Gyroscopic Investing

I wouldn't have an issue with government disaster relief if 1) it was universal and unpolitical; and 2) insurance liability was capped where the government coverage kicked in.  Arbitrarily deciding everybody gets a new house only encourages people to not sign up for necessary insurance in the first place, and the insurance is expensive because they have to assume that the government will not step in.

Bailouts, either at a corporate or mortgage level, are another matter.  I have a very tough time supporting a straight reward for irresponsible spending.  Bankruptcy is a painful solution precisely because it has to be to discourage that kind of financial behavior. 

Back to the topic -- another thing I really like about the PP is that it minimizes my chances of financial disaster.  No matter what happens in the markets, I'll be much better positioned to take care of my family financially than most.  It's sorta like portfolio insurance.  For all the times when the government steps in with bailouts, individual investment accounts tanking during the next market crash will not be one of them. 

I actually don't object on principal to government intervention in legitimate mass disaster situations. This is one of the reasons I disagree with anarchists. Sometimes they just seem oblivious to common sense. I do however object to providing disaster relief to people who keep building and rebuilding in very high risk locations. I'm sorry but if you choose to build your home or business in a flood plane, or on an earthquake fault line, then that's on you. Predictable disasters should not be covered by the general public.

There is a reason why, until fairly recently in our history, most ordinary people did not build their homes overlooking the beach.

iwealth wrote:

Reub wrote: It sure looks like treasuries have ended their long term bull market. Friday's tepid treasury bounce back after its recent free fall was fairly tepid.

I'm guessing you say this in jest.

[img width=800]http://i62.tinypic.com/2w6xq9e.png[/img]

In jest you say? I can't see your chart for some reason but it sure looks like long bonds are pooh pooh right now. Is that a technical enough term for you?

And gold is a close second.

And stocks are beginning to falter too.

Oh well, there's always our savior.....cash.

Reub wrote:

iwealth wrote:

Reub wrote: It sure looks like treasuries have ended their long term bull market. Friday's tepid treasury bounce back after its recent free fall was fairly tepid.

I'm guessing you say this in jest.

[img width=800]http://i62.tinypic.com/2w6xq9e.png[/img]

In jest you say? I can't see your chart for some reason but it sure looks like long bonds are pooh pooh right now. Is that a technical enough term for you?

And gold is a close second.

And stocks are beginning to falter too.

Oh well, there's always our savior.....cash.

Are you referring to these securities by their recent PRICE performance, or the fundamentals driving their returns going forward?

If ALL the PP asset classes appear to have weak earnings potential for the future, that simply means to me that all assets still have a similar fundamental role in a diversified portfolio, but that we should expect a lower rate of return out of the assets both individually and as a group.

Reub wrote: In jest you say? I can't see your chart for some reason but it sure looks like long bonds are pooh pooh right now. Is that a technical enough term for you?

And gold is a close second.

And stocks are beginning to falter too.

Oh well, there's always our savior.....cash.

Here's a link: http://finance.yahoo.com/echarts?s=%5ET ... ange":"max"}

I sent that in response to you saying the 30-whatever year bond bull market is over. I honestly thought you were being sarcastic. Even after today's bloodbath, this yield rise still looks like a tiny bump on a long downward slope. TLT was at its current levels just 6 months ago. I admit, this recent fall in treasuries has been aggressive, but are we about to reverse a 30+ year trend in yield direction? That's some brave bottom calling.

SPY is 0.8% off its all-time high. Only 9.2% more and we can officially call it a correction. Not saying it can't or won't happen, but I'm sure you'd agree it's a bit early to fret about stocks.

Reub,
If you had a significant lump sump to invest today, in what would you invest?

Cash.

I Shrugged wrote: If you had a significant lump sump to invest today, in what would you invest?

Always an interesting question. I am less wary of bonds now that some of the air has been let out, but I have been contemplating a higher cash component as well. At these price levels though I think I would be adding to all four assets equally. Wealth is a relative thing and I think the PP has a better chance of preserving it than other portfolios I have looked at.

