Gyroscopic Investing

Wow. Today was fugly.

Another great day to be in the permanent portfolio...

Cortopassi wrote: ↑Thu Mar 12, 2020 10:32 am Really close to a rebalance band on my 5% position on VBR. Won't get hit today, but if this continues one more day, it might.

How about you, Sophie?

I crossed a rebalance band today (small caps dropped to 13%). This is just barely over the edge though....let's see if the same is true tomorrow. The market is moving a lot faster than I can, in rebalancing out of bonds, mutual funds etc.

For those who were here in 2008-2009: how many times did you guys tax loss harvest and rebalance? I'm entering into unknown territory here.

I was more pure bogglehead portfolio 2008 / 2009.

Rebalanced s couple of times on the way down.

Couldn't get myself to rebalanced the last time (when it actually WAS at the bottom).

I don't think I had hard rules though.

Not sure what I'll do when this time.

Check at end of month maybe....

I recommend very strongly that anyone who is considering rebalancing all the way down consider just how far down that might be.
William Bernstein's "Rational Expectations", a very good book in general, includes a case study on what would have happened to someone who held a 75% stock/25% T-bill portfolio in June 1929 and rebalanced all the way down on pp. 105-106.
If after reading that, you think you could have actually rebalanced all the way down, more power to you.
I doubt I could have, and I'm not easy to scare out of a market.

Of course this applies much more to bogleheads than it does to us, but it's still worth considering.

Libertarian666 wrote: ↑Thu Mar 12, 2020 6:31 pm I recommend very strongly that anyone who is considering rebalancing all the way down consider just how far down that might be.
William Bernstein's "Rational Expectations", a very good book in general, includes a case study on what would have happened to someone who held a 75% stock/25% T-bill portfolio in June 1929 and rebalanced all the way down on pp. 105-106.
If after reading that, you think you could have actually rebalanced all the way down, more power to you.
I doubt I could have, and I'm not easy to scare out of a market.

Of course this applies much more to bogleheads than it does to us, but it's still worth considering.

Two questions for you. One related. One completely unrelated.

1) What is your opinion of William Bernstein? He is top five for me in the world of personal finance / investing. I know I read his book you cited above at least once, if not twice. And, believe I've read every book he has ever written, again some of them multiple times.

2) Do you consider Chris Wallace on Fox News Sunday to be far to the left of you?


Vinny

yankees60 wrote: ↑Thu Mar 12, 2020 6:37 pm

Libertarian666 wrote: ↑Thu Mar 12, 2020 6:31 pm I recommend very strongly that anyone who is considering rebalancing all the way down consider just how far down that might be.
William Bernstein's "Rational Expectations", a very good book in general, includes a case study on what would have happened to someone who held a 75% stock/25% T-bill portfolio in June 1929 and rebalanced all the way down on pp. 105-106.
If after reading that, you think you could have actually rebalanced all the way down, more power to you.
I doubt I could have, and I'm not easy to scare out of a market.

Of course this applies much more to bogleheads than it does to us, but it's still worth considering.

Two questions for you. One related. One completely unrelated.

1) What is your opinion of William Bernstein? He is top five for me in the world of personal finance / investing. I know I read his book you cited above at least once, if not twice. And, believe I've read every book he has ever written, again some of them multiple times.

2) Do you consider Chris Wallace on Fox News Sunday to be far to the left of you?

Vinny

1. William Bernstein is quite good. I've corresponded with him a few times on his economic writing, and found him very nice as well.
2. As to Chris Wallace's position relative to mine: I'm an anarchist, so left/right doesn't generally apply. However, I will say I find him a partisan hack rather than a serious journalist.

Libertarian666 wrote: ↑Thu Mar 12, 2020 6:46 pm

yankees60 wrote: ↑Thu Mar 12, 2020 6:37 pm

Libertarian666 wrote: ↑Thu Mar 12, 2020 6:31 pm I recommend very strongly that anyone who is considering rebalancing all the way down consider just how far down that might be.
William Bernstein's "Rational Expectations", a very good book in general, includes a case study on what would have happened to someone who held a 75% stock/25% T-bill portfolio in June 1929 and rebalanced all the way down on pp. 105-106.
If after reading that, you think you could have actually rebalanced all the way down, more power to you.
I doubt I could have, and I'm not easy to scare out of a market.

Of course this applies much more to bogleheads than it does to us, but it's still worth considering.

Two questions for you. One related. One completely unrelated.

1) What is your opinion of William Bernstein? He is top five for me in the world of personal finance / investing. I know I read his book you cited above at least once, if not twice. And, believe I've read every book he has ever written, again some of them multiple times.

