I'm feeling some paralysis about new money

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dualstow
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Re: I'm feeling some paralysis about new money

Post by dualstow » Thu Aug 15, 2019 8:21 am

One form of “mental accounting” (kind of like a fallacy) that I engage in is that i find it fairly easy to hold an asset even when I don’t feel like buying more of it.
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sophie
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Re: I'm feeling some paralysis about new money

Post by sophie » Thu Aug 15, 2019 8:34 am

Buying is hard for me too. I always feel like I'm going out on a limb and disaster may strike at any moment.

Having a framework for everything, including cash, is worth its weight in gold for me!
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ochotona
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Re: I'm feeling some paralysis about new money

Post by ochotona » Thu Aug 15, 2019 9:40 am

dualstow wrote:
Thu Aug 15, 2019 8:21 am
One form of “mental accounting” (kind of like a fallacy) that I engage in is that i find it fairly easy to hold an asset even when I don’t feel like buying more of it.
Yup. The Endowment fallacy or illusion. Seriously though, TLT has gone vertical for all intents and purposes. It cannot continue in that fashion.
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Tyler
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Re: I'm feeling some paralysis about new money

Post by Tyler » Thu Aug 15, 2019 9:43 am

dualstow wrote:
Thu Aug 15, 2019 8:21 am
One form of “mental accounting” (kind of like a fallacy) that I engage in is that i find it fairly easy to hold an asset even when I don’t feel like buying more of it.
Interesting. Now that you mention it, I can definitely relate to that.

It reminds me of buying a car. I get super paranoid about not getting the best price, spend way too much time researching negotiating points, struggle pulling the trigger, and get really frustrated if I see a particularly good deal after I already committed. But after the over-thinking it phase wears off, all I think about is how much I like the car and am happy with my choice.

I think some people are just wired to optimize, which is a blessing in a lot of ways but can also create a lot of mental friction in others.
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Kbg
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Re: I'm feeling some paralysis about new money

Post by Kbg » Thu Aug 15, 2019 4:31 pm

I very humbly with no disrespect don’t get these sentiments being expressed with the PP. At a portfolio level it is all handled very elegantly via your rebalancing strategy.

Other strategies I get it, but not the PP. I have a pretty good active strategy that buys/sells Nasdaq 100 stocks and it is quite difficult to buy and sell manic moods in the market because this strategy has spectacular moves both ways at the individual stock level...and with very high correlation.

With the PP normally I smile on a rebalance and don’t think twice on a purchase of the down and out asset because by definition it is out of phase and out of favor.

Not to say I didn’t ask myself the following question...is UGLD ever going to get in the green (since 2014)? :-)
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dualstow
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Re: I'm feeling some paralysis about new money

Post by dualstow » Fri Aug 16, 2019 8:22 am

Kbg wrote:
Thu Aug 15, 2019 4:31 pm
I very humbly with no disrespect don’t get these sentiments being expressed with the PP. At a portfolio level it is all handled very elegantly via your rebalancing strategy.

...
With the PP normally I smile on a rebalance and don’t think twice on a purchase of the down and out asset because by definition it is out of phase and out of favor.
...
That’s just it. There are no down and out assets. This thread is about new money.
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Maddy
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Re: I'm feeling some paralysis about new money

Post by Maddy » Fri Aug 16, 2019 8:27 am

I hate to break it to you, guys, but this month I took the plunge and moved substantially toward the PP. This means, of course, that the PP will cease to work for the first time. Just thought I'd warn ya.
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Kbg
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Re: I'm feeling some paralysis about new money

Post by Kbg » Fri Aug 16, 2019 9:43 am

LOL, the story of my life. However, with patience I’ve found that a good strategy will work out. I pretty much bank on the fact that as soon as I invest it will have an awful year.
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Re: I'm feeling some paralysis about new money

Post by Mike59 » Mon Aug 19, 2019 6:59 pm

Having been through a couple of cycles and having done a ton of research, I can tell you that investing up front is statistically most likely to return you the highest. You're losing out on bond yield, stock dividends and capital gains on the sidelines, ultimately you miss out on the power of compounding. The PP has only a handful of negative years over the last few decades and the odds of you timing the negative year by staying in cash is roulette.

I just push new money in 4x25 , the first few times don't look at your returns for a few months and stop watching CNBC or checking the stock market news, it helps temper the nausea that comes with this process.
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Re: I'm feeling some paralysis about new money

Post by jalanlong » Tue Aug 20, 2019 9:45 pm

Smith1776 wrote:
Thu Aug 15, 2019 12:33 am


Browne did say (I think in Fail-Safe Investing?) that an acceptable alternative to the PP was just t-bills.

Better than putting it all on red. :D
Harry said putting all your savings in T-bills was acceptable alternative to the PP for all of your savings? I will have to go back and read that again. That seems dangerous in times of low interest rates. T Bills haven’t kept up with inflation in the last 5 years or so.
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Re: I'm feeling some paralysis about new money

Post by Smith1776 » Wed Aug 21, 2019 11:24 am

jalanlong wrote:
Tue Aug 20, 2019 9:45 pm
Smith1776 wrote:
Thu Aug 15, 2019 12:33 am


Browne did say (I think in Fail-Safe Investing?) that an acceptable alternative to the PP was just t-bills.

Better than putting it all on red. :D
Harry said putting all your savings in T-bills was acceptable alternative to the PP for all of your savings? I will have to go back and read that again. That seems dangerous in times of low interest rates. T Bills haven’t kept up with inflation in the last 5 years or so.
Yeah, just found it -- page 116 of Fail-Safe Investing.

He says if you aren't comfortable with constructing your own PP that you could: 1) put it in PRPFX; 2) put it all in t-bills; or 3) diversify amongst 3 commercial bank accounts.

Diversifying amongst commercial banks... it's too bad Browne did not live to see 2008.
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