Knuckleheads PP thread resurrected

[Smith1776]

null

I’m lovin’ your null posts.

I would love to meet a Zen master on a forum, just so I could quote him.

Null

Be one with the null!

[CT-Scott]

I will have no part in recruiting the riffraff of the Knuckleheads forum into our elite club. That's like putting regular gasoline into a sports car.

If any of them see reason and join of their own volition, that's a different story though.

Ha, I love it! So I'm guessing because we don't see the red-fonted moderator notations in those "null" posts, that you were the one who deliberately nulled them out so as to deny the Knuckleheads whatever wisdom you had previously blessed upon them, and later decided they were unworthy of?

I think we need a heavy-handed moderator here, but with only one rule (at least, for now), where the rule is that any reference to the "Bogleheads forum" will be replaced with the "Knuckleheads forum". First time is free, 2nd time gets a warning, 3rd time a 24-hour ban (I'm kidding, but for those that are unaware, that's the sort of thing they do over there).

[Smith1776]

Ha, I love it! So I'm guessing because we don't see the red-fonted moderator notations in those "null" posts, that you were the one who deliberately nulled them out so as to deny the Knuckleheads whatever wisdom you had previously blessed upon them, and later decided they were unworthy of?

I think we need a heavy-handed moderator here, but with only one rule (at least, for now), where the rule is that any reference to the "Bogleheads forum" will be replaced with the "Knuckleheads forum". First time is free, 2nd time gets a warning, 3rd time a 24-hour ban (I'm kidding, but for those that are unaware, that's the sort of thing they do over there).

Hahahahaha. Something along those lines, though I'm not sure I have a ton of wisdom. Joking aside, I just want to distance myself and not associate too strongly with that crowd anymore. I'll still lurk for the interesting topics, but I don't think I'll be posting there anymore.

To kind of elaborate, Larry Swedroe's last post there sort of summed it up for me very nicely for me.

I'll close with this last post on Bogleheads for me, removing it from my favorites list so won't be checking any longer, which is sad. What's sad is that this used to be a place where one could have a good discussion on various topics and just agree to disagree. Now this has become a "religious" site IMO [OT comment removed by admin LadyGeek], where if you disagree you are EVIL, have bad intentions. So you get only one side of any viewpoint and learn nothing, because you learn from those you DISAGREE with it, and you become subject more and more to confirmation bias. One reason I enjoyed the discussions was you got challenged and had to defend positions, and if could not you learned something, and if could you learned something as well. But that type discussion is no longer possible here so I'm saying farewell, not goodbye.

The moderating in the middle of the paragraph just accentuates why I'm not a fan of the place anymore. We can't have a conversation and say anything real, for fear of the Knucklehead Thought Police cracking down on us.

[Kbg]

Techno,

You worked for HB, really?

Also...please expand on your "he wouldn't do LTTs now" comment. The most interesting PP related comment I've heard for a good while. I'd like to hear more of your thoughts on this.

From a value/expected long term returns perspective, bond nominal returns are about as easy as it gets and with this rationale buying LTTs borders on pure stupidity. The flip side is convexity.

[dualstow]

Techno,

Unless he deleted it, he didn’t even post in this thread. You were looking for a bond thread, right?

[CT-Scott]

Techno,

Unless he deleted it, he didn’t even post in this thread. You were looking for a bond thread, right?

He's posted a couple of times recently in the Knuckleheads thread linked to in this thread. I think that's where he mentioned having worked for HB.

[dualstow]

Ah, thank you. I searched this thread, but not the older one.

I do remember much older conversations about tech procuring some internal computer components(?) software for Harry Browne.
↳ here’s some: viewtopic.php?f=9&t=10658

[Libertarian666]

Techno,

You worked for HB, really?

Also...please expand on your "he wouldn't do LTTs now" comment. The most interesting PP related comment I've heard for a good while. I'd like to hear more of your thoughts on this.

