Gyroscopic Investing

MediumTex wrote:

annieB wrote: Damn Gold has gone mental again.
#@+**^%#** !!!!

Did gold go mental or did you?



Interesting response there MT.

I don't think I'm mental about the falling gold price.Maybe a little stressed.

I think you said on your book jacket that we could avoid market stress by using the permanent portfolio?

Now that may be mental.

buddtholomew wrote: Those weekly amounts are minor in comparison to the 85B in monthly purchases and dont warrant a 3% decline. If anything, gold should habe risen now that tapering in October is less likely with the shutdown.

Those purchases are an asset swap: cash reserves for Treasurys.  They aren't inflationary unless the banks then loan their increased reserves, as much as they are already loaning, or more.  That might happen, and it might not.

So the swaps do not change the inflation expectation, although they might make it more uncertain.  Nor do they change the interest rates much, since the Fed has mostly influenced rates as much as it can, in dropping rates to record lows through its bond purchases over the last few years.  Interest rates have gone up somewhat recently, despite continued QE.

Contrasted with QE, gov't spending is inflationary, in the sense that a larger USG budget means more money in the pockets of USG employees, and more of it being spent on goods an services.  Banks can sit on cash reserves, or try to loan them back to Uncle Sam when an auction comes up, but USG employees can't do that because they have bills to pay.  So whereas QE is not on its face inflationary, gov't spending is.

buddtholomew wrote: http://finance.yahoo.com/news/gold-slam ... 00844.html

Others are perplexed at gold's reaction given the recent shutdown. It is difficult to ignore the possibility of intervention or manipulation in the PM markets.

This is not a dig, just an observation.
One anagram of "buddtholomew" is Tumbled! Doh! Ow!
Therefore, I think your screenname is to blame for gold's falling prices. 

Oh, what a world, what a world, what a world… 

annieB wrote:

MediumTex wrote:

annieB wrote: Damn Gold has gone mental again.
#@+**^%#** !!!!

Did gold go mental or did you?

Interesting response there MT.

I don't think I'm mental about the falling gold price.Maybe a little stressed.

I think you said on your book jacket that we could avoid market stress by using the permanent portfolio?

Now that may be mental.

I'm sorry to hear that you are experiencing stress about your portfolio.

IMHO, watching the portfolio every day doesn't seem to be a productive activity.

MediumTex wrote:

annieB wrote:

MediumTex wrote: Did gold go mental or did you?

Interesting response there MT.

I don't think I'm mental about the falling gold price.Maybe a little stressed.

I think you said on your book jacket that we could avoid market stress by using the permanent portfolio?

Now that may be mental.

I'm sorry to hear that you are experiencing stress about your portfolio.

IMHO, watching the portfolio every day doesn't seem to be a productive activity.

The problem is that whatever reasonable interval one uses to look at their portfolio isn't looking too good.  I feel like people here backtest the optimal observation interval.  Performance bad this year?  Only look every three years.

I am not personally bothered by daily fluctuations.  My negative feelings come from total performance since I've started the pp. 

Sure, the portfolio is up today.  It goes up and down but recently more down than up.  This is the opposite of what we want.

It is obvious to me that the portfolio struggles when equity markets are on the rise (prosperity or other factors). The stock market has not fallen consistently over a period of time to allow the other assets to outperform and return the overall portfolio to positive territory. Without this rotation, it is unlikely that we will see significant gains soon. Also, what's difficult to digest is the behavior of gold and treasuries given the geopolitical uncertainty we are witnessing today. If these assets don't respond under these circumstances and the portfolio struggles when equities rise, then what conditions do we have to have for the PP to perform as advertised?

Sure, I'm annoyed that the last year has been lousy for the PP. Problem is, every other investment portfolio I've ever been in has also had 1+ year periods of flat or negative performance--sometimes highly negative performance.

Unlike those other portfolios, the PP operates with an internal logic that makes sense to me. And I don't see anything better in terms of risk-adjusted reward. Sure, stocks are pretty hot right now, but will they be next year? If I say, "Oh screw it! This PP thing sucks!" and pile into stocks or a boglehead portfolio, I'd be exposing myself to the possibility of a 20% or greater yearly loss and an even larger intra-year drawdown.

Pointedstick wrote: Sure, I'm annoyed that the last year has been lousy for the PP. Problem is, every other investment portfolio I've ever been in has also had 1+ year periods of flat or negative performance--sometimes highly negative performance.

Unlike those other portfolios, the PP operates with an internal logic that makes sense to me. And I don't see anything better in terms of risk-adjusted reward. Sure, stocks are pretty hot right now, but will they be next year? If I say, "Oh screw it! This PP thing sucks!" and pile into stocks or a boglehead portfolio, I'd be exposing myself to the possibility of a 20% or greater yearly loss and an even larger intra-year drawdown.

I agree.  I haven't sold any parts of my PP.  But I don't think the answer is telling people to stick their head in the sand.

