Gyroscopic Investing

Posted: **Fri Jul 10, 2015 9:09 am**

all that matters is you are happy with the results. as for me , i will keep maturities very short and not gamble heavy on rates . i rather place my bets on equity's than interest rates falling at this stage..

Posted: **Fri Jul 10, 2015 9:23 am**

On the bright side, at least in this forum, the people that complain most about the PP don't actually hold their entire portfolios in the 25/25/25/25 allocation. So yes, it'd appear that the rest are happy and/or not paying attention to the daily ebbs and flows.

There's not a single person around here that uses a 25/25/25/25 allocation that has lost money if they've held for longer than 12 months. What else can be said?

Posted: **Fri Jul 10, 2015 9:27 am**

they may end up severely under funded for that luxury and that is the danger.

Posted: **Fri Jul 10, 2015 9:38 am**

mathjak107 wrote: they may end up severely under funded for that luxury and that is the danger.

You can't keep saying "as long as people are happy" and then follow-up with "but you are dooooomed". Feels like the religion thread

Posted: **Fri Jul 10, 2015 9:43 am**

iwealth,

Thank you for a good chuckle... Your portfolio sucks, but, hey, if you're happy...

Posted: **Fri Jul 10, 2015 9:45 am**

TLT's volatility increases as rates get lower, right? It seems very volatile lately.

Posted: **Fri Jul 10, 2015 11:16 am**

iwealth wrote:
mathjak107 wrote: they may end up severely under funded for that luxury and that is the danger.
You can't keep saying "as long as people are happy" and then follow-up with "but you are dooooomed". Feels like the religion thread

i wouldn't say doomed , i would say can be doomed.

the reality is that it does fall way short over the long haul over all climates we have had because it is so conservative and even with the bonds and gold the low equity allocation still dominates the final balance . . if you can live with that and the final balance great . but if you fall way short than yeah your retirement can be doomed as envisioned and cuts made in the plan . .

if you already made your money and are just looking to preserve it then good choice,. to dependent on low rates for my taste but i would not say you made a poor choice.

Posted: **Fri Jul 10, 2015 1:48 pm**

mathjak107 wrote:
iwealth wrote:
mathjak107 wrote: they may end up severely under funded for that luxury and that is the danger.
You can't keep saying "as long as people are happy" and then follow-up with "but you are dooooomed". Feels like the religion thread
i wouldn't say doomed , i would say can be doomed.

the reality is that it does fall way short over the long haul over all climates we have had because it is so conservative and even with the bonds and gold the low equity allocation still dominates the final balance . . if you can live with that and the final balance great . but if you fall way short than yeah your retirement can be doomed as envisioned and cuts made in the plan . .

if you already made your money and are just looking to preserve it then good choice,. to dependent on low rates for my taste but i would not say you made a poor choice.

Harry Browne's Rule #1 is: "Your career provides your wealth". You're advocating taking big risks in the stock market in order to get rich without working. It might work... But it might not.

Posted: **Fri Jul 10, 2015 3:38 pm**

mathjak107 wrote:
iwealth wrote:
mathjak107 wrote: they may end up severely under funded for that luxury and that is the danger.
You can't keep saying "as long as people are happy" and then follow-up with "but you are dooooomed". Feels like the religion thread
i wouldn't say doomed , i would say can be doomed.

the reality is that it does fall way short over the long haul over all climates we have had because it is so conservative and even with the bonds and gold the low equity allocation still dominates the final balance . . if you can live with that and the final balance great . but if you fall way short than yeah your retirement can be doomed as envisioned and cuts made in the plan . .

if you already made your money and are just looking to preserve it then good choice,. to dependent on low rates for my taste but i would not say you made a poor choice.

This is why I have always said that "age in PP assets" is the way to go. No more than that! For example, being 58, I should be 42% invested in other vehicles such as Boglehead 60/40.

