Gyroscopic Investing

FinanceFun writes in response to the description of a European PP investor's portfolio:

So in summary:
- I dont like gold as an investment, and for those who do the vast majority keep exposure to ~10%
- Your equities are poorly diversified, focusing on mega-caps. Needs global diversification, and at least a market-weighting of the SmB and HmL factors.
- Bond fund duration should be short if its loaded up with core-euro zone debt
- Cash expectations need be revised downward

and

I am quite familiar with the permanent portfolio. I am also quite familiar with the 30 year bull market in treasuries, and Gold's recent mega burst past its "track inflation" history. Both factors play into recency-bias. Since I don't invest in the past, I would be highly skeptical of the risk and returns of Gold and Long Term Tres. going forward. Add to that an obviously non-diversified equities position, and a flawed expectation of 2% return on cash... and you have the rationale for my post.

http://www.bogleheads.org/forum/viewtop ... 3#p1513533

Bogleheads folks don't really seem to "get" the PP. The point is to protect your assets from inflation, financial shenanigans, and market catastrophes far more than it's supposed to grow quickly.

Some nice BH PP action:

http://www.bogleheads.org/forum/viewtop ... 3#p1513693

Makes me feel like a kid again.

MediumTex, you have a way of explaining things... I'm impressed, as I was in the past.

EDIT: same goes for Craigr! I'm looking forward to reading the book.

MediumTex wrote: Some nice BH PP action:

http://www.bogleheads.org/forum/viewtop ... 3#p1513693

Makes me feel like a kid again.

It seems I was very fortunate to have sidesteppd the entire BH forum experience, but read my signature.

MachineGhost wrote:It seems I was very fortunate to have sidesteppd the entire BH forum experience, but read my signature.

Actually it's a great forum overall. It's the only other investing forum I read outside of this one. They have a lot of very knowledgeable people there on different subjects outside of pure investing. Disagreements online are common, but the Bogleheads and this forum have similar goals of low-costs passive investing as being the best option for investors to escape the pitfalls of Wall St.

I'd love to see a town-hall style debate between financefun and Craigr or MT!

Reub wrote: I'd love to see a town-hall style debate between financefun and Craigr or MT!

It looks like it's turning into more of a street fight. 

Was that the same Clive from this forum accusing Craig and Tex of stealing from Harry Browne's widow and purposely for their own profit leading naive investors down the garden path?  I suppose he's entitled to his opinion, but that certainly seemed uncalled-for and below the belt.

Xan wrote: Was that the same Clive from this forum accusing Craig and Tex of stealing from Harry Browne's widow and purposely for their own profit leading naive investors down the garden path?  I suppose he's entitled to his opinion, but that certainly seemed uncalled-for and below the belt.

He's said the same thing here before.

I don't understand where he's coming from.  Our book is obviously going to sell a lot of Harry Browne books and get a lot of fresh exposure for Harry Browne's ideas.  Harry Browne's name is in the title and his PP books are listed in the back for further reading.

People write books about deceased people all the time.  I don't know how else you keep someone's memory alive other than writing about them and discussing their ideas.  

As far as leading people down the garden path, it's the same path that Craig and I are on ourselves, and a lot of people seem to think it's a much better path than they were previously following (I know it's been a heck of a lot better for me).

I really appreciate all of clive's interesting and well-reasoned contributions that he has made here and at the BH forum, with the exception of this particular one.  :D

funny that Clive, a regular here, would say something like that.
You're right MediumTex, I think your book will help Harry Browne's widow more than it will hinder her.

anyway, I wanted to comment on the bogglehead thread.

The feeling I get from posts on Boggleheads is that the core difference between PPers and Boggleheaders is that Boggleheaders think with great conviction that gold and bonds are going to drop imminently, which is why they don't like these asset classes. While PPers take a neutral stand, and say, "I don't know whether gold and bonds are going to drop in the near future".

