buddtholomew wrote: ↑Mon Oct 08, 2018 8:56 am
Gold and LTT’s are down > 10% YTD...that’s worse than any stock declines I’m trying to protect myself from.
Being frustrated is fine but that statement is factually wrong and will only set you up for even greater disappointment. Stocks have FAR more downside than 10%, so don't let your feelings cloud your judgment. Also, it's a good time to remember that the portfolio as a whole is only down less than 2% YTD. If you really can't handle that, forget 100% stocks -- you shouldn't be investing at all.
As one internet friend to another who has experienced some of your same frustrations at times, I personally think you should seek a new way of approaching life. You're already tremendously wealthy but for some reason are still letting money rule your emotions and upset you on a daily basis. I can guarantee simply changing portfolios isn't going to fix that, so focus on addressing the root cause of your stress rather than putting your investments on a pedestal as the only way out. They're not, and you deserve better!
buddtholomew wrote: ↑Mon Oct 08, 2018 8:56 am
Gold and LTT’s are down > 10% YTD...that’s worse than any stock declines I’m trying to protect myself from.
Being frustrated is fine but that statement is factually wrong and will only set you up for even greater disappointment. Stocks have FAR more downside than 10%, so don't let your feelings cloud your judgment. Also, it's a good time to remember that the portfolio as a whole is only down less than 2% YTD. If you really can't handle that, forget 100% stocks -- you shouldn't be investing at all.
As one internet friend to another who has experienced some of your same frustrations at times, I personally think you should seek a new way of approaching life. You're already tremendously wealthy but for some reason are still letting money rule your emotions and upset you on a daily basis. I can guarantee simply changing portfolios isn't going to fix that, so focus on addressing the root cause of your stress rather than putting your investments on a pedestal as the only way out. They're not, and you deserve better!
You invest in the GB so at some point realized the PP was sub-optimal else you would still hold 4x25. The 2% loss is irrelevant and not worrisome. What concerns me is continuing to invest in Gold and LTT’s for the foreseeable future since the last decade has been a bust for these assets! The PP is responding like a 100% equity allocation the last couple of weeks with one difference...we didn’t participate in the 300% increase in stocks...well maybe we did with 25% of the allocation. Wow, guess I should be grateful.
buddtholomew wrote: ↑Mon Oct 08, 2018 12:38 pm
What concerns me is continuing to invest in Gold and LTT’s for the foreseeable future since the last decade has been a bust for these assets!
GLD +30%, TLT +56% over the last decade. Not barn-burners, but not busts either. What concerns me is that stocks have been so great since March 2009, they can't keep going indefinitely. Trees do not grow to the sky. A -50% bear market in stocks is not a rare event.
I worry much more about the forward prospects for TLT, actually, than for GLD... if we are indeed in a new secular increasing interest rate cycle. I think Gold has been so mercilessly beaten down so many times, there's not too much more downside, or if there is, the recovery will be short. But stocks and LTT could have a downside measured in multiple years to more than a decade.
buddtholomew wrote: ↑Mon Oct 08, 2018 12:38 pm
What concerns me is continuing to invest in Gold and LTT’s for the foreseeable future since the last decade has been a bust for these assets!
GLD +30%, TLT +56% over the last decade. Not barn-burners, but not busts either. What concerns me is that stocks have been so great since March 2009, they can't keep going indefinitely. Trees do not grow to the sky. A -50% bear market in stocks is not a rare event.
I worry much more about the forward prospects for TLT, actually, than for GLD... if we are indeed in a new secular increasing interest rate cycle. I think Gold has been so mercilessly beaten down so many times, there's not too much more downside, or if there is, the recovery will be short. But stocks and LTT could have a downside measured in multiple years to more than a decade.
I haven’t achieved the 30% returns in Gold nor the 56% in LTT’s. I realize stocks don’t grow to the sky, but don’t be fooled into thinking Gold and/or LTT’s will save you when they fall. If they do, you’d better have 25% in them but I doubt many will.
buddtholomew wrote: ↑Mon Oct 08, 2018 12:38 pm
What concerns me is continuing to invest in Gold and LTT’s for the foreseeable future since the last decade has been a bust for these assets!
