Gyroscopic Investing

American Asset Management Inc. Boca Raton, Fl. looks like they are selling advice on an asset portfolio that looks identical to HB's PP. Anyone know anything more about this company and it's founder?

JMoyle wrote: American Asset Management Inc. Boca Raton, Fl. looks like they are selling advice on an asset portfolio that looks identical to HB's PP. Anyone know anything more about this company and it's founder?

I could be wrong, but I think that the fund manager visited this forum a year or so ago.

MangoMan wrote: Why would anyone pay them a 1% management fee to do what PRPFX does for 0.71% and PERM does for 0.5%?

Some people just don't trust themselves to make these decisions.  They get a sense of security in paying an "expert" to do it for them. 

MangoMan wrote:

AdamA wrote:

MangoMan wrote: Why would anyone pay them a 1% management fee to do what PRPFX does for 0.71% and PERM does for 0.5%?

Some people just don't trust themselves to make these decisions.  They get a sense of security in paying an "expert" to do it for them.  

That's one of the reasons I like PRPFX even though it is not a pure HBPP and is more costly. As a relative noob, I question my resolve when one of the individual components goes way south. With the fund, at least you can't see what each part is doing, only the fund as a whole.

I think having that kind of insight as to your investment psyche is rare and very healthy.  That is a very good reason to use PRPFX.  Most people underestimate their fear of risk, and overestimate their ability to deal with it when it rears its ugly head.

There is a large segment of people that just don't have a lot of confidence in creating and managing their own portfolios.  And that's ok, IMO. 

Boca is probably filled with multi-millionaires who were very knowledgeable in their former professions, who are more than willing to pay 1% p.a. to AAM for the smooth, bond like returns that they are provided using the PP. 

As another poster said, Julian Rubinstein used to frequent this website.  He also has an infomercial that is used to attract clients, but talks about the PP's approach and why he chooses that strategy.

It seems to boil down to opportunity cost.  As a modest salary office worker it "pays" well tor me to take on the duty of being my own asset custodian.  OTOH if I were someone who made like 2 grand or more in a week (it is crazy but it happens) I would be so good at making the cash roll in I would probably better off letting someone else fret over it assuming I can overcome the trust issues.

shoestring wrote: It seems to boil down to opportunity cost.  As a modest salary office worker it "pays" well tor me to take on the duty of being my own asset custodian.  OTOH if I were someone who made like 2 grand or more in a week (it is crazy but it happens) I would be so good at making the cash roll in I would probably better off letting someone else fret over it assuming I can overcome the trust issues.

This is true, and believe me, Boca Raton where this guy operates is chalk full of people that earn a heck of a lot more than $2k/wk just on their passive investments.  That place is full of deca-millionaires who will be more than happy to fork over 1% to receive the steady NAV that the PP provides.

clacy wrote:

shoestring wrote: It seems to boil down to opportunity cost.  As a modest salary office worker it "pays" well tor me to take on the duty of being my own asset custodian.  OTOH if I were someone who made like 2 grand or more in a week (it is crazy but it happens) I would be so good at making the cash roll in I would probably better off letting someone else fret over it assuming I can overcome the trust issues.

This is true, and believe me, Boca Raton where this guy operates is chalk full of people that earn a heck of a lot more than $2k/wk just on their passive investments.  That place is full of deca-millionaires who will be more than happy to fork over 1% to receive the steady NAV that the PP provides.

Absolutely, but why then wouldn't they prefer 0.71% with PRPFX or 0.5% with PERM? What's this thing got that those cheaper and/or more established funds don't also have? I guess there's the warm fuzzy feeling to having somebody with a suit and tie take care of your money for you, but that's always been more of a cold prickly feeling for me.

I met with Julian about a year ago. No suit or tie and helpful info on PRPFX and HBPP, which i do myself. Julian picked me up at the Boca Airport since we are both pilots flying Piper planes.

Pointedstick wrote:

clacy wrote:

shoestring wrote: It seems to boil down to opportunity cost.  As a modest salary office worker it "pays" well tor me to take on the duty of being my own asset custodian.  OTOH if I were someone who made like 2 grand or more in a week (it is crazy but it happens) I would be so good at making the cash roll in I would probably better off letting someone else fret over it assuming I can overcome the trust issues.

This is true, and believe me, Boca Raton where this guy operates is chalk full of people that earn a heck of a lot more than $2k/wk just on their passive investments.  That place is full of deca-millionaires who will be more than happy to fork over 1% to receive the steady NAV that the PP provides.

Absolutely, but why then wouldn't they prefer 0.71% with PRPFX or 0.5% with PERM? What's this thing got that those cheaper and/or more established funds don't also have? I guess there's the warm fuzzy feeling to having somebody with a suit and tie take care of your money for you, but that's always been more of a cold prickly feeling for me.

I'm guessing that 9 out of 10 of his clients have never heard of Harry Browne, the PP, PRPFX or PERM.  They are simply choosing AAM based on a referral, or they like the story he tells, or have listened to his radio program, or whatever the case may be.  

These clients aren't any different than the clients of the other 500 investment advisory companies in S. Florida, except that Julian adheres to a different investment philosophy than most in his business.

Also, your question could be asked for just about any investment adviser or strategy.  One certainly doesn't need to pay 1% to get a 60/40 stock/bond split that Joe Blow C.F.P. advises them to do, when they could just open a Vanguard account and buy VBINX, but it happens every day because a lot of people aren't able or willing to educate themselves on topics such as asset allocation and so forth.