Posted: **Fri Jul 10, 2015 3:59 pm**

Xan wrote:
mathjak107 wrote:
iwealth wrote: You can't keep saying "as long as people are happy" and then follow-up with "but you are dooooomed". Feels like the religion thread
i wouldn't say doomed , i would say can be doomed.

the reality is that it does fall way short over the long haul over all climates we have had because it is so conservative and even with the bonds and gold the low equity allocation still dominates the final balance . . if you can live with that and the final balance great . but if you fall way short than yeah your retirement can be doomed as envisioned and cuts made in the plan . .

if you already made your money and are just looking to preserve it then good choice,. to dependent on low rates for my taste but i would not say you made a poor choice.
Harry Browne's Rule #1 is: "Your career provides your wealth". You're advocating taking big risks in the stock market in order to get rich without working. It might work... But it might not.

first of all big risks ? there is a difference between big risks and volatility . the normal market cycles are volatility if you are in it for the long haul as long as you use diversified funds .

a 60/40 or 50/590 mix is hardly risky

even 100% equity has produced nothing but good returns over every long term period . no one lost a dime ever as long as they stayed the course for the long term.

i can tell you there were way more failures using 25% equity's in retirement than using 50/50 60/40 or even 100% equity's.

Posted: **Fri Jul 10, 2015 4:02 pm**

mathjak107 wrote: i can tell you there were way more failures using 25% equity's in retirement than using 50/50 60/40 or even 100% equity's.

...in portfolios where the only other option is bonds.

Posted: **Fri Jul 10, 2015 4:03 pm**

Reub wrote:
mathjak107 wrote:
iwealth wrote: You can't keep saying "as long as people are happy" and then follow-up with "but you are dooooomed". Feels like the religion thread
i wouldn't say doomed , i would say can be doomed.

the reality is that it does fall way short over the long haul over all climates we have had because it is so conservative and even with the bonds and gold the low equity allocation still dominates the final balance . . if you can live with that and the final balance great . but if you fall way short than yeah your retirement can be doomed as envisioned and cuts made in the plan . .

if you already made your money and are just looking to preserve it then good choice,. to dependent on low rates for my taste but i would not say you made a poor choice.
This is why I have always said that "age in PP assets" is the way to go. No more than that! For example, being 58, I should be 42% invested in other vehicles such as Boglehead 60/40.

not the greatest way either . just wait until all these retires that are 60 and 70% see their statements from the down turn in bonds . they will freak .

loading older people up with bonds as they turn the corner without regard for what is happening around them is insane .

investing is not easy , there is no simple answer . you need to pay attention and adjust with the big picture . age based investing is a terrible way to go .

telling a 25 year old with no pucker factor they should be 80% in stock because they are young is just as wrong.

Posted: **Fri Jul 10, 2015 4:14 pm**

Yes, but a 70 yr old would still have 30% in a 60/40 type vehicle which would probably be doing quite nicely in that scenario.

Posted: **Fri Jul 10, 2015 4:20 pm**

Reub wrote: Yes, but a 70 yr old would still have 30% in a 60/40 type vehicle which would probably be doing quite nicely in that scenario.

may be , not all glide paths follow that . some may be more ,some may be less and some may have no equity's .

as far as doing well ? , if they are retired and 30% equity at a 4% swr they would have only an 86% success rate in the past , meaning they already had more failure periods then is acceptable and that was with a 40 year bull market in bonds which may not happen much longer.

the current updated trinity study shows 35-40% as the minimum that produced acceptable success rates

with bonds poised to fall more likely than not , stocks struggling being fully valued and gold just sucking in general there is not a whole lot to invest in .

so the prettiest face in the morgue to me is equity's since everything has overly long cycles.

a low interest rate bond fund portfolio and some equity index funds to me makes the most sense.

Posted: **Fri Jul 10, 2015 4:34 pm**

mathjak107 wrote: even 100% equity has produced nothing but good returns over every long term period . no one lost a dime ever as long as they stayed the course for the long term.

But lots of people lose their lunch in 100% stocks. And I don't think it's just because they are poor investors.

