Gyroscopic Investing

Or just a stock photo? Beautiful cat! Perfect illustration of the passive strategy.

https://portfoliocharts.com/2016/11/11/ ... at-choice/

Just a stock photo, but I understand that cats power the internet.

I know the passive theme simply echoes common knowledge in these parts, but hopefully the message can help others understand the benefits of the approach.

Passive is for suckers!

MachineGhost wrote:Passive is for suckers!

I wouldn't want MG (or CNBC) to answer any other way. But passive is for the wise.

dualstow wrote:

MachineGhost wrote:Passive is for suckers!

I wouldn't want MG (or CNBC) to answer any other way. But passive is for the wise.

How wise do you feel after the nearly 100 basis point move in T-Bonds lately?

MachineGhost wrote:

dualstow wrote:

MachineGhost wrote:Passive is for suckers!

I wouldn't want MG (or CNBC) to answer any other way. But passive is for the wise.

How wise do you feel after the nearly 100 basis point move in T-Bonds lately?

Wise enough to know how unimportant ephemeral movements are.
And look, bonds could completely crash, but the pp knows that.

Go dualstow!!

And thanks for posting that. I'm due to rebalance into gold and bonds and once again it's nose-holding time.

WiseOne wrote:I'm due to rebalance into gold and bonds and once again it's nose-holding time.

I bought some bonds in the auction the other day, the ones with the CUSIP ending in ~RU4. 2.875% yield I can think of worse things than holding on to that for a while.

I *wish* I had to rebalance into gold after this recent drop, but I can't justify buying more at 27% of my pp.

You guys seem to rebalance awfully frequently and not every 2-3 years as rebalancing bands dictate. You are letting your losers run and capping your winners.

MachineGhost wrote:You guys seem to rebalance awfully frequently and not every 2-3 years as rebalancing bands dictate. You are letting your losers run and capping your winners.

Maybe not frequently, but I did rebalance after a year and several months as Harry suggests an annual rebalance is ok. I'm low on bonds and need some.

dualstow wrote:

MachineGhost wrote:You guys seem to rebalance awfully frequently and not every 2-3 years as rebalancing bands dictate. You are letting your losers run and capping your winners.

Maybe not frequently, but I did rebalance after a year and several months as Harry suggests an annual rebalance is ok. I'm low on bonds and need some.

Who cares what Harry said 15+ years or so ago? He's dead, Jim! Use the P2T backtest tool and you'll see that annual rebalancing is inferior to the bands. The more frequent you rebalance, the lower your gains and higher your risk.

I believe Browne also wrote to check the bands once a year for a rebalance, not actually rebalance annually. The gaps help preserve momentum.

And my own optimizations showed that the proscribed 15%/35% rebalancing bands (checked yearly) were very close to being optimal.

I'm not nitpicking -- you're leaving money on the table if you rebalance too frequently. And yearly is too frequently.

Fair enough. I'll take another look.

MachineGhost wrote:You guys seem to rebalance awfully frequently and not every 2-3 years as rebalancing bands dictate. You are letting your losers run and capping your winners.

This is my first rebalance since starting in 2013. It was prompted by cash hitting an upper band, which happened because I've been getting lazy and putting odd PP contributions into cash.