Gyroscopic Investing

EOM

Who are you and what have you done with Budd?

You are always such a happy fellow!

flyingpylon wrote: Who are you and what have you done with Budd?

The old Budd is no more!
He was kicked to the curb in late 2015 and never to return.
I am at peace with my investments and especially the PP.

Tis odd, rooting for the market not to do well.....

buddtholomew wrote:

flyingpylon wrote: Who are you and what have you done with Budd?

The old Budd is no more!
He was kicked to the curb in late 2015 and never to return.

Until the stock indices outperform the PP again, then we will see proof the resurrection really does occur.

ochotona wrote:

buddtholomew wrote:

flyingpylon wrote: Who are you and what have you done with Budd?

The old Budd is no more!
He was kicked to the curb in late 2015 and never to return.

Until the stock indices outperform the PP again, then we will see proof the resurrection really does occur.

The PP has met my expectations for taxable investing.
I continue to invest in retirement accounts 70 stocks / 30 bonds.
I would not be able to rebalance the 70/30 without the stability of the PP.
I rebalanced once when the S&P was around 1875. I'm down about 7% and combined with the PP 3%. The PP is positive. Pretty awesome.

buddtholomew wrote:
The old Budd is no more!
He was kicked to the curb in late 2015 and never to return.
I am at peace with my investments and especially the PP.

Budd, Budd, don't you know your not supposed to smoke that Mongolian dope? It's bad stuff, it gives you headaches!! (Just kidding, I am paraphrasing an old Saturday Night Live skit.) Welcome back to the True Faith, Budd.

Budd, the anti mathjak!

Hey blood, ST bonds are not a direct cash replacement. As bonds, they still have "duration" and interest rate risk. Yellen raised ST rates, so ST bonds went down. Try Ally Bank.

Putting ST bonds in place of cash is an example of investors reaching for yield in a low yield world. Ouch. you can get hurt.

buddtholomew wrote: I am at peace with my investments and especially the PP.

And all is well with the world!  Congratulations on your epiphany, Budd.  Your mix of retirement vs taxable investments will serve you well.  No more worries!

Budd, let's see what tune you sing when stocks have another good run.

I Shrugged wrote: Budd, let's see what tune you sing when stocks have another good run.

That could be a while.

I Shrugged wrote: Budd, let's see what tune you sing when stocks have another good run.

We need stocks to recover and I am a buyer should re-balance bands trigger.
This mindset is only possible because the PP has performed so admirably.

sophie wrote:

buddtholomew wrote: I am at peace with my investments and especially the PP.

And all is well with the world!  Congratulations on your epiphany, Budd.  Your mix of retirement vs taxable investments will serve you well.  No more worries!

Thanks Sophie! You've seen me ride the roller coaster of emotions.

IDrinkBloodLOL wrote: My PP is murdering stocks right now. YTD stocks are down ~10% depending on fund, but I'm up over 3% already. Hell, I want more of whatever is going on.

We got hammered last year, I'm down for a 20% recovery year.

I'm up 8% YTD. 

As of today, all of my bond holdings are positive, even though I took profits in 2010 or 2011, selling all my EDV shares, and bought  *some* new bonds a year ago. Bonds that are left are up 19% overall.
I did not see this coming.

IDrinkBloodLOL wrote:

Libertarian666 wrote: I'm up 8% YTD. 

Nice! Are you 4x25 or something else? When'd you buy in for the year?

No, I hold the DW (decidedly weird) portfolio, very roughly 50% gold, 35% swiss francs, 10% silver and the rest cash.

I haven't made any significant changes to my portfolio recently.

Needless to say, I've had a few bad years recently, but this one is shaping up very nicely. 

It surely must feel good to see the PP roaring back to life.  Budd, try to remember this the next time the stock market points skyward while the PP plods along at its snails pace.

I checked YTD, 12, 24, and 36 month returns of the PP vs VTI on etfreplay.  These numbers are quite instructive:

YTD:  PP up 3%, VTI down 8%
Last 12 months:  PP down 4%, VTI down 8.9%
Last 24 months:  PP up 7%, VTI up 8%
Last 36 months:  PP up 5%, VTI up 30%
Last 5 years (since Feb 2011):  PP up 27%, VTI up 55%
Last 10 years (since Feb 2006):  PP up 64%, VTI up 64%

So yes, you missed out on the big upswings but over time, you'll do just as well as owning 100% stocks.

I have indeed seen you go through those 36 months of agony, Budd!  Just remember the first & last lines above and you'll be able to hang in there next time the market is on a tear and the PP appears to be missing out.

sophie wrote: It surely must feel good to see the PP roaring back to life.  Budd, try to remember this the next time the stock market points skyward while the PP plods along at its snails pace.

