Gyroscopic Investing

Posted: **Wed Jun 15, 2011 11:25 am**

This is the first time since enacting my PP that I've seen the stock market trip up to a decent degree over a decent period of time (a few months)... The turmoil in the middle east and Japan was part 1 (but the other PP assets more-than compensated at that time).... now I'm seeing the sequel and am having some time to digest my own feelings about all this, especially now as the PP has been having some losing days.

The PP has had a "rough" month, but I have to say it's such a weird feeling to watch the stock market take a 1.5% dive and the PP have a "meh" month and literally not really care all that much. Even though the PP is down as a whole the last 30 days, given the "snap back" that usually happens relatively quickly with the PP, I can truly look at these moments as "buying opportunities" and not be afflicted with the gut-wrenching fear of trying to put money into the stock market at what I perceive as lows (which is how I used to do it).

Just my observations... pretty much par for the course it seems.

Posted: **Wed Jun 15, 2011 12:23 pm**

moda0306 wrote: This is the first time since enacting my PP that I've seen the stock market trip up to a decent degree over a decent period of time (a few months)... The turmoil in the middle east and Japan was part 1 (but the other PP assets more-than compensated at that time).... now I'm seeing the sequel and am having some time to digest my own feelings about all this, especially now as the PP has been having some losing days.

The PP has had a "rough" month, but I have to say it's such a weird feeling to watch the stock market take a 1.5% dive and the PP have a "meh" month and literally not really care all that much. Even though the PP is down as a whole the last 30 days, given the "snap back" that usually happens relatively quickly with the PP, I can truly look at these moments as "buying opportunities" and not be afflicted with the gut-wrenching fear of trying to put money into the stock market at what I perceive as lows (which is how I used to do it).

Just my observations... pretty much par for the course it seems.

I've had my PP for 14 months now, and I have to say that I'm finally at the point where I only look at the cumulative returns maybe once a month or so. I've seen my PP handle a number of rough patches by this point, so it's getting to be old hat. Supposedly the PP is going down (from what you and others say) but I honestly don't know the details.

To borrow MT's analogy...after awhile I accepted that the tree pretty much looks the same whether or not you look at it every day or every week.

Posted: **Wed Jun 15, 2011 12:29 pm**

Yeah I'm still not quite at that phase... good to hear this pesky will to check daily disappears.

Posted: **Wed Jun 15, 2011 12:35 pm**

If you let it, the PP will move along like a clock in a thunderstorm.

All it asks is that you don't start rearranging parts inside the movement.

Fear and greed are powerful, though. Don't underestimate their pull. I think that's why real success with the PP requires practice. The practice, however, is in restraining yourself from taking the clock apart every time you get uneasy about what time it is.

Posted: **Wed Jun 15, 2011 1:26 pm**

My VP is making me more nervous than anything PP related - if we get another black swan event like a complete Greek default, which looks highly likely at this point, it could take my VP stock picks with it. AAPL has been a great stock to me so far, but do I want to go through another 30-40% correction like 2008? I'm tempted to just bolt for the exits and sell my VP. But, that is exactly what my herd mentality is telling me to do, so I'm not going to do it.

Posted: **Wed Jun 15, 2011 1:49 pm**

Storm wrote: My VP is making me more nervous than anything PP related - if we get another black swan event like a complete Greek default, which looks highly likely at this point, it could take my VP stock picks with it. AAPL has been a great stock to me so far, but do I want to go through another 30-40% correction like 2008? I'm tempted to just bolt for the exits and sell my VP. But, that is exactly what my herd mentality is telling me to do, so I'm not going to do it.

I believe HB recommended that you should just implement a stop-loss order on your VP assets and let the selling trigger on its own. That way the decision to sell parts of your VP is automatic and less emotional. If it goes up, you keep your shares. If it goes down (below your stop loss), you automatically get out at an acceptable price. He recommended that approach to his readers with silver, when it was near its all-time high, and those that followed his advice locked in some very nice profits.

Posted: **Wed Jun 15, 2011 1:50 pm**

As an experiment, you may want to try not watching your PP or the markets, gold price, yield curve, etc. for one month. Consciously use the additional mental energy for something you really enjoy doing or thinking about.

I found this so habit-forming that it's now how I operate. I give the PP a howdy on the first of the month and then just sort of quit bothering it. Turns out it didn't need my help after all!

Posted: **Wed Jun 15, 2011 2:53 pm**

You guys have to admit, though...

Looking at the elements of the PP on a day like today gives you a warm feeling inside... some days it just "works."

Posted: **Wed Jun 15, 2011 3:11 pm**

Even though I rarely check my performance, I do allow myself to look at the meaningless squiggly lines just for fun, once in awhile.

(TLT, VTI, GLD, SHY)

You're right. It really is beautiful. It days like this that remind you what Long Term Treasuries are for.

Posted: **Wed Jun 15, 2011 3:32 pm**

Gumby wrote: You're right. It really is beautiful. It days like this that remind you what Long Term Treasuries are for.

I believe that the bond bears may be singing a song similar to this slightly modified version of "Gloom, Despair and Agony on Me" from the TV show "Hee Haw":

Gloom, despair, and treasury rally agony on me
Deep, dark depression, excessive bond market misery
If it weren't for bad luck with market calls, I'd have no luck at all
Gloom, despair, and treasury rally agony on me

We figured she was done, rates could only upward tilt
And we figured she would fall over like a blind man on stilts
'Cause we had heard for years how an upward move in rates was to be feared
How was we to know their calls were based on patterns in grandma's quilt?

Gloom, despair, and treasury rally agony on me
Deep, dark depression, excessive bond market misery
If it weren't for bad luck with market calls, I'd have no luck at all
Gloom, despair, and treasury rally agony on me

***

If you are not familiar with the original form of this serious style of music, here is a good example for reference:

http://www.youtube.com/watch?v=1okb5EIo1nw

Gyroscopic Investing

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