Gyroscopic Investing

There are days that we just have to give some love to the gold gods.
This is one.Love you gold !

Now how do we string several of these love days together ?

upside wrote:

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.

Apparently my recollection was wrong. I went back and looked at my spreadsheet for 12/31/2013 and I have $1205 as the Kitco closing price that day. So with the close yesterday of 1178 it's down about 2.2% YTD.

annieB wrote: There are days that we just have to give some love to the gold gods.
This is one.Love you gold !

Now how do we string several of these love days together ?

The gods demand a sacrifice

dragoncar wrote:

annieB wrote: There are days that we just have to give some love to the gold gods.
This is one.Love you gold !

Now how do we string several of these love days together ?

The gods demand a sacrifice

There is no god...

The PP is like a student that gets D's on all of his tests and then gets an A on the final exam to average a C+. Down, down, down, and then an up day to squash the shorts. It's going to give everything back from Friday. Garbage.

buddtholomew wrote: The PP is like a student that gets D's on all of his tests and then gets an A on the final exam to average a C+. Down, down, down, and then an up day to squash the shorts. It's going to give everything back from Friday. Garbage.

No, no, no. The PP is like a student that gets average grades but becomes the most reliable, indispensable plumber in town.

For those of us with a queasy stomach, sometimes it is not a good idea to tour the sausage factor...

Whatever! Worst mistake I ever made was finding out about this portfolio. I'm done here for a while. There's nothing magical about this portfolio and the sooner you realize that, the better off you will be.

buddtholomew wrote:

dragoncar wrote:

annieB wrote: There are days that we just have to give some love to the gold gods.
This is one.Love you gold !

Now how do we string several of these love days together ?

The gods demand a sacrifice

There is no god...

The PP is like a student that gets D's on all of his tests and then gets an A on the final exam to average a C+. Down, down, down, and then an up day to squash the shorts. It's going to give everything back from Friday. Garbage.

That was my approach in college.  I called it gyroscopic education.

For perspective, the PP is down 0.7% today.  Maybe I missed the accompanying fire and brimstone. 

As an aside, I wonder if the PP gives some people grief because it's actually transparent enough that you know what's in it and can easily track the sub-components.  In contrast, the same person can buy a complex mutual fund but not even blink when it gyrates several multiples of that per day.  Maybe just buying a single diversified fund and never peeking under the hood just works better emotionally for certain personalities.

chart 8 & 11 tell me i need Au...btw...10 tells me why Au likely is out of favor now...

http://theeconomiccollapseblog.com/arch ... -s-economy

Tyler wrote: For perspective, the PP is down 0.7% today.  Maybe I missed the accompanying fire and brimstone. 

And for even more perspective, it's up 6.6% this year when there's basically no meaningful inflation.

Seems like it's been a good year so far to me.

Gold will see its day in the sun again.  Someday.  Just maybe not today.

In the meantime, what's the problem?  The portfolio is working exactly as designed.

buddtholomew wrote:
There is no god...

The PP is like a student that gets D's on all of his tests and then gets an A on the final exam to average a C+. Down, down, down, and then an up day to squash the shorts. It's going to give everything back from Friday. Garbage.

Not 100% accurate, but a great analogy nonetheless.

The thing is, I find it to be a comforting comparison whereas you don't seem to.

buddtholomew wrote:

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.

Wait, wait, wait:  you seem to have a hate-love-hate and mostly-hate relationship with gold (and actually, I haven't seen the love from you ever) but you have 100% of your Variable Portfolio in Gold Miners?  I think I have misunderstood you entirely.  I am very confused by this.

You reduced the amount of gold in your Permanent Portfolio to 20% due to your discomfort with it, and reported feeling much better.

buddtholomew wrote:I sold a portion of GLD in taxable to TLH, invested some of the proceeds in VEU (All-World ex-US) and the balance in Cash on 9/15.

PP Allocation: 30% equities (90% SPY, 10% VEU), 20% GLD, 25% TLT and 25% Cash. I am comfortable with this allocation and expect to hold indefinitely. Surprising what a 5% difference (GLD to VEU) can achieve for your peace of mind.

-- http://gyroscopicinvesting.com/forum/pe ... #msg103799

But while you are uncomfortable with gold, you at the same time are speculating that gold miners will do great -- and speculating on that with all of your speculative funds?  Shouldn't you be uncomfortable with gold miners as well?  I mean, I'm not trying to tell you you're wrong or what to think, but the price of gold and the fortunes of gold miners are generally considered to be related.  But clearly you have some dissension from that view and perhaps some interesting thoughts of your own, reasons for allocating this way, and I'd be interested to hear them.

LC475 wrote:

buddtholomew wrote:

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.

