Gyroscopic Investing

ochotona wrote:

Jack Jones wrote: I sometimes feel the same way about the PP. In light of the old saying, "diversification is the only free lunch", sometimes I feel like we're leaving some food on the table in the form of international assets, real estate, commodities, etc.

Ivy-5 has US stocks, ex-US stocks, REITs, bonds, commodities. Tyler has coded it as one of default lazy portfolios.

I know. 

I've been reading a lot of Faber's stuff recently. I just got a free ebook (Global Asset Allocation) from him. There's a section on the PP, but I haven't read it yet.

I have to balance the Faber 10 month MA model with my personality and my lack of interest in trading more, I chose the PP.  Back in 2014 I read his Tactical Allocation paper and I really thought that was the way I wanted to go.  But coming from a background of severe overtrading for the previous 5 years, it was time to stop that.  Not that the Ivy overtrades.  But I know from experience, the fewer things that entice me to trade, the better my portfolio does, by a LONG shot.

Jack Jones wrote: I sometimes feel the same way about the PP. In light of the old saying, "diversification is the only free lunch", sometimes I feel like we're leaving some food on the table in the form of international assets, real estate, commodities, etc.

Diversification is only a free lunch if the co-correlations go down.  Its the co-correlations that ultimately matter, not diversification.  At least at the asset level.

I have a metric I need to finish that tells you the Diversification Score of a portfolio.  Why add something if it doesn't up it?

I wish Faber were an annual rebalance, but that has been testing, doesn't work.

MJ,

On the topic of deep drawdowns and recoveries being faster generally in stocks, see the clip below from Zerohedge on why people aren't too crazy with stock investing. 

It led me to look a bit at the 2008/2009 drop in the S&P.  Peak prior to the crash was Oct, 2007.  It took until March, 2013, 5 1/2 years, to recover back to that point.

I don't know if that qualifies for you as a fast recovery?  I am asking seriously.

the s&p  alone is only a large cap index not a complete portfolio  , the midcap 400  recovered way before , bonds and small caps along with rebalancing all  cut  recovery time .

i know our insight model recovered way before the s&p did .

3 stocks in the s&p 500 accounted for most of the delay so any managed funds that did not own them likely recovered much sooner .

the biggest culprit was ibm  which carried a huge weighted share in the s&p  and  lagged a lot  from 2008 to 2013 pulling the index much lower then it should have been .

hewlett packard continued losing money until it finally got booted and alcoa was a big drag gaining 1/2 of what the index did without it \pulling down the success of hundreds of stocks with its weight . . .

technology and consumer discretionary stocks were soaring way before the s&p 500  broke even so managed funds had different break even points depending what they owned . or in the case of the miserable 3 what they didn't own . .

not sure if your chart includes reinvested dividends .


interesting comparison here of index's

http://www.fool.com/investing/general/2 ... t-1-2.aspx

Cortopassi wrote: ↑Wed Oct 21, 2015 3:55 pm I've tried timing before, failed miserably.  Stressed out constantly.  PP removed all that.  No way am I a timer in any fashion!  My timing will either be annual or the bands.

In reading so many of these old posts this is one CONSISTENT message you have had.

It is inspiring!

Thanks!

Cortopassi wrote: ↑Sun Nov 01, 2015 11:50 am All this is telling me that there is going to be blood in the streets in the next decade.  No pension plan can survive this level of return, and there is a limit to which citizens will be taxed to pay for pensions and such without revolt.  More municipalities are going to have to declare bankruptcy, and I do not look forward to what will happen!

All bets are off on comparisons to history for everything, IMO.

We are almost halfway through the above "next decade". But what you predicted has STILL not happened.

However, I share your concern about it happening and am amazed that the causes for this future problem just never seem to abate, i.e., all the burdens put on the taxpayer with much of this burden a result of the costs of government employees.

Vinny

vnatale wrote: ↑Tue Jan 21, 2020 11:12 pm

Cortopassi wrote: ↑Sun Nov 01, 2015 11:50 am All this is telling me that there is going to be blood in the streets in the next decade.  No pension plan can survive this level of return, and there is a limit to which citizens will be taxed to pay for pensions and such without revolt.  More municipalities are going to have to declare bankruptcy, and I do not look forward to what will happen!

All bets are off on comparisons to history for everything, IMO.

We are almost halfway through the above "next decade". But what you predicted has STILL not happened.

However, I share your concern about it happening and am amazed that the causes for this future problem just never seem to abate, i.e., all the burdens put on the taxpayer with much of this burden a result of the costs of government employees.

Vinny

Yup, and no matter if/when that revolt happens, the PP investors on this forum will just look on and go...