For JeffreyAlan

Discussion of the Cash portion of the Permanent Portfolio

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dualstow
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For JeffreyAlan

Post by dualstow » Tue Apr 09, 2019 3:00 pm

In the Stock Scream Room, you wrote
The case for 100% cash is a lot stronger than 100% Gold or Stocks IMO. 100% stocks could easily lose you 50% in a year and make take many, many years to recover. Cash will not ever do that to you unless you are talking about runaway inflation. Correct me if I am wrong on that.

When I say I think about going to cash, I don't mean for a certain period of time and then trying to jump back in. I am thinking of going to cash permanently. I often think instead of putting my money at risk (even if it is a small risk) squeezing a 4-6% return out of the Desert Portfolio, why don't I just keep my money in 2.5% bank accounts and Treasury bills and focus on trying to save more, cutting my cost of living, having no debt, buying things in bulk, taking advantage of special bank offers of promotional rates, working an extra hour of overtime each week? Those would be certain returns instead of hopeful returns.
Check out this long-running (2015) Bogleheads thread, Selling all equities, discuss why I'm wrong. :)

The OP writes on the current page -- page 7 -- how he's doing since he sold and went to cash...though he occasionally dabbled in other stuff.

https://www.bogleheads.org/forum/viewto ... 5#p4484665
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Re: For JeffreyAlan

Post by europeanwizard » Wed Apr 10, 2019 12:52 am

Wow, that's an extremely interesting thread. Fascinating how the topic author, "Calais", updates his topic over the years. Also interesting: he jumps out of equities, and then most recently, reveals how he's been taking pretty huge risks which lost 45% of his usually very steady 2% yields:
(...) my model out-of-the-market portfolio is at a CAGR of 1.9%. My actual performance is slightly lower than my model -- about 1% CAGR overall (...) been buying/rolling over monthly out-of-the money put options on SPX that have been a money pit
Source: https://www.bogleheads.org/forum/viewto ... 0#p4484593

Wow, I have a lot of respect for this guy. He's been posting his mistakes (in hindsight) publicly, for all to learn.
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Re: For JeffreyAlan

Post by dualstow » Wed Apr 10, 2019 6:54 am

I agree, Not easy to admit that, and over so many years.
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Re: For JeffreyAlan

Post by Jeffreyalan » Wed Apr 10, 2019 1:50 pm

It seems like the OP of that thread has a different idea than mine. He seems to be market timing. Other parts of the thread show him to be invested in Crypto and options. I was more thinking of just walking away completely from the worry or stress of investing and markets and concentrating on how to save money and increase my wealth outside of market forces.

My grandfather never earned a great living. Nor did he ever invest a penny in the stock market. But yet thru frugal living and consistent saving he amassed a pretty decent 6 figure nest egg. Of course that was in the days before ZIRP. Could he have had more with more aggressive investments? Of course. But he never had to waste a min of sleep worrying about where the market was going and how was his portfolio doing and would it recover by the time he retired etc.

I probably will stick with my Desert Portfolio. But it is a thought I have at times.
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Re: For JeffreyAlan

Post by dualstow » Wed Apr 10, 2019 2:34 pm

You're absolutely right. The OP over there, as he admits, has been trying to make up for lost time, time out of the market, with risky investments. To commit to staying out of the market forever once you get out makes more sense to me. As long as you have enough...

If I won the lottery (which is hard because I almost never play), I'd do some serious thinking about an all-treasury portfolio with a variety of maturity dates.
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