Gyroscopic Investing

sophie wrote: Are you sure you're down 2% for the year?

As of May 1st, my PP is down 0.34% since January 1. 

notsheigetz wrote:

sophie wrote: Are you sure you're down 2% for the year?

As of May 1st, my PP is down 0.34% since January 1. 

My Morningstar tracking of SHY+TLT+IAU+VTI to approximate the PP is actually showing + 1.1% YTD so I don't know what y'all are looking at.

buddtholomew wrote: Your YTD returns depend on the percentages of each asset held at the beginning of the year.

GT wrote: Buddtholomew - Can you tell me more about the 60/40 VP portfolio?  What is the overall weighting of your VP relative to your HBPP? Do you plan on taking the current gains from this portfolio and rebalancing into the HBPP or will you keep the two portfolio’s separate? sorry for the questions.

I ask because I have been wondering if having a VP set up for growth, 60/40 - three fund portfolio, would be a way to keep me from feeling that I missed out on an opportunity? 

VP designed to capture the "good times" –  60/40 - Three Fund portfolio - Vanguard Lifestrategy
HBPP based on “when the party is over”? (stole that phrase from pointedstick)

notsheigetz wrote:

sophie wrote: Are you sure you're down 2% for the year?

As of May 1st, my PP is down 0.34% since January 1. 

My Morningstar tracking of SHY+TLT+IAU+VTI to approximate the PP is actually showing + 1.1% YTD so I don't know what y'all are looking at.

Pointedstick wrote: It's hilarious how we're all quibbling over basically a rounding error. Whether it's +1% or -2% probably depends on what your allocation started as and whether reinvested dividends are included. And regardless, IMHO it's damn fine performance for a portfolio that's seen one of its assets fall over 20% in a short period of time.

Pointedstick wrote: And regardless, IMHO it's damn fine performance for a portfolio that's seen one of its assets fall over 20% in a short period of time.

rocketdog wrote:

Prepare2BFleeced wrote: Everyday, it seems to be getting worse and worse. I'm a newcomer to the PP, and I've lost upwards of 6% in gold and 3% in bonds already. The meager returns in equities aren't bridging the gap and my total portfolio is down 2% for the year. 
I wish there was some way I could stop the bleeding, because I feel like it's just going to get worse.

Don't forget that your PP has 25% in cash, so if things really take a turn for the worse you can snatch up some bargains on the way down with a portion of your cash, which lowers your cost basis.  It also puts more of your PP at risk, so just be aware of the trade-offs.

Prepare2BFleeced wrote: Thank you for your reply, but IAU will have to sink to record lows before I would even consider buying more of it. I'm talking $5 a share low. Time will tell if we see those prices.

buddtholomew wrote:

Pointedstick wrote: It's hilarious how we're all quibbling over basically a rounding error. Whether it's +1% or -2% probably depends on what your allocation started as and whether reinvested dividends are included. And regardless, IMHO it's damn fine performance for a portfolio that's seen one of its assets fall over 20% in a short period of time.

Down 20K or up 10K is not rounding error. Thats not hilarious to me.

melveyr wrote: Budd,

You might enjoy a copy of Zvi Bodie's book "Worry Free Investing." You might be an investor that should be 100% short-term TIPS.

Ad Orientem wrote:

melveyr wrote: Budd,

You might enjoy a copy of Zvi Bodie's book "Worry Free Investing." You might be an investor that should be 100% short-term TIPS.

+1

Based on his comments it sounds like Budd has a near zero risk tolerance, even in the short term. 100% T Bills / ST TIPS is the only place I can think of that fits his risk profile.

iwealth wrote:

buddtholomew wrote:

Pointedstick wrote: It's hilarious how we're all quibbling over basically a rounding error. Whether it's +1% or -2% probably depends on what your allocation started as and whether reinvested dividends are included. And regardless, IMHO it's damn fine performance for a portfolio that's seen one of its assets fall over 20% in a short period of time.

Down 20K or up 10K is not rounding error. Thats not hilarious to me.

The 2008-2009 crash must have been pretty brutal for you with that size portfolio. Even the PP had a pretty serious drawdown during that period.

Down 20K or up 10K is not rounding error. Thats not hilarious to me.

Pointedstick wrote: Knowing what I know about Budd from his posts here, I believe there are two things at play:
1. Near-zero downside volatility tolerance
2. Envy at not being invited to the stock party

My VP is for retirement and the PP for an emergency, short-term and intermediate term goals. The VP decline in 2008 was a rebalancing opportunity that served me well. I was not invested in the PP at the time, but after the decline knew that I did not want "the money I can't afford to lose" at risk to such declines. This led me to the PP. I just didn't expect negative returns during a raging bull market.

GT wrote:

My VP is for retirement and the PP for an emergency, short-term and intermediate term goals. The VP decline in 2008 was a rebalancing opportunity that served me well. I was not invested in the PP at the time, but after the decline knew that I did not want "the money I can't afford to lose" at risk to such declines. This led me to the PP. I just didn't expect negative returns during a raging bull market.

Budd - tell me if I am wrong but it sounds like you are really talking about “Neutrality”? in the portfolio.  YTD gold is down and stocks are up and as a result of this cancellation effect the HBPP portfolio has really just remained neutral (or maybe a gain or lose depending on drift of current AA). If you have Harry Brown’s book, File-Safe Investing, reference page 43 on the subject of neutrality. Below is an expert from the page I just referenced.

“It might seem that a Permanent Portfolio containing these four contradictory investments would be neutralized: As one element rose, another would fall- and nothing would be gained.
On a day-to-day basis, that can be true. But over broad periods of time, the winning investments add more value to the portfolio than the losing investments take away.
For example, during 1973-77, stocks generally lost 20%, but gold rose by 153%. During 1981-86, gold fell 34% while stocks rose 80%. During these periods, stocks and gold didn’t cancel each other out; the winner had a bigger impact on the overall outcome than the loser did.”?

My take way from reading that section was a time frame of years; or not based on short term results. 

Since this is your emergency and short term portfolio, can you give me a detailed explanation of your expectations for this style portfolio?  If you had to rank the order of importance around this portfolio’s objectives what would they be? Sorry for all the questioins.