From a value/expected long term returns perspective, bond nominal returns are about as easy as it gets and with this rationale buying LTTs borders on pure stupidity. The flip side is convexity.

Yes, I wrote some software for him to speed up some calculations on his HP 9845 "personal computer". It had some kind of "internal language" to add functions to the BASIC interpreter. That's what I wrote the software in.

I don't think he would be interested in LTTs at these ridiculously low interest rates with insane amounts of money printing going on at the same time.

It's obvious to me that one (or both) of these events is now virtually assured in the relatively short term:
1. The dollar is destroyed by the Fed's continuing money printing.
2. The Fed stops printing money and the bond interest rate goes to what it would be in a free market, which would be much higher than it is now because all the borrowers would have to compete.

If either of these happens, bonds will be toast.

[Kbg]

I don't think it's that simple...the dollar is always relative to another currency and all the other majors and minors are doing the same thing.

Not saying LTTs are a good deal, back to convexity and perceived flight to quality. It's easy enough to not have to guess...just watch inflation measurements.

[craigr]

It was indeed great fun to read the witty William Bernstein quote! If only the rest of the crew on that forum had a fraction of Bernstein's brilliance and sincere appreciation of risk parity portfolios like the PP. His book "Deep Risk" is essentially a dialogue with Craig's writing on the PP and Browne's work itself and for me anyway helped me appreciate the PP more and, especially, made me realize how brilliant the Golden Butterfly iteration of the PP is.

Bill Bernstein and I are friends and when I am visiting in town where he lives I have gone to his house for dinner with him and his lovely wife. I talked to him quite a bit when he wrote the book Deep Risk and am mentioned in the acknowledgements which is why is why it has my overtones in it I suspect.

I think Bill's main critique of the PP is that it has tracking error vs. a more conventional portfolio. This is completely valid to me. This is probably why the portfolio tends to attract very engineer/technical/introvert types that are able to detach themselves emotionally I feel. It takes a certain personality to take the Red Pill and just let go of trying to predict the markets. It also takes a certain kind of person that is OK with a portfolio that just tries to ride the middle and doesn't get worked up when Bob in Accounting is bragging about their 22.7% gains in TechCorp stock that year.

I think the PP really incorporates philosophy of being very detached yet prepared for the unexpected. One thing I've always liked about the portfolio is that it gives you options to respond to extraordinary scenarios. You can hang tight, but if things are going truly off the rails you aren't so locked into a single asset that you lose everything. It's important in a crisis to always have options available to respond even if you don't have to use them. For me, that PP does exactly that.

[Libertarian666]

It was indeed great fun to read the witty William Bernstein quote! If only the rest of the crew on that forum had a fraction of Bernstein's brilliance and sincere appreciation of risk parity portfolios like the PP. His book "Deep Risk" is essentially a dialogue with Craig's writing on the PP and Browne's work itself and for me anyway helped me appreciate the PP more and, especially, made me realize how brilliant the Golden Butterfly iteration of the PP is.

Bill Bernstein and I are friends and when I am visiting in town where he lives I have gone to his house for dinner with him and his lovely wife. I talked to him quite a bit when he wrote the book Deep Risk and am mentioned in the acknowledgements which is why is why it has my overtones in it I suspect.

I think Bill's main critique of the PP is that it has tracking error vs. a more conventional portfolio. This is completely valid to me. This is probably why the portfolio tends to attract very engineer/technical/introvert types that are able to detach themselves emotionally I feel. It takes a certain personality to take the Red Pill and just let go of trying to predict the markets. It also takes a certain kind of person that is OK with a portfolio that just tries to ride the middle and doesn't get worked up when Bob in Accounting is bragging about their 22.7% gains in TechCorp stock that year.

Yes, FOMO is a powerful emotion for many people. Unfortunately FOMO seems to make them forget how difficult it is to "stay the course" with a 50-50 stock/bond portfolio when the stock market is tanking, which is why there are so many threads about that on Knuckleheads when that occurs.

