Gyroscopic Investing

Posted: **Tue Jun 02, 2015 5:17 pm**

PRPFX has been an underperformer, mostly due to their lighter weighting in long term treasuries. With this smaller exposure to bonds (and their recent very bearish nature) and with their ownership of commodities, agriculture, silver and Swiss Francs, is this their time to outperform the vanilla PP?

Posted: **Tue Jun 02, 2015 5:21 pm**

Not sure Reub but even cash is outperforming the PP.

Posted: **Tue Jun 02, 2015 7:39 pm**

Dear Resident Worrier,

The PP has definitely been on a roller coaster this year, but it's hardly a disaster. Still not tempted to jump to PRPFX either.

YTD: PP 0.4%, PRPFX 0.7%
Last 12 months: PP 4.4%, PRPFX -2.5%

The question is what are you comparing to? Surely not 100% stocks (VTI YTD: 3.9%), or is it a 50/50 total stock/total bond mix (YTD 2.2%)? These have been doing quite well, and will continue to - until they don't.

Why don't you split your portfolio between the PP and a standard stock/bond allocation of your choice? Then you can focus on whichever one is doing well at the time, and also you will have hedged your bets.

Posted: **Wed Jun 03, 2015 9:55 am**

sophie wrote: Why don't you split your portfolio between the PP and a standard stock/bond allocation of your choice? Then you can focus on whichever one is doing well at the time, and also you will have hedged your bets.

Logically, it should be compared to the global financial asset portfolio which is broad 55% bonds, 45% equity. That's the only true passive allocation since you're not making any decisions regarding subsets.

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Posted: **Wed Jun 03, 2015 11:27 am**

MachineGhost wrote: That's the only true passive allocation since you're not making any decisions regarding subsets.

Posted: **Wed Jun 03, 2015 11:41 am**

Sad to watch the PP perform so poorly

Posted: **Wed Jun 03, 2015 2:28 pm**

All of that pie is making me hungry!

Posted: **Wed Jun 03, 2015 3:03 pm**

Reub wrote: All of that pie is making me hungry!

Hear, hear!

Posted: **Wed Jun 03, 2015 4:38 pm**

buddtholomew wrote: Sad to watch the PP perform so poorly

Compared to what?

Posted: **Wed Jun 03, 2015 6:57 pm**

MediumTex wrote:
buddtholomew wrote: Sad to watch the PP perform so poorly
Compared to what?

You pick.

Posted: **Wed Jun 03, 2015 7:12 pm**

Desert wrote: I think Cullen Roche is making a decent point. There is no truly passive, all-market-encompassing portfolio. Even the pie chart is missing a lot of categories, including gold, non-public-REIT real estate, etc. So I agree with his general point, that we're all active investors to some degree. But I think he's being a bit too dramatic with his discussion; maybe because of the way "passive investors" are freaking out about it. In my view, there is a broad spectrum from "largely passive" to "hyperactive." The PP is closer to "largely passive," even though it deviates dramatically from the "market."

Yeah, especially since he's using 2011 data rather than 2014. But the PP is definitely an active stance to specifically protect against all economic climates as possible. What's wrong with that?

I think one of the main benefits that gets overlooked in having a truly global financial portfolio is you never need to rebalance. Ever.

Posted: **Sat Jun 06, 2015 6:29 am**

Anybody tested an all-world portfolio= and how does it work?

Posted: **Sat Jun 06, 2015 9:00 am**

Desert wrote: We should start an all world fund that just buys everything. As you said, other than the original purchases, we wouldn't have to do anything. Just sit back and count those ER dollars flowing in.

Cullen has since updated (Jan this year) and simplified the global financial asset portfolio:

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Posted: **Sat Jun 06, 2015 10:08 am**

That's the problem with the Boglehead portfolios. How often do they get "adjusted" in response to the latest thinking about what an optimal portfolio should be? Which probably involves a healthy dose of market timing, which could also be described as selling low and buying high.

I'm purposely trying to blind myself to the flood of recommended portfolios, to keep myself from tinkering with simple 3 fund lazy portfolio I set up in my 403b. I wish Vanguard had an autorebalance feature the way TIAA CREF does, so I wouldn't have to do any monitoring other than to log in occasionally to get messages and record the balance for my asset spreadsheet.

Posted: **Sat Jun 06, 2015 11:18 am**

sophie wrote: That's the problem with the Boglehead portfolios. How often do they get "adjusted" in response to the latest thinking about what an optimal portfolio should be? Which probably involves a healthy dose of market timing, which could also be described as selling low and buying high.

I'm purposely trying to blind myself to the flood of recommended portfolios, to keep myself from tinkering with simple 3 fund lazy portfolio I set up in my 403b. I wish Vanguard had an autorebalance feature the way TIAA CREF does, so I wouldn't have to do any monitoring other than to log in occasionally to get messages and record the balance for my asset spreadsheet.

FWIW, Vanguard came out with a global financial asset portfolio that was virtually the same as what Cullen did, so I think we can safely say either one is a true passive global financial portfolio that never needs changing or rebalancing. So we add cash and real assets in the PP and this is our active approach vs the passive reference. I'm tempted to invest in the global financial portfolio just to be a masochist (I don't believe in market-cap weighting).

Posted: **Fri Jun 26, 2015 3:45 pm**

Does anyone recall any postings showing the annual results of a pairing of PRPFX with EDV or TLT (say 90/10 or 85/15)?

I thought I had seen one or two, but can't seem to find them.

Posted: **Fri Jun 26, 2015 4:29 pm**

bndx does not have enough ooomph when called upon to fly fighter cover for a portfolio. it can't really do the heavy lifting long term treasury's can.

about the best thing you can say for it is it isn't stock. it may not take away a whole lot in a downturn but it can't add much either.

while bnd was up a bit in 2008 many other total bond funds were down as they acted more like stocks then bonds.

Posted: **Fri Jun 26, 2015 9:22 pm**

HB Reader wrote: Does anyone recall any postings showing the annual results of a pairing of PRPFX with EDV or TLT (say 90/10 or 85/15)?

I thought I had seen one or two, but can't seem to find them.

I believe it was close to the end of the massive PP thread over on the BH forum.

Gyroscopic Investing

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