Wait, wait, wait:  you seem to have a hate-love-hate and mostly-hate relationship with gold (and actually, I haven't seen the love from you ever) but you have 100% of your Variable Portfolio in Gold Miners?  I think I have misunderstood you entirely.  I am very confused by this.

You reduced the amount of gold in your Permanent Portfolio to 20% due to your discomfort with it, and reported feeling much better.

buddtholomew wrote:I sold a portion of GLD in taxable to TLH, invested some of the proceeds in VEU (All-World ex-US) and the balance in Cash on 9/15.

PP Allocation: 30% equities (90% SPY, 10% VEU), 20% GLD, 25% TLT and 25% Cash. I am comfortable with this allocation and expect to hold indefinitely. Surprising what a 5% difference (GLD to VEU) can achieve for your peace of mind.

-- http://gyroscopicinvesting.com/forum/pe ... #msg103799

But while you are uncomfortable with gold, you at the same time are speculating that gold miners will do great -- and speculating on that with all of your speculative funds?  Shouldn't you be uncomfortable with gold miners as well?  I mean, I'm not trying to tell you you're wrong or what to think, but the price of gold and the fortunes of gold miners are generally considered to be related.  But clearly you have some dissension from that view and perhaps some interesting thoughts of your own, reasons for allocating this way, and I'd be interested to hear them.

Retirement Assets: BH Portfolio 65/35/5 equities, fixed income, precious metals and mining (GDX)
Taxable Assets: HBPP 4x25 + 3% in GDX to re-balance the 5% in retirement assets. I can't buy GDX any other way. Brokerage window does not allow.
Total Assets: 50/40/10 equities, fixed income, GLD and GDX

Hope this clears the ambiguity. Like you said, I have a love-hate relationship with gold, but I've never felt the love...

Budd,

At 10% of your total portfolio, I really don't understand all your angst about gold. Seems like you hold some long bonds and a bunch of equities. Haven't you had a good run in the last couple of years despite the down trend in gold? Even if it drops 20%, you are only down 2% overall, right?

buddtholomew wrote: Whatever! Worst mistake I ever made was finding out about this portfolio. I'm done here for a while. There's nothing magical about this portfolio and the sooner you realize that, the better off you will be.

Are you fracking serious?!!

buddtholomew wrote: Whatever! Worst mistake I ever made was finding out about this portfolio. I'm done here for a while. There's nothing magical about this portfolio and the sooner you realize that, the better off you will be.

Budd,

Very true.  There is nothing magical about the PP.

I don't know how you define good and bad, but for me, I like to see good growth with minimal risk.  The problem is in defining good growth and minimal risk.

Most of us would say that >4% CAGR over inflation is "good enough" growth for a safe, retirement account.  Sort of implied in that, is the measure of risk.  Let's say we want that 4% over any 10 year average.  And we never want to see a 20% drop or more.  (Maybe 15%?)

It turns out that that fairly simple recipe is damn hard to achieve in practice.  The PP has done reasonably well in the past.  The future, who knows?  There are a few other portfolios that have also done reasonably well in the past - depending on how you measure - but certainly nothing leagues better than the Permanent Portfolio.

I completely understand rejecting the PP based on the ups and downs which can be hard to swallow.  But what have you found that provides a better combination of growth and stability?  Serious question.  Rejection of one plan, assumes acceptance of another - even if it is stuffing the mattress with $2 bills.

MachineGhost wrote:

buddtholomew wrote: Whatever! Worst mistake I ever made was finding out about this portfolio. I'm done here for a while. There's nothing magical about this portfolio and the sooner you realize that, the better off you will be.

Are you fracking serious?!!

Conventional BH wisdom and their perspective on gold has been accurate for me personally. I have not witnessed the value gold provides in a well diverisifed portfolio of stocks, bonds and cash. Sorry.

buddtholomew wrote: Conventional BH wisdom and their perspective on gold has been accurate for me personally. I have not witnessed the value gold provides in a well diverisifed portfolio of stocks, bonds and cash. Sorry.

Clearly you did your research before investing in the PP and saw long gold bear markets in its backtested history. It's not like the price action should be a surprise given the current economic conditions. Strong dollar, no inflation, improving economy, stocks at all time highs - and yet you are miserable with your portfolio. That sucks.

I know you were just venting but to stick with anything in life you refer to as the "worst mistake I ever made" seems very counterproductive.

iwealth wrote:

buddtholomew wrote: Conventional BH wisdom and their perspective on gold has been accurate for me personally. I have not witnessed the value gold provides in a well diverisifed portfolio of stocks, bonds and cash. Sorry.

Clearly you did your research before investing in the PP and saw long gold bear markets in its backtested history. It's not like the price action should be a surprise given the current economic conditions. Strong dollar, no inflation, improving economy, stocks at all time highs - and yet you are miserable with your portfolio. That sucks.