GLD +30%, TLT +56% over the last decade. Not barn-burners, but not busts either. What concerns me is that stocks have been so great since March 2009, they can't keep going indefinitely. Trees do not grow to the sky. A -50% bear market in stocks is not a rare event.
I worry much more about the forward prospects for TLT, actually, than for GLD... if we are indeed in a new secular increasing interest rate cycle. I think Gold has been so mercilessly beaten down so many times, there's not too much more downside, or if there is, the recovery will be short. But stocks and LTT could have a downside measured in multiple years to more than a decade.
I haven’t achieved the 30% returns in Gold nor the 56% in LTT’s. I realize stocks don’t grow to the sky, but don’t be fooled into thinking Gold and/or LTT’s will save you when they fall. If they do, you’d better have 25% in them but I doubt many will.
Stocks have been on a near decade long tear. How much longer is that going to last? The FED is raising interests rates and bonds are getting killed. This is also pushing the dollar up and keeping a lid on gold. At the moment, my favorite asset is CASH. [Caveat: I do have a small speculative position in silver but I am not expecting that to pop anytime in the near future.]
buddtholomew wrote: ↑Mon Oct 08, 2018 12:38 pm
You invest in the GB so at some point realized the PP was sub-optimal else you would still hold 4x25.
Even if I'm personally happy with the GB that does not mean I was unhappy with the PP. After all, it's still 80% of my portfolio.
I invest the way I do not because it is "optimal" in the good times but because it more than meets my needs even in the bad times. I don't worry about the little things like YTD gold performance because I know I'm set regardless. That peace of mind is the reward for knowing your financial history, intelligently planning ahead, and being smart with expenses.
FWIW, the "aha" moment for me was when I switched gears from stressing about the perfect wealth accumulation plan to solve all of my problems to building a sustainable life without so many problems to begin with. Do that, and eventually you'll look back and wonder why you ever wasted so much energy on things you can't control.
buddtholomew wrote: ↑Mon Oct 08, 2018 8:56 am
This will fall on deaf ears, but PP investors will have the lowest allocation in Gold and LTT’s when they kick in (if ever).
You can rebalance more often so that you're not in the position you described above, but of course that means holding your nose and buying the "worst" assets while watching the best ones rise. Not easy.
If I had Budd’s purported portfolio you can be darn sure I would have investigated my investment approach thoroughly. Personally I’ve highlighted the major salient features of the PP three or four times, suggested he look at a portfolio with a lot more cash in it and not to look at component returns.
There is nothing unusual about what is going on right now. I think we all should stop replying to his “bursts.”
Buds is not a troll...but I think feeding his bursts yields the same result.
Tyler wrote: ↑Mon Oct 08, 2018 2:02 pm
FWIW, the "aha" moment for me was when I switched gears from stressing about the perfect wealth accumulation plan to solve all of my problems to building a sustainable life without so many problems to begin with. Do that, and eventually you'll look back and wonder why you ever wasted so much energy on things you can't control.
I reached that a few months ago. Would be nicer to have reached it with 10M in the bank, but there nonetheless!
Ahhh, 2% interest on 10M, 200k a year with no thinking. That would be priceless. And I don't care if you tell me inflation is eating away at it.
Tyler wrote: ↑Mon Oct 08, 2018 2:02 pm
FWIW, the "aha" moment for me was when I switched gears from stressing about the perfect wealth accumulation plan to solve all of my problems to building a sustainable life without so many problems to begin with. Do that, and eventually you'll look back and wonder why you ever wasted so much energy on things you can't control.
I reached that a few months ago. Would be nicer to have reached it with 10M in the bank, but there nonetheless!
Ahhh, 2% interest on 10M, 200k a year with no thinking. That would be priceless. And I don't care if you tell me inflation is eating away at it.
