Gyroscopic Investing

barrett wrote:

mathjak107 wrote: i would seek a vanguard or fidelity newsletter and let them call the shots.  it worked for me and kept me from myself.

But those newsletters have writers and researchers that change over time.

I think you take for granted that you have a special skill set that gives you favorable investing results.

mathjak107 wrote: market cycles recover fairly quick

Cortopassi wrote: I am 100% with barrett. 

I've been doing this for 25 years.  I have little skill at it, and I would get over run by emotions at the worst possible times.  I am the typical 2% average return person.

If I had a 50/30/10/10 like mathjak, I could guarantee when that next stock drop comes, I'd be itching to get out.

My intent is simply to continue saving as much as possible, into the standard PP, and basically hope that it works going forward.  I see there are a lot of thoughts and concerns on headwinds, the bond bull is over, stocks have to drop, gold will go below $1000 and stay there for years, the dollar will continue being devalued.

Hence my original title "No where to hide."

I am comfortable with 25% in each.  It may not win the day in returns, but lets me sleep at night.

dutchtraffic wrote:

mathjak107 wrote: market cycles recover fairly quick

Until they don't.

mathjak107 wrote: it is that thinking that has left many folks a whole lot poorer for the last 146 years as long term it never has happened.

mathjak107 wrote: the skill set for success is simple , no magic calls or insight from the marketing gods needed.

just stick to the plan with no timing in or out.

mathjak107 wrote: well the numbers speak for themselves. take any balanced fund you like , and compare the numbers .  let both go through extended periods of time so they include the best and the worst of times and tell us what you got at the end of 20 -40 years of investing.

want to talk about the near term coming up ?

well if we even go by jack bogles calculation which makes sense here is what you got in this low rate high valuation environment.

you have dividends  typically representing 1/3 of the markets returns and dividends are linked to interest rates.

so with dividends at 2% we are looking at total returns in the 6% range.

you have long term treasury's at the bottom of the rate cycle which took 40 years to get here.

if those bond rates go up even 1% that is a 30% loss in bonds.

now i am not that great at math but  my logic tells me a 6% gain with a pretty good chance of at least  a  40% loss can be a horrible way to kick off retirement. it can take decades for  you to heal if rates head back to their norm over many many years in the 6-7% range.

unless we have that remote flyer , counting on it may not be the bast way to go from here.


so here is what i see:

you can use the pp and bet  on some remote flyer to give you the edge , or you can bet on what , was , what is , and what stands a pretty good chance of meeting your retiremnet goals vs what more often than not under performed in that respect over the decades.

it certainly has never been back tested as to how it would have handled the worst of times in retirement . if it is anything like the longer term corporates  that the  trinity study used and had more failures then that certainly would not be the way to go in retirement , that is the part that scared me out.

mathjak107 wrote: you have long term treasury's at the bottom of the rate cycle which took 40 years to get here.

if those bond rates go up even 1% that is a 30% loss in bonds.

now i am not that great at math but  my logic tells me a 6% gain with a pretty good chance of at least  a  40% loss can be a horrible way to kick off retirement. it can take decades for  you to heal if rates head back to their norm over many many years in the 6-7% range.

mathjak107 wrote: because the permanent portfolio uses only long term bonds .  each 1  point rise on a 30 year is a 30% drop in value.  roughly 1% for each year to maturity. for sure you will see 20-25% on a 1% rise  .

unlike stocks which cycle around like day follows night eventually you may never see rates his low again as 40 year cycles can happen , they just did.

mathjak107 wrote: did gold rise ?  the long bond just went from 2.30% in january to 3.25% now .

mathjak107 wrote: because the permanent portfolio uses only long term bonds .  each 1  point rise on a 30 year is a 30% drop in value.  roughly 1% for each year to maturity. for sure you will see 20-25% on a 1% rise  .

unlike stocks which cycle around like day follows night eventually you may never see rates his low again as 40 year cycles can happen , they just did.

but that is not what you are going to experience , cash will not offset a drop in  the nav of your bonds.  right now TLT has lost all its interest this year plus 6% of the principal  as well since january .

mathjak107 wrote: once i hit retirement i would move the PP back in to a standard retirement allocation that i knew already survived 146 years of  rolling time frames and use that through retirement if i needed 4% withdrawals.

mathjak107 wrote: the model works out to 50% in equities , 30% bonds , 10% gold 10% cash

Year	mathajk	PP
1968	4.01%	4.23%
1969	-11.72%	-12.15%
1970	2.98%	2.50%
1971	8.43%	8.11%
1972	11.92%	16.03%
1973	-6.94%	5.13%
1974	-16.52%	-0.11%
1975	11.88%	-0.79%
1976	11.19%	5.96%
1977	-7.40%	-1.39%
1978	-1.32%	2.81%
1979	11.06%	24.63%
1980	6.75%	0.78%
1981	-10.52%	-14.10%
1982	17.62%	18.63%
1983	7.93%	-0.68%
1984	2.12%	-1.30%
1985	19.63%	16.16%
1986	15.42%	17.71%
1987	1.71%	2.62%
1988	4.40%	-0.68%
1989	15.90%	9.68%
1990	-4.62%	-4.54%
1991	16.48%	8.87%
1992	2.34%	0.49%
1993	7.21%	10.31%
1994	-3.57%	-5.07%
1995	22.23%	17.08%
1996	8.65%	1.77%
1997	15.67%	6.52%
1998	16.27%	11.37%
1999	7.40%	0.58%
2000	-4.27%	-0.45%
2001	-4.42%	-1.34%
2002	-7.10%	0.75%
2003	14.61%	11.44%
2004	3.10%	2.74%
2005	1.09%	4.38%
2006	8.87%	8.87%
2007	5.41%	9.08%
2008	-13.80%	2.88%
2009	11.64%	2.92%
2010	10.61%	11.89%
2011	1.33%	8.13%
2012	7.44%	4.72%
2013	10.59%	-3.93%
2014	6.67%	9.60%
Total	238.36%	222.86%

iwealth wrote: And the other main investment philosophy driver is wealth protection during those outlier events that don't concern you. So when you combine the desire for max drawdown reduction and wealth protection against all outlier scenarios I think you'd be hard-pressed to find a more appropriate allocation than the 4x25 PP.

mathjak107 wrote: standard portfolio's have weathered every storm the pp has  and went on in all cases to grow far more money in the end.

mathjak107 wrote: if those bond rates go up even 1% that is a 30% loss in bonds.

mathjak107 wrote: now i am not that great at math but  my logic tells me a 6% gain with a pretty good chance of at least  a  40% loss can be a horrible way to kick off retirement. it can take decades for  you to heal if rates head back to their norm over many many years in the 6-7% range.

MachineGhost wrote:

mathjak107 wrote: now i am not that great at math but  my logic tells me a 6% gain with a pretty good chance of at least  a  40% loss can be a horrible way to kick off retirement. it can take decades for  you to heal if rates head back to their norm over many many years in the 6-7% range.

Bogle isn't an expert at forecasting future returns.  Lets use Hussman's model that indicates 10-year stock returns are now negative including the 2% dividends.

What will you do now, sir?  Still think your 50%/30%/10%/10% is the way to go?

mathjak107 wrote: but that is not what you are going to experience , cash will not offset a drop in  the nav of your bonds.  right now TLT has lost all its interest this year plus 6% of the principal  as well since january .

that is offset but none of the cash.