You could ask "who would pay someone to mow their lawn when they could just do it themselves", but I choose to "outsource" that task just because I value my time with my family more than  the $30/wk that it costs me to pay for that service.

clacy, the lawn mowing analogy seems to me to be akin to the difference between a DIY PP and a PP fund, since one trades money for convenience when one makes that choice. However in the AAM vs PP fund situation, both are instances of trading money for convenience; but one of them seems to do it less efficiently than the other (higher ER). So to return to the lawn mowing analogy, what we have here is a difference between two lawn mowing services, one of which charges you more money but offers no real additional benefit.

I agree, but the vast majority of those that seek professional help in investing, are doing that for one of the following reasons:

1. It's what they've always done, it's what their friends do, and they probably have never thought about DIY
2. They are intimidated by the thought of learning to handle their own trades/investments
3. They don't want to take the time to learn what is required to be confident and comfortable with investment decisions

These people think differently than you and I, affirmed by the fact that you and I are on a DIY website.

Either way, I would say that 90% of the people that do business with AAM have never heard of the PP, or PRPFX/PERM

You're absolutely right, clacy. It just makes me sad, because these people get taken for a ride and often don't even know it. You don't need to go full-blown DIY to be able to get the benefit of some comparison shopping at least. It's a darn shame when people are so intimidated by money that they don't even know where to start and or willing to turn everything over to a stranger whose performance they can't even measure. I run into this constantly when friends and family ask for financial advice, only to proclaim their ignorance and fear as if it were a badge of honor when I dispense some.

I wouldn't use the word shame.  Simply put, not everyone can be experts at all facets of their lives.  The financial service industry is just like any other service.

The shame, IMO would not be charging 1% to implement the PP, but selling inferior products such as whole life and so forth.  

Our society is now built on specialization and services.  

One guy builds his bank account buy building homes and makes a small fortune over the course of his career....

Then he finds a guy like Julian Rubenstien who takes 1% pa to manage his assets.....  

Then Julian needs a new home and finds a home builder and forks over some of his hard earned money and so on.....

As I've gotten older I've come to appreciate that things that seem totally useless and wasteful to me, are often completely appropriate for a small minority of people in very specific circumstances. Bellhops seemed like a complete waste of money until I saw a paraplegic checking in to a hotel.

I'm glad that things like American Asset exist for people like my recently-widowed grandmother. She never in her life managed finances or did business any way besides face-to-face conversations with people in her town. Learning about macroeconomics, securities markets, using computers, and placing orders over the Internet, is just not going to happen. In this circumstance I condone handing her portfolio over to a trustworthy, conservative manager.

(And, at the risk of being morbid, a 1% yearly fee is less expensive to an elderly person since it won't be compounding as long.)

Now this gets problematic when a service meant for the 1% of people that are truly helpless, gets marketed and sold to the great masses who could manage things themselves if they would just take some personal responsibility and stop being lazy for one afternoon.

So I'm much more offended by expensive mass-market services such as Edward Jones or T. Rowe Price than I am fee-based personal advisers.

One of the things I like about PRPFX is that you can set up your account to have a certain amount sent to you each month when you get ready.

Thus, for an elderly person with $1,000,000 in assets, she might send the money to PRPFX, set up a drawdown plan of 3.5% or so per year (or whatever percentage you want to plug in), and basically forget about it after that.

Very convenient.

MediumTex wrote: One of the things I like about PRPFX is that you can set up your account to have a certain amount sent to you each month when you get ready.

Do you happen to know if that amount is expressed in units of percentages, or dollars?

clacy wrote: These people think differently than you and I, affirmed by the fact that you and I are on a DIY website.

Either way, I would say that 90% of the people that do business with AAM have never heard of the PP, or PRPFX/PERM

These people are known as Muppets aka dumb money.

KevinW wrote:

MediumTex wrote: One of the things I like about PRPFX is that you can set up your account to have a certain amount sent to you each month when you get ready.

Do you happen to know if that amount is expressed in units of percentages, or dollars?

I believe it is dollars, and you can select the frequency you will receive it (monthly, quarterly or annually).

You would probably want to look at the drawdown figure once a year or so to make sure it still made sense.

MachineGhost wrote:

clacy wrote: These people think differently than you and I, affirmed by the fact that you and I are on a DIY website.

Either way, I would say that 90% of the people that do business with AAM have never heard of the PP, or PRPFX/PERM

These people are known as Muppets aka dumb money.

Ok, but a lot of these Muppets have made insane amounts of money in different industries. We're all muppets for someone else at some point in our lives.

MediumTex wrote: I believe it is dollars, and you can select the frequency you will receive it (monthly, quarterly or annually).

You would probably want to look at the drawdown figure once a year or so to make sure it still made sense.

Makes sense. Thanks.

clacy wrote: We're all muppets for someone else at some point in our lives.

I made a lot of money as an actor and singer, but I know almost nothing about investing.

clacy wrote:

MachineGhost wrote:

clacy wrote: These people think differently than you and I, affirmed by the fact that you and I are on a DIY website.

Either way, I would say that 90% of the people that do business with AAM have never heard of the PP, or PRPFX/PERM

These people are known as Muppets aka dumb money.

Ok, but a lot of these Muppets have made insane amounts of money in different industries. We're all muppets for someone else at some point in our lives.

Wouldn't even a person who did everything themselves to avoid paying other people for services be himself/herself still a muppet to father time because you are wasting your precious hours on something that could be more efficiently done by someone else? That's why we got into specialization in the first place because it produces more wealth. (or at least that's how I see it)

For what it's worth, Julian introduced himself on the board last year here...

http://gyroscopicinvesting.com/forum/ht ... 5405#p5405

He visits the forum frequently. Read through his replies to various questions in that link.

Here's an old thread pertaining to American Asset Management that you might find interesting... Lot's of oldies but goodies contributors back then.