How do you resist

[TK3]

Using stop losses with the PP components that have done really well,  Gold and LT Bond component.  Not a market timer by any means, but are folks using stop/loss or other techniques other the rebalancing bands to protect gains?  Thanks!

[craigr]

Using stop losses with the PP components that have done really well,  Gold and LT Bond component.  Not a market timer by any means, but are folks using stop/loss or other techniques other the rebalancing bands to protect gains?  Thanks!

I don't use stop losses. Too much risk of being whipsawed and this could really hurt a taxable investor for instance. For the variable portfolio you could consider stop losses if you feel more comfortable doing it.

[Reido]

I don't like stop-losses for the reason the "flash-crash" illustrated - normal market variations, or "mistakes" as that brokerage house claimed, are responsible for automatic trade executions.

Personally, I'm afraid that the SL-7 was discovered mainly by data-mining and happenstance.

If it was the SL-6 or SL-8 technique, would it still be so profitable over the last 200 years??  What's so special about SL-7??

[Reido]

It's an interesting idea - although I'm a little wary of it...

So basically, 7% was determined as the best over historical averages rather than the other percentages.  I understand your point...  

This is an interesting momentum-play.  It differs from the value-style rebalancing of the PP.  Does it add value to a PP when it is combined with an equivalent SL-7 PP?? Like 50% in PP, 50% SL-7 PP (with your 12mo. rolling periods)? I didn't see a direct result of this in your prior post - unless I missed what you were trying to say. 

Anyway - this is an interesting idea...  It's a little over my head - but I'll have to try to wrap my mind around it.

Best. Reido

[TK3]

Thanks for the feedback.  PP seems to me one of the most rational abeit non-traditional investment strategies around, and the simple Monte Carlo tool I use QP40 projects it to have the lowest AAR/SD around.  Like many folks, however, conviction to my AA is directly corelated to how the market is doing.  Another poster on this board referenced the fact that watching the individual components of the portfolio move is disturbing, it is hard to just focus on the overall return.  Thanks again. 

[Reido]

Thanks Clive!

I follow you there.