Gyroscopic Investing

Desert wrote: ↑Tue Jun 07, 2022 12:37 pm Much of the HBPP's low volatility and steady returns can be attributed to its allocation of 25 percent equity, and the remainder in fixed income and other stuff (gold).

This is exactly the case. The equity portion is hands down the driver for both performance and risk.

One simple thing I've observed (and I think I've posted as well but don't recall where)

Dial the equity nob, then just divide bonds and gold in half for the rest. If you are a gold hater or lover then after the equity knob adjustment, dial the gold/bond ratio to preference...and this second adjustment really isn't going to be much of a driver overall and particularly as compared to the first.

In short...it's the equity slice that matters. The rest really is just padding in the cage.

Brutal week

Pp down 10.17%

Insight model down 9.1%

Wellesly down 8.77%

So pp still getting hit the hardest but all pretty close

Kbg wrote: ↑Wed Jun 08, 2022 11:21 am

Desert wrote: ↑Tue Jun 07, 2022 12:37 pm Much of the HBPP's low volatility and steady returns can be attributed to its allocation of 25 percent equity, and the remainder in fixed income and other stuff (gold).

This is exactly the case. The equity portion is hands down the driver for both performance and risk.

One simple thing I've observed (and I think I've posted as well but don't recall where)

Dial the equity nob, then just divide bonds and gold in half for the rest. If you are a gold hater or lover then after the equity knob adjustment, dial the gold/bond ratio to preference...and this second adjustment really isn't going to be much of a driver overall and particularly as compared to the first.

In short...it's the equity slice that matters. The rest really is just padding in the cage.

If it was only about equities then wellesly at 40% should be in last place yet it is out performing the othe 25% models

mathjak107 wrote: ↑Sat Jun 11, 2022 3:00 am If it was only about equities then wellesly at 40% should be in last place yet it is out performing the othe 25% models

Not sure I'm tracking your point here.

At the end of the day a backtest is a reflection of the historical record and nothing more. How assets actually perform today/in the recent history is due to what is going on economically and the expectations of the sum total of market participants. In the 2008/09 draw down a 40% (20% each the remaining) PP performed better than Wellesley. So your point, was not a point.

My point was in response to your point that the equity slice is all that matters .


But with the pp that isn’t the case as Tlt is down more than stocks… and welleslys 40% equity holding has the fund down less overall , then the 25% equity holding pp is overall.

The pp is acting like it is 75% equities in this down turn as 3 out 4 assets get hit hard

What I said was the equity slice largely drives performance and risk which isn’t even debatable in general…but yep it sucks when everything is down (really 4/4 are down in real terms).

I admit it's taking some discipline, but I'm trying to resist passing judgment on the PP's current performance until later this year.
The reason - IIRC even in 2008 when equities crashed, it took some time before bonds, then gold rallied. For a short while, all four buckets were down.
Is it fair to use a visual of a group of four tumbler wheels? They don't move immediately. One slows or moves backward, and it takes the market some reaction time for one or more of the other wheels to start spinning.
I expect (hope?) by Fall, we might see a gold rally.
Don't really know what to say about bonds though. There could be a flight to safety long bond rally. Especially if global instability persists.

In my case I've decided I am where I am. I can't find anything better to buy. Hoping to ride it out. Thread title checks out.

ppnewbie wrote: ↑Mon Jun 06, 2022 4:41 pm

dualstow wrote: ↑Mon Jun 06, 2022 7:01 am

ppnewbie wrote: ↑Mon Jun 06, 2022 1:05 am It’s also fun to try to replicate an HBPP in two components Wellesley and gold OR Wellington and gold.

It’s a cool portfolio, but how is that replicating the HBPP? That’s like replicating a pizza with a bowl of spaghetti and meatballs. Also a fine dish, but not the same.

Gold, Stock, Bonds, Short term bonds maybe act like cash.

Screen Shot 2022-06-06 at 2.40.16 PM.png

Long time lurker here and I just have to ask — what is the software that you took the screenshot from? I've been looking for something like this forever

but the pp is still not that far from other comparable models .

like i said it my be disappointing since the pp battle cry has been wait until stocks fall and when they did the pp wasnt helped by its safety assets compared to other conservative models .

i havent tracked the dalio all weather in a while but i should see how that is standing up

gospodin_i wrote: ↑Mon Jun 13, 2022 10:36 am

ppnewbie wrote: ↑Mon Jun 06, 2022 4:41 pm Gold, Stock, Bonds, Short term bonds maybe act like cash.
Screen Shot 2022-06-06 at 2.40.16 PM.png

Long time lurker here and I just have to ask — what is the software that you took the screenshot from? I've been looking for something like this forever

From the filename, I’d say it just looks like MacOS’s in-house utility. Right, ppnewbie?
EDIT: Sorry, i answered as if you were asking what he took the screenshot with.