I checked YTD, 12, 24, and 36 month returns of the PP vs VTI on etfreplay.  These numbers are quite instructive:

YTD:  PP up 3%, VTI down 8%
Last 12 months:  PP down 4%, VTI down 8.9%
Last 24 months:  PP up 7%, VTI up 8%
Last 36 months:  PP up 5%, VTI up 30%
Last 5 years (since Feb 2011):  PP up 27%, VTI up 55%
Last 10 years (since Feb 2006):  PP up 64%, VTI up 64%

So yes, you missed out on the big upswings but over time, you'll do just as well as owning 100% stocks.

I have indeed seen you go through those 36 months of agony, Budd!  Just remember the first & last lines above and you'll be able to hang in there next time the market is on a tear and the PP appears to be missing out.

Sophie, does etfreplay take rebalancing into consideration?  Because peaktotrough.com has the PP handsomely beating stocks over the last 10 years.  From Feb 8 2006 to today, with 35/15 bands and reinvested dividends, the PP returned 97% (7.0% CAGR, four rebalances) while "stocks" returned 71% (5.5% CAGR).  Without rebalancing, the PP was similar to stocks, returning 73% (5.6% CAGR), so that looks like your results.  Annual rebalancing was also a winner: 90% return (6.6% CAGR).

Over the last five years (from Feb 8, 2006), rebalancing hasn't really helped:
PP (35/15): 27% (4.9% CAGR, no rebalances)
PP (30/20): 28% (5.0% CAGR, four rebalances)
PP (annual rebalance): 29% (5.2% CAGR)
Stocks: 51% (8.5% CAGR)

The advantage of the PP over stocks in the last 10 years arose entirely from not failing in 2008:

[img width=500]http://i.imgur.com/tFOvgPD.png[/img]

Actually, this graphic teaches a really interesting lesson about the PP: it does well because it doesn't suffer huge drawdowns.  Look at the columns for "S&P500" and "Total" (that's the PP with annual rebalancing).  Stocks did better than the PP seven times out of the 11 periods (2006 and 2016 are two partial years; 2007 to 2015 is nine full years).  And if you average the returns over these 11 periods, stocks give 7.1% and PP gives 6.3%.  In 2008 the PP bested stocks by about 39%; in 2013 stocks bested the PP by about 35%; that's a wash.  How the hell did the PP get a better CAGR?  Because it didn't suffer the huge loss that stocks experienced in 2008.  That loss of 36% meant that stocks had to recover 57% to break even.  That took about four years -- four years that the PP continued to grow, too.  Without such extreme downward moves, the average PP investor is likely to remain invested and not bail on the strategy.  The average stock investor might lose heart when the market is down >30% and cash out.  Last year's 3% decline in the PP was hard for a lot of us to take, but as of today it seems we have already overcome that loss.

IDrinkBloodLOL wrote: Ah, so you're holding the "hedge against humanity" portfolio.

I wouldn't be surprised if in the future I end up doing something like that plus real estate, either actual rentals or REITs.

You must be loving life right now with what gold's done.

It's more the "hedge against horrible times where I can't make a living" portfolio, but yes, I am pretty happy with its performance at the moment.

Pet Hog, you're right.  The PP does indeed get a boost from rebalancing that isn't reflected in the numbers I posted from etfreplay.  My point though, was that for potentially long stretches (5+ years), the PP - even while providing positive real returns, as demonstrated in Tyler's charts - can lag the returns of a 100% stock portfolio significantly.  You may have to wait longer than that to get to parity.  That's the problem that has been such an issue for Budd and others here.

Which reminds me...anyone check their portfolios lately?  There are several PP's around here that might be in for a rebalance soon!

sophie wrote: Pet Hog, you're right.  The PP does indeed get a boost from rebalancing that isn't reflected in the numbers I posted from etfreplay.  My point though, was that for potentially long stretches (5+ years), the PP - even while providing positive real returns, as demonstrated in Tyler's charts - can lag the returns of a 100% stock portfolio significantly.  You may have to wait longer than that to get to parity.  That's the problem that has been such an issue for Budd and others here.

Which reminds me...anyone check their portfolios lately?  There are several PP's around here that might be in for a rebalance soon!

So much yes.  Anyways I contribute to the lagging Asset so no rebalance for me.  But I do track the pp since I started it and if I wasn't contributing to the lagging asset I would have rebalanced about 6 months ago-- perfect timing for getting out of stocks!