Also, I think Boggleheaders are more positive about the future, whereas again, PPers are neutral. (PPers are SEEN as doomsday types, but really, I think we're just risk-averse, having been burned throughout the 2000's. I really appreciate the stability of the portfolio -- I know that makes me sound like a weeny, but watching my stocks go up as bonds are going down is relieving.)

christina wrote: The feeling I get from posts on Boggleheads is that the core difference between PPers and Boggleheaders is that Boggleheaders think with great conviction that gold and bonds are going to drop imminently, which is why they don't like these asset classes. While PPers take a neutral stand, and say, "I don't know whether gold and bonds are going to drop in the near future".

They obviously haven't been studying their Jurassic Park.  Chaos Theory (3 minutes): http://youtu.be/n-mpifTiPV4

My gut tells me that cash+LTT will likely combine to pace inflation, stocks will bounce around and not really go anywhere, while gold is the wildcard which is the most likely to outperform.  But I don't place too much faith in my gut.  :)  Plus I can play my hunches in the VP, which allows me to see the PP as the "cash" portion of my portfolio, while I strive for excess returns in the VP.

Gosso wrote:

christina wrote: The feeling I get from posts on Boggleheads is that the core difference between PPers and Boggleheaders is that Boggleheaders think with great conviction that gold and bonds are going to drop imminently, which is why they don't like these asset classes. While PPers take a neutral stand, and say, "I don't know whether gold and bonds are going to drop in the near future".

They obviously haven't been studying their Jurassic Park.  Chaos Theory (3 minutes): http://youtu.be/n-mpifTiPV4

My gut tells me that cash+LTT will likely combine to pace inflation, stocks will bounce around and not really go anywhere, while gold is the wildcard which is the most likely to outperform.  But I don't place too much faith in my gut.  :)  Plus I can play my hunches in the VP, which allows me to see the PP as the "cash" portion of my portfolio, while I strive for excess returns in the VP.

Based solely upon the 10 year chart of gold, and the typical life-cycle of any secular bull market in any asset, gold could easily hit $4,000-$5,000 an ounce before the current bull market is over.

If that sounds stupid, it's supposed to.  Blow-off tops in bull markets always sound stupid both before and after the fact.  It's only when they are actually happening that they seem to make sense to everyone involved.

That's not a prediction, but more of an observation based on past bull markets in other assets.

MediumTex wrote: Based solely upon the 10 year chart of gold, and the typical life-cycle of any secular bull market in any asset, gold could easily hit $4,000-$5,000 an ounce before the current bull market is over.

If that sounds stupid, it's supposed to.  Blow-off tops in bull markets always sound stupid both before and after the fact.  It's only when they are actually happening that they seem to make sense to everyone involved.

That's not a prediction, but more of an observation based on past bull markets in other assets.

Climbing the wall of worry.  Someday the bull will die, I just have no idea when...although I can speculate in the VP

Just got to enjoy the slugfest, or at least the parts that haven't been deleted.  There is something about a good contrary position that brings out MT's literary acumen.

The Bogleheads forum is indeed wonderful, but life for the average stocks/bonds investor is pretty tough right now.  If all agree that stocks aren't going anywhere, bonds are about to tank, gold is in a bubble, and cash is worthless, what do you do?  I guess buy dividend stocks and hope for the best, but that might not turn out so well since everyone else is out there bidding up the price.

I'm thankful for the PP.

craigr wrote:

MachineGhost wrote:It seems I was very fortunate to have sidesteppd the entire BH forum experience, but read my signature.

Actually it's a great forum overall. It's the only other investing forum I read outside of this one.

Fatwallet Finance forums is another great one. They have a viewpoint that differs substantially from Bogleheads but they make money in their own ways. They also do some creative things to help juice returns, even if indexing is your thing.

I don't even know of any other forums outside of FWF, Bogleheads and this one.

TripleB wrote:

craigr wrote:

MachineGhost wrote:It seems I was very fortunate to have sidesteppd the entire BH forum experience, but read my signature.

Actually it's a great forum overall. It's the only other investing forum I read outside of this one.

Fatwallet Finance forums is another great one. They have a viewpoint that differs substantially from Bogleheads but they make money in their own ways. They also do some creative things to help juice returns, even if indexing is your thing.

I don't even know of any other forums outside of FWF, Bogleheads and this one.

FWF is great for little "free lunch" type  financial deals. Some of those guys make an art out of borrowing cheap and lending dear.