Gyroscopic Investing

mathjak107 wrote: there are noooooo bad markets , there is only bad planning .

Now those are the words of a supremely confident active investor.    Perhaps you should write your own newsletter in your newfound retirement time.

May the good planning continue to shine in your favor.

mathjak107 wrote: there are noooooo bad markets , there is only bad planning .

Speaking of bad planning, didn't you jump into the PP, lose some money over the course of a few days or a few weeks, and then immediately jump back out for a more conventional, stock-heavy portfolio? That's the epitome of 'buy high, sell low'

Not trying to be a jerk, but I just feel like you are giving out a lot of advice for someone who, in my opinion, got really lucky by holding onto some stock-market funds and using a newsletter to make a ton of money. I am just not sure your strategy is repeatable going forward.

That being said, I totally agree with your actual point about 'bad planning.' I just think the PP has that built-in due to the 25% cash allocation. A person using a more conventional stock/bond portfolio would have to put a lot of thought into their cash allocation to prevent needing to sell in a down market.

mathjak107 wrote: my portfolio can be quite volatile , it is not quite risky though long term . but in my example of you needed your money back today the pp sustained the most damage .

I see what you mean. I don't think Tyler meant to imply anyone would ever need 100% of their money back. If that could conceivably be the case then no, that money should not be invested in anything but maybe CD's, and everyone here would agree with that I'm sure.

You need to take into consideration that there are a lot of potential early retirees w/ no pensions around here. Obviously social security will also be a long way off. So a large cash buffer is necessary for an emergency. It's one of the draws of the PP.

mathjak107 wrote: there are noooooo bad markets , there is only bad planning .

So then accepting the lousy returns from the stock market during a period like 1999-2008 is just bad planning, right? Maybe some gold would have been helpful?

mukramesh wrote:

mathjak107 wrote: there are noooooo bad markets , there is only bad planning .

Speaking of bad planning, didn't you jump into the PP, lose some money over the course of a few days or a few weeks, and then immediately jump back out for a more conventional, stock-heavy portfolio? That's the epitome of 'buy high, sell low'

Not trying to be a jerk, but I just feel like you are giving out a lot of advice for someone who, in my opinion, got really lucky by holding onto some stock-market funds and using a newsletter to make a ton of money. I am just not sure your strategy is repeatable going forward.

That being said, I totally agree with your actual point about 'bad planning.' I just think the PP has that built-in due to the 25% cash allocation. A person using a more conventional stock/bond portfolio would have to put a lot of thought into their cash allocation to prevent needing to sell in a down market.

yep and it was bad planning and as consrvative as the pp is i lost money because i pulled it out at a bad time .

it wasn't a bad investment plan  on the part of the pp , it was poor action on my behalf .

iwealth wrote: I see what you mean. I don't think Tyler meant to imply anyone would ever need 100% of their money back. If that could conceivably be the case then no, that money should not be invested in anything but maybe CD's, and everyone here would agree with that I'm sure.

You need to take into consideration that there are a lot of potential early retirees w/ no pensions around here. Obviously social security will also be a long way off. So a large emergency cash buffer is necessary for an emergency. It's one of the draws of the PP.

+1

Pointedstick wrote:

mathjak107 wrote: there are noooooo bad markets , there is only bad planning .

So then accepting the lousy returns from the stock market during a period like 1999-2008 is just bad planning, right? Maybe some gold would have been helpful?

accepting downturns is all part of the deal . the long term returns are what counts and even with all these downturns have grown lots of money .  we did okay during the period , not great but okay .

mathjak107 wrote:

Pointedstick wrote:

mathjak107 wrote: there are noooooo bad markets , there is only bad planning .

So then accepting the lousy returns from the stock market during a period like 1999-2008 is just bad planning, right? Maybe some gold would have been helpful?

accepting downturns is all part of the deal . the long term returns are what counts and even with all these downturns have grown lots of money .  we did okay during the period , not great but okay .

Other countries did not do 'ok'.
You cannot simply look at the US alone and say everything will always be fine, it won't.

iwealth wrote:

mathjak107 wrote: my portfolio can be quite volatile , it is not quite risky though long term . but in my example of you needed your money back today the pp sustained the most damage .

I see what you mean. I don't think Tyler meant to imply anyone would ever need 100% of their money back. If that could conceivably be the case then no, that money should not be invested in anything but maybe CD's, and everyone here would agree with that I'm sure.

You need to take into consideration that there are a lot of potential early retirees w/ no pensions around here. Obviously social security will also be a long way off. So a large emergency cash buffer is necessary for an emergency. It's one of the draws of the PP.

even if i don't use the pp my cash works out almost the same . we have 2 years in withdrawals held in cash and an emergency fund.

the only difference is we hold it outside the portfolio.

but the 40% bond funds in the portfolio are all very low volatility . they can be sold for more cash even the last few months and wouldn't have even been down 1 %

mathjak107 wrote: it wasn't a bad investment plan  on the part of the pp , it was poor action on my behalf .

