mathjak's daytrading adventures

[mathjak107]

I don’t buy options ...I prefer portfolios ..especially because there is an unlimited time frame ..

No one expected rates to soar like they did.

I am very familiar with the pp and how it works ...I have been following but not using the pp since the 1980s ....in fact I have my original best laid plans book .

It just is a bad time for it now ...but time will tell if I ultimately made a good choice ...I go by what I see and how it acts for me .

Each day is a new day in the investment trail ..each day whether new or old money , we commit x amount of money regardless of its source and each day markets act on it good or bad

[mathjak107]

The best way to understand how I think of it is this .

Every day for 40 years I got up and went to work , that was me working for my money"

Everyday my money got up at the ring of the bell and was my money working for me .

It does not matter any more what I made prior years nor what my money made .

Each day we both go to work .

If each week or each month investments cost me money, well they did a poor job working for me .

Until they stop costing me money I picked a not so good employee ...perhaps one day they may be my best employee but until that happens they are an expense

[doodle]

I understand how dissapointing it can be to suffer a loss but I think it's important to keep things in perspective and realize ultimately like Harry Browne did that the movements of the market are out of our control and completely unpredictable. Today it seems like you might have made a bad decision, tomorrow that could swing the other way, and the day after that back into the negative.

I listened to an interview with this man yesterday...Derrick Soo...retired a multi millionaire and somehow lost everything in the crash of 2008. Then lost his father to cancer shortly thereafter and then got diagnosed with cancer himself. Now living homeless on the streets of oakland (and running for mayor next year actually). His story is a reminder that it could always be so much worse. I have a lot of respect though for this man's ability to endure his loss and keep on going.


https://youtu.be/XZComkkxeEI

[doodle]

Why not train yourself to look at the assets and be happy if they are doing what they are supposed to do that day and have a plan on what to do if they stop behaving as expected ready so that it's actionable when the event arises?

Short of imminent political collapse or some other such cataclysmic event I'm not sure how and at what point one could determine that assets weren't working as intended?

I'd add volatile assets like those in the PP seem to act kind of like rubber bands. They stretch far past normal valuations on the low and high sides and then snap back pretty quickly. It's one of the features that makes them so great for rebalancing as they tend to overshoot on the high and low side quite significantly. Also, from 12 years of watching them day after day there is definitely a strong negative correlation to them over longer time horizons..this isn't apparent when taking a short term view of them and there can be periods when they move in conjunction which sucks. Something will snap back soon...usually the asset that you are most disenchanted with and couldn't think of stomaching another buy order and vice versa with selling your winners. I look at treasuries for example right now and am sick from their recent drop...which makes me think we may see a quick 10% pop here soon. That's usually how it works.

[Kbg]

MJ,

Agree with v_c...keep perspective...you have to think beyond the short term when dealing with portfolios. If you have historical data, what was the drawdown of your previous allocation? Was it worse or better than the PP? If worse, then the odds are pretty good of a repeat somewhere down the road for that portfolio. I assume you came into the PP know you were never going to "knock it out of the park" performance wise as it isn't that kind of portfolio.

If the history of the PP is any guide, I would not expect much from it for the next two years and after a lull it will likely do well again. We are coming off two really good years and that generally does not bode well for the next couple.

My personal total assets are a mix of strategies. One strategy completely blew the last two years so much so that I seriously thought of bailing on it...and this year it is by far the best performing of the lot as it has moved to international investments. Meanwhile another tech momentum strategy that has been phenomenal for the past several years is getting absolutely hammered this year with the tech sell off.

For me the #1 thing I monitor in my strategies is simply this: Are they behaving according to their historical record, good and bad. If yes, I stick with them and for this year there is absolutely nothing about the PP that is out of norms.

[doodle]

The treasury market can not function as we've seen where spreads are wide.

Why? They behaved quite well during covid drop.

The rest of your points are valid concerns, sure...but entirely unpredictable and based on fickle psychology. Who knows? Bitcoin could go to 100k and it still might disappear. Perhaps it might be a giant hoax in the end.

[Kbg]

Some people may consider unrealistic multiples given to companies earnings due to low interest rates as the wrong way to value a company. I think this is more controversial but it deserves discussion.

Great point, what are your thoughts?

