Well put. I would also add that many of us (me included) seem to be paying a little too much attention to what has happened to the PP in the last five minutes. Any asset allocation should be scrutinized from all sides, but at a certain point you just have to let it do its thing or you can drive yourself nuts. My own goal is to keep myself and my wife financially comfortable for the next 40 years. All investments are bound to have bad patches during that kind of time horizon.

Posted: **Wed Nov 05, 2014 6:05 pm**

When I got into the pp, I wished and wished for cheaper gold b/c it seemed expensive.
Got my wish.

Posted: **Wed Nov 05, 2014 6:20 pm**

portart wrote: My Variable is all in GDX and GDXJ. Still holding but losing money in hard bunches. I know a way to get it to reverse...sell it.

100% of my variable portfolio is in GDX as well. I almost need a 100% return to breakeven. Feel completely trapped, but will only purchase additional lots if re-balancing bands are breached. I am well within tolerances after averaging down. Sad to be honest.

Posted: **Wed Nov 05, 2014 8:37 pm**

iwealth wrote: If stocks were in the midst of a 50% correction, there'd be a lot of cheering around here about the PP holding its ground while those crazy stock-heavy investors got what was coming to them. Now gold is in the midst of a 50% correction or so, and there's gnashing of teeth and anger over low single-digit CAGRs. It's easy to overlook that relative to a 100% gold portfolio, (or a 60% gold/40% whatever portfolio) the PP is holding its ground.

+1. It's all about perspective.

Posted: **Wed Nov 05, 2014 9:03 pm**

Stocks and bonds will always go up, and gold will always go down...until they don't!

Posted: **Thu Nov 06, 2014 9:28 am**

I see GLD....Green

it can't be.

Posted: **Thu Nov 06, 2014 10:03 am**

buddtholomew wrote: I see GLD....Green it can't be.

The extent of my Stockholm syndrome is palpable because I was happy today that the overall loss is small.

Posted: **Thu Nov 06, 2014 5:24 pm**

Gold swings so much that the only way I can hold it is physical.

I like being able to look into my locker and say. Why yes, there are 10 gold coins. And last year there were 10 gold coins. Maybe next year, I'll buy another coin and there will be 11.

I think of gold as 10,000 years of history where each 1 oz gold coin is worth either:
- 1 acre of mediocre farm land
- 1 beef on the hoof
- 1 month of unskilled manual labor

Next year it will be the same. And it will be the same forever in every part of the world.

So... I open my locker in a foreign land and I count my shekels and I say. Ah.... I have X months minimum wage. Or X acres of land. Or X beeves. And I am content.

Hopefully, the whole PP makes me money. But it is wonderful to see that my coins don't disappear on their own.

Posted: **Thu Nov 06, 2014 10:18 pm**

Mark Leavy wrote: Gold swings so much that the only way I can hold it is physical.

I like being able to look into my locker and say. Why yes, there are 10 gold coins. And last year there were 10 gold coins. Maybe next year, I'll buy another coin and there will be 11.

I think of gold as 10,000 years of history where each 1 oz gold coin is worth either:
- 1 acre of mediocre farm land
- 1 beef on the hoof
- 1 month of unskilled manual labor

Next year it will be the same. And it will be the same forever in every part of the world.

So... I open my locker in a foreign land and I count my shekels and I say. Ah.... I have X months minimum wage. Or X acres of land. Or X beeves. And I am content.

Hopefully, the whole PP makes me money. But it is wonderful to see that my coins don't disappear on their own.

I say the same thing about my beanie babies. No matter how the market goes, they stay cute and cuddly

Posted: **Fri Nov 07, 2014 8:54 am**

Looks like Wednesday was a good time to buy.

Posted: **Fri Nov 07, 2014 9:40 am**

Pointedstick wrote: Looks like Wednesday was a good time to buy.

Yes, or late last night in Hong Kong. LTTs up in early action as well. I am rubbing my hands together and dreaming of future riches. Think of all the jewels!

Posted: **Fri Nov 07, 2014 1:23 pm**

Thank goodness that there won't be any crying today!

Posted: **Fri Nov 07, 2014 1:26 pm**

Pointedstick wrote: Looks like Wednesday was a good time to buy.

+1

Posted: **Fri Nov 07, 2014 2:55 pm**

Yeah, just one or two more days just like this... and gold will be back to 0% YTD. $:-\$

@ barrett

I don't have to be a swami to see that the cards are stacked against another multi-year bull run in gold. Perhaps I'm not mistaken, but price inflation doesn't come overnight in places like the US. It take years. Nothing the Fed announces tomorrow is going to put gold back on its pedestal, or prevent its continued decline.

@ Reub

Wow, you're cool as a cucumber. You must never get upset about things you have no chance of controlling. Like the US President for example.

Posted: **Fri Nov 07, 2014 3:06 pm**

Lowe wrote: Yeah, just one or two more days just like this... and gold will be back to 0% YTD. $:-\$

I have gold down less than 1/2% for the year at present, since my records show that the last print for physical in 2013 was $1180. So one more day like this and it will be up almost 3% for the year.

Posted: **Fri Nov 07, 2014 3:25 pm**

I just looked at goldprice.org, and the current price is roughly 2% less than what it was on Jan 1 ($1202.30). Maybe I missed something, but if not, I don't know what to make of your numbers.

EDIT : Oh, I said YTD, tech.

Posted: **Fri Nov 07, 2014 3:52 pm**

Libertarian666 wrote:
Lowe wrote: Yeah, just one or two more days just like this... and gold will be back to 0% YTD. $:-\$

I have gold down less than 1/2% for the year at present, since my records show that the last print for physical in 2013 was $1180. So one more day like this and it will be up almost 3% for the year.

Tech, I've seen you use that $1180 figure a couple times now. I believe that's incorrect. The final spot for physical in 2013 was above $1200.

Posted: **Fri Nov 07, 2014 4:58 pm**

dragoncar wrote:
Mark Leavy wrote: Gold swings so much that the only way I can hold it is physical.

I like being able to look into my locker and say. Why yes, there are 10 gold coins. And last year there were 10 gold coins. Maybe next year, I'll buy another coin and there will be 11.

I think of gold as 10,000 years of history where each 1 oz gold coin is worth either:
- 1 acre of mediocre farm land
- 1 beef on the hoof
- 1 month of unskilled manual labor

Next year it will be the same. And it will be the same forever in every part of the world.
...
I say the same thing about my beanie babies. No matter how the market goes, they stay cute and cuddly

lol!
Yeah, I mean even though our coins are made of a "rare" metal, it is possible that they will one day be regarded as something like shares of a shaky tech stock, nothing more. It is comforting to count them, but I don't find much solace in gold. Only in the pp overall. (That's not a reference to chaps or overalls. I mean the pp, overall.

)

Gyroscopic Investing

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