Gyroscopic Investing

I've told co-workers and they don't buy it. I mention gold and they think "gold bug". It seems to be a little hard for people to get their head around.

I throw it out now and then over on Seeking Alpha.  Mixed reception.  The market timers laugh and think they will rule the world.  But Bogleheads and other passive investors are usually willing to give it a hard look.

Indices wrote: I've told co-workers and they don't buy it. I mention gold and they think "gold bug". It seems to be a little hard for people to get their head around.

That's quite an understatement.

In my experience, you really have to be ready for the PP or it just won't make any sense at all.

I have talked to lots of people about the PP, and I have learned that there is often an enormous amount of sloppy thinking and superstition that you have to overcome to really get someone to see the PP clearly.

Some question you might want to "pre-answer" for people:

1. No, I'm not a gold bug.
2. No, I don't think the world is going to end tomorrow.
3. No, I don't think anyone can predict the future.
4. Yes, I think most investors are actually just gambling most of the time.
5. No, I don't think that our political leaders and central bankers are taking care of everything.
6. No, the gains in one PP asset are not completely offset by losses in another.
7. No, you should not tweak the PP allocation to reflect your own ideas about what the market is likely to do next.
8. No, I don't think the allocation is about to stop working.
9. Yes, I am saying that all of those people on TV are basically a bunch of card readers, hucksters and confidence men.  They are all just guessing, hoping that their stories will engage enough people that they can make a living, and often worrying that they are about to be exposed.
10. No, I do not attribute Warren Buffett's success to luck, though I would point out that most of his really good years happened before he was a household name, and since then his performance has been pretty unimpressive.  IMHO, looking for the next Warren Buffett is a complete waste of time.

What I find stunning is that the empirical result that the PP does what people want gets so reddily overlooked. It is almost as though people value their preconceptions so much that they are unwilling to face facts even when they are staring them in the face.

Told my dad because I help the family invest. He's not interested. He's got a bond guy who set him up with a portfolio of high yield tax free munis. (We also hold stocks and cash, and he used to own numismatic coins, many of them gold).
Every once in a while, I show him how I've done, how long-term treasuries and gold coins have really helped my portfolio since I began. His response is usually, "I'll buy (long) bonds when the interest rate is better."

I've casually told some friends because we talk about investing a couple times a month anyway. They at least ask follow-up questions but they are also greying and set in their ways. They've got their own plans. And who's to say they won't perform better?

dualstow wrote: I've casually told some friends because we talk about investing a couple times a month anyway. They at least ask follow-up questions but they are also greying and set in their ways. They've got their own plans. And who's to say they won't perform better?

I am very happy I found the PP.

Before I found the PP, investing was mostly a confusing and frustrating experience that seemed to involve a lot of risk, speculation and murky cause and effect relatinships.

Now, I really enjoy investing. 

Several people.  Some get the idea right off; most don't.  Two have bought into PRPFX; one is about to go 50/50 with PRPFX and an HB PP.

I've explained it to my kids - 20-somethings.  One is now 100% PRPFX in his Roth IRA.  The other's Roth is about 30% in a 4x25 PP using VTI/CEF/SHY/TLT with 70% in a speculative VP (which I think is getting pretty soundly outpaced by his PP).

When I discuss it with people, I show them a picture of stocks vs. long term US treasuries in 2008. 

They usually at least start to understand the idea after that. 

I've had a couple of friends who have asked me to just set up the portfolio for them.  They tell me that they're clueless when it comes to investing, but still seem to understand that owning only stocks is probably not the best idea.

I've set three PP's up for three people. 

It can be a little bit time consuming, and it also makes me a little bit nervous.

I feel like if these people don't understand the theory, they may jump ship at some point and be upset with me (if it has a bad year or if it underperforms the S&P). 




 

I have had mixed reactions.

More often than not, people change the subject after they realize I don't have anything to say about individual stocks. Also, about a year ago I was talking to my schools investment club about the strategy and a friend of mine rolled his eyes at the mention of holding a 30 year Treasury. That was when interest rates had to go up because Bill Gross said so. I'm sure glad I held them though.

MediumTex wrote:
I am very happy I found the PP.
Before I found the PP, investing was mostly a confusing and frustrating experience that seemed to involve a lot of risk, speculation and murky cause and effect relatinships.
Now, I really enjoy investing. 

This has also been my experience. I talked to Mrs. Shadow about this new approach and the 25% allocations and she loved the idea. Once I impressed upon her that no one economic bad event would devastate our assets, she commented that I was finally on board with her. I will never forget 2008 and all the havoc I caused our portfolio. I hope never again, now that I have a PP

MediumTex wrote: In my experience, you really have to be ready for the PP or it just won't make any sense at all.

That's pretty much been my experience as well.  My brother took right to it, but nobody else I know has.  It's pretty much the familiar saying: "You can lead a horse to water, but you can't make him drink."

Also, I would have a similar concern to Adam, what if it doesn't perform well, or they just get nervous after a few months of bad market conditions and dump it at the worst possible time.

I've never had a face to face discussion about investments etc apart from with my better half who is very much a 100% cash /"don't believe anything from the internet" person. I tried to explain the PP and she said she was worried .

I made my wife listen to episodes of Harry Browne's radio program; does that count?

I've told a few thousand people 

- Paul Boyer, host MadMoneyMachine.com podcast.