Gyroscopic Investing

When I rebalance. As some may know, I am not a 25/25/25/25 PP implementer, more a 35(st)/25(bonds)/25(gold)/5(silver)/10(cash) setup for the past couple years and that has worked well.

I am likely going to up the cash portion to 15% in January though, and bring the stocks and bonds down 2-3 points each.

It does feel certainly like market timing. But I read parts of Rickard's book as well, and he advocates 30% cash, which helped convince me I need to raise my cash level. With the election and Brexit and China and everything else, taking a bit off the table doesn't feel wrong.

Happy to hear all comments.

I agree. , I am running far more conservative now after running multiple 6 figures in gains this year ....I have no intention of watching them evaporate

MangoMan wrote: ↑Tue Dec 17, 2019 1:27 pm

Cortopassi wrote: ↑Tue Dec 17, 2019 9:39 am But I read parts of Rickard's book as well, and he advocates 30% cash, which helped convince me I need to raise my cash level.

Why does he advocate such a large cash component? And regardless, is his record as a prognosticator any better than the other gurus who are wrong at least half the time?

From recently reading his book I seem to remember that he believes that no one in government dealing with the deficit is going to be one of the causes of future problems.

I was just listening this morning to someone on C-Span discussing the deficit and how it just cannot be increased forever with zero consequences.

Vinny

MangoMan wrote: ↑Tue Dec 17, 2019 1:27 pm

Cortopassi wrote: ↑Tue Dec 17, 2019 9:39 am But I read parts of Rickard's book as well, and he advocates 30% cash, which helped convince me I need to raise my cash level.

Why does he advocate such a large cash component? And regardless, is his record as a prognosticator any better than the other gurus who are wrong at least half the time?

You may wish to listen to this short interview where he discusses the rationale for the cash allocation. (4:25 onwards)

https://www.youtube.com/watch?v=ywHU8sg_pUw

Hal wrote: ↑Tue Dec 17, 2019 4:25 pm

MangoMan wrote: ↑Tue Dec 17, 2019 1:27 pm

Cortopassi wrote: ↑Tue Dec 17, 2019 9:39 am But I read parts of Rickard's book as well, and he advocates 30% cash, which helped convince me I need to raise my cash level.

Why does he advocate such a large cash component? And regardless, is his record as a prognosticator any better than the other gurus who are wrong at least half the time?

You may wish to listen to this short interview where he discusses the rationale for the cash allocation. (4:25 onwards)

https://www.youtube.com/watch?v=ywHU8sg_pUw

pug,

1) I've always been slightly uncomfortable going all the way down to 10% cash. I also did this when I had cash pretty much in cash in IRAs or checking, making 0.01%. For the past couple years, it has been in an Ally savings account making currently 1.7%, as much as I think 2.4% or so before the rate cuts. So at least it is making something. IRA cash is now in SHV as well.

2) I want to take a bit more than a standard rebalance off the table, esp. in stocks. Sure, no doubt they can continue up. But this mini tweak doesn't change things drastically and will make me sleep a tiny bit better.

mathjak107 wrote: ↑Tue Dec 17, 2019 9:53 am I agree. , I am running far more conservative now after running multiple 6 figures in gains this year ....I have no intention of watching them evaporate

Is my memory correct that you have declared yourself NOT a Permanent Portfolio? And, the above would indicate that you do, however, believe in market timing?

Vinny

Corto, why was Harry Browne unable to convince you to hold more cash while Rickards is able?

dualstow wrote: ↑Fri Dec 20, 2019 8:31 pm Corto, why was Harry Browne unable to convince you to hold more cash while Rickards is able?

I personally treat Rickards' work more as entertainment than real financial advice... but I must admit he writes persuasively!

yankees60 wrote: ↑Fri Dec 20, 2019 8:02 pm

mathjak107 wrote: ↑Tue Dec 17, 2019 9:53 am I agree. , I am running far more conservative now after running multiple 6 figures in gains this year ....I have no intention of watching them evaporate

Is my memory correct that you have declared yourself NOT a Permanent Portfolio? And, the above would indicate that you do, however, believe in market timing?

