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No where to hide

Posted: Thu Apr 30, 2015 9:11 am
by Cortopassi
Seem to be quite a lot of these days lately.  Looks like any 2015 gains I had are now gone.  Gold to the woodshed, yet again, even after another delay in rate hikes.  It can't win.

Re: No where to hide

Posted: Thu Apr 30, 2015 9:26 am
by buddtholomew
I am at a loss for words...this portfolio is very disappointing and it has trailed my 60/40 allocation substantially since 2009. No matter what anyone says, if gold sucks the PP sucks.

Re: No where to hide

Posted: Thu Apr 30, 2015 10:04 am
by dualstow
After such a long run, I don't know how we can expect gold to do anything fantastic anytime soon. Best not to pay attention to these short term movements, regardless of whether they're up to 13xx or down to 11xx.

I just wish I had enough cash to buy more gold for the future.

Re: No where to hide

Posted: Thu Apr 30, 2015 10:09 am
by iwealth
Dollar is strong, commodities are weak, global deflation, US rate hikes around the corner, strong stock market, relative geopolitical calmness...gold being in the pits is about as surprising as the sun coming up in the morning.

The PP is supposed to be a "market agnostic" portfolio, but it doesn't mean the market itself is agnostic. The market very much so believes it can predict the future and it's saying no inflation or WW3 likely any time soon, so lay off the gold and enjoy the free money and rising equities.

And once you do that it'll be sure to promptly chop your manhood right off.

Re: No where to hide

Posted: Thu Apr 30, 2015 10:14 am
by ochotona
iwealth wrote: Dollar is strong, commodities are weak, global deflation, US rate hikes around the corner, strong stock market, relative geopolitical calmness...gold being in the pits is about as surprising as the sun coming up in the morning.

The PP is supposed to be a "market agnostic" portfolio, but it doesn't mean the market itself is agnostic. The market very much so believes it can predict the future and it's saying no inflation or WW3 likely any time soon, so lay off the gold and enjoy the free money and rising equities.

And once you do that it'll be sure to promptly chop your manhood right off.
I remember hearing / reading those housing bubble news stories during 2005-2006-2007 and thinking, "OMG this can't last".

Re: No where to hide

Posted: Thu Apr 30, 2015 11:03 am
by dualstow
iwealth wrote: And once you do that it'll be sure to promptly chop your manhood right off.
Are you watching the Bruce Jenner interview or something?  ;)

Re: No where to hide

Posted: Thu Apr 30, 2015 11:27 am
by KevinW
Guys, we've been through this.

The PP is designed to achieve moderate returns, low volatility, and protect a portion of your wealth against a local economic collapse.

It is not designed to achieve high returns, go up every single day, or track a stock-heavy index allocation.

We're only 4 months into 2015. It's too early to give up on the year. One day's returns are irrelevant.

You can't expect a bicycle to work like a car or for chocolate ice cream to taste like strawberry. Likewise you can't expect the PP to perform to a standard different than the one to which it was designed. If you can't tolerate a one-day drawdown then you should probably be in a portfolio designed to prevent that, such as 100% cash or short term bonds. If you can't tolerate tracking error vs. a conventional portfolio then you should probably be in a conventional portfolio. Sorry, but that's how the cookie crumbles.

Re: No where to hide

Posted: Thu Apr 30, 2015 11:35 am
by barrett
Cortopassi wrote: ...Looks like any 2015 gains I had are now gone...
Yeah, as I have said a couple of times, with interest rates this low, even if we are expecting rolling real returns of 4% - 5%, we are likely to have more weeks, months & years with negative nominal PP returns. The real returns will just be clustered around a lower number and the portfolio is bound to feel as if it's going nowhere until (If? When?) some inflation kicks in. With inflation at 4% to 5% you would expect a CAGR of around 9% and that would mean doubling your money every 8 years. If there is no inflation and we use a real return of 4.5%, your money doubles in 16 years. Just a slow upward crawl with lots of ups and downs around that line of best fit. At least that is what I am hoping for.

For sure there is a better allocation going forward but I don't know what it is. But, yes, definitely a couple of crappy days and it's best not to be checking balances or attaching too much self worth to net worth (I have nothing against the latter in good times!). Chins up, I say.

Re: No where to hide

Posted: Thu Apr 30, 2015 1:30 pm
by Ad Orientem
KevinW wrote: Guys, we've been through this.

The PP is designed to achieve moderate returns, low volatility, and protect a portion of your wealth against a local economic collapse.

It is not designed to achieve high returns, go up every single day, or track a stock-heavy index allocation.

We're only 4 months into 2015. It's too early to give up on the year. One day's returns are irrelevant.