mathjak107 wrote: ↑Mon Jun 13, 2022 10:38 am but the pp is still not that far from other comparable models .

like i said it my be disappointing since the pp battle cry has been wait until stocks fall and when they did the pp wasnt helped by its safety assets compared to other conservative models .

i havent tracked the dalio all weather in a while but i should see how that is standing up

Further to my point above, you're expecting immediate response between the negatively correlated assets. That's not how it's worked historically.
Conduct your comparisons, but I think you should keep updating them for the next 3-6 months before passing judgment.

glennds wrote: ↑Mon Jun 13, 2022 10:42 am

mathjak107 wrote: ↑Mon Jun 13, 2022 10:38 am but the pp is still not that far from other comparable models .

like i said it my be disappointing since the pp battle cry has been wait until stocks fall and when they did the pp wasnt helped by its safety assets compared to other conservative models .

i havent tracked the dalio all weather in a while but i should see how that is standing up

Further to my point above, you're expecting immediate response between the negatively correlated assets. That's not how it's worked historically.
Conduct your comparisons, but I think you should keep updating them for the next 3-6 months before passing judgment.

i can easily track them and will .

i am not passing judgement . i am simply calling it as the ytd reflects

gospodin_i wrote: ↑Mon Jun 13, 2022 10:36 am

ppnewbie wrote: ↑Mon Jun 06, 2022 4:41 pm

dualstow wrote: ↑Mon Jun 06, 2022 7:01 am

ppnewbie wrote: ↑Mon Jun 06, 2022 1:05 am
It’s also fun to try to replicate an HBPP in two components Wellesley and gold OR Wellington and gold.

It’s a cool portfolio, but how is that replicating the HBPP? That’s like replicating a pizza with a bowl of spaghetti and meatballs. Also a fine dish, but not the same.

Gold, Stock, Bonds, Short term bonds maybe act like cash.

Screen Shot 2022-06-06 at 2.40.16 PM.png

Long time lurker here and I just have to ask — what is the software that you took the screenshot from? I've been looking for something like this forever

If you are using a Windows based computer you could always use "Snipping Tool", which I use many times each day.

gospodin_i wrote: ↑Mon Jun 13, 2022 10:36 am

ppnewbie wrote: ↑Mon Jun 06, 2022 4:41 pm

dualstow wrote: ↑Mon Jun 06, 2022 7:01 am

ppnewbie wrote: ↑Mon Jun 06, 2022 1:05 am It’s also fun to try to replicate an HBPP in two components Wellesley and gold OR Wellington and gold.

It’s a cool portfolio, but how is that replicating the HBPP? That’s like replicating a pizza with a bowl of spaghetti and meatballs. Also a fine dish, but not the same.

Gold, Stock, Bonds, Short term bonds maybe act like cash.

Screen Shot 2022-06-06 at 2.40.16 PM.png

Long time lurker here and I just have to ask — what is the software that you took the screenshot from? I've been looking for something like this forever

The screenshot is from Portfolio Visualizer's backtest tool: https://www.portfoliovisualizer.com/bac ... allocation

glennds wrote: ↑Mon Jun 13, 2022 10:32 am I admit it's taking some discipline, but I'm trying to resist passing judgment on the PP's current performance until later this year.
The reason - IIRC even in 2008 when equities crashed, it took some time before bonds, then gold rallied. For a short while, all four buckets were down.
Is it fair to use a visual of a group of four tumbler wheels? They don't move immediately. One slows or moves backward, and it takes the market some reaction time for one or more of the other wheels to start spinning.
I expect (hope?) by Fall, we might see a gold rally.
Don't really know what to say about bonds though. There could be a flight to safety long bond rally. Especially if global instability persists.

In my case I've decided I am where I am. I can't find anything better to buy. Hoping to ride it out. Thread title checks out.

Good post, and excellent perspective. Also, I think there was a time in March 2020 when everything was down at the same time as well, before EVERYTHING sprung back quickly. I think LTT's were first up off the mat that time (or maybe they were the only thing that held steady, I can't remember). Regardless, things looked very bleak indeed before things quickly sprung back to life. If this is the popping of the everything bubble, who knows where we end up or how long it will take to get there.

March I think was very different as deflation was the fear from a shut down economy not inflation..

The wild card is how high can inflation go before the house of cards collapses

flyingpylon wrote: ↑Mon Jun 13, 2022 10:56 am The screenshot is from Portfolio Visualizer's backtest tool: https://www.portfoliovisualizer.com/bac ... allocation

This is what I was looking for — thank you!

I’m down about 16% ytd, just rough calculation.

