Gyroscopic Investing

Thanks for posting!

On the HBPP (emphasis added):

Although the portfolio underperformed stocks, it was incredibly consistent across all market environments with low volatility and drawdowns.  This presents a classic dilemma for investors, particularly professional advisors.  What is the trade-off for being different?  Despite the incredibly consistent performance there are many years this portfolio would have underperformed U.S. stocks or a 60/40 allocation.  Can you survive those periods even if you believe this portfolio to be superior?

The critique of the PP that it sometimes underperforms stocks and is thus hard to stick to has always made me roll my eyes.  The number of stock investors that run to the PP in times of market turmoil is just as plentiful.

That said, I find the caveat about professional advisers to be interesting and probably spot on.  Some people like to think of them as neutral experts with your best interests in mind, but even the honest ones are just as susceptible to market forces as anyone else.  Even if they personally believe that a particular portfolio is the best choice in the long run, staying put in a lower-volatility portfolio while their clients get returns envy may put them out of business.  Ultimately, most people pay advisers not for real advice but for the illusion of constantly beating the market.  You get what you pay for, but not what you think.