[pp4me]

I see they now have a "Beware the Hype of Gold" thread that was begun by the much respected Taylor Lattimore.

Since he had good things to say about the PP in a review of the book I'm going to assume he means you might want to think twice about rushing into it at $2k/ounce if you don't own any.

That would probably be good advice but if you actually did want to start the PP right now, what asset class wouldn't you be worried about?

[dualstow]

...
I'm going to assume he means you might want to think twice about rushing into it at $2k/ounce if you don't own any.

That would probably be good advice but if you actually did want to start the PP right now, what asset class wouldn't you be worried about?

Always seems to be the case, doesn’t it.

[Kevin K.]

I chimed in on that thread with the modest suggestion that "Beware the Hype of the Three-Fund Portfolio" might be a more beneficial thread given its atrocious risk-adjusted performance, drawdowns and dismal safe withdrawal rates compared to not just the PP but all the other portfolios that include gold on Portfolio Charts.

There are a few other PP fans and some others expressing an agnostic or at least non-allergic approach to gold but for the most part it's same old, same old. That forum is fundamentalism sans "fun."

[Smith1776]

Bill Bernstein and I are friends and when I am visiting in town where he lives I have gone to his house for dinner with him and his lovely wife. I talked to him quite a bit when he wrote the book Deep Risk and am mentioned in the acknowledgements which is why is why it has my overtones in it I suspect.

I think Bill's main critique of the PP is that it has tracking error vs. a more conventional portfolio. This is completely valid to me. This is probably why the portfolio tends to attract very engineer/technical/introvert types that are able to detach themselves emotionally I feel. It takes a certain personality to take the Red Pill and just let go of trying to predict the markets. It also takes a certain kind of person that is OK with a portfolio that just tries to ride the middle and doesn't get worked up when Bob in Accounting is bragging about their 22.7% gains in TechCorp stock that year.

I think the PP really incorporates philosophy of being very detached yet prepared for the unexpected. One thing I've always liked about the portfolio is that it gives you options to respond to extraordinary scenarios. You can hang tight, but if things are going truly off the rails you aren't so locked into a single asset that you lose everything. It's important in a crisis to always have options available to respond even if you don't have to use them. For me, that PP does exactly that.

Interesting insights as always. I had never considered that the PP would have special appeal to those who are technical/introvert/math/science types. That would explain a lot on my part!

I try to explain to people that indeed the PP is a portfolio that is detached but prepared. It's neutral to the future. However, most people think it's a doomsday portfolio which it is no such thing.

[mathjak107]

I see they now have a "Beware the Hype of Gold" thread that was begun by the much respected Taylor Lattimore.

Since he had good things to say about the PP in a review of the book I'm going to assume he means you might want to think twice about rushing into it at $2k/ounce if you don't own any.

That would probably be good advice but if you actually did want to start the PP right now, what asset class wouldn't you be worried about?

Anyone who stays invested is actually buying in each day at the current price ....there so no logic at all in thinking that somehow it is different if you first buy in ....that balance is all ours at any point in time ...if it falls thousands of dollars from here our balance is down the same amount whether we bought in now or 20 years ago .

Some one may be buying 20k of Gld today who sold a total market fund and made 20k .

You may be up 20k in gld ........either way if it falls 5k we are both down 5k in net worth
.

So every day at the open in effect we are buying in at that days prices

Let this sink in

[Smith1776]

Anyone who stays invested is actually buying in each day at the current price ....there so no logic at all in thinking that somehow it is different if you first buy in ....that balance is all ours at any point in time ...if it falls thousands of dollars from here our balance is down the same amount whether we bought in now or 20 years ago .

Some one may be buying 20k of Gld today who sold a total market fund and made 20k .

You may be up 20k in gld ........either way if it falls 5k we are both down 5k in net worth
.

So every day at the open in effect we are buying in at that days prices

Let this sink in

That's a very good point that Larry Swedroe also liked to hammer home, but few really took to heart.

