Gyroscopic Investing

After my adventures in trading land I have concluded that no one can know anything.

Harry Browne was right, the meager returns from investing in the markets are not for getting rich, you get rich by providing value to other people through business ventures and careers. The markets can at most give a small return of investments above inflation.

The Permanent Portfolio is quiet brilliant and I can only hope that it will continue to perform according to the plan in the future because I am switching back to it. I need to concentrate my efforts on providing real value to my fellow human beings and making a better society for everyone.

lordmetroid wrote: After my adventures in trading land I have concluded that no one can know anything.

Harry Browne was right, the meager returns from investing in the markets are not for getting rich, you get rich by providing value to other people through business ventures and careers. The markets can at most give a small return of investments above inflation.

The Permanent Portfolio is quiet brilliant and I can only hope that it will continue to perform according to the plan in the future because I am switching back to it. I need to concentrate my efforts on providing real value to my fellow human beings and making a better society for everyone.

Another candidate for post of the year.

(sound of applause)

Sounds good, Lord M.

lord probably had to pay a lot for that lesson.

Unfortunately, I think it's a lesson that a lot of people have to learn for themselves rather than taking someone else's word for it.

MediumTex wrote: lord probably had to pay a lot for that lesson.

Well, he said he sold stocks "at the top." Correct me if I'm wrong on that, Lord. I did not go back and check.

I assume it to be true. Still, the problem with that, of course, is the next cycle, being in stocks for the long haul. Too many people who sold at the top were only in stocks when they were just a bit lower, nowhere near the relative bottom.

lordmetroid wrote: After my adventures in trading land I have concluded that no one can know anything....

The Permanent Portfolio is quiet brilliant and I can only hope that it will continue to perform according to the plan in the future because I am switching back to it. I need to concentrate my efforts on providing real value to my fellow human beings and making a better society for everyone.

Words of wisdom, Lord M.

John Bogle has said that he not only does not know anyone who has succeeded in timing the market, but he does not know anyone who knows anyone who succeeded in timing the market.

There are plenty of frenzied market timers and investment advisors out there who claim they do have a crystal ball, but none of them seem to succeed over the long term. This is why I, too, am avoiding a lot of anxiety by sticking with the PP, although about 1/3 of my portfolio is in a Boglehead VP.

MediumTex wrote: lord probably had to pay a lot for that lesson.

Unfortunately, I think it's a lesson that a lot of people have to learn for themselves rather than taking someone else's word for it.

dualstow wrote: Well, he said he sold stocks "at the top." Correct me if I'm wrong on that, Lord. I did not go back and check.

I gained 5% by momentum investment as I jumped on the small cap rally we had in Sweden while the index was busy crashing, recovering my losses from the year of Permanent Portfolio investment of 2015 and then some. Then when the markets took a nose dive, I had already sold everything at 2015-12-30 to do some tax loss harvesting. Guess, if I was happy!

However, during the market crash, I was very nervous, constantly worrying, I had no idea how to know when I would go all in again. I spent a better part of a month of my life, reading, studying, watching videos, etc. to figure out how but without prevail.

The idea of day-trading came to my mind, the illusion of more control and the fact that I only needed about 0,5% per day on average to make a living day-trading seemed very feasible. So I tried and burned through 1,5% of my capital in a matter of seconds. First trade went well, then I noticed the price continued to increase and I wanted in again. So I bought at the top and the demand literally vanished and the price plummeted so rapidly I couldn't even get a sales order with a relevant price to the market. That day was crazy, I was nerve-wrack, buying and selling all over the place and in a lot stocks, just giving money away, like it was some kind of charity. All in all when it was all counted and fees tallied up, I had lost 3%

Did a whole lot more studying over the following week. Took it a lot more cool this time around(That doesn't mean I wasn't high on adrenaline while trading and a complete nerve-wrack afterwards) first trade went well, I regained 0,5%, tried my luck a second time and now lost 1,5%, then I revenge traded back the 1,5% an hour later when I bet on a trend to continue for a little while. I had done it! I was the one who took someone else money this time. My sell order was the very top, literally! Some poor fella had probably lost a lot at the very next second as the price plummeted. I was so happy and an adrenaline junkie at that moment, I deliriously took a shower and sang happy tunes. My whole body shaking like a ash leaf.

Next day I tried my luck again and gained another 0,5% and was in total back in black again(id est, I have 0,5% total return of investments). Yet again, full of adrenaline I talked myself out of trying my luck a second time that day. Leave it while you are still in the black!

I can't even remember when the last time I had these kind of adrenaline rushes. I realize, this is gambling, pure gambling! I got better things to do with my life.


I thought I wanted to have an extreme early retirement and financial independence, living of my investments. However, I realize, I only wanted that because I was working in a regular job, being constantly miserable every day. What I really want is to not have anyone telling me when and how to live. I think a small business is perfect for fit for my personality so I am going to start building one.

I can easily contribute a significantly large chunk of savings from a career to the portfolio that will easily dwarf any potential yield. Money saved in the portfolio is just that, it is money intended for a use in the future. Some I want to use for a 3 month adventure in Japan, another intended use is to pay off my mortgage and yet another use is to simply have a significantly large capital buffer so I never need to worry about money at the end of the month.

You invest your hard earned money in order to prevent your savings from eroding. The Permanent Portfolio is probably the ultimate tool for this as according to theory it will prevent your hard earned money from eroding no matter the current prevailing economic climate.

lordmetroid wrote: After my adventures in trading land I have concluded that no one can know anything.

Last Friday my 2 year long LEAPs on SLV, GDX and GDXJ were closed out.  These were, at the time "Can't lose" scenarios, hell give me two years and there's no way in hell these options aren't going to make money.  Well, they expired worthless.

