Gyroscopic Investing

in what way ?

i will tell you my life lesson about choices .

i grew up in a nyc housing project and hung out with a rough group .

well one day the group decided to do something bad .

well using our own senses a buddy and i opted out and didnt join the group .

next thing that happened is my buddy was arrested .

him and i had nothing to do with what the group was busted for yet somehow my buddy got accused .

his family was just over the limit for legal aid and couldnt afford a layer .

so he was going to opt to plead guily and avoid a trial .

what ?? he was going to plead guilty to something he didnt do simply because he HAD NO CHOICE .

at the last minute a relative took an equity loan and got him an attorney .. he was found not guilty and all charges dropped .

i learned early on about how important having choices can be

The whole system of plea bargaining is a civil rights nightmare that nobody is talking about.

I used to live in the ghetto and had a similar experience. I represented myself (no prior legal training). The system said pay a little money and basically get a slap on the wrist.

I said “What if I don’t pay?”. They said “we’ll toss you in jail”. I said “what kind of food do you serve and can I bring books?”.

They laughed and were then like “wait, what? are you serious?”. It was the most productive experiences of my life. Good food, gross bathrooms. Lol.

The real question is what did your buddy do with his time instead of going to jail? If he sat around and watched tv what did he gain?

ahhrunforthehills wrote: ↑Tue Jun 14, 2022 8:11 am I used to live in the ghetto and had a similar experience. I represented myself (no prior legal training). The system said pay a little money and basically get a slap on the wrist. I said “What if I don’t pay?”. They said “we’ll toss you in jail”. I said “what kind of food do you serve and can I bring books?”. They laughed and were then like “wait, what are you serious?”. It was the most productive experiences of my life. Good food, gross bathrooms. Lol.

The real question is what did your buddy do with his time instead of going to jail? If he sat around and watched tv what did he gain?

That is a whole other topic

ahhrunforthehills wrote: ↑Mon Jun 13, 2022 9:52 pm

Desert wrote: ↑Mon Jun 13, 2022 5:20 pm

ahhrunforthehills wrote: ↑Mon Jun 13, 2022 3:46 pm The definition of "financially independent" is what is setting your goal post. This definition is different for everyone. Do you have a formula in mind?

Personally, I calculate it as follows:

(Annual Spending x Cape) x 1.2 = Entry-Level Financially Independent

Your calculation makes sense to me, but I'm curious where the factor of 1.2 originated.

I don’t have my breakdown in front of me, but it is factoring the probability of higher taxes going forward which will cause additional drag not only on personal finances. Those GAO reports don't beat around the bush about the harsh fiscal realities the US faces going forward and the lack of options available. There is also global trade that will inevitably happen more and more outside of the US Dollar, there are large real estate headwinds, population headwinds, etc. These can all impact spending and non-CAPE assets.

TLDR: 1.2x because the future is bleak based on the government’s own reports that need accounted for.

Basic question...what exactly is "Cape" and how do I calculate it? Thanks!

Desert wrote: ↑Tue Jun 14, 2022 10:22 am

joypog wrote: ↑Tue Jun 14, 2022 10:13 am
Basic question...what exactly is "Cape" and how do I calculate it? Thanks!

CAPE = Cyclically-adjusted price to earnings ratio. It's essentially a PE ratio, using a ten-year average of earnings.

You can look it up here:
https://www.multpl.com/shiller-pe

Some use 1/CAPE to estimate future stock returns (real returns), and current bond yields to estimate future bond returns (nominal returns). Future Inflation can be estimated by "breakeven" between TIPS and nominal treasuries. So a 60/40 portfolio future returns could be estimated as follows:

Future real return = .6*(1/CAPE) + .4*(bond yield - inflation rate)

The result is depressing, but is getting less depressing as yields rise and equity prices melt down.

OK cool thanks! (for the info, not the depressing commentary)

Desert wrote: ↑Sat Jun 11, 2022 8:50 am

Jack Jones wrote: ↑Sat Jun 11, 2022 8:27 am This was a great exercise. I did it and arrived at a 60/40 PP/VP split (for context, I'm 38 and my wife is pregnant w/ our second, god help us). My wife was slightly more conservative, so we landed at 65/35. This was way more conservative than I would have landed had I not done the exercise.

Congrats, and I know exactly how you feel, being one of the oldest dads in captivity myself.

I'm curious what overall percent equity results from your 65/35 PP/VP split.

I just finished splitting the portfolios (logically, since they both span multiple investment accounts). I haven't made any moves in the VP, so it's largely cash at this point. I suppose I'll update my progress there in the VP section of the forum.

I feel better about the PP now. My main goal there is to accumulate more physical gold to reduce my paper gold holdings.

Yesterday, I realized that we have 40k in our HSA accounts...and above all, HSA money is money we "can't afford to lose".

So we now have a neat little baby HBPP. I finally feel like a real member of this site.

Desert wrote: ↑Tue Jun 14, 2022 10:22 am

joypog wrote: ↑Tue Jun 14, 2022 10:13 am
Basic question...what exactly is "Cape" and how do I calculate it? Thanks!

CAPE = Cyclically-adjusted price to earnings ratio. It's essentially a PE ratio, using a ten-year average of earnings.

You can look it up here:
https://www.multpl.com/shiller-pe

Some use 1/CAPE to estimate future stock returns (real returns), and current bond yields to estimate future bond returns (nominal returns). Future Inflation can be estimated by "breakeven" between TIPS and nominal treasuries. So a 60/40 portfolio future returns could be estimated as follows:

Future real return = .6*(1/CAPE) + .4*(bond yield - inflation rate)

The result is depressing, but is getting less depressing as yields rise and equity prices melt down.

That’s a great simple formula.

ahhrunforthehills wrote: ↑Tue Jun 14, 2022 8:11 am I used to live in the ghetto and had a similar experience. I represented myself (no prior legal training). The system said pay a little money and basically get a slap on the wrist.

I said “What if I don’t pay?”. They said “we’ll toss you in jail”. I said “what kind of food do you serve and can I bring books?”.

They laughed and were then like “wait, what? are you serious?”. It was the most productive experiences of my life. Good food, gross bathrooms. Lol.

The real question is what did your buddy do with his time instead of going to jail? If he sat around and watched tv what did he gain?

Good luck getting outta jail when you live on a Prison Planet.