I know you were just venting but to stick with anything in life you refer to as the "worst mistake I ever made" seems very counterproductive.

I suppose that I fall into the crowd that believed rampant inflation (QE) would erode my savings and gold was the only means to protect my wealth. Some see the glass as half full - PP up YTD, but I see it as half empty - the lost opportunity of allocating a significant sum to an asset that has blown up in my face.

Let me be more clear, worst investing mistake, not worst mistake.

buddtholomew wrote: Retirement Assets: BH Portfolio 65/35/5 equities, fixed income, precious metals and mining (GDX)
Taxable Assets: HBPP 4x25 + 3% in GDX to re-balance the 5% in retirement assets. I can't buy GDX any other way. Brokerage window does not allow.
Total Assets: 50/40/10 equities, fixed income, GLD and GDX

Hope this clears the ambiguity. Like you said, I have a love-hate relationship with gold, but I've never felt the love...

Thanks!  Hmm, that makes some sense.  But why have the GDX at all?  It's not part of the Permanent Portfolio.  It doesn't correspond to any economic condition.  And... it's gold-related, which, why would you want more of that?

Why not just ditch the GDX entirely, both in the "BH" portfolio and in the taxable assets?

Just trying to understand the thought process, because I still don't get it.

LC475 wrote:

buddtholomew wrote: Retirement Assets: BH Portfolio 65/35/5 equities, fixed income, precious metals and mining (GDX)
Taxable Assets: HBPP 4x25 + 3% in GDX to re-balance the 5% in retirement assets. I can't buy GDX any other way. Brokerage window does not allow.
Total Assets: 50/40/10 equities, fixed income, GLD and GDX

Hope this clears the ambiguity. Like you said, I have a love-hate relationship with gold, but I've never felt the love...

Thanks!  Hmm, that makes some sense.  But why have the GDX at all?  It's not part of the Permanent Portfolio.  It doesn't correspond to any economic condition.  And... it's gold-related, which, why would you want more of that?

Why not just ditch the GDX entirely, both in the "BH" portfolio and in the taxable assets?

Just trying to understand the thought process, because I still don't get it.

I previously had an allocation to VGPMX and switched to GDX in retirement accounts (rollover) when management left and the prospectus changed. I am since down 30+% and rebalanced to 5% of portfolio recently as bands were breached. I now own an additional batch in taxable at 3% of total.

I dont want to sell down 30% and lock in losses.

buddtholomew wrote: I previously had an allocation to VGPMX and switched to GDX in retirement accounts (rollover) when management left and the prospectus changed. I am since down 30+% and rebalanced to 5% of portfolio recently as bands were breached. I now own an additional batch in taxable at 3% of total.

I dont want to sell down 30% and lock in losses.

Well, if you think the prospects for GDX are not good, by selling it while down 30% you are not locking in losses, don't look at it that way; rather, you are getting out in the nick of time, escaping greater losses.

Don't fall into the "Previous Investment Trap".  Would you buy GDX today if you didn't own any?  If you would not, then should you fail to sell GDX today?

If you think that this investment is just going to go down, down, down, and it serves no purpose for you, in fact causing you endless angst, then to sell today is to get out at the top.  The past is gone.  It doesn't exist any more.  If the graph is going to go down in the future, then this is the peak, the tip of the mountain, right now.  The perfect time to sell.  The price in the past is irrelevant -- that's gone now.

buddtholomew wrote: I suppose that I fall into the crowd that believed rampant inflation (QE) would erode my savings and gold was the only means to protect my wealth.

But QE hasn't resulted in rampant inflation. Inflation is near zero. I used to believe this stuff too, but all the predictions have been 100% wrong for quite a few years. People who put huge amounts of money in gold have lost big time. I'm no gold bug; the only reason why I do is because it's in the PP and I appreciate its role in conjunction with other assets, but alone... not great, I don't think.

buddtholomew wrote: Some see the glass as half full - PP up YTD, but I see it as half empty - the lost opportunity of allocating a significant sum to an asset that has blown up in my face.

This strikes me as a terribly stressful way to view your investments. Unless you happened to choose the best asset this year, you've always lost the opportunity to put more of your money into it. But agonizing over your failure to anticipate the future seems to be a sure way to make yourself permanently miserable, since the investing future is always unknowable and the nature of hedging your bets means that the assets you're holding that aren't this year's winners always look like stinkers. That is simply the way of the PP--and most diversified investment portfolios, for that matter. When gold is going up, it will be because stocks are blowing up in your face, for example. The very nature of holding multiple uncorrelated highly volatile assets means that one is probably always making you feel sick, if looking at individual assets in your portfolio falling makes you feel sick.

If that's the way you feel, how about a low-volatility version of the PP? Say, 30% SHV, 30% IEI (shorter-term bonds), 30% SPLV (low-volatility stocks), 10% GLD.