Gyroscopic Investing

Posted: **Sun Jan 15, 2012 8:29 pm**

'cuz he's ignorant. Everyone is about different things. But this is the big problem with relying on GURUS for investment direction instead of one's own thinking skills.

MG

FarmerD wrote: That's a prime reason why I can't understand why Swedroe prefers a commodities basket over physical gold.

Posted: **Thu Mar 19, 2015 11:16 am**

Reub wrote: Something tells me that Larry will be back.

Three years later and he hasn't.

I've recently become a fan of Larry if only because he hammers the same points over and over again relentlessly. And even though he is wrong about a few things, but I'll take a near miss than missing by a country mile.

I just had to bump this post: LINQUE

I'm telling y'all that choline is gangbusters in that I can remember this thread!

Posted: **Thu Mar 19, 2015 12:45 pm**

I guess that we were a little rough on Larry. He shouldn't have taken it so personally.

Posted: **Thu Mar 19, 2015 1:02 pm**

I'm glad he took the time to post, and he did say it was a one time post.

Always interesting and thought provoking.

I still don't hold any CCF, though... but also have less than 25% gold - I'm a rebel....

Posted: **Thu Mar 19, 2015 5:03 pm**

I had a nice PM conversation w/ Larry once upon a time. He's not at Bogleheads as often as he used to be, either.

Posted: **Fri Mar 20, 2015 11:53 am**

So I was curious about what Larry's business actually is.

It seems he pushes DFA's passively managed funds and manages portfolios of them for clients. Not only does DFA have higher management fees than Vanguard's passively managed index funds, they're accessible only through RIA's, which means an additional layer of management fees. So whatever minor outperformance there may be with DFA vs Vanguard is turned into a negative proposition.

That's really rich coming from Larry. Hypocrite?

I can only see DFA maybe working out with roboadvisors like WealthFront or Schwab charging .25% or less. The question is whether DFA will allow that and cannibalize all their crony RIA's. Not holding my breath.

Bottom line: Does Larry live in a bigger house and drive a better car than you do?

Posted: **Fri Mar 20, 2015 4:07 pm**

MachineGhost wrote:
That's really rich coming from Larry. Hypocrite?

Bottom line: Does Larry live in a bigger house and drive a better car than you do?

MachineGhost,

CraigR had previously closed off new comments on this post because of comments such as yours. Swedrow has along history of helping people learn how to invest and not get caught up in the hype of some financial advisors.

You and I may be better educated than some on investing, but do not criticize those who are out there trying to help and, yes, make a living doing it. All-in-all, I and many other people believe Swedrow is one of the better and honest advisors out there.

Posted: **Fri Mar 20, 2015 4:14 pm**

stone wrote: It is amazing to me that he apparently didn't get the concept of opposing volatilities and rebalancing gains

Gold is for negative real interest rates when STT are failing to keep up with inflation and for currency exchange rate swings (such as for Iceland in 2008 or to a lesser extent for UK or Australia etc in 2008).

Fortunately, I don't need a good memory when I can just go back and read the thread - luckily, because my memory was trashed after I went through residency. Great discussion!

I am quoting the post that I thought completely nailed the response to complaints that LS and the boglehead crowd have about gold.

Posted: **Fri Mar 20, 2015 5:21 pm**

EdwardjK wrote: CraigR had previously closed off new comments on this post because of comments such as yours. Swedrow has along history of helping people learn how to invest and not get caught up in the hype of some financial advisors.

You and I may be better educated than some on investing, but do not criticize those who are out there trying to help and, yes, make a living doing it. All-in-all, I and many other people believe Swedrow is one of the better and honest advisors out there.

The enemy of my enemy is my friend? I can live with that.

Posted: **Sat Jun 20, 2015 8:09 am**

larry's comment about gold not tracking inflation is because gold is a competitor to the dollar.

as long as the dollar stays healthy which it did , even in the face of inflation gold has little reason to run with the ball from an inflation stand point .

Posted: **Mon Jan 13, 2020 9:12 pm**

larryswedroe wrote: ↑Thu Jan 12, 2012 8:38 pm Just thought I would make a few comments as one of the Bogleheads pointed this out to me.
One time post for me though. Just not enough hours in the day

It never ceases to amaze me how people make statements about which they know little, making assumptions without any basis.

First, I am quite familiar with the PP.

Second, it is likely that I know as much about financial history as any other person on this site, and likely far more

Third, I know all about correlations, and the benefits of diversification across asset classes as well as rebalancing benefits (diversification return). I have written many books on the subject

Fourth, no one talks or writes more about the fact that returns are not normally distributed, that there are fat tails, etc. I even give a speech specifically on that subject, providing the evidence.

Fifth, I write all the time about people making the mistake of treating the unlikely as impossible and the likely as certain. In fact, those mistakes are covered specifically in my books, including the new book Investment Mistakes Even Smart People Make and How to Avoid Them

Sixth, when it comes to fixed income we in fact don't even use mutual funds, we use laddered portfolios and often as one poster noted taxables are better on the short end.
But I was addressing the PP which uses funds

Seventh, I specifically stated gold doesn't hedge inflation, which is one reason, many, if not most people buy gold, so I wanted to make sure that point was made. Gold does have other hedging benefits, hedging geopolitical risks, but not inflation. It is not a source of inflation, while commodities, a broad basket, is and does hedge inflation well, in fact is the second best hedge of inflation after TIPS.l

Eighth, I would highly recommend TIPS as superior to other FI investments for tax advantaged accounts as they hedge both inflation and deflation, while LT bonds only hedge deflation. And the literature on the subject is all on that side, TIPS should be the preferred choice for tas advantaged accounts

Bottom line is while there are worse strategies IMO there are superior strategies, diversifying across other sources of risks, not just beta, and using broad CCF instead of gold and using TIPS. For those really interested in the latest thinking from the academic community on building portfolios across multiple sources of returns I would highly recommend reading Antti Illmanen's Expected Returns.