Been thinking that a good idea for a new thread might be "What are the most commonly proposed PP tweaks?" But as near as I can tell they change with whatever is happening in the financial markets.

As another side note, does anyone else find the title of this thread odd? I guess "No where" sounds more poetic (in a rapper sort of way) than "Nowhere."

We going down into a trough. You would expect when stocks do turn down, the other areas would pick up. Rather is seems that once the equities stop growing, we may get equally punished in stocks and gold as a total all over takedown of portfolio value. Maybe there is a master plan to give no one but short sellers a profit.  I am looking for a climate that will make gold interesting again but I am not sure what that is. Gold is the driver of PP by its very nature of volatility, both up and down. Every time a market cycles, it does something different. Earn, save, re invest and hope...

Cash!

ochotona wrote: Cash!

Hasn't USD been declining too?

Tyler wrote: I wouldn't have an issue with government disaster relief if 1) it was universal and unpolitical; and 2) insurance liability was capped where the government coverage kicked in.  Arbitrarily deciding everybody gets a new house only encourages people to not sign up for necessary insurance in the first place, and the insurance is expensive because they have to assume that the government will not step in.

That's because you think if it were done that way, it would work.

Unfortunately, government doesn't work.

LC475 wrote:
Unfortunately, government doesn't work.

That's frequently true. Unfortunately, anarchism works even less.

Ad Orientem wrote:

LC475 wrote:
Unfortunately, government doesn't work.

That's frequently true. Unfortunately, anarchism works even less.

Actually, it is always true.  That is the lesson Harry was patiently, calmly, reasonably trying to explain to us.

As for anarchism, I don't have any idea what you mean by it.  Do you?

LC475 wrote:

Ad Orientem wrote:

LC475 wrote:
Unfortunately, government doesn't work.

That's frequently true. Unfortunately, anarchism works even less.

Actually, it is always true.  That is the lesson Harry was patiently, calmly, reasonably trying to explain to us.

As for anarchism, I don't have any idea what you mean by it.  Do you?

The absence of government is anarchy. I took your earlier statement as a subtle endorsement of anarchism. That's probably from spending too much time in threads with kshartle. Beyond which I dislike speaking in absolutes. Harry Browne was a smart guy but he was not infallible. Stating that government never works is just silly.

Ad Orientem wrote:

LC475 wrote:

Ad Orientem wrote: That's frequently true. Unfortunately, anarchism works even less.

Actually, it is always true.  That is the lesson Harry was patiently, calmly, reasonably trying to explain to us.

As for anarchism, I don't have any idea what you mean by it.  Do you?

The absence of government is anarchy. I took your earlier statement as a subtle endorsement of anarchism. That's probably from spending too much time in threads with kshartle. Beyond which I dislike speaking in absolutes. Harry Browne was a smart guy but he was not infallible. Stating that government never works is just silly.

HB is one of my favorite investors and individual philosophers, but he essentially commits the fallacy of composition when he assumes that when people individually all seek their own individual best-interests, and do so unencumbered, that this, by logical necessity, will result in the most overall happiness.

This is the underlying problem with anarchism/uber-libertarianism... they take what is true of the individual and try to logically carry it to the system as a whole. 

But this is getting into hijack mode.

When I, as a European, pay in fact close to 70% taxes on my income (taking into account direct and indirect taxation, VAT and mandatory social plans plus mandatory public TV channel tax) I presume a grain of low-tax uber-libertarianism would be very good for this society.

[/quote]

HB is one of my favorite investors and individual philosophers, but he essentially commits the fallacy of composition when he assumes that when people individually all seek their own individual best-interests... will result in the most overall happiness.
[/quote]

Happiness is subjective, but in the economic sphere this is called capitalism. To paraphrase Churchill, it is the worst economic system for achieving prosperity, except for all the others that have been tried. In other words, "Let those who say it can't be done get out of the way of those who are doing it." Works for me... 

Well, looks like today all PPers have no reason to hide!  Yeah!  Good to see gold get bid for a couple days in a row, seems very rare in the past few years.

Ad Orientem wrote: Stating that government never works is just silly.

