Gyroscopic Investing

Posted: **Sun Jan 17, 2016 2:54 pm**

My guess. We get a big nasty drop. And we go right back up again.

Posted: **Sun Jan 17, 2016 3:12 pm**

Professor Disorientation wrote: In Aesop's fable of the Tortoise and the Hare, the tortoise wins the race. Sure the hare is confident, faster and flashy. But the Tortoise is disciplined, focused and unfazed by the hare. I liken the PP to the Tortoise.

What is less well known about the story of the tortoise and the hare is that the hare was one of the worst trash talkers in the whole forest racing league and played mind games with his opponents relentlessly.

In the lead up to the race with the hare, it's reported that the tortoise traveled with an entourage of professional greyhound racing dogs, each of whom wore a collar with a rabbit's foot dangling from it. Prior to the race starting, the tortoise is reported to have said: "I feel like a great chef preparing to make a giant batch of rabbit stew."

During the race, when the tortoise finally passed a mentally and physically exhausted hare gasping for breath, the tortoise is reported to have whispered in his ear: "Don't worry, the dogs will be here soon."

Posted: **Sun Jan 17, 2016 4:33 pm**

Pointedstick wrote: Hehe, where is that from?

I can't remember. That link is just to photobucket, but if I can find where I posted it a couple of months ago on this forum, it's probably the link to the original, which I will edit in below. First saw it on reddit.

EDIT: I googled

Code: Select all

finance app heisenberg other income

The real link would make your iTunes open with a message that it's available in the UK but not US store, so here's a link to a blurb about it instead:
http://www.blameitonthevoices.com/2015/ ... f-day.html

Posted: **Sun Jan 17, 2016 8:20 pm**

Desert wrote:
var wrote: I will be fine that's what asset allocations about. If spy goes down and Tlt will go up.
That's not always the case, though it's been pretty consistent in the past few decades of declining interest rates. Before that period, the correlations weren't negative, they were closer to zero.

of course. i checked it out in bogglehead simba spreadsheet. nothing perfect, but its close enough for me...

i dont want over tinker with my AA.

Posted: **Mon Jan 18, 2016 1:34 pm**

rocketdog wrote: I never sell an investment at a loss. I have the patience of a saint and can wait years for my bets to pay off.

This is a common speculating mistake that Harry discusses in "Why the Best-Laid Plans...".

Posted: **Mon Jan 18, 2016 6:14 pm**

l82start wrote: the moderation staff likes to stay with a traditional post content allocation, and allow the topic to drift within the 15% bands before resorting to re-balancing or ....God forbid... slice and dice thread splitting

I actually use a newsletter to moderate. $:-\$

Posted: **Tue Jan 19, 2016 11:50 am**

Welcome to the forum, Mr (Mrs?) blood! I love your user name. Great perspective.

Posted: **Tue Jan 19, 2016 2:01 pm**

Pointedstick wrote: Welcome to the forum, Mr (Mrs?) blood! I love your user name. Great perspective.

Yep.

Good stuff from CacklingBloodSlurper.

Strong first post from the latest member of the PP coven.

Posted: **Tue Jan 19, 2016 3:03 pm**

Jack Jones wrote:
rocketdog wrote: I never sell an investment at a loss. I have the patience of a saint and can wait years for my bets to pay off.
This is a common speculating mistake that Harry discusses in "Why the Best-Laid Plans...".

Thank you for reminding me of this. I found it in the hardcover. In case anyone wants to read along with the class:

Chapter 15
"Other Ways the Best-Laid Plans Go Wrong." p 219: "And a positive mental attitude can cause several bad things. The sense that you're sure to succeed can encourage you to hang on to a losing investment too long, to ignore defects in your strategy..."

p 224 'Going Wrong Avoiding Losses' "One of the qualities of a successful speculator is his readiness to accept losses...To say 'I can't sell because I don't want to lose money' is to hide from the problem. You already have a loss if the investment's value has declined from the price at which you bought. Selling only acknowledges the loss, it doesn't create it. It's true that selling now destroys all hope that the investment could someday be a winner. But keeping the investment makes you a prisoner to it, while selling the investment frees you to buy anything you want."

