Gyroscopic Investing

Just started reading this book:

Noise: A Flaw in Human Judgment

https://www.amazon.com/Noise-A-Flaw-in- ... l_huc_item

Written by a world-class author.

Seems like its content would be of interest to many here.

I think you can get a taste of it just from the first page:

I just read this twice and came up with a score....but if I reveal it to you...it WILL influence your score.

Therefore if you want to participate in this....respond by saying you have a score. If enough respond then I will set up a poll in which we can then see the range of our scores. I know what I focused on and why I gave the score that I did.

Vinny


The Experience of Judgment: An Example
Before we further discuss the experience of judgment, we now ask you to make one yourself. You will absorb more from the rest of this chapter if you do this exercise and carry it out to completion.

Imagine that you are a member of a team charged with evaluating candidates for the position of chief executive in a moderately successful regional financial firm that faces increasing competition. You are asked to assess the probability that the following candidate will be successful after two years on the job. Successful is defined simply as the candidate’s having kept the CEO job at the end of the two years. Express the probability on a scale from 0 (impossible) to 100 (certain).

Michael Gambardi is thirty-seven years old. He has held several positions since he graduated from Harvard Business School twelve years ago. Early on, he was a founder and an investor in two start-ups that failed without attracting much financial support. He then joined a large insurance company and quickly rose to the position of regional chief operating officer for Europe. In that post, he initiated and managed an important improvement in the timely resolution of claims. He was described by colleagues and subordinates as effective but also as domineering and abrasive, and there was significant turnover of executives during his tenure. Colleagues and subordinates also attest to his integrity and willingness to take responsibility for failures. For the last two years, he has served as CEO of a medium-sized financial company that was initially at risk of failing. He stabilized the company, where he is considered successful though difficult to work with. He has indicated an interest in moving on. Human resources specialists who interviewed him a few years ago gave him superior grades for creativity and energy but also described him as arrogant and sometimes tyrannical.

Recall that Michael is a candidate for a CEO position in a regional financial firm that is moderately successful and that faces increasing competition. What is the probability that Michael, if hired, will still be in his job after two years? Please decide on a specific number in the range of 0 to 100 before reading on. Read the description again if you need to.

Speaking of flaws in human judgment....

Vinny, would you PLEASE stop with the posting of links to inane articles that none of us could care less about????

Make a thread called "Vinny's Favorite Clickbait" or something and post there. Please stop clogging up the forum for the rest of us.

Thank you.

Vinny,

I think you are a reasonable guy. Not someone I would ever hang out with - but weird in a way that I sometimes find interesting.

The problem is that there are a lot of smart and invested people here - people that will share information with like minded serious folks.

But you have not been acting like a serious person.

You are on the Permanent Portfolio forum and have no investments that are even related to the permanent portfolio philosophy.

Despite years of reading and posting. Fine, everyone probes a bit at first - but now it is apparent that you are just a voyeur with no serious intentions. You have not offered one single bit of investment advice, nor ever added any substantial wisdom related to a diversified portfolio.

The same with your political and social posts. You are an agent provocateur with no skin in the game. This forum is on your daily entertainment channel surfing list. You get the benefit of the doubt - but at some point you have to contribute more than just some news clip to poke the local neanderthals. This forum is a speedbump on your daily dopamine hit. It gets old after a while.

I repeat, I like your style Vinny. I'm not very orthodox myself. But to play in this forum, please contribute more ideas and analysis and opinion. Not just throw tinder on to the fire. This forum is a jewel. You have it in you. Rise to the occasion.

Mark Leavy wrote: ↑Fri Jul 09, 2021 8:16 pm
Vinny,

I think you are a reasonable guy. Not someone I would ever hang out with - but weird in a way that I sometimes find interesting.

The problem is that there are a lot of smart and invested people here - people that will share information with like minded serious folks.

But you have not been acting like a serious person.

You are on the Permanent Portfolio forum and have no investments that are even related to the permanent portfolio philosophy.

Despite years of reading and posting. Fine, everyone probes a bit at first - but now it is apparent that you are just a voyeur with no serious intentions. You have not offered one single bit of investment advice, nor ever added any substantial wisdom related to a diversified portfolio.

The same with your political and social posts. You are an agent provocateur with no skin in the game. This forum is on your daily entertainment channel surfing list. You get the benefit of the doubt - but at some point you have to contribute more than just some news clip to poke the local neanderthals. This forum is a speedbump on your daily dopamine hit. It gets old after a while.

I repeat, I like your style Vinny. I'm not very orthodox myself. But to play in this forum, please contribute more ideas and analysis and opinion. Not just throw tinder on to the fire. This forum is a jewel. You have it in you. Rise to the occasion.

Thank you for your well-stated (as usual( opinion, Mark.

I will try to be brief (but that can oftentimes be difficult for a detail person such as myself).

Back in the spring of 2019 I discovered the Permanent Portfolio. I twice read Harry Browne's book on it (plus his 500 page book on investing).

I then discovered Craig at the Bogleheads and read every single post he put there. That led me to discovering here and I read every single post of his his here. During that time I also discovered his and Tex's book, which I also read twice.

After all of that investigation I was all set to go full "Level Four" Permanent Portfolio.

Just about two years ago this past weekend I was at a a friend's house going over all my 9 different retirement accounts with Vanguard to decide how to apportion all of them about the four investments.

Somehow other things took precedent so I got side tracked in the implementation. Not something unusual for me.

