Gyroscopic Investing

dutchtraffic wrote: Now down almost 6% since buying in a few weeks ago, if i hit -10% i'm buying again 

buddtholomew: Stop investing, you have no idea what you are doing, nothing you say makes any sense.

You guys are all correct...what was I thinking? I should be rejoicing...everything is fantastic!!!!

buddtholomew wrote:

dutchtraffic wrote: Now down almost 6% since buying in a few weeks ago, if i hit -10% i'm buying again 

buddtholomew: Stop investing, you have no idea what you are doing, nothing you say makes any sense.

Typical idiot

I think you should take some time to cool off, Budd.

Pointedstick wrote:

buddtholomew wrote:

dutchtraffic wrote: Now down almost 6% since buying in a few weeks ago, if i hit -10% i'm buying again 

buddtholomew: Stop investing, you have no idea what you are doing, nothing you say makes any sense.

Typical idiot

I think you should take some time to cool off, Budd.

So it's OK for others to have free reign to say what they like?

buddtholomew wrote:

Pointedstick wrote:

buddtholomew wrote: Typical idiot

I think you should take some time to cool off, Budd.

So it's OK for others to have free reign to say what they like?

This is a forum based on respect and maturity. You're not displaying either of those things right now. You are highly agitated and are lashing out at people for no good reason. Go drink some tea and relax for a bit. There's more to life than the markets.

Oh you mean the PP Koolaid...I see.

The reality of this year thus far:

Cash, stocks, gold and bonds pretty much have gone nowhere...I find this a fascinating investor psychology thread.

BT...the key to investing success is A) something that works and B) something that works in a way that you can stick with it. A is easy enough to find, B is what you have to find and no one but no one can solve this one for you except for you.

Budd, personally, I love your venting posts. Eternal optimism is boring. Consider your two quotes here from back in March. I'm fairly certain I have the context correct.

3/6/15 after/during what must have been a lousy day:

"I suppose the portfolio is doing wonderfully today? Seriously, what a piece of crap."

3/18/15 after a Fed announcement caused stocks/bonds/gold to rally simultaneously:

"Glad I hold all 3 leveraged assets @ approximately 25% on days like today. Really nice to see gold move up as well."

And that's just two. If you look back at your own stuff, at times it may as well be two totally different people conversing, and sometimes only days apart. Also at one point just recently you said you were finally comfortable with your allocation. It can't be that hard to see why people sometimes respond to you the way that they do. Hate to see you taking so much offense to it because conversations are always better when you have a contrarian view in the room. Just so long as that view is consistent.

iwealth wrote: Budd, personally, I love your venting posts. Eternal optimism is boring. Consider your two quotes here from back in March. I'm fairly certain I have the context correct.

3/6/15 after/during what must have been a lousy day:

"I suppose the portfolio is doing wonderfully today? Seriously, what a piece of crap."

3/18/15 after a Fed announcement caused stocks/bonds/gold to rally simultaneously:

"Glad I hold all 3 leveraged assets @ approximately 25% on days like today. Really nice to see gold move up as well."

And that's just two. If you look back at your own stuff, at times it may as well be two totally different people conversing, and sometimes only days apart. Also at one point just recently you said you were finally comfortable with your allocation. It can't be that hard to see why people sometimes respond to you the way that they do. Hate to see you taking so much offense to it because conversations are always better when you have a contrarian view in the room. Just so long as that view is consistent.

Good point and constructive. Thank you.

buddtholomew wrote: Oh you mean the PP Koolaid...I see.

I can't remember the exact quote, but Jack Bogle said the two highest correlated items to a good return are low costs and not changing your portfolio strategy all the time.

So with that in mind, I don't think folks here are married to the PP, but I doubt there is anything else out there that meets the low cost and low maintenance criteria with equivalent historical returns in both good and bad markets.

Everything is awesome, but I'm glad we have budd to tell us why it's not.

buddtholomew wrote:

dutchtraffic wrote: Now down almost 6% since buying in a few weeks ago, if i hit -10% i'm buying again 

buddtholomew: Stop investing, you have no idea what you are doing, nothing you say makes any sense.

You guys are all correct...what was I thinking? I should be rejoicing...everything is fantastic!!!!

It's interesting you're calling me an idiot.

I'm just trying to figure out what on earth is going on in your head, what on earth are you expecting from an investing strategy?

Basicly you want something that NEVER goes down, not even intraday, and not even by 0.0004% because if it does you will go to a random forum and start complaining everything sucks, and everyone who doesn't agree is an idiot + other random insults.

Also even if your portfolio would ONLY go up, never down, it must go up (at least) as much as the best performing assetclass, if stocks are up 9% and your PP is up 8%, you will again come to online forums and complain, etc etc.

