Gyroscopic Investing

This survey is certainly time dependent, but I am interested to know your current asset allocation percentages.

S&P500: 26%
Gold: 21%
LTT's: 26%
Cash: 27%


I am actually interested in current PP allocations and each individual's perception of how their portfolio is performing. All respondents so far are well balanced with annieB and I having a lower allocation to gold.

Stocks: 26%
Gold: 24%
Bonds: 28%
Cash: 22%

Stocks  24.9%
Gold    24.3%
LTT's    26.5%
Cash    24.4%

Stocks: 28%
Gold: 24%
Bonds: 27%
Cash: 19%

Cash:  24.52%
Gold:  18.87%
Bonds: 23.95%
Stocks: 32.66%

(Not that I chart it every week)

annieB wrote: Cash:  24.52%
Gold:  18.87%
Bonds: 23.95%
Stocks: 32.66%

(Not that I chart it every week)

I will pick on you annieB. How do you feel about the possibility of rebalancing into gold if/when it breaches the 15% tolerance band? Personally, I am more comfortable re-balancing into one or more of the other assets. It would be a monumentous achievement for me to execute the trade. Yikes!

I am actually interested in current PP allocations and each individual's perception of how their portfolio is performing. All respondents so far are well balanced with annieB and I having a lower allocation to gold. 

You have to do it!  I am the poster child for this.  I've spent the past 5 years railing against the system, corrupted, manipulated, etc. etc. and was basically totally out of the market in cash and gold.  And you know what has happened.

If I had the PP in place I would have been doing a hell of a lot better in assets that I personally felt had run their course years ago (stock and bonds).

Now you are in the situation where gold has gotten mercilessly slammed for 3 years.  Going nowhere.  If you ask me, what a PERFECT time to rebalance into it!  When you hate doing it.

Mike

Cortopassi wrote: When you hate doing it.

Probably 95% of the best investments fall into this category.

I would suspect 95% of the worst investments fall into the opposite category "When you love doing it".

I'll be ready when it's time to rebalance.
I'm thinking that stocks are a little rich here.
Bonds....omg.
The PP is so interesting..

annieB wrote: I'll be ready when it's time to rebalance.
I'm thinking that stocks are a little rich here.
Bonds....omg.
The PP is so interesting..

Working from home, watching the guys on CNBC drool over the record highs and I pulled out on old favorite of mine from H. Browne "New Profits from the Monetary Crisis". He wrote it in 1978.

Quote - "When the gold price is soaring and people are talking about it, the time has come to sell-not buy. The next big opportunity to buy gold will come when the stock market has regained its reputation and is reaching new highs and gold is scorned as a bygone fantasy."


Well.............where were we in 1999? How about 2011? Where are we now?

annieB wrote: I'll be ready when it's time to rebalance.
I'm thinking that stocks are a little rich here.
Bonds....omg.
The PP is so interesting..

Keep us posted annieB. There is strength in numbers and I will follow your lead :-)

As of May 1:

stocks 32.8%
bonds 24.3%
cash 24.1%
gold 18.7%

However, rebalancing into gold would have meant either using up more taxable cash than I was comfortable doing, or switching a couple of retirement accounts into almost 100% gold ETFs.  So I wimped out.  About 1/3 of my PP was in a retirement account with no gold options.  I took that account out of the PP and made it a separate 50/50 Boglehead stock/bond portfolio instead (which meant not changing anything except converting some cash assets to bonds).

That left me with a gold allocation of 29%, which is just kind of absurd.  So now I'm wondering about reserving a portion of the gold to balance against the Boglehead portfolio, e.g. make that 45% stocks/45% bonds/10% gold.  If I did that, I'd be left with:

stocks 25.2%
bonds 22.7%
cash 27.5%
gold 24.6%

and with complete ability to rebalance into gold in future, should it become necessary.

Yuk.  Comments welcomed.  Let this be a warning to the uninitiated that the PP really doesn't play nice with traditional retirement accounts.

That's exactly why I prefer to have each individual account be its own PP! Rebalancing across different accounts with different tax treatments is a nightmare that overcomplicates everything and encourages second-guessing.

buddtholomew wrote: I will pick on you annieB. How do you feel about the possibility of rebalancing into gold if/when it breaches the 15% tolerance band? Personally, I am more comfortable re-balancing into one or more of the other assets. It would be a monumentous achievement for me to execute the trade. Yikes!

Interesting how we all have our likes and dislikes about the different assets. It was time for me to sell stock and buy gold last January and I didn't give it a second thought. Felt good about doing it actually. Didn't feel so good buying a few more LTT's but I did it any way.

As for my allocation percentages I'll have to let you know in January as I've resolved not to look until then.

sophie wrote: As of May 1:

stocks 32.8%
bonds 24.3%
cash 24.1%
gold 18.7%

However, rebalancing into gold would have meant either using up more taxable cash than I was comfortable doing, or switching a couple of retirement accounts into almost 100% gold ETFs.  So I wimped out.  About 1/3 of my PP was in a retirement account with no gold options.  I took that account out of the PP and made it a separate 50/50 Boglehead stock/bond portfolio instead (which meant not changing anything except converting some cash assets to bonds).

That left me with a gold allocation of 29%, which is just kind of absurd.  So now I'm wondering about reserving a portion of the gold to balance against the Boglehead portfolio, e.g. make that 45% stocks/45% bonds/10% gold.  If I did that, I'd be left with:

stocks 25.2%
bonds 22.7%
cash 27.5%
gold 24.6%

and with complete ability to rebalance into gold in future, should it become necessary.