Tyler wrote: ↑Mon Oct 08, 2018 2:02 pm
FWIW, the "aha" moment for me was when I switched gears from stressing about the perfect wealth accumulation plan to solve all of my problems to building a sustainable life without so many problems to begin with. Do that, and eventually you'll look back and wonder why you ever wasted so much energy on things you can't control.
I reached that a few months ago. Would be nicer to have reached it with 10M in the bank, but there nonetheless!
Ahhh, 2% interest on 10M, 200k a year with no thinking. That would be priceless. And I don't care if you tell me inflation is eating away at it.
Kbg wrote: ↑Mon Oct 08, 2018 3:06 pm
If I had Budd’s purported portfolio you can be darn sure I would have investigated my investment approach thoroughly. Personally I’ve highlighted the major salient features of the PP three or four times, suggested he look at a portfolio with a lot more cash in it and not to look at component returns.
There is nothing unusual about what is going on right now. I think we all should stop replying to his “bursts.”
Buds is not a troll...but I think feeding his bursts yields the same result.
Investigated my investment approach or held more cash?
Not sure what you mean - PP is base with extra cash and increased equities 30/20/15/35.
I also hold a VP that is 70/30 stocks/bonds so have no regrets over the last 10 years.
I was drawn to the PP for its simplicity and bought into the philosophy that it was designed for the money you “can’t afford to lose”...all I see when the going gets tough and equities stumble is Gold and LTT’s selling off. (year after year, not a one time event). Then it’s hold your nose and buy more to rebalance.
I hold > 25% in stocks to outrun the losses in Gold and LTT’s. Now that’s bizarre isn’t it? Having to increase your stock allocation to reduce losses in “conservative” assets.
I’m frustrated because the reduced equity allocation comes at too great of a cost and I continue to believe that someday investing in the PP will pay off.
If you did your homework you should know the following:
- PP always underperforms a more conventional port during bull markets
- The PP makes up some or all of the lag during equity bear markets
- When looked at as a whole portfolio, it is one of the least volatile simple portfolios around
- It is very tax efficient
- And finally the blatantly obvious, a full 50% of the port is in non return bearing assets.
I will repeat something I have mentioned 2 or 3 times previously, quit fixating on individual assets. Three of the four are highly volatile. Until the equity market enters a bear, don’t expect anything from the two assets you are currently complaining about. Currently the PP is down 2ish and 4-5 realish...why are you in the state you are. There is absolutely nothing unusual about what is going on right now.
Put this post in your favorites folder please and save us all the Buddbursts.
If you did your homework you should know the following:
- PP always underperforms a more conventional port during bull markets
- The PP makes up some or all of the lag during equity bear markets
- When looked at as a whole portfolio, it is one of the least volatile simple portfolios around
- It is very tax efficient
- And finally the blatantly obvious, a full 50% of the port is in non return bearing assets.
I will repeat something I have mentioned 2 or 3 times previously, quit fixating on individual assets. Three of the four are highly volatile. Until the equity market enters a bear, don’t expect anything from the two assets you are currently complaining about. Currently the PP is down 2ish and 4-5 realish...why are you in the state you are. There is absolutely nothing unusual about what is going on right now.
Put this post in your favorites folder please and save us all the Buddbursts.
The portfolio is a massive waste of time and energy...a la Bogle “full of sound and fury, signifying nothing”. It does not bring peace of mind but only angst.
“Nothing unusual”...what you mean to say is underperforming a 50/50 conservative allocation by 700 basis points.
We’ll see what happens in a bear market but I’m not holding my breath.
Kriegsspiel wrote: ↑Mon Oct 08, 2018 8:13 pm
budd, your FOMO is making you angsty. You own a big slice of stocks outside your PP in addition to the ones inside it, just chill.
PS "700 basis points?" C'mon bro why are you trying to sound like a financial warlock. Just say 7%.