// end book quote
I struggle with this myself.

----
edited for formatting several times. I really f'ed this up in emacs.

Posted: **Tue Jan 19, 2016 3:13 pm**

MediumTex wrote:
Pointedstick wrote: Welcome to the forum, Mr (Mrs?) blood! I love your user name. Great perspective.
Yep.

Good stuff from CacklingBloodSlurper.

Strong first post from the latest member of the PP coven.

mathjak started out strong too!

Posted: **Tue Jan 19, 2016 3:37 pm**

Reub wrote:
MediumTex wrote:
Pointedstick wrote: Welcome to the forum, Mr (Mrs?) blood! I love your user name. Great perspective.
Yep.

Good stuff from CacklingBloodSlurper.

Strong first post from the latest member of the PP coven.
mathjak started out strong too!

But he never claimed to drink blood, so that's a big difference right there.

I don't think we've ever had a blood drinker here who turned into a bad citizen.

Posted: **Wed Jan 20, 2016 9:14 am**

PP is now beating S&P YTD. S&P has lost almost 11% just in the month of January. The PP is starting to show how in more volatile environments it does in fact work as expected and provide protection. TLT is up to 127.10, about $10 from where it had previously settled and my gold ETF (PHYS) has picked up some decent slack as well. The protection I'm getting right now makes me feel much better about the minor loss last year.

Posted: **Wed Jan 20, 2016 11:27 am**

PP must be blowing S&P 500 away by a longshot.

Small itty bitty concern that gold has yet to really push higher -- sure it is up $17 right now, but we were here just a week or so ago and went back down. And still only barely over $1100, jeez. But I'll take it.

In 2016 the gold and TLT up when stocks down followed by gold and TLT down while stocks up hasn't really been followed. stocks just haven't come back up.

The pounding the market is taken is amazing. The EM and SCV ETFs I bought earlier this year are down significantly. Glad I didn't go all in at one time. Now the question is do I still nibble and add to them or hold off? Bottom could be a ways off.

Regardless, my PP is down 0.26% for 2016. I am sure mathjak and many others in the market would kill for that right now.

Posted: **Wed Jan 20, 2016 11:40 am**

Cortopassi wrote: Small itty bitty concern that gold has yet to really push higher -- sure it is up $17 right now, but we were here just a week or so ago and went back down. And still only barely over $1100, jeez. But I'll take it.

I think we should give gold plenty of time. Like the Rio Grande carving the Grand Canyon time. But, one day, hopefully in our lifetimes or the lifetimes of our immediate heirs, the value will multiply. That is gold's superpower.

Posted: **Wed Jan 20, 2016 12:14 pm**

Sorry, yeah it's blowing away S&P YTD by a long shot. I was looking at my chart since inception and that is now beating S&P by a slight margin

Posted: **Wed Jan 20, 2016 3:56 pm**

Wow, this was quite a volatile day in the markets! No way would I have guessed we'd go back positive after 500+ down, and then finish 200+ down!

And the PP just went, ehh, whatever and did its thing.

Posted: **Wed Jan 20, 2016 4:24 pm**

+1 to the thread title! It's so much fun looking at panicked headlines but not being in the least worried. Sort of like snowfall predictions.

I'll also just remind everyone of something that was neatly laid out in the Permanent Portfolio book: after a big loss, you need gains far in excess of the loss to get back to where you were.

Let's say the PP is -2% last year, 0% this year, and 4% next year. Meanwhile, VTI is +2% last year, -20% this year, and +20% next year. After those three years, the PP will be up 1%, and VTI will be down 2%.

Despite that, people will have spent comparatively far more time bemoaning the PP's performance compared to VTI, and only a relatively short time during the market crash being thankful for the PP. Definitely a problem with the PP's design...it just doesn't have the entertainment value of watching the stock market.

Posted: **Wed Jan 20, 2016 6:13 pm**

sophie wrote: Definitely a problem with the PP's design...it just doesn't have the entertainment value of watching the stock market.

