Gyroscopic Investing

Harry Browne's investment radio shows are all now 5-6 years old.  By most standards, this ought to mean that they must be filled with outdated information and therefore of virtually no value.  However, as I'm sure anyone who has given these old shows a listen would agree, the material is not only interesting but also extremely relevant to what we face today in the investment world.

For example, Browne fields questions from callers about how "overpriced" gold and long-term bonds are.  While I'm sure that the case for both of these sounded extremely persuasive at the time, Browne sticks to his guns, calmly explaining that we simply don't know what's going to happen.

One call that particularly stuck with me was a gentleman who explained that although he'd gotten great results from his portfolio over time, he was "waiting" to rebalance.  Fairly soon he revealed that his gold had dropped all the way to being 10% of his portfolio and his long-term bonds had hit something like 6% (!).  While I can't imagine how he let his "PP" get so badly out of shape, the point was that even after experiencing great success with the PP through the years, he still had a hard time following the most basic rules.  The urge to time the market was that overwhelming.

With the benefit of hindsight, it's easy to see that this fellow was making a terrible, terrible mistake (one that I can only hope he followed Browne's urgent advice about and corrected!)  But on the day the call was made, I bet I would have been nodding my head and thinking how nervous I was at the idea of "overpaying" so much for these things.

Also valuable is hearing how many things that callers predict are about to immediately happen (such as a total dollar collapse) that have not happened, at least not yet.  If you'd been "sure" of such a thing and invested accordingly, you'd have been screwed.  The PP is designed to protect you from screwing yourself with such tunnel vision.  In an uncertain world, tunnel vision means that you never see the thing coming at you sideways.

Thanks again to craigr for mirroring these old shows.  What a pleasure it is to listen to these.

Yep his shows are timeless. This is because he doesn't talk about current market events and predictions. He is just giving good solid advice and not wavering on it no matter what people are predicting. 

I wrote about this before, but several years back I went and listened a fairly well known investment podcast. But the thing is I listened to the prior year's shows, not the recent ones. I made mental notes of predictions, etc. What I found was that information was completely worthless. The predictions were no better than guesses (if they were even close at all which many weren't). I suspect that if someone was trading on this advice they would have lost loads of money by the end. If you do this exercise on your own you'll quickly cure yourself of needing to read investment news, blogs, TV, etc. You'll recognize just how worthless all that information actually is.

But the thing is I can listen to Browne's shows and find something useful in them again and again. Sometimes it's a subtle point I didn't pick up on before as I was focusing on the big topic. Often it's a piece of information/advice he gave years back that didn't come true then but did later (like the credit risk in non-Treasury bonds showing up). It is not only a great show on investing principles, but also a great show on economics in general and Austrian economics in particular.

Nice, that sounds like an illuminating experiment.  It might be the case that all investment shows are more valuable a little "stale".  The good concepts will stand the test of time.  The picks, however, will probably seem mostly awful, occasionally lucky, or exercises in entirely missing the point.  Even hearing a "pretty good" pick that was profitable for the wrong reason (such as buying lots of gold before the 2008 crash because the dollar was poised to collapse) would snap you out of the illusion that anyone can truly predict the future.