Briefly, mine are that given most bonds are running negative real returns globally so there's just no where to go for real returns and everyone kinda knows that so they are taking on risk and we have a classic overshoot in valuations. Specifically in tech, the market rewarded those companies, rightly so in my view, that were postured well for pandemic but as the pandemic appears to be subsiding things are now repricing.

[doodle]

Some people may consider unrealistic multiples given to companies earnings due to low interest rates as the wrong way to value a company. I think this is more controversial but it deserves discussion.

Great point, what are your thoughts?

Briefly, mine are that given most bonds are running negative real returns globally so there's just no where to go for real returns and everyone kinda knows that so they are taking on risk and we have a classic overshoot in valuations. Specifically in tech, the market rewarded those companies, rightly so in my view, that were postured well for pandemic but as the pandemic appears to be subsiding things are now repricing.

Tangential question related to real returns... can broader market returns outpace real gdp growth without stretching valuations? Seems like the market is trying to invent a way to meet investor expectations in a mature economy with 1-2 percent (and declining) growth rates and deflationary pressures. From a macro perspective is that even possible? I don't have enough economic training to answer that question but wouldn't seem so to me.

A lot of the crazy market action we've seen over the last few years from Bitcoin and crypto in general, to SPACs, to reddit pump and dump plays, penny stocks, NFTs etc all seem like desperate attempts to find alpha somewhere.

[doodle]

The treasury market can not function as we've seen where spreads are wide.

Why? They behaved quite well during covid drop.

The rest of your points are valid concerns, sure...but entirely unpredictable and based on fickle psychology. Who knows? Bitcoin could go to 100k and it still might disappear. Perhaps it might be a giant hoax in the end.

They actually did not.

https://www.federalreserve.gov/newseven ... 01015a.htm

From mid January of last year to sometime early April of this year EDV spiked in the neighborhood of 35%...at the same time stocks plummeted about the same. It was one of my most lucrative rebalancing events since I started portfolio. How is that not working?

[doodle]

You can either choose to monitor the function of the markets and have a deep understanding like a pro,

Frankly, I'm not so sure even the "pros" really know that much...there are widely divergent opinions regarding everything from equally intelligent and educated individuals. And because market movements are based on psychology you can be right about something while misinterpreting the way the masses react....throw government meddling and natural phenomena into the picture and you essentially have reduced predictibility to zero.

[doodle]

Interesting to note that if Mathjak had chosen to buy into PP last Friday he would be singing an entirely different tune at this moment. In the long run probably won't make that much of a difference. It hasn't for me...my first few years in portfolio weren't the best..I think pretty flat returns initially for a few years..then a few good pops..overall despite a rocky beginning I'm satisfied. As Corto said the alleviation of having to constantly try to figure out where to stash my money is worth a bundle to me. Everyone differs in that respect but the constant pressure of trying to figure out if market was going to rise or drop or whatever was definitely taking a toll on my quality of life and mental well being. Ultimately the worry of that would have probably taken years off my life and been detrimental to health and relationships...that has to be worth at least a few percentage points right there!

[doodle]

Harry Browne outlining permanent portfolio on radio show.


https://youtu.be/7uFPVjMC-IE



Pick it up around 22 minute mark..he talks about recession and how he hasn't been able to find an asset that responds positively to this economic condition and that the portfolio...as well as pretty much any other investment except cash is going to go down in an environment of rising rates and declining business sentiment. Seems to me that's pretty much what we are on the cusp of and hence portfolio reacting in negative manner..

[doodle]

Frankly, I'm not so sure even the "pros" really know that much...there are widely divergent opinions regarding everything from equally intelligent and educated individuals.

Monitoring market function is not the same as predicting what the market will do.

For example, during the height of the pandemic GLD which is meant to hold physical metal followed spot pricing when front month futures diverged and was closer to prices for physical. Premiums for physical metal spiked.

Oil prices trading at -$37 a barrel would be an indication that that market is not functioning normally.

Stock markets hitting multiple circuit breakers.

It's what you will do when you spot a malfunctioning market, for me this is the reason why I invest using futures because very quickly with a few clicks of a button I can be in cash while I assess what's going on and I can jump back in when things are working again.

Will your jump back in result in a more positive or negative entry point? Hard to say...

I'm not skilled enough to know all the tricks of trade. I'm sure there are events that can be profited off of by individuals with those skills...but that's a bit outside the scope of what I was getting at which is that educated intelligent trained economists have widely divergent views on just about everything down to the economic situation we presently find ourselves in...let alone where we might be next year. I have "faith" in the concept of a portfolio that is agnostic as to predicting anything and simply holds volatile assets that react strongly to whatever the future might bring. Now, whether these assets will continue to do their job...that's debatable and certainly a source of concern...but what's the alternative? What asset would replace long bonds for deflation? Or gold for inflation?