You can't expect a bicycle to work like a car or for chocolate ice cream to taste like strawberry. Likewise you can't expect the PP to perform to a standard different than the one to which it was designed. If you can't tolerate a one-day drawdown then you should probably be in a portfolio designed to prevent that, such as 100% cash or short term bonds. If you can't tolerate tracking error vs. a conventional portfolio then you should probably be in a conventional portfolio. Sorry, but that's how the cookie crumbles.
+1

Re: No where to hide

Posted: Thu Apr 30, 2015 2:08 pm
by Cortopassi
I know, I know.  All I am doing is bitching.

Re: No where to hide

Posted: Thu Apr 30, 2015 2:28 pm
by dragoncar
Cortopassi wrote: I know, I know.  All I am doing is bitching.
I find bitching is just a regular part of the PP.  It's really 20% stocks, 20% gold, 20% bonds, 20% cash, and 20% bitching.  Bitching is high right now so you probably need to rebalance out of it.

Re: No where to hide

Posted: Thu Apr 30, 2015 2:48 pm
by iwealth
dragoncar wrote:
Cortopassi wrote: I know, I know.  All I am doing is bitching.
I find bitching is just a regular part of the PP.  It's really 20% stocks, 20% gold, 20% bonds, 20% cash, and 20% bitching.  Bitching is high right now so you probably need to rebalance out of it.
Typically as a hedge one holds a high % of bitching when stocks are outperforming. Bitching allocations are then moderate to low when bonds are doing really well. And nobody holds any bitching whatsoever when gold is on a tear. People actually short bitching and buy more gold when this happens.

Re: No where to hide

Posted: Thu Apr 30, 2015 2:50 pm
by Cortopassi
;D ;D ;D

Thanks.  Best laugh of the day.

Re: No where to hide

Posted: Thu Apr 30, 2015 3:38 pm
by AdamA
dragoncar wrote: I find bitching is just a regular part of the PP.  It's really 20% stocks, 20% gold, 20% bonds, 20% cash, and 20% bitching.  Bitching is high right now so you probably need to rebalance out of it.
Good one.

Re: No where to hide

Posted: Thu Apr 30, 2015 4:28 pm
by Pet Hog
I just posted these numbers on the Bonds>"TLT Negative YTD" thread, but thought they might be of interest here, too.  The real yields over the last one, five, and ten years have all been greater than 5%.  This year has been slightly positive.  No cause for concern, yet, in my mind.
Pet Hog wrote: YTD returns (dividends reinvested; Dec 31, 2014 to Apr 30, 2015)
TLT: +0.63%
VTI: +2.27%
IAU: +0.00%
SHY: +0.62%
PP Total: +0.88% (+2.70% annualized)
Inflation: +0.56% (end Dec 2014 to end Mar 2015)
PP real: +0.32% (+0.98% annualized)

YOY returns (dividends reinvested; Apr 30, 2014 to Apr 30, 2015)
TLT: +16.57%
VTI: +12.72%
IAU: –8.48%
SHY: +0.82%
PP Total: +5.41%
Inflation: –0.40% (end Apr 2014 to end Mar 2015)
PP real: +5.81%
Pet Hog wrote: Five-year returns (dividends reinvested; Apr 30, 2010 to Apr 30, 2015)
TLT: +60.28%
VTI: +95.60%
IAU: –0.87%
SHY: +4.31%
PP Total: +39.83% (+6.94% annualized)
Inflation: +8.31% (end Apr 2010 to end Mar 2015; +1.61% annualized)
PP real: +5.33% annualized

Ten-year returns (dividends reinvested; Apr 30, 2005 to Apr 30, 2015)
TLT: +98.82%
VTI: +133.77%
IAU: +163.59%
SHY: +27.34%
PP Total: +105.88% (+7.49% annualized)
Inflation: +21.34% (end Apr 2005 to end Mar 2015; +1.95% annualized)
PP real: +5.54% annualized

Re: No where to hide

Posted: Thu Apr 30, 2015 5:53 pm
by madbean
I discovered the secret last year.

Don't look.

I resolved to not look for one full year and when I did last February I had WAY more money than I thought I would.

I'm thinking maybe it's a quantum mechanics/Schrodinger's cat thing. Looking at it affects the outcome so just don't do it.

Re: No where to hide

Posted: Thu Apr 30, 2015 7:50 pm
by dualstow
Hmm, now I have to choose between not looking and bitching.
As the saying goes: if you don't look, you can't bitch.

Re: No where to hide

Posted: Thu Apr 30, 2015 8:21 pm
by sixdollars
dragoncar wrote:
Cortopassi wrote: I know, I know.  All I am doing is bitching.
I find bitching is just a regular part of the PP.  It's really 20% stocks, 20% gold, 20% bonds, 20% cash, and 20% bitching.  Bitching is high right now so you probably need to rebalance out of it.
Bitching sounds like a bad VP play, should just go 100% PP imo.