My EU portfolio is down nearly 6% since i bought in JUST a few weeks ago, so what? A 6% swing is nothing, this is completely normal when you invest in anything, 60% would probably make me take a closer look (and maybe buy in much bigger depending on why its crashing).

Basicly, you complain no matter what, what you want, simply does not exist, and will never exist, so when someone tells you you should be 100% in cash, he's obviously completely correct, if you then start calling other people idiots... you're just making a fool out of yourself.

Kbg wrote: BT...the key to investing success is A) something that works and B) something that works in a way that you can stick with it. A is easy enough to find, B is what you have to find and no one but no one can solve this one for you except for you.

If (A) is easy enough to find, why did it take me 20 years to find it, and then it was just by sheer coincidence as far as I can tell that I found the HBPP.  To be honest, I can't even remember how I found the HBPP, but I'm glad I did.

One strange thought enters my mind every once in awhile, although I never took action on it. I have been in PP since early 2000. I have noticed each time my PP reaches an all time high (the combination/conversion of all the elements) it's only a short time until it drops considerably. It's really almost a pattern. So I imagine when the next PP high is reached, that I sell out to all cash and wait on the sidelines, tracking my PP until it drops back 4% to 6% on the top line and go back into PP again.  The worst that happens is you are out at your highs. Since PP is never very volatile, your risks of missing a huge jump at your already reached highs are lower than if you tried this when things are at a low point.

Will I do this? I haven't yet.. I am not that much of a market timer anyway. It is just something I noticed.

portart wrote: One strange thought enters my mind every once in awhile, although I never took action on it. I have been in PP since early 2000. I have noticed each time my PP reaches an all time high (the combination/conversion of all the elements) it's only a short time until it drops considerably. It's really almost a pattern. So I imagine when the next PP high is reached, that I sell out to all cash and wait on the sidelines, tracking my PP until it drops back 4% to 6% on the top line and go back into PP again.  The worst that happens is you are out at your highs. Since PP is never very volatile, your risks of missing a huge jump at your already reached highs are lower than if you tried this when things are at a low point.

Will I do this? I haven't yet.. I am not that much of a market timer anyway. It is just something I noticed.

I've always thought there was something very frustrating about the way the PP behaves.  Maybe this is it.  It's just a big fat tease.

Kbg wrote: The reality of this year thus far:

Cash, stocks, gold and bonds pretty much have gone nowhere...I find this a fascinating investor psychology thread.

BT...the key to investing success is A) something that works and B) something that works in a way that you can stick with it. A is easy enough to find, B is what you have to find and no one but no one can solve this one for you except for you.

So true. I think it's also the case that any decent, moderately-diversified investing strategy will probably work well enough if you keep at it for a long time. The key is finding something you can live with and whose volatility matches your time horizon. If you truly have a high tolerance for volatility and are absolutely positive that you won't need the money for 50 years, then a very stock-heavy portfolio can work very well for you. If you anticipate needing the money in the next 15 years and aren't a big fan of high volatility, it's harder for me to envision a better portfolio than the PP, except maybe 100% cash or short-duration bonds for people who can't tolerate any volatility at all.

buddtholomew wrote: Oh you mean the PP Koolaid...I see.

What about "invest all in cash" is PP coolaid?

We aren't asking you to buy into the PP.  We're suggesting that you align your strategy with 1) economic reality, and 2) your own emotions.  You're obviously not doing that.  Don't put it on PP advocates who advise that you have a far less volatile portfolio.  If you find that NOBODY here can give you answers (I don't think anyone can), then perhaps you should stop looking for them here.

If I believed in bigfoot, and I went to a hunting forum trying to find out how to hunt one, and everyone told me it doesn't exist, perhaps I should either 1) accept that the bigfoot doesn't exist, or 2) go somewhere that will at least agree they exist, or at best help me find one.

But in the absence of that, perhaps you can tell us, with numbers defining rate of return and volatility metrics, what you want out of a portfolio, and we might be able to help you find it, or at least be able to articulate to you why what you want is impossible. 

But you seem to want it all...


High RoR

Very low historical intraday volatility

Deep fat tail protection


You simply can't have all this, bud. 

And to the degree you have other areas of your life that are going unaddressed to your detriment (as we all do), you are doing yourself a disservice by burning up precious time and mental energy trying to find it, in my opinion.  If anyone disagrees with me, feel free to chime in and back bud up on this.  To the degree that you can't get someone to help you find those things, perhaps you should just accept that it truly is impossible to have with any degree of historical or forward-looking certainty, and move on to living life.

buddtholomew wrote:Of course in isolation the YTD performance is of little concern

OK, well then... it would seem that there should be little concern!