Vinny

i am a fair weather friend user of the pp with a twist of timing on the gld and tlt portion at times when i do .

for the most part , no i am not a consistent user , but there are times like now where after a great bunch of years in my growth and income model i want to take some chips off the table and wait for better opportunity to go back in more aggressive . with the chaos in washington and tweets able to evaporate 6 figure gains i like the pp at times like now ...but i enhance the returns playing the 1 to 2% jumps in tlt and gld which you see are pretty consistent . even if i buy in and it dips and i don't get the jump i am no worse off for it than any user of it . but when it cycles up and down i can make money even when it slides .

'

dualstow wrote: ↑Fri Dec 20, 2019 8:31 pm Corto, why was Harry Browne unable to convince you to hold more cash while Rickards is able?

Not saying he has. Even ever since 2014 when I got into the PP, I still shake my head at stock market performance, and cannot embrace it, but luckily the PP has saved me from myself and I've gotten very good at finding out that doing the complete opposite of what I want to (i.e. higher allocation to stocks than 25%) has been better for me than what I would have done without the PP guidance.

I just cannot see the performance of the past year continuing at the same pace. Every major index is up well over 20%. I just feel it's time to take some off the table. When even democrats are resigned to the fact that the economy seems to be doing great, but there's all of a sudden these nightly multi-billion Fed repo operations (I admit I do not understand any of it), I am getting more a sense there's too much going on behind the curtain and I want to lock in a few % points of gain on a good year.

I think I get it. You want to increase cash anyway and Rickards’ recent comments are resonating with you. I don’t mean that as a dig- I’m quite guilty of the same kind of confirmation bias.

one thing about the pp is when you put big dollars in to it the amount of cash you end up with at very low rates is extraordinary .

with multiple 7 figures in the pp , coupled with our refilling of the years spending cash since we are retired , i show cash/ cash proxy levels at 650k ....

phew .

the insight income model i also use has 18% in an ultra conservative bond fund which is really more like an old style money market that fluctuates now a few cents . so that is akin to cash too bringing up that number even higher ...

if i count all cash and all models i show 25% equities/ 45% bonds / 15 cash / 15% gold but it looks like instant x-ray classifies some of those funds like shv , bil , the ultra conservative bond fund as bond funds and not cash instruments . so cash level percentages are actually way higher then x-ray shows

Smith1776 wrote: ↑Sat Dec 21, 2019 2:39 am

dualstow wrote: ↑Fri Dec 20, 2019 8:31 pm Corto, why was Harry Browne unable to convince you to hold more cash while Rickards is able?

I personally treat Rickards' work more as entertainment than real financial advice... but I must admit he writes persuasively!

How many of his books have you read? I believe I now have all his books. I've read the latest but not of the prior. I'm going to start reading the oldest ones first.

Vinny

Dow 40,000!

I Shrugged wrote: ↑Sat Dec 21, 2019 7:59 pm Dow 40,000!

Please

Dow 40,000 in 2020 sounds like a joke, one more prediction, and yet someone whom I *have* to listen to made the same prediction.

Louis Navellier - I do some trading according to his stock newsletters on behalf of some family members. Does a guy peddling stock advice have a vested interest in saying Dow 40K rather than Dow 10,000? Of course. But he has me convinced that it’s going to be a good year for stocks.

#stockMeltUpUnderWay

it is so hard to say ... on one hand this is the most pessimistic bull market i ever saw ... bull markets don't end with such pessimism .

but everyone who trades has their finger on the sell button just waiting for a sign .

it is always the things none of us see yet on the radar that is the trigger to the next downturn which is long over due .

that is one of the reasons i am pretty conservative right now .

Trading volume has been very light. Imagine if it gets heavy.

this is the lowest equity allocation i have had in my entire investing life .

the pp is 25% equities and the fidelity insight newsletter income model is about 26% equities ..

so i have 2/3's in the pp and 1/3 in the income model and then some daily trading money i keep .

the income model spins off some nice yields though in some of the funds so it is not as conservative as the pp in some ways , but then again it does not see the volatility we see in gold and long term treasuries at all