Gyroscopic Investing

Many recently dislike long dated treasuries, due to low yields. rising inflation and interest rate risk. The same however might have been said about gold in the early 1980's when the Dow/Gold ratio was down at near 1.0 levels. Yet that subsequently provided a means to accumulate/cost-average gold. Broadly post 1980 and as stocks did well (Bull run) the bear run in gold resulted in multiple more ounces of gold being accumulated as stock gains were top-sliced to buy more ounces of gold. Eventually that turned around and post 2000 Bear/Bunny in stocks was accompanied with a Bull run in gold. Collectively that all worked out OK - broad PP portfolio wise.

Reviewing a 'trick' however, and starting with 25% virtual gold in 1980, where for instance if you had $100,000 actual capital you pretended to have $133,333 with $33,333 invested in actual stocks, STT and LTT along with $33K of virtual (pretend) gold holdings ... and that worked out really well, by the end of 1999 had annualized 11.6% instead of 8.9%, ending 1999 with 12% actual gold (13% still virtual gold).

The same could be applied to LTT's from present presumed 'high' levels. A PP of 25% each of actual stock, STT and gold holdings, along with 25% pretend/virtual LTT holdings. When buys occur (rebalancing) actually buy (average into) LTT's. If a sale occurs then sell actual holdings when available otherwise sell virtual holdings above/beyond that. Likely if/when LTT's do decline to being 'better value' you will at least have averaged into actual holdings. And as per gold 1980 - 1999 might yield higher rewards compared to a conventional PP.

Trading (rebalancing) did see percentage actual gold holdings swing quite wildly during the 1980 - 1999 years. For instance from 0% actual gold in 1980 that rose to 13% at the end of 1984, but then dropped back down to 1% at the end of 1987, was back up to 10% at the end of 1992, fell back to 5% a couple of years later, before rising up to 12% at the end of 1999.

I thought this was going to be about some gold fund despite the “(bonds).”
Are you just talking about holding extra cash and easing into the pp?

No. It averages into the asset you opine has the lowest-prospect/seems-high. Gold in 1980 (Dow/Gold ratio was down at 1.0 levels), LTT's as of recent.

In the example that started with 0% gold in 1980, so thirds each stock/STT/LTT, along with 25% virtual (pretend) gold - so a actual conventional PP but comprised of some virtual gold instead of actual gold. Then over time as the price of gold declined that PP (including virtual gold) saw rebalancing adding to gold (stocks/whatever up, gold down, PP rebalancing has you sell some stock to buy more gold), which at each such trade replaced virtual gold with actual gold (but in some cases where gold might have been up and some of actual gold sold to add to other down-assets (stock, STT and/or LTT).

Could be revised to instead of starting with 0% of the 'expensive' asset (all virtual), to perhaps underweighted - maybe 10%/whatever.

Could be considered a form of mild/moderately leveraged PP, where you're 'shorting' the expensive asset to add more into the other PP assets.

Why is what_you_opine better than the rebalancing bands?