Even if everything isn't going my way what alternative do I have besides to jump into the market and start making predictions about the future? As far as I can tell, none.

[Kbg]

Some people may consider unrealistic multiples given to companies earnings due to low interest rates as the wrong way to value a company. I think this is more controversial but it deserves discussion.

Great point, what are your thoughts?

Briefly, mine are that given most bonds are running negative real returns globally so there's just no where to go for real returns and everyone kinda knows that so they are taking on risk and we have a classic overshoot in valuations. Specifically in tech, the market rewarded those companies, rightly so in my view, that were postured well for pandemic but as the pandemic appears to be subsiding things are now repricing.

Tangential question related to real returns... can broader market returns outpace real gdp growth without stretching valuations? Seems like the market is trying to invent a way to meet investor expectations in a mature economy with 1-2 percent (and declining) growth rates and deflationary pressures. From a macro perspective is that even possible? I don't have enough economic training to answer that question but wouldn't seem so to me.

Theoretically no over long periods of time and in the aggregate. However, let's assume the theory is 100% accurate (and it is reasonably correct) it doesn't help you at all in terms of managing investments in practicality for a bunch of reasons.

[dualstow]

Harry Browne outlining permanent portfolio on radio show.


https://youtu.be/7uFPVjMC-IE



Pick it up around 22 minute mark..he talks about recession and how he hasn't been able to find an asset that responds positively to this economic condition and that the portfolio...as well as pretty much any other investment except cash is going to go down in an environment of rising rates and declining business sentiment. Seems to me that's pretty much what we are on the cusp of and hence portfolio reacting in negative manner..

One of my favorite episodes. Thanks for posting that.

[Cortopassi]

Things must be green today, not a lot of posting....

[mathjak107]

Only need 3 more of today to get back to even

[buddtholomew]

Assets still moved in lock-step with each other.
Yields seem to be under control for the time being.
Dollar is lower.
Energy is lower.
Migration back to growth over value.
Doesn’t provide much direction in the short term.

Gold was up which always puts a smile on my face.

[Kriegsspiel]

If the history of the PP is any guide, I would not expect much from it for the next two years and after a lull it will likely do well again. We are coming off two really good years and that generally does not bode well for the next couple.

That's the way I see it, too.

[mathjak107]

Well the other models did well for many many years and if they keep doing well and the pp doesn’t for two years then yep , shot myself in the foot with a poor choice ...

Like I always say , the source of your investing dollars that is committed each day is irrelevant...it is always x-amount being acted on at the ring of the bell ..markets don’t care if it came from investing and includes last years gains or the last 30 years gains or that you never invested before , or even whether it came from your job ,or you stole it .


Last years money is used to eat with this year , this years money feeds me next year ...each year determines how much I get to spend . It determines my next years pay check ..

Would you want a pay cut at work ? Of course not ..we’ll pay cuts in retirement amount to the same thing ...except your money is your employee .

Each year stands on its own for me .

Your money working for you producing nothing or little is not a good choice in employee. Worse is when that employee costs you money instead of bringing in money and you had better employees to chose from ...

So each day It either adds to that invested balance or takes away

[doodle]

Well the other models did well for many many years and if they keep doing well and the pp doesn’t for two years then yep , shot myself in the foot with a poor choice ...

Like I always say , the source of your investing dollars that is committed each day is irrelevant...it is always x-amount being acted on at the ring of the bell ..markets don’t care if it came from investing and includes last years gains or the last 30 years gains or that you never invested before , or even whether it came from your job ,or you stole it .


Last years money is used to eat with this year , this years money feeds me next year ...each year determines how much I get to spend . It determines my next years pay check ..

Would you want a pay cut at work ? Of course not ..we’ll pay cuts in retirement amount to the same thing ...except your money is your employee .

Each year stands on its own for me .

Your money working for you producing nothing or little is not a good choice in employee. Worse is when that employee costs you money instead of bringing in money and you had better employees to chose from ...

So each day It either adds to that invested balance or takes away

What you say is technically true but you have millions of dollars, plus I'm assuming social security income, medicare and perhaps a pension? No offense, but you probably have more money than time to spend it.