Oddly, I also kind of enjoy reading Buddbursts. A collection of those with our responses would make kinda of a fun little book.
I wouldn't consider either gold or 30 year bonds to be "conservative". They are both if anything more volatile than stocks. Call them "insurance assets" instead.
The reason you hold the PP is not because bonds and gold are such fantastic investments - I wouldn't hold either of those alone. Try this little exercise: go onto FIRECALC and run some simulations with a portfolio that is about 20x annual expenses. Plug in 100% stocks, or 75/25 stock/bond for investments and see what the success rate is. Then try a random portfolio with returns of 5%, inflation 0% (i.e. a 5% real return, lower than either the PP or GB historically), and standard deviation of 8% (which is a bit higher than the Golden Butterfly, and higher yet than the PP). When I did this, the success rate with this crummy real return, low-variance portfolio was higher than either of the stock portfolios. So much for the conventional wisdom that you need large stock allocations to succeed!
Add in the extra safety of the large cash component, and you have the closest you're going to get to a worry-free retirement. Of course, it kind of defeats the purpose if you're going to worry about your assets on a daily basis anyway. If you can't handle watching any asset drop 2% in value, maybe you should just stick with savings bonds, tips, and T bills. I can only imagine the Buddburst that would result if you held a ton of stocks during a 30-50% market correction, so that's not the answer either.
sophie wrote: ↑Tue Oct 09, 2018 8:19 am
Oddly, I also kind of enjoy reading Buddbursts.
At some point, Budd said, in so many words, I just need to vent. Fair enough. Now I kind of look forward to it on certain market days. It’s like we’re on the golf course together, Budd, and you’re saying, “My neighbor has screamy kids in the pool next door.” There’s nothing I can do about it, but I can listen.
Kbg, I think it’s funny that you entreated us not to respond to the outbursts, and then you yourself couldn’t help responding again to the very next one.
sophie wrote: ↑Tue Oct 09, 2018 8:19 am
Oddly, I also kind of enjoy reading Buddbursts.
At some point, Budd said, in so many words, I just need to vent. Fair enough. Now I kind of look forward to it on certain market days. It’s like we’re on the golf course together, Budd, and you’re saying, “My neighbor has screamy kids in the pool next door.” There’s nothing I can do about it, but I can listen.
Kbg, I think it’s funny that you entreated us not to respond to the outbursts, and then you yourself couldn’t help responding again to the very next one.
Budd can vent anytime he wants, I just find it surprising he does so on the same things repeatedly. Nothing personal Budd...please vent away if you need to. But if your mental comparison is US stocks vs. the PP you can plan on being frustrated 70%+ of the time.
Check this link out and spend some time looking at the PP from say 1990 to 2001 and REALLY look at 1996-1999 followed by 2000-2002 annual and monthly returns tabs. Of all the PP periods I believe the one highlighted is most like the current period. We shall see if we get a similar follow on.
Thanks all for not ousting the crazy guy
Going to spend some time reading through the comments and looking at historical returns as I have obviously internalized the portfolio incorrectly and I need to realign expectations.
I think my financial position changed over time and the PP served its purpose at 4x25. Feel more comfortable at 30/20/15/35 and possibly moving towards 5x20.
buddtholomew wrote: ↑Mon Oct 08, 2018 4:47 pm
The portfolio is a massive waste of time and energy...
Huh?
To me, only time and energy I waste on PP when reading your complains. :-)
Kidding aside, it is quite opposite for me, I personally didn't spend much time on energy on PP at all.
Only when had it set up and then rebalanced for the first (and so far the only) time.
buddtholomew wrote: ↑Wed Oct 10, 2018 11:34 am
No Buddburst today
Looks like gold and TLT are going down...not as fast as stocks.
There's a boglehead thread about John Bogle saying it makes sense to sell stocks down 5 or 10% if it helps one sleep. Hmm. This is in the context of his belief that we're not going to see great market returns in the years to come.
For those who are 4x25 this might be a great opportunity to do nothing. Have another pina colada.