Investing is all about the bottom line, yes?  What is in your wallet?  Is there more money in my wallet now, or less?  Am I just being a simpleton?  Is there something I'm missing?  It seems to me the proof is in the pudding and the pudding for investing is really simple.  Is my wallet fatter, or skinnier?  That's it!

My Permanent Portfolio wallet is getting fatter.  And I haven't had to do anything, it's just growing by itself!  How cool is that?  It's free money! (in a way). 

It's flat this particular year?  Super!  That's to be expected sometimes!  As I said, I can absolutely guarantee that there will be years in which the PP is flat.  I can absolutely guarantee it is not going to go up by 9% every single year forever.  There may even be years in which it goes down by as much as .3325%, or .46%, or even (heaven forbid!) an entire percentage point!  Losing 1% isn't fun.  It isn't good.  It isn't the goal.  It's like being ripped off!  What did I get for that 1%?  It's like I'm paying a bill for thousands of dollars for zip!  But if my goal is to keep having the money in my wallet magically multiply for me due to no work whatsoever, this is the trade-off for that reward.

As long as the magic deposits outnumber the magic rip-offs, mission accomplished: my wallet is fatter.

That is the mission, right?  I mean, am I confused about the mission?  Because to determine the success of that mission, you look in one place: your wallet!

What you don't do is look here:

but compared to a conservative allocation the portfolio is under-performing again.

Because how would that make any sense?  How would that be relevant?  Why would you concern yourself going around looking at other people's wallets when what you really care about is the thickness of your own wallet?  The wallet of this Conservative Allocation fellow is his own business.  His success doesn't hurt us in any way.  We can feel happy for him and go our merry way, because we are also happy and confident in ourselves and our own way of doing things.

...

We've all (or at least I have) been where Bud is right now.  Frustrated, looking down the road to a retirement that may or may not be secure, putting hard earned dollars toward what is day to day a crapshoot, no matter what kind of portfolio you are invested in.

These emotions have happened to me over the years trading stocks, trading options and holding gold.  Never to the same extent with gold, however, at least physical.  In my possession, real, touchable, not graphs on a computer screen and 1's and 0's on some database.  It makes a huge difference to me.  Just like real cash in hand is more "real" than cash at a brokerage being put toward a trade.

Bud, as crazy as it may sound, my sleep well at night portfolio would probably be 50% cash, 50% physical gold in my possession.  It may not get any kind of return, but it is not going to disappear overnight either.  At least not the gold... 

But it would have been a terrible 4 years if you started this in 2011.  If you started in 2000, you'd still be feeling really good.

The "something that works that YOU can stick with" comment is easy at or near the top of rules to live by.

And what LC just posted about comparison -- that is the bane or everything.  Comparing portfolios, returns, salaries, house size, # of cars, # of vacations, yada yada.  I truly think to be happy this is a human trait you have to get over.  It is a constant effort!

Is it possible that the PP is dead? That it has only worked because it has been riding the decades long bulls in treasuries and in gold? Are those bull markets over now? Do we need to look for the next investment vehicle riding the hot markets of today and tomorrow instead of what worked yesterday?

What is the purpose of investing in non-correlated assets when they decline in unison? Not only have I given up outsized equity returns, but the investments that are supposed to buoy stock declines are having even a larger impact on recent losses. This is the source of my frustration. It feels like the cards are stacked against this portfolio. I am drawn to the agnostic philosophy, but damnit I want some success as well. Is that really that unrealistic?

buddtholomew wrote: What is the purpose of investing in non-correlated assets when they decline in unison? Not only have I given up outsized equity returns, but the investments that are supposed to buoy stock declines are having even a larger impact on recent losses. This is the source of my frustration. It feels like the cards are stacked against this portfolio. I am drawn to the agnostic philosophy, but damnit I want some success as well. Is that really that unrealistic?

On a daily basis, yes. It is unrealistic to expect that on a day when stocks decline, that bonds or gold will go up, or vice versa, or something else. The non-correlation of the assets is something that shows up in charts depicting yearly performance, not daily choppiness. On any given day, everything could go up, down, or sideways. Focusing on daily movements is a recipe for madness.

YTD, the PP is doing exactly what you would expect it to do. Bonds, gold, and stocks have all moved in different directions, none with much magnitude. Stocks are slightly up, bonds are slightly down, and cash and gold are flat. All of which leads to a slightly up portfolio YTD (+0.5% as of yesterday's close).

Even if you were 100% stocks, so far you would be up 2% this year… after first enduring a 2.5% decline in January. So far this year is has not shaped up to be a stellar time for U.S. markets and dollar-denominated assets. Nobody's particularly happy.