Everytime I hear someone complaining about the PP, this excerpt always comes to mind from William Bernstein.
And therein lies the real problem with the TPP: because of its huge tracking error relative to more conventional portfolios, it attracts assets and adherents during crises, then sheds them in better times. There?s nothing wrong with Harry?s portfolio?nothing at all?but there?s everything wrong with his followers, who seem, on average, to chase performance the way dogs chase cars.

Re: No where to hide

Posted: Fri May 01, 2015 9:24 am
by barrett
madbean wrote: I discovered the secret last year.

Don't look.

I resolved to not look for one full year and when I did last February I had WAY more money than I thought I would.

I'm thinking maybe it's a quantum mechanics/Schrodinger's cat thing. Looking at it affects the outcome so just don't do it.
Two days ago I wouldn't have understood the reference but came upon a reference to Schrodinger's thought experiment a couple of nights ago. Alas, I am old enough so that I may forget who Schrodinger was two days hence!

sixdollars, thanks for the reminder on the Bernstein quote. It is a great one.

Re: No where to hide

Posted: Fri May 01, 2015 9:33 am
by buddtholomew
And the rout continues...rationalize all you want, but the bottom line is the portfolio is doing absolutely nothing but racking up losses.

Re: No where to hide

Posted: Fri May 01, 2015 9:39 am
by Kbg
buddtholomew wrote: And the rout continues...rationalize all you want, but the bottom line is the portfolio is doing absolutely nothing but racking up losses.
OK, I'll go here...by my tracking YTD

100% SPY: .88% return
PP: .39% return

Seriously...if you are going to freak out about .49% maybe this investing stuff isn't for you.

Re: No where to hide

Posted: Fri May 01, 2015 10:00 am
by Pointedstick
Kbg wrote:
buddtholomew wrote: And the rout continues...rationalize all you want, but the bottom line is the portfolio is doing absolutely nothing but racking up losses.
OK, I'll go here...by my tracking YTD

100% SPY: .88% return
PP: .39% return

Seriously...if you are going to freak out about .49% maybe this investing stuff isn't for you.
+1

Some of these criticisms border on the ridiculous. The YTD tracking error of PP vs SPY is practically a rounding error. If not the PP, then what? Stocks, bonds, and gold have all had a rough and choppy year so far. Nothing goes up all the time and sometimes everything treads water for a bit. If this kind of stuff bothers you, you should be in all cash or on whatever portfolio makes you feel better even if it may be riskier (100% stocks, 60/40, etc). Or maybe put some of your money towards anti-anxiety medication of counseling or something. All this worrying over nothing is likely far more detrimental to your finances than obsessing that your investment portfolio isn't doing as well as you'd like.

Re: No where to hide

Posted: Fri May 01, 2015 10:13 am
by Cortopassi
I think the no looking is the best strategy, however, if people are like me, this is all tied into Quicken or some other financial program, so when I enter receipts from stores or other financial info, it is staring me right in the face, every single day, so it is something I need to/have learned to live with.

The optimistic view?  That all assets don't go down simultaneously and rebalancing lets me add to the laggards over the upcoming years.  That's the whole concept, right?

I have no better investment ideas or plans (outside of personal business ventures), so I stick with the PP.

Re: No where to hide

Posted: Fri May 01, 2015 10:24 am
by Ad Orientem
Pointedstick wrote:
Kbg wrote:
buddtholomew wrote: And the rout continues...rationalize all you want, but the bottom line is the portfolio is doing absolutely nothing but racking up losses.
OK, I'll go here...by my tracking YTD

100% SPY: .88% return
PP: .39% return

Seriously...if you are going to freak out about .49% maybe this investing stuff isn't for you.
+1

Some of these criticisms border on the ridiculous. The YTD tracking error of PP vs SPY is practically a rounding error. If not the PP, then what? Stocks, bonds, and gold have all had a rough and choppy year so far. Nothing goes up all the time and sometimes everything treads water for a bit. If this kind of stuff bothers you, you should be in all cash or on whatever portfolio makes you feel better even if it may be riskier (100% stocks, 60/40, etc). Or maybe put some of your money towards anti-anxiety medication of counseling or something. All this worrying over nothing is likely far more detrimental to your finances than obsessing that your investment portfolio isn't doing as well as you'd like.
+2

Re: No where to hide

Posted: Fri May 01, 2015 10:24 am
by buddtholomew
Under what circumstances does the PP produce a satisfactory return? The portfolio has been lagging a conventional allocation since 2009, correct? If it declines when equities rise and declines when equities fall, what am I missing?

Keep in mind that I am comparing the PP to my BH portfolio. The latter is beating the pants off the PP year after year. Do we need another financial crisis or inflation at 10% for the PP to return to its historical 7-9% nominal return?