Gyroscopic Investing

Thank you all for the thoughtful replies to my previous posts. I apologize if you are annoyed by my similar posts. But I have no one to ask but you helpful folks on this forum and this post is about how to DCA into pp.

Right now, I have 10% stocks, 10% gold and 80% cash.

How would I achieve dollar cost averaging into a pp while keeping 25% x 4 assets every month without selling my current portfolio (I don't want to sell them because my stocks are in the red and gold is physical)? Should I just keep the current portfolio in variable portfolio and use 80% cash to into a pp? But I don't like the idea of variable pp because I don't want to gamble with this money either.

Or should I just buy bonds 10% of my total portfolio so I have equal split of bonds/gold/stocks. And I could convert the rest of cash into pp over several months. In this case, I would not be buying the lagging assets but the opposite. So I'm a bit nervous about this method.

What do you think of setting set amount to invest on a lagging asset whatever that maybe until each asset becomes 25%. For example, I could buy more stocks this month because they are the lagging assets. Next month it could be bonds or gold that are lagging, then I would buy those. if the stocks fall more, I would buy more of stocks until I reach 25%. What do you think of this method? I might end up being too overweight in stocks while I have no chance of buying bonds or gold if they continue to do well.

Thanks so much!

Given 80% of your money is in cash I think the issue of selling stocks or gold is not on agenda. As to whether going in lump sum or doing DCA:
- if you are scared and/or new to PP you can DCA with amounts/frequency you feel comfortable with. Question of transaction costs should be kept in mind if you choose this route.
- if you are comfortable enough with the whole PP idea just go in and stop checking your portfolio too often.

I jumped into PP 15 months ago. I did it all at once and I don't regret.

If you're scared about jumping in, DCA'ing will likely help you sleep better.  There is no way of knowing whether it was better to DCA or lump sum until after the fact. 

I would at least get some treasuries to balance your current portfolio out.  You've just missed a big run up in those, but if you're buying at the top of the treasury market, either gold or stocks will probably rise to offset your losses.

I think the easiest thing to do in your situation is to just buy 10% worth of bonds right now, that way you'll have a 40% true PP and 60% cash.  Then, with the remaining money, you can dollar cost average in over  whatever period of time makes you most comfortable.  If you do this over a long period of time and always use cash to buy the lagging asset and even out your portfolio, you'll end up buying bargains of several assets over time.

Good luck!

Regarding "lagging assets" - you could view this as assets below your target allocation (as opposed to assets that have recently fallen).  If you're shooting for 25% each in cash, stocks, gold, and LT treasuries, your "most lagging" asset at this point is LTT.  If you want to DCA your way in with, say, a set dollar amount per month going to the most lagging asset, you'd buy LTT each month until you have more LTT than either stocks or gold, and then buy stocks or gold (whichever you have less of), and continue until you're roughly balanced at 25% each.  Many folks here recommend going all in - and as others have mentioned there's no way to know whether going all in or using a DCA approach will turn out better.

Thanks all for your opinions. What Rickby said makes sense. But please convince me to buy into bonds when they went up so much in a month. Maybe I should just do nothing until bonds come down a bit.   

The whole premise of the HBPP is that you cannot predict which asset(s) will decline, nor can you time them.  Another cornerstone of the PP is that if one asset, in this case treasuries, declines significantly, another asset(s) will rise even more to offset the loss and provide overall portfolio appreciation. 

What happens if you wait on buying treasuries, but stocks/gold keep drifting lower?  Without the treasuries, you have no deflation hedge.

clacy wrote:  Another cornerstone of the PP is that if one asset, in this case treasuries, declines significantly, another asset(s) will rise even more to offset the loss and provide overall portfolio appreciation. 

I bought Canadian stocks when they were high in summer before the crash and now again I'm contemplating to buy bonds when they are high. So I keep buying the assets when they are high. Is it really going to help me? If the stocks start rising and I recover my loss on the stocks, but the LTT I bought high will fall, so I reverse my recovery - so still in the red. If the stocks go down and LTT goes up to reduce the loss, I will feel better. But in the long term, will it matter? Eventually LTT will come down, and stocks will go up. In the long term, I suspect that I will come out well if I keep buying assets that are high.

Only about 10% is in stocks now and 80% in cash so I don't need to take the loss. I could just leave it for years until it finally goes up.

What do you think of leaving it as a variable portfolio (I didn't mean to gamble but it turned out that way). And then the rest of the cash I can try to put into a proper pp by buying different assets at the same time.

Is it about sleeping well at night? Actually trying to time the market and watching my portfolio shrinking has been very stressful for me.

What if you don't get "a buying opportunity" in treasuries for several months or years? I would imagine that you didn't buy treasuries back this summer because you believed they were too high.  You probably would be up right now if you had bought treasuries then.

You have to look at all 4 assets as a total portfolio and not look at the individual components.