I came back to it in the fall of 2019 and started asking a lot of questions here (go back to my early posts during that time period). It was after than that I also did my deep dive into the archives.

Initially the diving into the archives was just to answer my questions regarding implementation but there were so many other topics in the archives which also interested me. I told myself I could read those topics as a "treat / reward" for being so diligent in reading all the posts in all the topics on implementation.

While I'm reading all those posts on implementation I'm extracting many of them into a huge Excel worksheet, arranged by topics. for me to study to assist me in making the myriad of decisions one must make to fully implement this "simple" plan. I did not want to have to make any decisions after I was fully implemented. I wanted to have it all planned out, e.g., what my bands would be to trigger rebalancing.

The goal was to finally fully implement by the end of January 2020.

Again other things came up....and that work got put aside in the spring 2020 to focus on something else of paramount importance related to implementation -- Getting straight all my various retirement plans.

Currently with Vanguard I have these:

Roth IRA
Rollover Traditional IRA
Rollover Roth IRA
Simple IRA as a self employed
Simple IRA as an employee
Individual 401(k)
Individual 401 (k) Roth
Individual 401(k) Employer
SEP-IRA

Along the way I'd also had many other retirement plans (Traditional IRA, Non-Deductible IRA, 401(k) both Roth and Traditional as an Employee, Keoghs, Money Purchase Plans, Profit Sharing Plans 403(b)'s, 457's -- all of which had been rolled over to the two existing Rollover plans).

In implementing Permanent Portfolio I don't want to continue to maintain NINE separate retirement accounts. I want to consolidate them as much as possible. But only like taxed accounts can be consolidated. One can never consolidate a Traditional IRA account with a Roth account.

Also at the same time last spring I decided to leave my job of 12 years which gave me a lot more time to work on my things as opposed to other things. Plus, I'm closer to having do those required minimum distributions (I'm quite thankful for the CARES Act which put it off for two years).

All of the above resulted in me going all the way back to my first tax return in 1967 and every subsequent one to document in an Excel worksheet every single detail in ALL those tax returns. Again...it was part of this Permanent Portfolio process (as determined by me)...but since I now had the luxury of time that I'd not prior had...I decided to go all out with it as once I got into it and saw how much time it was taking I recognized I'd never want to come back to do this again...so get it ALL done now.

The initial goal was to document exactly how each one of my retirement contributions had been treated on my tax returns -- whether or not I'd received any tax benefit in the years I made them. Also, Massachusetts has a lot of different tax rules regarding the tax benefits from retirement contributions. Mostly they do now give you any from many types of retirement contributions.

I put enormous amounts of hours into all of that...but once nice weather finally reached Massachusetts this spring I'm outside whenever weather permits and not sitting in front of this computer doing anything.

But lately I've been getting back to that tax return / retirement contribution documentation.

Just today I was matching up each year's tax return's IRA contribution with the dates they were made and into which investment account they were made. I continued with the Keogh and Money Purchase. Next time I do this work I start with the SEP-IRA contributions. And, so on until I know exactly how everything has been treated tax-wise and, more importantly, how they will be treated tax-wise for both federal and state tax purposes.

Then I can collapse my accounts into the minimum number of accounts possible, which then becomes my targets for the four 25% investments.

But I will still need to get back to getting all my questions answered as to how to implement plus all the questions answered regarding any issues that arise post-implementation.

As you can see I've actually devoted significant amounts of time into all aspects of this. That is my style. I don't want to have to constantly have to come back to trying to determine how I'm going to react in case something happens. I want it all to happen on automatic pilot because I'd had it all planned out ahead of time.

As usual...I said more than I'd intended but I warned you at the start.

Being in this forum has actually had some major impacts on my life.

1) Got me to totally buy into Dr. Ellie's teeth regime. I bought and read her two books twice plus did my usual excerpting from it and read everything on her web site. It's been just about a year now that I've been a 100% convert to her system.

2) Got me to buy tons of books that I would have otherwise not known even existed. I bought one of Technovelist's old ones...just because I "knew" him from here. Bought the one you stated that you'd worked all the way through and which taught you a lot which you know.

3) Got me to go 100% Treasury Bond Fund investments in March 2020 with all my vast cash holding with Vanguard. I recognized until I finally go full Permanent Portfolio that I'm best with a barbell. I am continuing to take unnecessary significant risk with my Vanguard (all being index) funds - European, Total Stock, Real Estate, Value, Small Cap Value, Investment Grade Bond). Risk that I do not need to take. Therefore I should not be chasing any form of yield on the cash investments and go total opposite with the cash investments. Almost no yield, but no risk.

4) Got me to now two years in a row buy iBonds

5) Believe it or not I have made some friends here. There are some things that have gone on between me and others "behind the scenes".

Okay. That is probably (more than?) enough. Time to get to reading my Stalingrad book.

tomfoolery wrote: ↑Sat Jul 10, 2021 12:58 am

This book on cognitive noise sounds fascinating. Humans have developed cognitive shortcuts, or heuristics to navigate a complex world with efficient energy expenditure.

I wonder if that book touches on this and explores the intersection as perhaps a reason for the noise.

I think what you state was well covered here in a prior well known book by one of the authors --

Thinking, Fast and Slow Kindle Edition
by Daniel Kahneman

https://www.amazon.com/Thinking-Fast-Sl ... 212&sr=8-3


This current book delves into all the ways this noise occurs, which is aside from the bias that we all bring to assessing any information.