Pointedstick wrote:

buddtholomew wrote: What is the purpose of investing in non-correlated assets when they decline in unison? Not only have I given up outsized equity returns, but the investments that are supposed to buoy stock declines are having even a larger impact on recent losses. This is the source of my frustration. It feels like the cards are stacked against this portfolio. I am drawn to the agnostic philosophy, but damnit I want some success as well. Is that really that unrealistic?

On a daily basis, yes. It is unrealistic to expect that on a day when stocks decline, that bonds or gold will go up, or vice versa, or something else. The non-correlation of the assets is something that shows up in charts depicting yearly performance, not daily choppiness. On any given day, everything could go up, down, or sideways. Focusing on daily movements is a recipe for madness.

YTD, the PP is doing exactly what you would expect it to do. Bonds, gold, and stocks have all moved in different directions, none with much magnitude. Stocks are slightly up, bonds are slightly down, and cash and gold are flat. All of which leads to a slightly up portfolio YTD (+0.5% as of yesterday's close).

Even if you were 100% stocks, so far you would be up 2% this year… after first enduring a 2.5% decline in January. So far this year is has not shaped up to be a stellar time for U.S. markets and dollar-denominated assets. Nobody's particularly happy.

I am not comparing YTD. I am referring to the period 2011-current. That is the timeframe I have been invested in the PP.

buddtholomew wrote:

Pointedstick wrote:

buddtholomew wrote: What is the purpose of investing in non-correlated assets when they decline in unison? Not only have I given up outsized equity returns, but the investments that are supposed to buoy stock declines are having even a larger impact on recent losses. This is the source of my frustration. It feels like the cards are stacked against this portfolio. I am drawn to the agnostic philosophy, but damnit I want some success as well. Is that really that unrealistic?

On a daily basis, yes. It is unrealistic to expect that on a day when stocks decline, that bonds or gold will go up, or vice versa, or something else. The non-correlation of the assets is something that shows up in charts depicting yearly performance, not daily choppiness. On any given day, everything could go up, down, or sideways. Focusing on daily movements is a recipe for madness.

YTD, the PP is doing exactly what you would expect it to do. Bonds, gold, and stocks have all moved in different directions, none with much magnitude. Stocks are slightly up, bonds are slightly down, and cash and gold are flat. All of which leads to a slightly up portfolio YTD (+0.5% as of yesterday's close).

Even if you were 100% stocks, so far you would be up 2% this year… after first enduring a 2.5% decline in January. So far this year is has not shaped up to be a stellar time for U.S. markets and dollar-denominated assets. Nobody's particularly happy.

I am not comparing YTD. I am referring to the period 2011-current. That is the timeframe I have been invested in the PP.

And how much have you lost since 2011.......................?

buddtholomew wrote:

Pointedstick wrote:

buddtholomew wrote: What is the purpose of investing in non-correlated assets when they decline in unison? Not only have I given up outsized equity returns, but the investments that are supposed to buoy stock declines are having even a larger impact on recent losses. This is the source of my frustration. It feels like the cards are stacked against this portfolio. I am drawn to the agnostic philosophy, but damnit I want some success as well. Is that really that unrealistic?

On a daily basis, yes. It is unrealistic to expect that on a day when stocks decline, that bonds or gold will go up, or vice versa, or something else. The non-correlation of the assets is something that shows up in charts depicting yearly performance, not daily choppiness. On any given day, everything could go up, down, or sideways. Focusing on daily movements is a recipe for madness.

YTD, the PP is doing exactly what you would expect it to do. Bonds, gold, and stocks have all moved in different directions, none with much magnitude. Stocks are slightly up, bonds are slightly down, and cash and gold are flat. All of which leads to a slightly up portfolio YTD (+0.5% as of yesterday's close).

Even if you were 100% stocks, so far you would be up 2% this year… after first enduring a 2.5% decline in January. So far this year is has not shaped up to be a stellar time for U.S. markets and dollar-denominated assets. Nobody's particularly happy.

I am not comparing YTD. I am referring to the period 2011-current. That is the timeframe I have been invested in the PP.

Since 2011, here's a graph of the PP vs a 60% bonds 40% stocks portfolio:
[img width=600]https://i.imgur.com/v2cZex3.png[/img]


Here's a 40% bonds 60% stocks portfolio vs the PP:
[img width=600]https://i.imgur.com/BJlZcYJ.png[/img]

The performance looks normal to me. Unsurprisingly, during a stock bull market, the more stocks you hold, the more you beat the PP. But is that really the benchmark you want to have? If so, you should ditch the PP and have more stocks.