But we can watch. Like the people in southern FL watch the weather channel in January.

Posted: **Wed Jan 20, 2016 8:43 pm**

dualstow wrote:
sophie wrote: Definitely a problem with the PP's design...it just doesn't have the entertainment value of watching the stock market.
But we can watch. Like the people in southern FL watch the weather channel in January.

Too funny. We Winter in Southern Florida and my wife asked me right before I read your post why I was so absorbed watching news about the big Winter Storm expected in the Northeast this weekend and the stock market melt down if neither was impacting us

Thank you PP.

Posted: **Thu Jan 21, 2016 5:34 am**

It really pays to be stock light at this time.

Posted: **Thu Jan 21, 2016 7:04 am**

ochotona wrote: It really pays to be stock light at this time.

My guess is that most of us are "stock lighter" than we were three weeks ago. I think it's more correct to say that it's been good to be stock light YTD. Seriously, unless we know what is coming, how can we know what that it's a good time to be stock light? Not trying to pick a fight, ocho. You probably wrote that as a throw-away just to get the conversation started for the day. Though I'll admit it does feel like the equity pain could go on for a while.

Would you might sharing (sorry if you've posted this elsewhere) what your current AA is? I know that you don't love gold or LTTs at the current levels. Are you laden with cash just waiting for certain entry points?

Posted: **Thu Jan 21, 2016 9:49 am**

Not me, I'm stock heavy. Notice how miniscule our gains are with stocks declining. Equities will always be the main driver of returns.

Posted: **Thu Jan 21, 2016 10:00 am**

I am with Budd here. At 27% equities right now, on the way to (gulp) 40% over the year. 1% chunks at a time.

If the market continues tanking, seems like a decent a time as any to begin increasing stock allocation. My modified PP will be 40 stocks, 25 each gold/TLT and 10 cash, a slightly modified Golden Butterfly.

I hope not to be crying come Dec 31.

Posted: **Thu Jan 21, 2016 1:13 pm**

Cortopassi wrote: My modified PP will be 40 stocks, 25 each gold/TLT and 10 cash, a slightly modified Golden Butterfly.

It's not the Slightly Modified Golden Butterfly. It's The Cortopassi Prosperity Tilt Supreme!

That 10% cash allocation is probably OK if you are still young and your work prospects remain good even in a severe downturn. The 4X25 cash component can be a thing of beauty if an asset goes on sale big time, but that can sometimes take years to happen. I remember 2008 all too well when I was left on the sidelines with no cash to inject into stocks.

Cortopassi, I know you have written a bit about wanting to go more heavy on the equities. Do you see the above as a flat-out better portfolio or maybe just one that is more suited to your personality? Thanks.

Posted: **Thu Jan 21, 2016 2:06 pm**

Honestly, what is best suited to my personality would be 100% in a 5% yielding money market, which we may not see again until long after I'm retired.

I have done enough with Tyler's charts to convince me I need to up my equity to try and capture some more CAGR in the 13-17 years I have until retirement. I'm the first to say the future is unknowable and I should not be taking the historical chart returns as a sure thing. However, I am at the point where if I don't do this, and stick to 25% allocations I am at point A (4.8 CAGR per Tyler's latest) and point B with the Cortopassi Prosperity Tilt (6.2% CAGR)

If I retire in 15 years, that's 2x my money with the PP and 2.5x with the modified.

Not as much difference as I'd like but at the levels I am talking about, extra $$ in retirement will help more than less $$ will hurt. At least that's what I think, assuming there is still a social security safety net.

Lady in the office and her husband are 2 years from retirement. Have 3 million in investments. Obviously invested their money wisely. Even with a 2.5x return and continuing the insane savings rate I do right now, it is nearly impossible for me to ever get to that level. I will be lucky to retire with half that amount in investment accounts. Not shabby, but I will beat myself up again here, it should have been a shitload more were it not for 25 years of stupidity on my part thinking I could beat the system.

Gyroscopic Investing

Stocks Crashing! Thank God For The PP!!

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Re: Stocks Crashing! Thank God For The PP!!