Gyroscopic Investing

For those of us in the PP, how does it feel to be up around 0.3% on a day when the market drops nearly 7%? 

For those of you reading this thread, who have considered the PP, or have decided to modify it arbitrarily to hold less gold/bonds, do you regret not being in the PP?

I'm up about 8% for the year based on my individual PP layout, and most importantly, very low volatility.

I love watching the markets go crazy. It's almost as good as netflix. With the PP, I feel like a spectator.

Bring on the action, my popcorn is almost ready.

Up only 0.3.  Hmm... That's a warning sign, I think.

Great day for CNBC listening. The market was fluctuating, and when it hit -500—after being there a time— the commentator is quick to add "off the lows of the day..."

Near the end, at -600 or so, one guy actually said that at least it was an orderly sell-off from the -230 open.  

To start it all off in the morning, Bogle was on.  Great!  Need I say more?  Why do they ever do that?

How can anybody NOT be tuning into these guys on day like this?  Made my laundry day a treat.

Holy Moly - Assets in isolation crowd in full panic! Meanwhile, I got that peaceful, easy feeling...

I am continually humbled by the effective simplicity of the Permanent Portfolio.  So thankful for Harry Browne's clear, concise writings that made an impact on my thick skull - 25*4, re-balancing bands, low costs, tax efficiency, strong savings rate, and continual improvement of my human capital. 

Pretty amazing to think that I may soon be selling Long Term Treasuries to buy stocks for the second time in three years...  As for my Variable Portfolio, couple more days like this and it may be time to go dumpster diving...

Every day is a good day to be in this portfolio. I just checked on the value of the total portfolio just this week to get a blog post together. Other than that, I ignore day to day fluctuations and news about it. I think the longer one runs the portfolio the more likely they are to adopt this approach as the comfort level grows. I honestly sleep like a baby and I just don't worry about it.

brick-house wrote:Pretty amazing to think that I may soon be selling Long Term Treasuries to buy stocks for the second time in three years...  As for my Variable Portfolio, couple more days like this and it may be time to go dumpster diving...

I'm getting close to another gold rebalance as well. It will be good to pick some stocks up cheap.

i haven't looked in at boglehead's lately but i bet there are a lot of "stay the course" posts being made today...   i am sure i feel better having the 60/40  portfolio  in my past and the pp in my present and future...

...I think Im gonna cancel my sky-diving and Base-jumping plans for tomorrow and do something EXCITING like watch the market on CNBC...

Get some popcorn ready!

Oh, and that "off the lows of the day" comment, only to watch the further crash 20 minutes later - That one was just precious!

Back in 2001, two friends--both 55 years old--are looking ahead to retirement in 2011.  They both have $100,000 to invest.  The first friend invests in a standard 50-50 b'head portfolio.  Today he has $104,000.  The second friend invests in a HBPP.  Today he has $225,000.

Whenever people tell you they don't like the PP because it's too conservative or "voodoo," ask them "compared to what?"

IMHO, don't be so smug. Even the HBPP was down 23.82% in 2008 vs. it's peak*. The PP could still see plenty of downside.

*backtest on ETFReplay.com using SHY, TLT, GLD, VTI

Drewskers wrote: IMHO, don't be so smug. Even the HBPP was down 23.82% in 2008 vs. it's peak*. The PP could still see plenty of downside.

*backtest on ETFReplay.com using SHY, TLT, GLD, VTI

Drewskers, you probably didn't rebalance the PP assets properly when you used ETFReplay. PP holders would have rebalanced at some point during that 2008-2009 fall/winter.

I've looked into this extensively — with the actual raw data — and I can say with certainty that ETF Replay is dead wrong about the drawdown. Between Mar 18, 2008 - Nov 19, 2008 the HB-PP saw a 13% to 15% drawdown — it varies, depending on when you started your PP. The PP rebounded very rapidly after Nov 19th 2008 — finishing 2008 with a 1% gain.

[align=center][/align]

Enter SHY, TLT, GLD, VTI into Google Finance, Smartmoney, or Morningstar — and rebalance your assets when the rebalancing bands are hit — and you'll see a much more accurate representation of the 4x25 PP. The real drawdown was definitely not anywhere close to what ETFReplay spits out.

Look at the Old Man Burnses populating this forum... LOL.

More likely it is a bunch of Einsteins in here, LOL.

brick-house wrote: Holy Moly - Assets in isolation crowd in full panic! Meanwhile, I got that peaceful, easy feeling...

I am continually humbled by the effective simplicity of the Permanent Portfolio.  So thankful for Harry Browne's clear, concise writings that made an impact on my thick skull - 25*4, re-balancing bands, low costs, tax efficiency, strong savings rate, and continual improvement of my human capital. 

Pretty amazing to think that I may soon be selling Long Term Treasuries to buy stocks for the second time in three years...  As for my Variable Portfolio, couple more days like this and it may be time to go dumpster diving...

Hear, hear!  It is a wonder watching the parts swing up and down while the PP just calmly strolls along.  There simply is no other investment approach that consistently grows even when stocks tank.

And a big thank you to craigr, MediumTex, and all the other brilliant people who contribute to this forum and patiently expound their wisdom.

Gumby wrote:
Drewskers, you probably didn't rebalance the PP assets properly when you used ETFReplay. PP holders would have rebalanced at some point during that 2008-2009 fall/winter.

I've looked into this extensively — with the actual raw data — and I can say with certainty that ETF Replay is dead wrong about the drawdown. Between Mar 18, 2008 - Nov 19, 2008 the HB-PP saw a 13% to 15% drawdown — it varies, depending on when you started your PP. The PP rebounded very rapidly after Nov 19th 2008 — finishing 2008 with a 1% gain.

You are right Gumby, the backtest I ran started in 2006 and I did not rebalance. That is not ETFReply's fault. I have emailed with the owner of that site a few times with questions and he is fanatical about obtaining correct data, and performing correct calculations. I don't want my laziness to cast any doubts on that site.

I went back to ETFReply and looked at PP portfolio backtests on a year-by-year basis, so each component starts out with an equal amount (this is effectively the same as rebalancing on the first trading day of the year, which is actually what I do). For 2008 ETFReply shows a draw down of -14.07% and the year closed with a 2.1% gain. Those numbers jibe pretty well with your analysis.