Yuk.  Comments welcomed.  Let this be a warning to the uninitiated that the PP really doesn't play nice with traditional retirement accounts.

annieB and Sophie might as well be holding the same portfolio as variances in assets is to the decimal point.

Sophie, I settled on a BH 65/30/5 equity/bond/miners allocation for retirement accounts and the 4x25PP in taxable. Overall portfolio allocation is 50/40/10 e/b/gold (7.5%) and miners (2.5%). All of my gold holdings are in the GLD ETF and I plan to tax loss harvest soon to purchase physical. The only road block is to locate an available safety deposit box. All in a 15-20 mile radius are taken.

buddtholomew, so far I feel that the PP is performing well but I have only been following the strategy since the beginning of this year and haven't seen any traumatic volatility that wasn't quickly compensated for by an increase in another asset. I am sure it gets much rockier than this.

Reading the posts from Sophie and PS give me pause though. So far I haven't had any issues with setting up PPs for both me and my wife across different accounts, but maybe I just don't understand long-term tax implications well enough. We do have too much in gold ETFs in our retirement accounts (where we should have more LTT's and stocks) but are gradually correcting that. Of course everyone comes upon the PP with assets committed to some other strategy and it can take time to get the particulars exactly right.

One big change for me... I used to always be concerned that I was either in or out of stocks at the wrong time. Now it's not an asset that I worry about owning. If I were in a position where I had to rebalance into LTT's at these levels, I wouldn't like that. But that is why I joined the support group...er, I mean, the forum.

Stocks 28%
Bonds 24%
Gold 25%
Cash 23%

STK    32%
LTT    25%
GLD    18%
CSH    25%

or maybe

STK  26%
LTT    20%
GLD  14%
CSH  39%

I got cold feet a year or so ago and just accumulated to cash. Unfortunately Gold does a swan dive when ever I think about adding to my PP and rewards my procrastination.

barrett wrote: But that is why I joined the support group...er, I mean, the forum.

Well put!!!!!

PS & Buddtholomew - the tax treatment issues didn't bother me nearly as much as the retirement account with no gold options.  I would have not hesitated to rebalance into gold in the retirement account, if an ETF option were available.

There have been many, many well-meaning suggestions on this forum to incorporate retirement accounts with limited options into the PP.  All would have been fine if gold had stayed high.  This unfortunately is the one scenario where such a plan blows up.  I would now recommend to people to just stick with Boglehead portfolios in those accounts, and roll them into the PP when you can (leave job or in-service rollover).

buddtholomew wrote: I settled on a BH 65/30/5 equity/bond/miners allocation for retirement accounts and the 4x25PP in taxable.

This is of course your decision, but I well remember your reaction to portfolio drawdowns in past threads.  How did you settle on 70% equities?  I went with 50% because I didn't think I could handle a big drawdown, and I'm wondering if even that is too high.

Gold mining stocks aren't a great substitute for gold unfortunately...see 2008.

sophie wrote:

buddtholomew wrote: I settled on a BH 65/30/5 equity/bond/miners allocation for retirement accounts and the 4x25PP in taxable.

This is of course your decision, but I well remember your reaction to portfolio drawdowns in past threads.  How did you settle on 70% equities?  I went with 50% because I didn't think I could handle a big drawdown, and I'm wondering if even that is too high.

Gold mining stocks aren't a great substitute for gold unfortunately...see 2008.

I look at the portfolio as a whole (BH + PP) and am comfortable with a 50/40/10 equity/bonds/gold and mining stocks allocation (if we consider mining stocks as equity, then the allocation is 52.5/40/7.5, which is not far off from your 50% target). If we encounter a 2008 scenario, I expect the BH portion of the portfolio earmarked for retirement to decline accordingly. The PP portion held entirely in taxable will hopefully weather the storm better and enable me to re-balance the retirement portion of the portfolio back to the 65/30/5 equity/bonds/mining stocks target. I have 20+ years until retirement and don't envision altering this allocation anytime soon.

I have 20+ years until retirement and don't envision altering this allocation anytime soon.

This quote from buddtholomew is maybe how all posts on PP allocations should start. We are all in different places in our careers (where the real $ comes from according to Harry Browne). If I am lucky, I have maybe 5-10 years left to earn money and I am certainly not in a line of work where my last years will be among my best. I figure that most of my earning power is behind me so preservation of assets is key to me and is why I am going with a 25/25/25/25 allocation. Buddtholomew is looking at a 20-year investment horizon or longer. Within that longer timeframe we might actually go through another cycle or two of prosperity and those high equity allocations should power a portfolio that is "50/40/10 equity/bonds/gold and mining stocks."

Anyone else think this way? That the allocation conversation kinda needs to start with "This is my situation with career, current assets, age, etc.?"

Stocks  29%
Bonds  26%
Gold    18%
Cash    27%

I retired about 10 months ago and hope to not draw on the portfolio for another 6-10 years.  I have been investing with the permanent portfolio strategy for a little over 6 years and it has served me quite well, so far.  We will close on a property sale in the next few weeks that should push the gold holding down to ~15% of total (gold includes a small legacy holding of silver) ; I will do some rebalancing into gold at that time. 

stocks 0.293
bonds 0.259
gold 0.213
cash 0.235

dualstow wrote: stocks 0.293
bonds 0.259
gold 0.213
cash 0.235

What are the subscript integers?