2) Do you consider Chris Wallace on Fox News Sunday to be far to the left of you?

Vinny

1. William Bernstein is quite good. I've corresponded with him a few times on his economic writing, and found him very nice as well.
2. As to Chris Wallace's position relative to mine: I'm an anarchist, so left/right doesn't generally apply. However, I will say I find him a partisan hack rather than a serious journalist.

Chris Wallace is at the top of my list of favorite conservatives. He has a clear bias towards conservatism but he does not give any of his conservative guests a free pass. He grills them and demands direct answers from them as much as he does of his liberal guests.

Vinny

yankees60 wrote: ↑Thu Mar 12, 2020 6:58 pm

Libertarian666 wrote: ↑Thu Mar 12, 2020 6:46 pm

yankees60 wrote: ↑Thu Mar 12, 2020 6:37 pm

Libertarian666 wrote: ↑Thu Mar 12, 2020 6:31 pm I recommend very strongly that anyone who is considering rebalancing all the way down consider just how far down that might be.
William Bernstein's "Rational Expectations", a very good book in general, includes a case study on what would have happened to someone who held a 75% stock/25% T-bill portfolio in June 1929 and rebalanced all the way down on pp. 105-106.
If after reading that, you think you could have actually rebalanced all the way down, more power to you.
I doubt I could have, and I'm not easy to scare out of a market.

Of course this applies much more to bogleheads than it does to us, but it's still worth considering.

Two questions for you. One related. One completely unrelated.

1) What is your opinion of William Bernstein? He is top five for me in the world of personal finance / investing. I know I read his book you cited above at least once, if not twice. And, believe I've read every book he has ever written, again some of them multiple times.

2) Do you consider Chris Wallace on Fox News Sunday to be far to the left of you?

Vinny

1. William Bernstein is quite good. I've corresponded with him a few times on his economic writing, and found him very nice as well.
2. As to Chris Wallace's position relative to mine: I'm an anarchist, so left/right doesn't generally apply. However, I will say I find him a partisan hack rather than a serious journalist.

Chris Wallace is at the top of my list of favorite conservatives. He has a clear bias towards conservatism but he does not give any of his conservative guests a free pass. He grills them and demands direct answers from them as much as he does of his liberal guests.

Vinny

I don't know why you think Chris Wallace is a conservative. Do you have any evidence for that? As far as I can tell, the reason he grills conservatives is because he isn't one, not because he is fair.

Libertarian666 wrote: ↑Thu Mar 12, 2020 7:01 pm

yankees60 wrote: ↑Thu Mar 12, 2020 6:58 pm

Libertarian666 wrote: ↑Thu Mar 12, 2020 6:46 pm

yankees60 wrote: ↑Thu Mar 12, 2020 6:37 pm

Libertarian666 wrote: ↑Thu Mar 12, 2020 6:31 pm I recommend very strongly that anyone who is considering rebalancing all the way down consider just how far down that might be.
William Bernstein's "Rational Expectations", a very good book in general, includes a case study on what would have happened to someone who held a 75% stock/25% T-bill portfolio in June 1929 and rebalanced all the way down on pp. 105-106.
If after reading that, you think you could have actually rebalanced all the way down, more power to you.
I doubt I could have, and I'm not easy to scare out of a market.

Of course this applies much more to bogleheads than it does to us, but it's still worth considering.

Two questions for you. One related. One completely unrelated.

1) What is your opinion of William Bernstein? He is top five for me in the world of personal finance / investing. I know I read his book you cited above at least once, if not twice. And, believe I've read every book he has ever written, again some of them multiple times.

2) Do you consider Chris Wallace on Fox News Sunday to be far to the left of you?

Vinny

1. William Bernstein is quite good. I've corresponded with him a few times on his economic writing, and found him very nice as well.
2. As to Chris Wallace's position relative to mine: I'm an anarchist, so left/right doesn't generally apply. However, I will say I find him a partisan hack rather than a serious journalist.

Chris Wallace is at the top of my list of favorite conservatives. He has a clear bias towards conservatism but he does not give any of his conservative guests a free pass. He grills them and demands direct answers from them as much as he does of his liberal guests.

Vinny

I don't know why you think Chris Wallace is a conservative. Do you have any evidence for that? As far as I can tell, the reason he grills conservatives is because he isn't one, not because he is fair.

For however long he's been the host on Fox News Sunday I don't think I've even missed listening to him a handful of times. And, I usually listen to each show twice (just like I do the four other Sunday news talk shows). And, my evidence is how I hear him behave and what he has to say. He's clearly NOT a liberal. Is definitely a conservative. But respect him a lot because he's so fair.

