Gyroscopic Investing

frugal wrote: For me it is a bit strange how someone can INVEST almost ALL his savings in a PP.

I am so used to CD's that covers the inflation. On your countries, as your CD's don't cover INFLATION, you had to discover another strategies earlier...

Please advice.


Thanks

I have access to CDs that very nearly cover inflation in the USA (inflation is very low right now). I don't use them for several reasons:

1. I don't want to match or just barely beat inflation; I want to beat it by 3-7%. CDs can't do that.
2. CDs are illiquid.
3. CDs are promises from commercial banks. I don't trust them as far as I can throw them.

Avoiding CDs gives you a better return, more safety, and more liquidity. That nice 4% CD return won't mean a thing if the Portuguese economy falls into a banking crisis and the firms holding your CDs collapse.

Hi,

but that can happens also with ETF's

... if we have a 4 ETF's HBPP



Please explain.

Hug

ETFs aren't illiquid or guaranteed to lose to inflation or just barely beat it (depending on what the ETF tracks) like CDs, but you're right, brokerage default or fraud can happen with ETFs too. That's why only a quarter of the HBPP is held in mutual funds/ETFs: the stock portion. The remaining three-quarters is supposed to be held directly. No bank or brokerage can default and tie up your money in legal limbo if it's in the form of directly-held gold and currency-issuer fiat-money government bonds.

Some advise a 4xETF PP, that seems very dangerous to me.

That being said, the point is the PP yields much more on average than CDs with much less risks of failure and a reasonable volatility. The VP is interesting to improve the overall yield (but with bigger risk), not to reduce it.

Well, in US that is easier.

In Portugal no.

Even for Gold I have some difficulty to buy real gold coins/bars because I'm affraid it goes down in price and I can't sell it one day.


Please help.

frugal wrote: Well, in US that is easier.

In Portugal no.

Even for Gold I have some difficulty to buy real gold coins/bars because I'm affraid it goes down in price and I can't sell it one day.

Isn't that a risk everywhere? Sounds like you have a problem with gold in general, not gold buying in Portugal. You'll always be able to sell your gold if it falls in value--at the lower price. But that's the way all financial assets work.

Yes it looks like you have a problem with gold as an asset. As it is often advised, just put a small portion of your overall savings in the PP (say 1/3) to look how it behaves over time and you'll probably want to gradually increase the percentage. Or not, if you really don't like it.

My entire IRA is invested in the PP, though, admittedly, today is a bad day for it, but then again it looks like most investing strategies will be down today.

I'm all in on the PP except for a few hundred in a checking account for miscellaneous expenses.

I'm almost "all in" except for a separate emergency fund which I've had to dip into recently due to Superstorm Sandy.

Average is probably 90%
Variables portfolios are small, very small.

Regards

I am approximately 50/50 PP and conventional 60/40 (equities and bonds). I am uncomfortable investing 100% in the PP. What happens if it fails to perform as it has historically? If the BH portfolio under-performs then many other investors will be in the same position. If the PP under-performs then you look like an idiot (everyone "knows" that stocks and gold are overpriced and LTT yields have no where to go but up.)

That makes a 42,5%, 32,5%, 12,5%, 12,5 % allocation. That's not HB PP nor conventional, but a Budd portfolio.
SIMBA results (1985 - 2011)
Budd, average: 9,7 %,  Std dev: 8,3 %
PP, average: 8,3 %, Std dev: 5,7%
witch means that the changes you like a idiot with a PP portfolio is much smaller then conventional investors.

However If 
(everyone "knows" that stocks and gold are overpriced and LTT yields have no where to go but up.)
then your Cash portions in the Budd portfolio is a bit low.
By the way, despite the results, most investors think PP followers are idiots, so why bother.

Another down day of course for this POS. Go ahead and use my pessimism as a sign that the low is in. I wish you all the best. Got to love the market soaring and your investments tanking. A dream come true...

buddtholomew wrote: Another down day of course for this POS. Go ahead and use my pessimism as a sign that the low is in. I wish you all the best. Got to love the market soaring and your investments tanking. A dream come true...

melveyr wrote:

buddtholomew wrote: Another down day of course for this POS. Go ahead and use my pessimism as a sign that the low is in. I wish you all the best. Got to love the market soaring and your investments tanking. A dream come true...

?

buddtholomew wrote: Another down day of course for this POS. Go ahead and use my pessimism as a sign that the low is in. I wish you all the best. Got to love the market soaring and your investments tanking. A dream come true...

PP down 0.3% today? tanking?

?no comprende?

Hi Budd. I don't know well the history of this: "Go ahead and use my pessimism as a sign That is in the low."
But the PP is up by 6.6% this year and also if you got 60/40 is above 12%. You got an average gain of 9.3%.
Then why: "and your Investments tanking ..."?

Edit: Sorry murphy put something similar while I was writing.

escafandro wrote: Hi Budd. I don't know well the history of this: "Go ahead and use my pessimism as a sign That is in the low."
But the PP is up by 6.6% this year and also if you got 60/40 is above 12%. You got an average gain of 9.3%.
Then why: "and your Investments tanking ..."?

Edit: Sorry murphy put something similar while I was writing.

Irrational...dealing with another stressful issue and refirected my anger.