Gyroscopic Investing

Can you please offer me advice for a Canadian newbie investor. I'm loosing sleep.
I have 200K and started investing end of June this year and I decided to dca over 6 months. I bought some stocks and were ready to buy bonds and then the market crashed. If I had known about HB PP, I might have bought at least bonds and stocks at the same time. Anyhow. now I'm 10% in Canadian stocks(now minus about 10%) and 10% physical gold (I'm still up by little) and 80% is in cash. I also recently started buying some physical gold one oz each dip because I want to increase it by 25% and I'm now so scared to buy more gold with this much volatility.

I'm scared to buy any bonds as it is all time high. Basically I'm too afraid of buying anything now. It seems whatever I buy, it goes down.
I feel that I might have been better off not investing at all and deposited it in a 5 year GIC.

Now I learnt that Canadian long bonds do not work as well as US long bonds. I wish I had bought US treasuries and US stocks when the loonie was high. And when gold goes down, Canadian stocks tend to suffer too.

By the way,
I'm in Vancouver, a city where an average house is million dollars. So I'm still renting but eventually IF EVER the prices come down (no one in this city thinks it's going to go down), I want to buy our first home with this money. In this case, would you say that I stop this gambling and keep the rest in cash for now? I could buy some bonds and make a mix of 10% bonds/10%gold/10%stocks and the rest in cash.

Harry browne said we should put money that we cannot afford to loose in PP but I am not sure if PP is ok for a short term (less than 5 years) investment, which is going to be used to buy a home. I'm still not comfortable with PP as it is based on US investors and whether it will work for Canadians for short term.

For bonds, a mix of US/Canadian would work better than just Canadian even with the high flying US dollar?

Thanks so much. I'm so much in need of advice.

In "Adam Smith's" classic late-1960s investing book "The Money Game" he noted that successful investing requires a high degree of self-knowledge and emotional maturity--i.e., a strong sense of one's own identity.  The problem, he went on to explain, is that market volatility creates a generalized sense of anxiety, and anxiety is an enemy of identity.

This process of anxiety undermining identity feels like emotion overwhelming reason, and that's about the same way of describing things.

My sense from your post is that you are feeling a strong sense of anxiety, which probably means that you are not communicating well with the rational part of yourself, which is the part of yourself that can weigh short and long term projections against the present situation.

I would wait until your sense of anxiety subsides before making any more investment decisions.  Even unwinding your current investments in the state of mind you are now in seems likely to lead to future regret.

When your mind is settled and you are ready to make some strategic investment decisions, ask yourself this question: "How is this strategy going to look to me when I am consumed by fear and anxiety?  Will I be able to stick with it?"

That ought to get you going in the right direction.

The PP is a great strategy, but it needs to be the result of a sober assessment on the part of each investor of his goals, risk tolerance and overall emotional disposition. 

metta2006 wrote: Can you please offer me advice for a Canadian newbie investor. I'm loosing sleep.
I have 200K and started investing end of June this year and I decided to dca over 6 months. I bought some stocks and were ready to buy bonds and then the market crashed. If I had known about HB PP, I might have bought at least bonds and stocks at the same time. Anyhow. now I'm 10% in Canadian stocks(now minus about 10%) and 10% physical gold (I'm still up by little) and 80% is in cash. I also recently started buying some physical gold one oz each dip because I want to increase it by 25% and I'm now so scared to buy more gold with this much volatility.

Welcome to the forum.  If it makes you uncomfortable to jump in too quickly, I think the dollar cost averaging approach is the best way to go.  Do something simple like go all cash right now, then for the next 10 months invest 10% each month into the PP.  Every time you buy, make your portfolio 4x25 again.  This way you are always buying more of the lagging assets and are keeping your portfolio balanced.  It also gives you a chance to benefit greatly from any assets that make big moves over the next 10 months, while minimizing your losses from lagging assets.

I'm scared to buy any bonds as it is all time high. Basically I'm too afraid of buying anything now. It seems whatever I buy, it goes down.
I feel that I might have been better off not investing at all and deposited it in a 5 year GIC.

Now I learnt that Canadian long bonds do not work as well as US long bonds. I wish I had bought US treasuries and US stocks when the loonie was high. And when gold goes down, Canadian stocks tend to suffer too.

If you are not afraid of the currency risk, it might be wise to invest in TLT as a substitute for US Treasuries or Canadian bonds.  This would be modifying the PP a bit, as you take on some currency exchange risk, but personally I am of the opinion that the next decade will continue the long bull market in US bonds, and they will continue benefit from the instability of the rest of the world.

By the way,
I'm in Vancouver, a city where an average house is million dollars. So I'm still renting but eventually IF EVER the prices come down (no one in this city thinks it's going to go down), I want to buy our first home with this money.

Wow, I remember people in California saying the same exact thing in 2005.  As soon as I hear someone say that prices will never go down, I KNOW it is a bubble.  Even if you are planning on buying a home with your PP money, it would probably not be the best idea to sink 100% of your savings in a house.  You should probably put the minimum down and keep the rest in the PP.  Unless interest rates rise above 8 or 9%, you can always come out ahead this way by paying a 3.5% mortgage and earning 9-10% on that money that you borrowed.

I'm with MediumTex.

It's a big decision. You should wait to act until what you decide to do feels good, and then you should wait some more. If what you decide to do still makes you feel peaceful a few weeks later, then it is probably okay to do it. You may still feel a little nervous when it comes time to push the button, but that is okay. The peaceful feeling will come right back.

You may have some second thoughts some time after you act. I do for sure. The thing to do is to sit with your new thoughts until you understand them.

While you are waiting for your decision to come, hang around this forum and listen to what other people have to say. You can also occupy yourself with some investing books. I bet you would like Jason Zweig's book "Your Money and Your Brain."

http://www.amazon.com/Your-Money-Brain- ... 074327668X

You might also like "The Four Pillars of Investing" by William Bernstein:

http://www.amazon.com/Four-Pillars-Inve ... 159&sr=1-1