Vinny

I got lucky and sold off all my EDV when it started going vertical for a few days and just about caught the top....that never happens. Long bonds had only hit about 28 percent for me but I felt that treasury interest rate move was getting ridiculous. Ive taken the proceeds and started slowly buying back in to stocks since a few days ago....I'm early I know but I can't imagine a plunge of much more than 50 percent and we are past the halfway point...once the news turns positive...and I fully realize that could take months...I would imagine we get a snapback...I'm definitely getting sliced up by trying to catch this falling knife so far

Libertarian666 wrote: ↑Thu Mar 12, 2020 9:16 pm

yankees60 wrote: ↑Thu Mar 12, 2020 7:17 pm

Libertarian666 wrote: ↑Thu Mar 12, 2020 7:01 pm

yankees60 wrote: ↑Thu Mar 12, 2020 6:58 pm

Libertarian666 wrote: ↑Thu Mar 12, 2020 6:46 pm

yankees60 wrote: ↑Thu Mar 12, 2020 6:37 pm

Libertarian666 wrote: ↑Thu Mar 12, 2020 6:31 pm I recommend very strongly that anyone who is considering rebalancing all the way down consider just how far down that might be.
William Bernstein's "Rational Expectations", a very good book in general, includes a case study on what would have happened to someone who held a 75% stock/25% T-bill portfolio in June 1929 and rebalanced all the way down on pp. 105-106.
If after reading that, you think you could have actually rebalanced all the way down, more power to you.
I doubt I could have, and I'm not easy to scare out of a market.

Of course this applies much more to bogleheads than it does to us, but it's still worth considering.

Two questions for you. One related. One completely unrelated.

1) What is your opinion of William Bernstein? He is top five for me in the world of personal finance / investing. I know I read his book you cited above at least once, if not twice. And, believe I've read every book he has ever written, again some of them multiple times.

2) Do you consider Chris Wallace on Fox News Sunday to be far to the left of you?

Vinny

1. William Bernstein is quite good. I've corresponded with him a few times on his economic writing, and found him very nice as well.
2. As to Chris Wallace's position relative to mine: I'm an anarchist, so left/right doesn't generally apply. However, I will say I find him a partisan hack rather than a serious journalist.

Chris Wallace is at the top of my list of favorite conservatives. He has a clear bias towards conservatism but he does not give any of his conservative guests a free pass. He grills them and demands direct answers from them as much as he does of his liberal guests.

Vinny

I don't know why you think Chris Wallace is a conservative. Do you have any evidence for that? As far as I can tell, the reason he grills conservatives is because he isn't one, not because he is fair.

For however long he's been the host on Fox News Sunday I don't think I've even missed listening to him a handful of times. And, I usually listen to each show twice (just like I do the four other Sunday news talk shows). And, my evidence is how I hear him behave and what he has to say. He's clearly NOT a liberal. Is definitely a conservative. But respect him a lot because he's so fair.

Vinny

All he wants to do is attack President Trump. The most you could say is that he might be a never-Trumper Republican. I don't consider such people to be conservatives.
Here are just a few examples. There are many more:
https://robertringer.com/tap/chris-wall ... ral-fangs/
https://www.rawstory.com/2019/05/fox-ne ... bill-barr/
https://crooksandliars.com/2019/02/fox- ... itor-chris
https://www.pacificpundit.com/2020/01/2 ... e-pavlich/
https://www.thegatewaypundit.com/2019/0 ... wer-video/
https://www.thedailybeast.com/chris-wal ... on-ukraine

From the quick search I did regarding him and being considered a conservative it seemed that conservatives have turned their ire on him precisely because he has not been a Trump supporter.

VInny

Value seems to be getting a solid bid today.

Libertarian666 wrote: ↑Thu Mar 12, 2020 6:31 pm I recommend very strongly that anyone who is considering rebalancing all the way down consider just how far down that might be.
William Bernstein's "Rational Expectations", a very good book in general, includes a case study on what would have happened to someone who held a 75% stock/25% T-bill portfolio in June 1929 and rebalanced all the way down on pp. 105-106.
If after reading that, you think you could have actually rebalanced all the way down, more power to you.
I doubt I could have, and I'm not easy to scare out of a market.

Of course this applies much more to bogleheads than it does to us, but it's still worth considering.

This is exactly my concern. I would have a hard time rebalancing repeatedly on the way down - yet, failing to rebalance may be a missed opportunity as Dieter's post indicated, since of course you will only know where the bottom is in retrospect.

