Gyroscopic Investing

Here's what happened to some people who thought they didn't:

http://forum.thecontrarianinvestor.com/ ... 9/page-505

This has received some press over at the BH site as well. Good luck trying to convince a speculator that has 100% of their retirement assets and savings (leveraged in some cases) to adopt a passive portfolio with 2-3% real returns.

I also question some of the posts. How many people have access to brokerage windows within their 401K plans that allow single stock purchases? Many require a 50/50 balance between the 401K plan investments and what is available in the brokerage. I'm sure some lost, but not to the extent that ALL retirement assets evaporated.

Wow.  This is sad.

I have just lost all of my retirement and all of my son's savings. My son has special needs and I have failed him in the biggest way, sorry for posting this but I am totally devastated!!

Saw it at B'heads.
Yup, the pp is the antithesis of putting all your eggs in one basket.

Of course, stock indexing is the first step. If those people aren't joking and really put all that money in a solar-energy-related stock, they have their heads where the sun don't shine.

buddtholomew wrote: This has received some press over at the BH site as well. Good luck trying to convince a speculator that has 100% of their retirement assets and savings (leveraged in some cases) to adopt a passive portfolio with 2-3% real returns.

I also question some of the posts. How many people have access to brokerage windows within their 401K plans that allow single stock purchases? Many require a 50/50 balance between the 401K plan investments and what is available in the brokerage. I'm sure some lost, but not to the extent that ALL retirement assets evaporated.

I had such a brokerage window in my Microsoft 401k plan. I guess they assumed people knew what they were doing, which in some cases might be correct. As for me, I don't need anyone to tell me how to invest; if I lose money it's my lookout.

Tyler wrote: Wow.  This is sad.

I have just lost all of my retirement and all of my son's savings. My son has special needs and I have failed him in the biggest way, sorry for posting this but I am totally devastated!!

Very sad indeed.

I've tried for years to convince my brother not to make investments like this.  He holds a few small cap stocks, like Sirius and Whole Foods, and won't consider even dollar-cost averaging into a stock index - let alone the Permanent Portfolio.  He thinks that this is the only way to make money investing.  He's infernally lucky to have bought a house a couple months ago which forced him to liquidate most of his stocks.

What I finally did was open a 529 account for his newborn daughter with a single passive target-date portfolio, set up a small monthly automatic deposit, and convince him to do the same (he doubled my amount).  He'll now get to watch the account grow over time.  I hope that eventually he'll get the message.

But...putting all your retirement money into ONE stock??  How many people have done that?  Heaven help us...

Sophie definitely show him this thread about the poor soul who gambled and lost it all.

I will indeed!

I also cleverly bought the PP book and left it lying around for the rest of the family to find.  So far it remains undisturbed.

Harry Browne was right about how people can be completely sensible and pragmatic in their professional lives and yet somehow throw that entirely out the window when it comes to investing. Sadly most people I know invest according to some kind of superstition, or put their head in the sand and do no investing whatsoever. 

The woman on that forum who lost everything for her and her special-needs son is why basic personal finance literacy should be a requirement for high school graduation. High school graduates should all be able to answer fundamental questions such as:

• (5 pts.) What is the difference between saving, investment, and speculation?
• (5 pts.) What is diversification, and why is it important?
• (5 pts.) How is a stock different from a bank account?
• (1,000,000 pts.) Why is it a REALLY F!@&ING BAD IDEA to put all of your money in a single company's stock?

Agree with Tortoise on the high school finance requirement. It's just obvious that most people are clueless when it comes to money. Also, it's hard to teach your own kids this stuff unless you are willing to do so over a long period of time. We started when our daughter was ten and will probably continue until she is 30 or so. But, yeah, even a one-semester course would be a big help.

+1.

Personal finance is a lot more important than driver education, which nearly every high school has.  And WAY more important than gym class.  What a ridiculous waste of time that was.

Given the likelihood of traffic accidents, driver's ed sounds like a good requirement.  Also gym should probably be a continuous requirement through high school.  Then maybe more people would be in the habit of exercising.

Personal finance would be a good additional requirement, plus courses in logic, civics, and home ec.  DE and gym seem more important than those, though, since anyone can wreck a car or get fat, whereas only a few people will ever have enough money for some stock shyster to steal it.

I work for an investment firm so we have to disclose our personal trades to comply with the law.  My boss had to remind me in recent days to disclose my trades and I told him I didn't make any.  He's perplexed, saying it's suicidal not to go all cash now. 

His words were something like "if you're so stubborn about not liquidating to cash whenever there's trouble, I can guarantee you one day in the future, your investments will blow up!"

  And last time he showed me, he had just 2 stocks (not ETFs) and little cash in a 200K IRA account.  This thread would be a great wakeup call..

Wow.  That's also a good reminder that everyone needs to learn how to invest their own money and not blindly trust the "experts".

[img width=400]http://mediacdn.snorgcontent.com/media/ ... rtwork.jpg[/img]

Tyler wrote: Wow.  That's also a good reminder that everyone needs to learn how to invest their own money and not blindly trust the "experts".

[img width=400]http://mediacdn.snorgcontent.com/media/ ... rtwork.jpg[/img]

In an industry where most (though not all) "experts" made it there due to their connections or charms rather than their skills or merits, I'm not too shocked...

blackomen wrote: In an industry where most (though not all) "experts" made it there due to their connections or charms rather than their skills or merits, I'm not too shocked...

[img width=500]http://i1.kym-cdn.com/photos/images/fac ... mbnail.jpg[/img]

blackomen wrote: I work for an investment firm so we have to disclose our personal trades to comply with the law.  My boss had to remind me in recent days to disclose my trades and I told him I didn't make any.  He's perplexed, saying it's suicidal not to go all cash now. 
...

I'd say give him a copy of the pp book, but at an investment firm it will in all likelihood fall on deaf ears / blind eyes. You're a rarity there. I was reminded of this when my new Vanguard rep called to introduce herself (read: harass me  )

dualstow, how did you get rid of her?

Reub wrote: dualstow, how did you get rid of her?

Vanguard rep: So, would you like to tell me a little bit about yourself?
Me: Nope, not really.
(strained laughter)
Rep: Should I call you once a year, or do you want to call me?
Me: I'll call you.

I sent her a little note afterwards explaining (truthfully) that I express myself better in writing. Gave her a mini-bio. I got something like a form letter in response. I think she had already gotten the picture that I won't be in need of her services, so fair enough. No offense taken.

Handled with finesse and tact!

dualstow wrote:

blackomen wrote: I work for an investment firm so we have to disclose our personal trades to comply with the law.  My boss had to remind me in recent days to disclose my trades and I told him I didn't make any.  He's perplexed, saying it's suicidal not to go all cash now. 
...

I'd say give him a copy of the pp book, but at an investment firm it will in all likelihood fall on deaf ears / blind eyes. You're a rarity there. I was reminded of this when my new Vanguard rep called to introduce herself (read: harass me  )

I actually discovered the PP when I was doing research on different portfolio asset allocations as a new analyst a few years back..  company didn't like the idea stating it was too hands-off but I was sold into it so I gradually moved my investments to the PP, starting with PRPFX in one account in early 2011 and was convinced enough to moved everything else to the HBPP around the time of the US rating downgrade.