Okay that is cool of you to admit

dutchtraffic wrote:

mathjak107 wrote:

Pointedstick wrote: So then accepting the lousy returns from the stock market during a period like 1999-2008 is just bad planning, right? Maybe some gold would have been helpful?

accepting downturns is all part of the deal . the long term returns are what counts and even with all these downturns have grown lots of money .  we did okay during the period , not great but okay .

Other countries did not do 'ok'.
You cannot simply look at the US alone and say everything will always be fine, it won't.

as a retiree my plan is built to withstand the worst situations we have ever had in this country .  that includes the great depression . the slack in the plan which is based around both bill bengans work and the trinity study would take something far worse to fail and even then a simple cut back in withdrawals can solve most anything.

i use a 60/40 mix  because of the high success rate of with standing these worst time frames to date.

quite frankly it is all we need to plan around and nothing either you or i do will be totally immune from the unknown  which could always be worse. but at least i am starting out with something that withstood the worst of the worst to date with a very high rate of success .

mukramesh wrote:

mathjak107 wrote: it wasn't a bad investment plan  on the part of the pp , it was poor action on my behalf .

Okay that is cool of you to admit

i thought it would be a good idea with the greece issue approaching . i always had a love for harry and his concept so i said what the heck , lets try it.

but within a few days i realized gold was not going to react , long term bonds were getting pounded and i started having 2nd thoughts about the lack of being able to stress test the pp over our worst time frames.

so i figured i was still not down much , if i switch back to a model with more conventional allocations i can make the loss up in a heart beat  , which i just about did as of today .

mathjak107 wrote: ... nothing either you or i do will be totally immune from the unknown .

Yep, that's just it. PP investors try to embrace the unknown. We say, "Sure, we could possibly go into a Japan-style slump in the future. It never happened before, but who's to say it absolutely won't happen on our time frame?"

The PP is widely diversified because it holds unconvential assets (gold, long term treasuries, lots of cash). This makes it a little more resilient in those situations that we can't quite predict compared to a standard 60/40 portfolio. We are willing to accept a slightly lower return for that feeling of safety, even over a long period of time, precisely because there are no guarantees.

Past performance is not indicative of future results. The future may not look like the past. It is unknown. No guarantees. PP is designed for a wider range of potential futures than a 100% stock allocation.

while the pp is always looking for something worse to happen  the reality through these long periods of investing time is what it prepared for rarely puts it a head in the events  when they play out and  it eventually a few years after  ends up behind again .


to date since it's existence it is still waiting for some thing to happen where  a conventional portfolio couldn't catch up after a number of years .

mathjak107 wrote: to date since it's existence it is still waiting for some thing to happen where  a conventional portfolio couldn't catch up after a number of years .

Just because it's never happened in the US does not mean it won't happen in the future. The PP will (hopefully) be fine either way. A conventional portfolio will only be fine if that 'thing' never happens.

if i had to worry about all the things that could ever happen that haven't i would never leave the house , drive or cross the street.

i strike a balance  that works , leave slack in the plan and maximize as much growth as i can with out OVERLY  worrying about every thing that could happen but hasn't.  there is little need to insure against every catastrophic event if odds are low it will ever play out.

it is much more efficient to deal with what has strong possibility's or a history of doing so then trying to fight every battle.

do you buy every type of insurance out there because of a remote chance something can happen ?

mathjak107 wrote: if i had to worry about all the things that could ever happen that haven't i would never leave the house , drive or cross the street.

This is really not a valid argument, there are valid reasons to worry about these things (because they simply happen), just ignoring it seems rather dumb if you ask me.

Also, considering you have pretty much been riding the biggest bullmarket ever, and needed a newsletter to tell you what to invest in (?????) i don't really think you are in the position to give any advice.

mathjak107 wrote: if i had to worry about all the things that could ever happen that haven't i would never leave the house , drive or cross the street.

But there are benefits to crossing the street and driving, so you take that risk and take some precautions as well.

mathjak107 wrote: i strike a balance  that works , leave slack in the plan and maximize as much growth as i can with out OVERLY  worrying about every thing that could happen but hasn't.

The same is true for PP investors; striking a balance that we are comfortable with. Like I said, the PP isn't bad at generating returns. It has been rather profitable and it has some sorts of protection from scenarios that haven't occurred yet as a bonus.

dutch traffic , i like the newsletter even though i can make up model portfolio's in my sleep.

why ?  because they have close ties to the fund managers and know right away when major changes are made .

you can buy two different fidelity funds  and have more overlap in holdings than you can imagine.

the lists of fund holdings you see on line are old and out dated .  they put together very nicely balanced portfolio's with little major over lap.

i hardly think you need to get insulting . i was quite civil answering you . if you don't like my answers don't read the post . it is simple .

mukramesh wrote:

mathjak107 wrote: if i had to worry about all the things that could ever happen that haven't i would never leave the house , drive or cross the street.