Have you read Why Government Doesn't Work by HB?

I believe HB would respond: please give a single example of a government program that works well.

Stewardship wrote:

Ad Orientem wrote: Stating that government never works is just silly.

Have you read Why Government Doesn't Work by HB?

I believe HB would respond: please give a single example of a government program that works well.

If the government didn't operate traffic signals, I believe my 30 min commute today would've been like 3 hours with uncontrolled intersections. I do not believe organizations would voluntarily and charitably spring up spontaneously to handle this work. Also sewers, clean water, these are nice things. It could be better, but our food is relatively safe... safer than China, though much less delicious. All of these attributes are conspicuously absent in the third world, or countries headed toward that status, like Greece or Venezuela, where tax evasion is also rampant.

It's clear that government can work, but it depends on how you define "work."

If you mean "accomplishes staled goals," then plenty of government programs work (and an embarrassing number don't).

If you mean "accomplishes stated goals within the bounds of common moral standards," then fewer government programs work, but there are still a bunch.

If you mean "accomplishes stated goals within the bounds of common moral standards and has no negative side effects that are as bad or worse than the solved problem," then we're getting into the realm where the examples of success are rarer.

If you mean "accomplishes stated goals within the bounds of common moral standards and has no negative side effects that are as bad or worse than the solved problem and systematically incentivizes improvement over time", then maybe there are one or two, but it's doubtful. This is the most common category that market transactions fall into, coincidentally.

If you mean "accomplishes stated goals within the bounds of common moral standards and has no negative side effects that are as bad or worse than the solved problem and systematically incentivizes improvement over time and is the most economically efficient way to solve the problem," then there probably aren't any examples of this. This is how the best marketplace transactions could be described.


IMHO It's really not so much that government can't work, but more than government works less reliably than most alternatives, and usually with higher cost, more wasteful expenditure of resources, and more morally objectionable side effects then those alternative would be and are in the cases where they're permitted.

ochotona wrote:

Stewardship wrote:

Ad Orientem wrote: Stating that government never works is just silly.

Have you read Why Government Doesn't Work by HB?

I believe HB would respond: please give a single example of a government program that works well.

If the government didn't operate traffic signals, I believe my 30 min commute today would've been like 3 hours with uncontrolled intersections. I do not believe organizations would voluntarily and charitably spring up spontaneously to handle this work. Also sewers, clean water, these are nice things. It could be better, but our food is relatively safe... safer than China, though much less delicious. All of these attributes are conspicuously absent in the third world, or countries headed toward that status, like Greece or Venezuela, where tax evasion is also rampant.

The classic argument is that private road operators would install traffic signals (to beat their competitor road operators with no signals).  Of course having all these competing but independent road operators would be super inefficient.

dragoncar wrote: The classic argument is that private road operators would install traffic signals (to beat their competitor road operators with no signals).  Of course having all these competing but independent road operators would be super inefficient.

Not at all. Competition is the process by which efficiency is discovered in the first place. Of course it would be the most efficient to have one single monopoly provider that did everything perfectly, but without a competitive market, there is no means by which the most efficient process is ever discovered, and even if it was, with no market, the single monopolist would abuse its position and exploit people.

I know we are getting off the original topic, but a couple things come to mind.

--Bureaucrats moan depending on left or right on cutting spending or increasing spending for different programs.  For example, the Amtrak derailment, caused increasing or decreasing funding for Amtrak to come to the forefront.  In the range of single billion up or down!  Why/how can these amounts of spending possibly be a concern when $85 billion was used per month during QE?  I am sure someone will explain to me it's not the same, not really "real" money, etc.  I just found the magnitudes interesting.  Social Security payouts per month are recently $72B a month.  What am I missing?  Seems that $85B could have been put to amazingly better use.

--As an engineer, we were talking about this positive train control being discussed and some outrageous cost mentioned for it.  I know it is simplistic, but with a smartphone with mapping/GPS or a Garmin system, an interface to the throttle of the train and I could have a working system to control train speed in production probably for less than $100k.  What am I missing?

A somewhat frustrated citizen.