One of the most attractive features of the PP is that it contains assets that protect against many severe economic scenarios. You don't have to helicopter parent the thing...just let it go and check in occasionally. It's the younger ones on this forum that should be fretting more as the timeline they are working with contain many more future uncertainties.

If you love micromanaging your portfolio and it's your hobby id say either abandon this thing entirely and go back to trying to time the markets, or just create a VP on the side to run simultaneously in order to scratch your trading itch and perhaps see if you can in fact outperform your PP. As you yourself said, every new day you are deciding to recommit your assets to the same investments. It's an irrational human trait to concern oneself with sunk costs in a losing strategy. If you truly doubt this portfolios ability to perform in the future you should be recommitting those assets to something more lucrative.

[mathjak107]

I am giving the pp a shot ..i just don’t believe it will likely offer the same protection it once did ..needless to say I am skeptical to say the least ..but day by day and month by month and year by year will determine that, not charts of a different age..

I am a show me guy....

Charts and data tells us how things may likely react and how they did react based on economic outcomes as they stood in the past but as we see the economic conditions may not align like they once did .

Then all bets are off as to how we unfold

[doodle]

I am giving the pp a shot ..i just don’t believe it will likely offer the same protection it once did ..needless to say I am skeptical to say the least ..but day by day and month by month and year by year will determine that, not charts of a different age..

I am a show me guy....

Charts and data tells us how things may likely react and how they did react based on economic outcomes as they stood in the past but as we see the economic conditions may not align like they once did .

Then all bets are off as to how we unfold

If you don't believe it will work, then why are you giving it a shot? Certainly if there are better alternatives you would be in them, right? Your starting balance today will certainly be higher tomorrow if you have a better strategy than the one you are currently employing.

I'm in much the same place as you regarding future but right now I don't have any other ideas of what to do with money and I've resigned myself to that reality. The investment landscape is mighty confusing and uncertain these days with overpriced assets everywhere. I have nearly 40% sitting in cash...which could end up being a good thing, or a bad thing. It's literally a crapshoot right now.

I don't think it's healthy though to fret about missed opportunities or poor decisions. They happen. That's life. You win some, you lose some. If you got a better idea of where to recommit money at this point, go for it. If not, then realize that in these uncertain times and due to the fact that no one can predict the future you chose to the portfolio you did. Maybe it will work, maybe it won't...at this point literally not a single person on earth knows. But don't beat yourself up over something you have literally no control over.

[mathjak107]

I am giving it a shot because the bull market went on for so long we are do for a fall ...we just don’t know when ...but that doesn’t mean that I won’t get hurt as bad or worse in the pp then what I was using ....

So I am hoping the pp stands up better but I am skeptical because conditions are very different then the past..so it is worth a shot But I don’t consider myself safe by any measure...

If rates are the issue things can be very nasty in the pp..we have to hope the fed is able to take control when it’s time or we have to hope rising rates slow us and we have recession fears .

But my worry is that by the time that happens things may be in such a deep loss that even the pop from recession fears does not do much towards making one whole again ..

Let’s have 3 or 4 more days like yesterday and my opinion may sway more favorable

[doodle]

I am giving it a shot because the bull market went on for so long we are do for a fall ...we just don’t know when ...but that doesn’t mean that I won’t get hurt as bad or worse in the pp then what I was using ....

So I am hoping the pp stands up better but I am skeptical because conditions are very different then the past..so it is worth a shot But I don’t consider myself safe by any measure...

If rates are the issue things can be very nasty in the pp..we have to hope the fed is able to take control when it’s time or we have to hope rising rates slow us and we have recession fears .

But my worry is that by the time that happens things may be in such a deep loss that even the pop from recession fears does not do much towards making one whole again ..

Let’s have 3 or 4 more days like yesterday and my opinion may sway more favorable

I share many of the same concerns....but no one knows...and so it doesn't make any sense to get emotionally wrapped up in an outcome we have no control over. It's like like tossing a coin. You would have the same fears of loss if you were invested heavily in stocks. Or entirely in cash, or gold, or Bitcoin...

I'm in this portfolio because I know enough to know that I don't know anything and I feel like it gives me the best shot to preserve money no matter the economic outcome. I can't say the same for other strategies that are tilted towards one particular outcome or another. I know that the PP won't be the winningest strategy, but it won't be the worst either. I'm ok with that.