Gyroscopic Investing

As of today I am no longer running a Variable Portfolio. I was doing exceedingly well in my VP until recently when I experienced a near 10% drop over a week. While I significantly beat the market in spite of this fact, I realized I didn't like watching my VP drop 10% in one week (based on all 3 of my VP holdings simultaneously going down for different reasons). I decided to move out of my VP at an approximate 60% annualized gain and go full into the PP.

While it sounds impressive, I was only about 20% of my total Portfolio in the VP so those 60% gains just about kept my portfolio floating last year when the PP was fairly flat. Also, I'm annualized those gains. They were really only over about 3 months.

I realized that I hated the fact that I was looking at the stock market obsessively even if I had no intention of making any trades. I just had to see what my VP was doing, every 30 minutes of every trading day. It also caused me to look at the PP every day too, because if I was looking at the market, I might as well see how my PP was doing and to be frank, the PP has done pretty crappy over the last few months.

I'm now in the CraigR camp of 100% PP and don't worry about anything. I had a bulk of my "cash" portion into TBills that matured in May 2013, and I sold them and rebought ones maturing in January 2014 so that I literally don't have to look at my portfolio at all for the next 10 months. I took CNBC off my bookmarks and will no longer be reading ridiculous articles every morning about why Apple Stock is about to jump to $700 per share or about to fall to $200 per share.

While I still believe I have "special powers" to beat the market, I don't like the costs it imposes to include (a) additional risk and portfolio volatility and (b) stress and time wasting of looking at stuff multiple times each day. At least for the foreseeable future I'm going to stick with 100% PP and an annual portfolio maintenance check.

Welcome to the good side of The Force.

Bravo! I'm not quite there yet, but moving in that direction.

Question: how are you going to contribute without checking? Put everything into cash and redistribute once a year? Or are you in draw-down mode? This still troubles me because every time I add money, I have an easy opportunity to check the balance and performance.

TripleB wrote:I'm now in the CraigR camp of 100% PP and don't worry about anything.

My Variable Portfolio is different than most and I recommend you try it:

Invest in yourself.

I know it sounds strange, but I'm a huge believer in taking risks on your career and not your life savings. This is opposite of what many people will tell you, but I think I'm correct.

For example, I do not run much in the way of a VP in stocks, etc. But I will do investment in ideas I'm working on. That investment can be money of course, but it is also just time in improving yourself, trying new things, and those crazy ideas that everyone around you says can "never work."

So I do run a VP, but the only stock in it is my own mind. I recommend everyone try running a VP that invests in themselves. It may not be starting a business, but it could be just trying to become better educated, better at your current job, learning new skills, etc. I think it will pay off in much better dividends investing your money that way than stock market speculating in a VP.

Pointedstick wrote: Bravo! I'm not quite there yet, but moving in that direction.

Question: how are you going to contribute without checking? Put everything into cash and redistribute once a year? Or are you in draw-down mode? This still troubles me because every time I add money, I have an easy opportunity to check the balance and performance.

I'm taking time off work this year to "invest in myself" as CraigR put it; I'm building up some intellectual property to leverage in future years. I'm living off money I previously put aside into a separate cash pool for living expenses for the year. I live frugally so it's not much money and I don't worry about not earning enough on it and not keeping it in the PP. Actually, even if I did put this year's living expenses into the PP, it would only be about 5% of the PP anyway so wouldn't trigger a rebalance from cash.

My dream is trade by the chart, which is possible!

I now have 90% hbpp and 10% bogle pp.

I know that most of the people here doesnt like daytrading.

Just me and the chart, yeahhhh!

Good on you, TripleB. It takes a lot of discipline and sheer force of will, in my opinion, to go 100% pp. Some keep a vp out of fear, eg. a fear of rising interest rates messes with the bond allocation, and others do it out of a belief that they can do better. I have often teased you about your somewhat exalted view of your own trading prowess, but you obviously *are* smart and 60% annualized gains *are* very impressive.

If you stray, if you go back to having a vp, please post and let us know when and why.

craigr wrote: My Variable Portfolio is different than most and I recommend you try it:

Invest in yourself.

I know it sounds strange, but I'm a huge believer in taking risks on your career and not your life savings. This is opposite of what many people will tell you, but I think I'm correct.

Article in the New York Times echoing Craig's sentiment:

The Biggest Financial Asset in Your Portfolio Is You