"Stay the course" doesn't sounds much like "stick your head in the sand" to me. The only possible head-sand-sticking I think is even remotely present here may be a slight lack of acknowledgement of the PP's anti-prosperity tilt that Budd mentioned. I've noticed this myself and every once in a while I tinker with the idea of trying to juice the volatility of my stock allocation with small-caps or something. So far my solution has just been to have a VP with a small-cap value index in it.

I'm starting to get this wacky idea that we can't predict where gold and other assets are going to go from here.
It's almost like we cannot depend on gold to rise when there's turmoil in the mid-east or chaos in Congress.
Hmm, I guess that makes sense because no one expected it to rise for ten straight years either, but....
I don't know if I can live in a world where I can't predict where gold, the stock market, or interest rates are headed.

"I don't know if I can live in a world where I can't predict where gold, the stock market, or interest rates are headed."

Please do not take rash action, dualstow! Call the Permanent Portfolio Hotline and we can walk you back in off of that ledge.

OK, but you better not have an annoying accent.

Pointedstick wrote: "Stay the course" doesn't sounds much like "stick your head in the sand" to me. The only possible head-sand-sticking I think is even remotely present here may be a slight lack of acknowledgement of the PP's anti-prosperity tilt that Budd mentioned. I've noticed this myself and every once in a while I tinker with the idea of trying to juice the volatility of my stock allocation with small-caps or something. So far my solution has just been to have a VP with a small-cap value index in it.

But "check your portfolio less often" does.  By replying to you I didn't mean to imply that this is Your advice, but it is nevertheless a very common response on this forum when people are upset with performance

dualstow wrote: OK, but you better not have an annoying accent.

Are you saying that you don't believe that I'm Ralph from Cleveland?

Reub wrote: Are you saying that you don't believe that I'm Ralph from Cleveland?

Hahaha!
Whle we were clowning around, gold resurfaced above 1300. Nothing to scream about, except that if it would continue to fall a bit, I could rebalance in.

Pointedstick wrote: "Stay the course" doesn't sounds much like "stick your head in the sand" to me. The only possible head-sand-sticking I think is even remotely present here may be a slight lack of acknowledgement of the PP's anti-prosperity tilt that Budd mentioned. I've noticed this myself and every once in a while I tinker with the idea of trying to juice the volatility of my stock allocation with small-caps or something. So far my solution has just been to have a VP with a small-cap value index in it.

I have been thinking about doing something like this, but I can't decide whether to use ETFs which I think might be a smart pick, either international or sector-specific...

Or pick a high-risk/high-return fund, which is sounds like what you are doing.  If you don't mind me asking, are you using the Vanguard small-cap fund (VB)?

Lowe wrote: I have been thinking about doing something like this, but I can't decide whether to use ETFs which I think might be a smart pick, either international or sector-specific...

Or pick a high-risk/high-return fund, which is sounds like what you are doing.  If you don't mind me asking, are you using the Vanguard small-cap fund (VB)?

VISVX - Vanguard's small-cap value mutual fund. I'd be fine with VBR as well.

Pointedstick wrote:

Lowe wrote: I have been thinking about doing something like this, but I can't decide whether to use ETFs which I think might be a smart pick, either international or sector-specific...

Or pick a high-risk/high-return fund, which is sounds like what you are doing.  If you don't mind me asking, are you using the Vanguard small-cap fund (VB)?

VISVX - Vanguard's small-cap value mutual fund. I'd be fine with VBR as well.

I tried a little "juicing" of the PP earlier this year when stocks were doing so well and gold was way down. Moved both my wife's and my Roth IRA's to Vanguard and bought VWINX. At that time it was up about 6% YTD.

The transfers weren't even complete before VWINX started falling and right now it looks about the same as the PP as far as my YTD goes.

Still don't regret it though. It was as much about taking a couple of accounts out of the PP balancing equation as it was looking for better returns so I have at least succeeded in that.

Pointedstick wrote:

Lowe wrote: I have been thinking about doing something like this, but I can't decide whether to use ETFs which I think might be a smart pick, either international or sector-specific...

Or pick a high-risk/high-return fund, which is sounds like what you are doing.  If you don't mind me asking, are you using the Vanguard small-cap fund (VB)?

VISVX - Vanguard's small-cap value mutual fund. I'd be fine with VBR as well.

Any reason you went with the value version?  Just preferred that the stocks had better fundamentals?

I don't plan to do anything till the debt ceiling goings-on are over, but when I do it may be a VP in a small-cap ETF like this, and to re-balance while I'm at it.  It is hard not to be spooked into inaction, though, since I hear a lot that equity is over-valued.  As long as they don't taper soon.

Looks like Budd dumped his gold this morning ??

annieB wrote: Looks like Budd dumped his gold this morning ??

haha! Right! There goes his first million.

Dumped 5000 contracts at 5:45 this morning. Resulted in a 10 second shutdown at the CME.

buddtholomew wrote: Dumped 5000 contracts at 5:45 this morning. Resulted in a 10 second shutdown at the CME.

Maybe you could let us know when you are going to do something like that in the future... 

Correction. 20,000 contracts were dumped in under a second.