With the stock market bumping back up today, my portfolio is no longer out of balance, so I get to wait once again. This down and up pattern is likely to continue, so I think it would be best to wait for a time when rebalance bands are breached for longer than a day. I'm going to bet there will be more bad news over the weekend, and Monday is going to be another "look out below" day.

Yeah I would be shocked if yesterday was the bottom. That being said, the Fed is meeting next week. Markets currently are pricing in a 90% chance of a full 100bp cut next week, meaning rates back to 0. The Fed knows if they don't deliver this it would be seen as tightening and send the markets further into panic. Also, we are likely to get a "whatever it takes" speech from Powell afterwards, just based upon the 1.5 trillion in additional liquidity they are already dropping. I am thinking of rebalancing early next week prior to the Fed announcement because of this. I wouldn't be surprised at all to see us sell into the announcement, and the Fed calm the investors enough to stop the panic selling at the announcement. We are in plunge protection mode right now. I also technically had a 5% band breach when I calculated last night on my small caps on the lower bound and bonds on the upper bound.

I'd like to give gold and bonds a chance to react some more, because I'm not that crazy about doing most of the rebalancing from cash.

Serves me right...I locked up a lot of my cash in savings bonds in order to limit the tax bite on interest and increase tax deferred space. I figured I would be doing most rebalancing from new contributions (buying the lagging asset), but...not this time!!!

Yeah, with my savings rate (last year I saved a hair under 60% of my gross income) I am really shocked that I hit a rebalancing band as well since I usually am funneling lots of money into the lagging asset. But I never considered a 2 week massacre like this. Regular contributions are a drop in the bucket compared to the amount of absolute dollars my portfolio is down at this point.

pmward wrote: ↑Fri Mar 13, 2020 10:48 am Yeah, with my savings rate (last year I saved a hair under 60% of my gross income) I am really shocked that I hit a rebalancing band as well since I usually am funneling lots of money into the lagging asset. But I never considered a 2 week massacre like this. Regular contributions are a drop in the bucket compared to the amount of absolute dollars my portfolio is down at this point.

I remember the 2000-2002 time period....I was earning more money per week than I had ever earned in my life....but on the other end I was losing even more per week in my equity investments!

Vinny

Good god, the VIX is a hair under 77. The only single time in history it was higher was the peak of the financial crisis when it hit 96.

Big box of cash under the bed is the only safe place right now. Those gold coins ain't working...

Someone explain what happened 4 days ago? I don't understand it.

I try not to rebalance from cash to one of the volatile assets.

YTD, my bonds have risen from 23.4% to 30.6%. A rebalance from 35% seems still a bit off, but who knows?

YTD, my stocks have fallen from 26.7% to to 19.5%. Likewise, a rebalance at 15% is possible, and I am prepared to meet it with a combination of LTT sales and my TMMF. I also have plenty of I-bonds older than 5 years I could liquidate in 24 hours. Deep Cash just means you designate them as last in line.

Seems like a lot better plan than buying "FDIC-backed" 5 year CDs, as some on this forum have recommended.

OK MangoMan, rub it in!

I agree with you about the CDs though. I am very, very glad that outside of savings bonds, my cash is all in Treasury bills or Treasury-only money market funds.

sophie wrote: ↑Fri Mar 13, 2020 10:13 am yet, failing to rebalance may be a missed opportunity

But otherwise would be the market timing?
We are not supposed to.

sophie wrote: ↑Fri Mar 13, 2020 2:03 pm OK MangoMan, rub it in!

I agree with you about the CDs though. I am very, very glad that outside of savings bonds, my cash is all in Treasury bills or Treasury-only money market funds.

Crap. I just missed transferring a bunch of cash from my Fidelity core settlement account into their T-bill-only account.
Now I've submitted a request to change my core account to their "Treasury money market fund".
Hopefully that will be done on Monday.

jhogue wrote: ↑Fri Mar 13, 2020 12:21 pm Seems like a lot better plan than buying "FDIC-backed" 5 year CDs, as some on this forum have recommended.

I'm not sure what I've missed, but my CDs are doing fine, earning their 3% interest. And I could break them tomorrow and have the cash in my account in a few days, less 6 months interest.

Did I miss news of a bank holiday or something?

drumminj wrote: ↑Fri Mar 13, 2020 4:33 pm

jhogue wrote: ↑Fri Mar 13, 2020 12:21 pm Seems like a lot better plan than buying "FDIC-backed" 5 year CDs, as some on this forum have recommended.

I'm not sure what I've missed, but my CDs are doing fine, earning their 3% interest. And I could break them tomorrow and have the cash in my account in a few days, less 6 months interest.

Did I miss news of a bank holiday or something?

Not all CDs are as liquid as yours. All CDs have more risk than a Treasury-backed security.