But there are benefits to crossing the street and driving, so you take that risk and take some precautions as well.

mathjak107 wrote: i strike a balance  that works , leave slack in the plan and maximize as much growth as i can with out OVERLY  worrying about every thing that could happen but hasn't.

The same is true for PP investors; striking a balance that we are comfortable with. Like I said, the PP isn't bad at generating returns. It has been rather profitable and it has some sorts of protection from scenarios that haven't occurred yet as a bonus.

exactly , you take calculated risks .  to think anyone who doesn't drink the kool aid is reckless in their investing and taking big chances by not cutting gains to protect against the sky falling is ludicrous .

but that is just what many of the comments try to imply . the only thing i imply is it can be a laggard most of the time even against a conservative portfolio  but if you are happy with the returns , great .

mathjak107 wrote: dutch traffic , i like the newsletter even though i can make up model portfolio's in my sleep.

why ?  because they have close ties to the fund managers and know right away when major changes are made .

you can buy two different fidelity funds  and have more overlap in holdings than you can imagine.

the lists of fund holdings you see on line are old and out dated .  they put together very nicely balanced portfolio's with little major over lap.

i hardly think you need to get insulting . i was quite civil answering you . if you don't like my answers don't read the post . it is simple .

I'm not insulting you, this is just what i understand of it, that you rode a massive bullmarket with some newsletter fund tips and think this is the only way to go.

I'm not not saying the PP is holy, it is not, i'm not incredibly happy with it (haven't even ever seen it in the green and am down almost 6%) but i don't have a better solution atm.

you can take the s&p 500 and 20% in a total bond fund and run any 25 year time frame you like and see the results that allocation would provide as a growth vehicle.

it does not have to be mine.

if you want a benchmark to compare what you could have done as compared to investing like the sky is falling for 30 years  going through the exact same events that happened  you will see the difference being overly conservative has made  .

that does not mean someone will have the pucker factor to do it but it will give you an idea of what being that conservative costs through the same events .

perhaps you may want to run two portfolios once you see the cost of that ultra conservatism  . perhaps a 60/40 mix and the pp for growth.

i was initially planning the pp and a 70/30 growth and income model .


again , i am not referring to those 50 and 60 who do not have a life time of investing a head of them .

mathjak107 wrote: you can take the s&p 500 and 20% in a total bond fund and run any 25 year time frame you like and see the results that allocation would provide as a growth vehicle.

it does not have to be mine.

if you want a benchmark to compare what you could have done as compared to investing like the sky is falling for 25 years  going through the exact same events that happened  you will see the difference being overly conservative has made  .

that does not mean you have the pucker factor to do it but it will give you an idea of what being that conservative costs through the same events .

And what do you do if the whole thing comes crashing down after being invested for 23 years, then what? Why do you think that is unlikely?

perhaps the the pp gets destroyed too in anything that bad  just like what we saw .  gold fell , treasury's plunged and stocks dropped with the fear of Europe crashing down.

in the mean time we went through the greatest financial collapse since the great depression and went on to new highs 5 years later .

if you want to  imagine  all the what if's and imagine you will be the last investor standing  have fun .

mathjak107 wrote: while the pp is always looking for something worse to happen  the reality through these long periods of investing time is what it prepared for rarely puts it a head in the events  when they play out and  it eventually a few years after  ends up behind again .


to date since it's existence it is still waiting for some thing to happen where  a conventional portfolio couldn't catch up after a number of years .

Is anyone disputing the fact that a US-centric equity allocation outperformed (past tense) the PP over an arbitrary period of time? This obviously says nothing of the future as DOW18K could have been the peak for the next decade or more.

This past week has reaffirmed my decision to continue investing in a 70/30 allocation for retirement and the PP for medium term investments in perpetuity.

I am aggressive in retirement accounts and purchased international stocks (4x multiple of my PP losses YTD) following the recent declines (VWILX - 11% peak to trough). I am comfortable with this volatility (shallow risk) and selected this allocation in the hopes of higher returns and ultimately reaching my ER objective.

On the other hand, I could not psychologically stomach these short-term fluctuations in my taxable accounts and perform as rationally. The PP structure insulates me as much as possible from these declines so that I can continue to invest according to plan. I realize the tradeoff could result in lower returns, but the security the portfolio offers is certainly worth the cost.

What was your portfolio loss following the draw down on 7/8? I suspect it far exceeded the 23K loss you would have incurred in the PP (before 7/9 and 7/10).