Every day you decide to continue holding is the same thing as deciding to buy that day.

[mathjak107]

Investors make this silly statement all the time as they stay invested every day but tell others they wouldn’t invest new money at this price ..DUH.

[dualstow]

Investors make this silly statement all the time as they stay invested every day but tell others they wouldn’t invest new money at this price ..DUH.

Well, I’m holding NEE (variable portfolio) and I would not invest new money. I am happy to hold it and collect dividends. If it should drop, even precipitously, I can still sell it at a profit.
I don’t want to buy more gold at 1994/oz, but I’m happy to hold that too. That’s part of the pp so I’ll go by the bands or at the very least, an annual checkup.

Maybe it’s an illusion but I’m sticking with it.

[mathjak107]

Not wanting anymore invested in an asset is different ....that would be true at any price ........

But each day all our investments add up to a certain value .....if they fall we are down the same whether new money or old money in them..

Our balance does not care what part of that balance is profit or what you started with ....down is down

[dualstow]

yep

[Libertarian666]

I see they now have a "Beware the Hype of Gold" thread that was begun by the much respected Taylor Lattimore.

Since he had good things to say about the PP in a review of the book I'm going to assume he means you might want to think twice about rushing into it at $2k/ounce if you don't own any.

That would probably be good advice but if you actually did want to start the PP right now, what asset class wouldn't you be worried about?

The piece "Wild About Harry" by Bill Bernstein (http://www.efficientfrontier.com/ef/0adhoc/harry.htm) covers that ground pretty well, I think.

[Kevin K.]

It was indeed great fun to read the witty William Bernstein quote! If only the rest of the crew on that forum had a fraction of Bernstein's brilliance and sincere appreciation of risk parity portfolios like the PP. His book "Deep Risk" is essentially a dialogue with Craig's writing on the PP and Browne's work itself and for me anyway helped me appreciate the PP more and, especially, made me realize how brilliant the Golden Butterfly iteration of the PP is.

Bill Bernstein and I are friends and when I am visiting in town where he lives I have gone to his house for dinner with him and his lovely wife. I talked to him quite a bit when he wrote the book Deep Risk and am mentioned in the acknowledgements which is why is why it has my overtones in it I suspect.

I think Bill's main critique of the PP is that it has tracking error vs. a more conventional portfolio. This is completely valid to me. This is probably why the portfolio tends to attract very engineer/technical/introvert types that are able to detach themselves emotionally I feel. It takes a certain personality to take the Red Pill and just let go of trying to predict the markets. It also takes a certain kind of person that is OK with a portfolio that just tries to ride the middle and doesn't get worked up when Bob in Accounting is bragging about their 22.7% gains in TechCorp stock that year.

I think the PP really incorporates philosophy of being very detached yet prepared for the unexpected. One thing I've always liked about the portfolio is that it gives you options to respond to extraordinary scenarios. You can hang tight, but if things are going truly off the rails you aren't so locked into a single asset that you lose everything. It's important in a crisis to always have options available to respond even if you don't have to use them. For me, that PP does exactly that.

It's always a treat to read your posts Craig! Let me add my gratitude to that others have expressed here for everything you've done to get the word out about the PP and Harry Browne.

Tracking error regret is one thing that Bernstein mentions but I think his more important quibbles with the PP as expressed in "Deep Risk" are that the 4 x 25% PP errs in allocating equal parts of the portfolio to deal with events that are anything but equally likely to occur, aren't equally devastating if the do occur, and involve different costs to defend against. Then there's the not-incidental matter that Browne spoke of gold as offering inflation protection when cash and stocks perform that function.

Bernstein does a much better job critiquing the PP than he does of providing actionable alternatives, but if memory serves he recommends a larger allocation to stocks (including international and tilts to small and value) and oodles of liquidity (i.e. cash). I see the Golden Butterfly as the best integration of Bernstein's ideas thus far in that it tilts towards prosperity (the most likely economic condition over time) and includes a sizable chunk of value stocks. Higher returns than the PP but more interestingly much higher safe withdrawal rates and much faster recoveries from drawdowns as well.