I hope the above is helpful and straightens out at least the assumptions that people made.

Best wishes
Larry

Was this Larry Swedroe's only appearance ever in this forum?

Vinny

Posted: **Mon Jan 13, 2020 9:34 pm**

yankees60 wrote: ↑Mon Jan 13, 2020 9:12 pm

Was this Larry Swedroe's only appearance ever in this forum?

Vinny

Yup. His one and only appearance.

Larry has had tremendous frustrations with the amateur investment community in general.

People on the Bogleheads forums have attacked his integrity and his ideas. He's even tussled with people that were part of the epic HBPP thread over there. I remember even Tex once called him a clown and pretty much dismissed him. It's one of the few times I didn't like a forum contribution Tex made.

Posted: **Tue Jan 14, 2020 1:03 am**

Larry’s such a good guy. He might be a little on the sensitive side, but I don’t blame him for shying away. As informative as the bogleheads site can be, it’s large enough that it’s going to have snide comments and even harbor some vicious members that even the heavy-handed moderation can’t filter out (Although it’s great at stopping you from touching on social issues).

For all that he gave, he deserved better.

Posted: **Tue Jan 14, 2020 2:16 pm**

MangoMan wrote: ↑Tue Jan 14, 2020 2:11 pm
larryswedroe wrote: ↑Thu Jan 12, 2012 8:38 pm I would highly recommend TIPS as superior to other Fixed Income investments for tax advantaged accounts as they hedge both inflation and deflation, while LT bonds only hedge deflation. And the literature on the subject is all on that side, TIPS should be the preferred choice for tax advantaged accounts

Anyone have any thoughts on this?

I think if part of the cash portion of the PP was replaced with short-term TIPS that would be a potential improvement. Interest rates on cash/short-term bonds do respond to increasing inflation, but typically with a lag. So TIPS could help to ameliorate that problem.

As a replacement for gold? No way.

I agree with Craig and Tex's contention that using TIPS as a replacement for gold's protection against strong inflation is playing with fire. If inflation is really getting that bad, then all bets are off regarding the efficacy of TIPS. Who knows what kind of economic chaos we may be subject to. Gold is also a protection against disasters generally, which is a whole 'nother can of worms.

I personally just don't want to buy protection from the very entity that's causing the inflation problem. Also, gold can be held physically in private storage anonymously. Unfortunately, we can't say that about TIPS.

Posted: **Tue Jan 14, 2020 2:39 pm**

MangoMan wrote: ↑Tue Jan 14, 2020 2:35 pm I'm not talking about TIPS as a replacement for gold, but as I think Larry meant, as a replacement for Long Term Treasuries.

larryswedroe wrote: ↑Thu Jan 12, 2012 8:38 pm I would highly recommend TIPS as superior to other Fixed Income investments for tax advantaged accounts as they hedge both inflation and deflation, while LT bonds only hedge deflation. And the literature on the subject is all on that side, TIPS should be the preferred choice for tax advantaged accounts

Well that's mud on my face.

Posted: **Tue Jan 14, 2020 5:02 pm**

MangoMan wrote: ↑Tue Jan 14, 2020 2:11 pm
larryswedroe wrote: ↑Thu Jan 12, 2012 8:38 pm I would highly recommend TIPS as superior to other Fixed Income investments for tax advantaged accounts as they hedge both inflation and deflation, while LT bonds only hedge deflation. And the literature on the subject is all on that side, TIPS should be the preferred choice for tax advantaged accounts

Anyone have any thoughts on this?

I see where he's coming from, but I personally think TIPS are overrated.

Everything has a tradeoff. The tradeoff for the inflation protection quality of TIPS is that they always pay less than nominal bonds of the same maturity. The difference between the interest rates is the expected average inflation that the market thinks will happen over the life of the bond. Since nobody knows the future, it's a crapshoot as to whether TIPS will return more than plain old nominal bonds of the same maturity. Another way to look at it is that investing in TIPS over a nominal bond is a speculative bet that future inflation will be higher than expected. You may win that bet, but you may not.

Long story short, I think TIPS are fine but are a lot more speculative than most people realize. And I definitely would not say they are clearly superior to nominal bonds.

Posted: **Tue Jan 14, 2020 6:59 pm**

The other problem with tips is they don’t track YOUR OWN PERSONAL COST OF LIVING ...tips are tied to a price change index not an actual cost of living index ...they can fall way short of someone’s own cost of living increases ...

The CPI is only a price measuring tool that takes the temperature of the 1500 mini economies this country is made up of ..

A cost of living index takes in the stuff you buy and use x how many times you buy or use it x a factor for measuring quality since higher quality goods tend to see higher price increases but tend to last longer ....we also sub differently ...if ice cream is not on sale I will buy apple sauce ....the CPI does not do unlike subs

Posted: **Tue Jan 14, 2020 8:23 pm**

In Canada we have what are called Real Return Bonds. They are analogous to TIPS and functionally similar.

The issue with them is that the market is tiny, and all the funds in the country that hold RRBs are long duration. You can't find short RRBs to save your life around here. Absolutely maddening.

Gyroscopic Investing

Larry Swedroe's Comments on the Permanent Portfolio

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Re: Larry Swedroe's Comments on the Permanent Portfolio