It feels crappy.

mathjak107 wrote: ↑Mon Jun 13, 2022 10:38 am but the pp is still not that far from other comparable models .

like i said it my be disappointing since the pp battle cry has been wait until stocks fall and when they did the pp wasnt helped by its safety assets compared to other conservative models .

i havent tracked the dalio all weather in a while but i should see how that is standing up

so i looked at the ray dalio all weather portfolio.

that is down the most at minus 16.88% ytd

vs pp at minus 13.67

vs wellesly minus 11.43

Just an awful week

Pp down 12.88% ytd , cagr the last 10 years 4.30%

Fidelity monitor income model down 11.31 , 4.71% the last 10 years

Wellesly 11.67% 40% equities . 5.93% the last 10 years


Ray dalio all weather is doing the worst , down 16.12..

5.31% the last 10 years .

Vti for comparison 12.38% the last 10 years so one could actually be down 50% and still be ahead of them all..

Correction: that being down 50% is from now, which means you would already be down 20% .so huge difference

The 10 year CAGR is a good addition, gives more context. I appreciate the weekly updates.

Kbg wrote: ↑Mon May 16, 2022 4:18 pm

jalanlong wrote: ↑Mon May 16, 2022 2:57 pm

dualstow wrote: ↑Thu May 12, 2022 9:32 pm Bitcoin is just too young and Harry was wise. Even though he would probably have been fascinated by it, I can’t imagine that he would have recommended crypto to investors depending on his sage advice, let alone telling people to put in in a portfolio of “money you can’t afford to lose.”

Bitcoin supporters (esp those in places like Canada) would say that Bitcoin can be for "money you can't afford to lose" when the government decides to start freezing or seizing financial assets without any due process because you have the wrong views on certain topics.

As opposed to the safety provided by private vendors who lose just a couple hundred mil here and there to the occasional hack.

Well like gold, if you dont hold it in a private vault then you probably dont own it.

jalanlong wrote: ↑Sat Jun 18, 2022 10:48 pm

Kbg wrote: ↑Mon May 16, 2022 4:18 pm

jalanlong wrote: ↑Mon May 16, 2022 2:57 pm

dualstow wrote: ↑Thu May 12, 2022 9:32 pm Bitcoin is just too young and Harry was wise. Even though he would probably have been fascinated by it, I can’t imagine that he would have recommended crypto to investors depending on his sage advice, let alone telling people to put in in a portfolio of “money you can’t afford to lose.”

Bitcoin supporters (esp those in places like Canada) would say that Bitcoin can be for "money you can't afford to lose" when the government decides to start freezing or seizing financial assets without any due process because you have the wrong views on certain topics.

As opposed to the safety provided by private vendors who lose just a couple hundred mil here and there to the occasional hack.

Well like gold, if you dont hold it in a private vault then you probably dont own it.

I've been feeling worse about my paper gold lately. I really question the value of it at all. I fear that I'm largely deceiving myself by thinking my gold allocation is where it is.

If we want the risk/returns of paper assets, then stocks fit the bill. If we want SHTF insurance, an off-the-books-asset, hard money, an asset that is no one else's liability, then that's physical gold. A combination of the two is an abomination and is not needed in modern times. Paper gold is like stocks w/out the upside.

Conspiracy theory: does the existence of paper gold suppress the price of gold? It seems plausible to me. I'm sure there is some degree of fractional reserve going on somewhere in the world, and that reduces the demand for the real thing.

Back to Bitcoin: since it is a digital-native asset, you are never in a position where you have to trust that someone has the Bitcoin they say they do. Reserves can be cryptographically audited:

https://www.kraken.com/en-us/proof-of-reserves

This would be like mathematically proving that all the gold bars are there in the vault, and they are all 100% gold. This is prohibitively expensive in the gold case.

joypog wrote: ↑Sat Jun 18, 2022 8:52 am The 10 year CAGR is a good addition, gives more context. I appreciate the weekly updates.

It does kind of show you if you are paying to much in expenses so to speak .

Paying for the insurance of the safety assets and coming in last in the bull and then lagging in the bear market you were buying that insurance for means you may have been sold a bill of good s with features and benefits you didn’t get…

So far Wellesly would have been a better choice all around.

Even 100% total market fund would have left you with a bigger balance despite the drop if one had the tolerance for the volatility.

mathjak107 wrote: ↑Mon Jun 20, 2022 7:28 am

joypog wrote: ↑Sat Jun 18, 2022 8:52 am The 10 year CAGR is a good addition, gives more context. I appreciate the weekly updates.

It does kind of show you if you are paying to much in expenses so to speak .

Paying for the insurance of the safety assets and coming in last in the bull and then lagging in the bear market you were buying that insurance for means you may have been sold a bill of good s with features and benefits you didn’t get…

So far Wellesly would have been a better choice all around.

Even 100% total market fund would have left you with a bigger balance despite the drop if one had the tolerance for the volatility.

Mathjak, as usual, you are trolling, but I’ll bite.

We are looking at one possible future. There were other futures where the insurance of gold would have paid out and your model portfolios would have been wiped out. For example, a German investor during the world wars.

Since I am not an average investor, I am a human being, I have only one life to live, I’d prefer to be protected from tail risks like that.