[bedraggled]

I believe last year someone suggested if/when CraigR or Medium Tex post, people should jump in their cars and track them down. Time was of the essence then. Might have to take one of the idled cruise ships to find CraigR.

Maybe with the virus inconvenience, just let it go for now.

[craigr]

It was indeed great fun to read the witty William Bernstein quote! If only the rest of the crew on that forum had a fraction of Bernstein's brilliance and sincere appreciation of risk parity portfolios like the PP. His book "Deep Risk" is essentially a dialogue with Craig's writing on the PP and Browne's work itself and for me anyway helped me appreciate the PP more and, especially, made me realize how brilliant the Golden Butterfly iteration of the PP is.

Bill Bernstein and I are friends and when I am visiting in town where he lives I have gone to his house for dinner with him and his lovely wife. I talked to him quite a bit when he wrote the book Deep Risk and am mentioned in the acknowledgements which is why is why it has my overtones in it I suspect.

I think Bill's main critique of the PP is that it has tracking error vs. a more conventional portfolio. This is completely valid to me. This is probably why the portfolio tends to attract very engineer/technical/introvert types that are able to detach themselves emotionally I feel. It takes a certain personality to take the Red Pill and just let go of trying to predict the markets. It also takes a certain kind of person that is OK with a portfolio that just tries to ride the middle and doesn't get worked up when Bob in Accounting is bragging about their 22.7% gains in TechCorp stock that year.

I think the PP really incorporates philosophy of being very detached yet prepared for the unexpected. One thing I've always liked about the portfolio is that it gives you options to respond to extraordinary scenarios. You can hang tight, but if things are going truly off the rails you aren't so locked into a single asset that you lose everything. It's important in a crisis to always have options available to respond even if you don't have to use them. For me, that PP does exactly that.

It's always a treat to read your posts Craig! Let me add my gratitude to that others have expressed here for everything you've done to get the word out about the PP and Harry Browne.

Tracking error regret is one thing that Bernstein mentions but I think his more important quibbles with the PP as expressed in "Deep Risk" are that the 4 x 25% PP errs in allocating equal parts of the portfolio to deal with events that are anything but equally likely to occur, aren't equally devastating if the do occur, and involve different costs to defend against. Then there's the not-incidental matter that Browne spoke of gold as offering inflation protection when cash and stocks perform that function.

Bernstein does a much better job critiquing the PP than he does of providing actionable alternatives, but if memory serves he recommends a larger allocation to stocks (including international and tilts to small and value) and oodles of liquidity (i.e. cash). I see the Golden Butterfly as the best integration of Bernstein's ideas thus far in that it tilts towards prosperity (the most likely economic condition over time) and includes a sizable chunk of value stocks. Higher returns than the PP but more interestingly much higher safe withdrawal rates and much faster recoveries from drawdowns as well.

Yes I see his point on the equal split and we did talk about that. The issue really is if I knew what the proper risk of each asset was based on the future then I'd just go all in on that one and ignore the others (or hold the one best asset and a bunch of cash). I don't think looking at past markets can predict these things which is what some risk parity approaches are trying to do.

But I get it that owning more stocks is an easy way to take advantage of the most likely outcome and I can't fault people for taking advantage of that bias if appropriate. Over the years when people have wanted to do a VP side of things I just recommended buying more of the total stock market index and leave things alone. I don't know what that figure is though. Is it 50% stocks and ~17% bonds/cash/gold? Or is it 30% stocks? It's what people can stomach I suspect.

But for pure simplicity I think the 25% split is pretty hard to beat. The performance differences around the edges are often negligible in real life if it allows the investor to hold the course and not panic in a market crash. Or, even worse, go into their portfolio and start tinkering all the time with different ratios thinking they are fixing things.