Gyroscopic Investing

We established a hybrid PP a month or so ago with 15% gold thanks to my spouse not agreeing to more gold.  We also have a Boglehead portfolio without any gold.  In this short time frame, the PP is down 1% (thanks to gold being down 15% since purchase), while the Boglehead portfolio is up 1.5%.

As a new PP person, it is interesting to see my reaction to large gold losses in such a short time frame and likely more on the way.  I think that the advice to not look at the PP for awhile after starting it is good advice.  It is tough to see the PP assets swinging around and not intervening. 

Interestingly, the LTT is keeping the PP from incurring even more loses.

At any point on an investing timeline you enter you will probably buy an asset that will be dropping, or is about to drop. The longer the timeline extends from that point, the less likely that loss will remain in total portfolio terms.

For example I bought a lot of LT bonds six years ago when the stock market was hopping. Short-term I was losing money. I heard a lot of people discuss the inevitable rise of interest rates. In fact, I would go to a local Bogleheads meeting a few times a year and this topic would come up. I would simply tell them that I was just sitting back and collecting interest payments.

Fast forward to today and those interest payments over time have racked up large gains even outside of the bond capital appreciation due to falling interest rates. Nobody knows nothing.

So when I hear the commentary about gold I kind of think the same thing. Today gold sank quite a bit, but then again so did stocks. Then someone set off some bombs at the Boston marathon. Innocent people were killed. The markets may not like that either when it opens tomorrow. The world is not predictable. Next week the Euro could blow up and send gold up again. Then again, Great Depression II could unfold and stocks collapse. All you can do is diversify and hope for the best and feel fortunate that we are able to live each day and enjoy our loved ones.