Practically speaking, what percentage of people stay the course and never touch their investments for the long-term? Never switch funds perhaps for a lower expense ratio or because their fund closed. Never tax loss harvest. Never follow a newsletter or adviser. Never be tempted by that hot new Apple or Nortel stock everyone is talking about. Never take money out to buy a house, pay for college, build a pool, or cover a medical bill. Never panic in a falling market and move to cash to ride it out. Never been fired and needed the money. Never switch allocations back and forth after reading too many message boards. Never retired, voluntarily or not.

I personally believe that the idea that any investor can sit on a single fund for 30 years without making a single move is largely a myth perpetuated by backtesting spreadsheets. Real life is a lot more complicated, and once you account for deposits and withdrawals the portfolio volatility can't be dismissed so quickly. Still, most people ignore it because it's too hard to quantify.

Basically, I believe the statement that "no one lost a dime (in 100% stocks) ever as long as they stayed the course for the long term" is academically correct but practically irrelevant.

Posted: **Fri Jul 10, 2015 4:38 pm**

well if we never had a period longer than 15 years to date where at some point you couldn't sell diversified funds at a profit how is it anything other than investors acting badly if they lost money ?

they either mismatched time frames , were overly invested for the pucker factor or just tried to time things..

you can't blame markets when it is people doing the wrong thing.

how many can even stick with the pp long term ? i know i couldn't when i tried it back in the 1980's.

so trying to blame markets for investors poor results is not being accurate .

conventional investing isn't about sitting on a single fund for 30 years or even a portfolio . in fact i have not sat on most funds longer than 2 or 3 years . a good investor molds and nudges the portfolio over the years to fit .

there are funds that work well when the dollar is strong and funds to own when it is weak . there are bond funds to own when rates fall and different ones when they rise.

it is the total at the end that is the culmination of whatever you do .

my first 20 some odd years were a growth model that used all different funds .

then as i got closer to retirement i went from the growth model to a split between 2 different models.

a 30 equity and 70% bond mix and a growth and income model that is 70/30.

i used that for 7 years and last week designed my own retirement model i want to use .

what i didn't do is pick a buy and die allocation and try to use it for a lifetime . if i used the pp all those years i would have a million dollars less .

Posted: **Fri Jul 10, 2015 4:48 pm**

Read that second paragraph again. Job loss (often coinciding with market crashes, BTW), buying a home, medical bills -- there are tons of good reasons to withdraw money that have nothing to do with timing or pucker factor.

And don't forget survivorship bias in these long-term analyses. 40% of the mutual funds active in 2004 closed by 2014. 20% of the 5-star Morningstar funds in 2002 did not survive the decade. So much for the long term.

My point is that not every life event can wait until you personally can turn a profit. If one personally has the money, patience, and luck to wait it out that's great. Interestingly, while you advocate for the long term you clearly move around quite often. Real-life investing is a lot more complicated than most people realize. I'm just trying to clear up what I see as an over-simplification.

Posted: **Fri Jul 10, 2015 4:50 pm**

Tyler wrote: Read that second paragraph again. Job loss (often coinciding with market crashes, BTW), buying a home, medical bills -- there are tons of good reasons to withdraw money that have nothing to do with timing or pucker factor.

And don't forget survivorship bias in these long-term analyses. 40% of the mutual funds active in 2004 closed by 2014. 20% of the 5-star Morningstar funds in 2002 did not survive the decade. So much for the long term.

My point is that not every life event can wait until you personally can turn a profit. If you personally have the money, patience, and luck to wait it out that's great. But real-life investing is a lot more complicated than most people realize.

then you needed to keep more cash . you can't blame investments because you need cash for the short term and put it in long term investments. it happens . divorce -illness and job loss are facts of life , they happen to all of us .

but you still can't blame investments or call them risky if you mismatched time frames.

just look at the pp i still track it . i bought it 4 weeks ago and as of today it is down 23k from where i bought it. what if i needed the money now all of a sudden. can you blame the pp ?

of course not . by the way over the same time fram as of today the same amount in the portfolio i am using is down 3700.