Pretty much in all my options trading I've done over 20 years, if I would have taken the opposite position, I would have done drastically better. 

I am now in a position half thinking I want to dedicate a little VP to GLD/SLV leaps, 2 years out, hey gold and silver HAVE to be higher two years from now, right?  But per Lord's quote and my experience, I will be better off not touching options ever again!

Cortopassi wrote:

lordmetroid wrote: After my adventures in trading land I have concluded that no one can know anything.

Last Friday my 2 year long LEAPs on SLV, GDX and GDXJ were closed out.  These were, at the time "Can't lose" scenarios, hell give me two years and there's no way in hell these options aren't going to make money.  Well, they expired worthless.

Pretty much in all my options trading I've done over 20 years, if I would have taken the opposite position, I would have done drastically better. 

I am now in a position half thinking I want to dedicate a little VP to GLD/SLV leaps, 2 years out, hey gold and silver HAVE to be higher two years from now, right?  But per Lord's quote and my experience, I will be better off not touching options ever again!

I use options on occasion, but only as a hedge. They are too volatile to be used in other ways, in my opinion.

It is hard to accept the pp until one has been humbled by the failure of an active investing system.

That said, I do not know if it a good idea to enter the stock market at this moment. I am speculating that we will have a crash in the magnitudes of the great depression as this debt and QE bubble bursts open now in 2016.

lordmetroid wrote: That said, I do not know if it a good idea to enter the stock market at this moment. I am speculating that we will have a crash in the magnitudes of the great depression as this debt and QE bubble bursts open now in 2016.

Is that a joke?  If it is, it's a good one.

I've mentioned this before, but it should be repeated again.
Personally, I would not feel comfortable holding any of the PP assets in isolation.
For the portfolio to perform as expected, do not try and time your entry. Purchase all 4 assets at the same time (lordmetroid).

buddtholomew wrote: I've mentioned this before, but it should be repeated again.
Personally, I would not feel comfortable holding any of the PP assets in isolation.
For the portfolio to perform as expected, do not try and time your entry. Purchase all 4 assets at the same time (lordmetroid).

I thought you abandoned the PP quite awhile ago?

Coffee wrote:

buddtholomew wrote: I've mentioned this before, but it should be repeated again.
Personally, I would not feel comfortable holding any of the PP assets in isolation.
For the portfolio to perform as expected, do not try and time your entry. Purchase all 4 assets at the same time (lordmetroid).

I thought you abandoned the PP quite awhile ago?

He will.

How about the action today?

A few days ago I would have counseled that the stock market was due for a bounce (1 of 1) gold would get slammed again and bonds would get slammed again (0 for 2).  No way would I have expected all three assets to be up.

Which is why we don't hold the assets in isolation, and we don't know anything.

Coffee wrote:

buddtholomew wrote: I've mentioned this before, but it should be repeated again.
Personally, I would not feel comfortable holding any of the PP assets in isolation.
For the portfolio to perform as expected, do not try and time your entry. Purchase all 4 assets at the same time (lordmetroid).

I thought you abandoned the PP quite awhile ago?

Coffee!
Coffee!
Coffee!

Nice to see you around my friend.

IDrinkBloodLOL wrote: You know, I realized recently how true this is.

I am completely unqualified to judge which company will succeed and which will fail. I don't know enough about business!

Consider this example: around the corner from me, there is a coffee shop that makes Starbucks look like gas station swill. They roast their own beans on site, the guy who runs it knows everything under heaven about coffee, everything they make is perfect. Starbucks has tried to set up shop several times near this place to drive them under, but every time they have failed. It's seriously been 3 or 4 times, they just couldn't compete.

So silly me, I would look at this and say that of COURSE the indie shop is the better company! That's obviously where I want to put my money, not Starbucks!

...And then I would get cleaned out, and I'd deserve it. Maybe I wouldn't, but this company isn't expanding to become the next Starbucks, Peet's, Green Mountain Coffee Roasters or any of that.

Why's that? Lack of desire by the owners? Failure of advertisement? Is there something financial going on behind the scenes I don't know about that precludes this company from growing? Are they getting screwed on taxes?

I don't know, and that's the problem. Not only do I not know, but I don't think I even have a way of finding out. Now multiply that times all the companies out there that it's possible for me to invest in, and imagine running around collecting all this internal financial and strategic info about all of them, comparing it all and deciding where to put my money.

It's a colossal task - potentially doable, but only with a crapload of spare time and a LOT more business and financial savvy than I have.

Therefore, I've decided that unless I hit early retirement WAY earlier than planned, I may as well give up and do index funds/PP (plus 1% a year on an overt gamble, in case I win the stock market lottery).

It's actually much simpler than that.

Since there are enormous pools of capital looking for the slightest edge on the market, any significant market anomaly that could be exploited is being exploited, which causes it no longer to be actionable.

Thus, if you are going to be in the stock market at all, you just take the average result by buying a low-cost index fund. This will put you in the top third of all investors, I believe, due to the behavioral mistakes and extra costs that most investors suffer from.

ochotona wrote:

Coffee wrote:

buddtholomew wrote: I've mentioned this before, but it should be repeated again.
Personally, I would not feel comfortable holding any of the PP assets in isolation.
For the portfolio to perform as expected, do not try and time your entry. Purchase all 4 assets at the same time (lordmetroid).

I thought you abandoned the PP quite awhile ago?

He will.

Coffee, you've got some reading to do.
Ocho, been invested since 2011 and don't plan on changing anything. It took the recent pullback in stocks to reinforce why I hold the PP.
I continue to stay aggressive in retirement accounts.