Posted: **Fri Jul 10, 2015 4:53 pm**

mathjak107 wrote: well if we never had a period longer than 15 years to date where at some point you couldn't sell diversified funds at a profit how is it anything other than investors acting badly if they lost money ?

they either mismatched time frames , were overly invested for the pucker factor or just tried to time things..

you can't blame markets when it is people doing the wrong thing.

how many can even stick with the pp long term ? i know i couldn't when i tried it back in the 1980's.

so trying to blame markets for investors poor results is not being accurate .

conventional investing isn't about sitting on a single fund for 30 years or even a portfolio . in fact i have not sat on most funds longer than 2 or 3 years . a good investor molds and nudges the portfolio over the years to fit .

there are funds that work well when the dollar is strong and funds to own when it is weak . there are bond funds to own when rates fall and different ones when they rise.

it is the total at the end that is the culmination of whatever you do .

my first 20 some odd years were a growth model that used all different funds .

then as i got closer to retirement i went from the growth model to a split between 2 different models.

a 30 equity and 70% bond mix and a growth and income model that is 70/30.

i used that for 7 years and last week designed my own retirement model i want to use .

what i didn't do is pick a buy and die allocation and try to use it for a lifetime . if i used the pp all those years i would have a million dollars less .

Why do you think the US is the entire world?

Posted: **Fri Jul 10, 2015 4:55 pm**

i don't but except for about 15% of my investments i stick here . i had no interest in overseas up until this week . i have not had much money overseas since the down turn .

Posted: **Fri Jul 10, 2015 4:56 pm**

mathjak107 wrote: i don't but except for about 15% of my investments i stick here .

I mean, there are examples of very long declines (Japan), and there are absolutely zero reasons to not expect those same situations at some point in the US.

Posted: **Fri Jul 10, 2015 4:58 pm**

we can get hit with an astroid too. that is why i keep saying a portfolio needs to be flexible . it needs to hold assets better suited for the world around it . it needs to change and adapt as the world changes. been my style for almost 30 years through crashes , wars , and the financial collapse of 2008 .

in the end all ends okay and if someone thinks other wise and is always going to think this time is different then investing isn't for them .

those types of chicken little's to date here have ended up quite a lot poorer by never committing .

Posted: **Fri Jul 10, 2015 5:01 pm**

mathjak107 wrote: we can get hit with an astroid too. that is why i keep saying a portfolio needs to be flexible . it needs to hold assets better suited for the world around it .

You keep making pretty crazy comparisons. In another thread you mentioned worrying about portfolio returns over a 15yr time frame is the equivalent of checking your portfolio daily. And now the US stock market going down for an extended period is as likely as an individual being hit by an asteroid? Hmm...

Posted: **Fri Jul 10, 2015 5:02 pm**

mathjak107 wrote: then you needed to keep more cash .

Interesting, so assume someone needed to keep more cash. Let's assume that person was you when you got started. Wouldn't that have had a similar effect to holding the PP - i.e. having a million dollars less?

just look at the pp i still track it . i bought it 4 weeks ago and as of today it is down 23k from where i bought it. what if i needed the money now all of a sudden. can you blame the pp ?

of course not . by the way over the same time fram as of today the same amount in the portfolio i am using is down 3700.

Not to be rude, but boy that sure is some irrelevant information. There's no shortage of portfolio configurations that did better than yours and worse than the PP over the past 4 weeks.

Posted: **Fri Jul 10, 2015 5:07 pm**

that is my point. there are good and bad times that hypothetically someone may need money that is in long term investments.

my example is merely pointing out as conservative as the pp is if you need the money at a bad time it does not mean your investment is risky .

my portfolio can be quite volatile , it is not quite risky though long term . but in my example of you needed your money back today the pp sustained the most damage .

so trying to judge a portfolio by "what i f someone needs their money sooner makes little sense .

there are noooooo bad markets , there is only bad planning .

perhaps without enough cash that person who needed the money back should not have been invested in the first place as even bad timing with the pp can be bad timing .

Gyroscopic Investing

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