Gyroscopic Investing

buddtholomew wrote: ↑Tue Nov 20, 2018 8:56 pm So what exactly is the “smart” money buying?

In general, it’s buying what everyone else is selling, right? Because when people are selling it, it’s... on sale.

People have been hating on the PP more than usual in recent years, so I’m just thinking this may be a good opportunity to buy it. We’ll see, I suppose.

Tortoise wrote: ↑Sat Nov 24, 2018 2:43 pm

buddtholomew wrote: ↑Tue Nov 20, 2018 8:56 pm So what exactly is the “smart” money buying?

In general, it’s buying what everyone else is selling, right? Because when people are selling it, it’s... on sale.

People have been hating on the PP more than usual in recent years, so I’m just thinking this may be a good opportunity to buy it. We’ll see, I suppose.

Yeah, now would be a good time to see some strength.

A little strength finally in gold and bonds.

Cortopassi wrote: ↑Tue Dec 04, 2018 9:03 am A little strength finally in gold and bonds.

About f@cken time
Only problem is Gold has no juice, +.59% while S&P down almost 3%. Same applies to TLT, only +1.8%. Up is better than down I guess...

What a joke of a portfolio...
Maybe we’ll see a real move in Gold and LTT’s when stocks are down 50%.

No U.S. stock trading tomorrow as it is the official day of mourning for President Bush. I wonder if investors are going to pile into gold.

I have no plans tomorrow (maybe some baking). It’s just an idle thought.

dualstow wrote: ↑Tue Dec 04, 2018 3:15 pm No U.S. stock trading tomorrow as it is the official day of mourning for President Bush. I wonder if investors are going to pile into gold.

I have no plans tomorrow (maybe some baking). It’s just an idle thought.

DS, why would investors pile into gold?
I just don't see it happening.
If anything, LTT's should get a bid although today was a little pathetic given an 800 point decline in the DOW.

Things do seem to be changing, though....past 90 days for me. Yes, still down YTD. But the curve has changed directions...?

Seems the S&P keeps on getting rejected at a similar level for the past couple months.



SPY:

buddtholomew wrote: ↑Tue Dec 04, 2018 3:36 pm

dualstow wrote: ↑Tue Dec 04, 2018 3:15 pm No U.S. stock trading tomorrow as it is the official day of mourning for President Bush. I wonder if investors are going to pile into gold.

I have no plans tomorrow (maybe some baking). It’s just an idle thought.

DS, why would investors pile into gold?
I just don't see it happening.
If anything, LTT's should get a bid although today was a little pathetic given an 800 point decline in the DOW.

I don’t know why investors do what they do, but they won’t be able to sell stocks tomorrow.

Gold + .25
SPY -1.8
TLT +.8

Precious gold useless as ever.

GARBAGE
GARBAGE
GARBAGE

Can’t say I didn’t tell you so; when the shit hits the fan the PP cowers and shows its true colors - utter confusion.

Looks like LTT’s are getting a bid but any strength in equities will club that down.

I just want to make sure I have this right:
Overall, you're saying you love the pp.

dualstow wrote: ↑Thu Dec 06, 2018 10:12 am I just want to make sure I have this right:
Overall, you're saying you love the pp.

Haha
It is what it is.

Just look at it:

Gold is going red and LTT’s now only .8 from 1.13 while stocks tank. Are you happy with the PP? Please explain how.

buddtholomew wrote: ↑Thu Dec 06, 2018 10:36 am Just look at it:

Gold is going red and LTT’s now only .8 from 1.13 while stocks tank. Are you happy with the PP? Please explain how.

I have a little bit of buyer's remorse myself, but when stocks are soaring, it doesn't feel like the right time to go all stocks. When stocks are plummeting, I also don't want to be all in stocks. I guess I don't hate the pp that much because aside from trimming my long bonds as they hit breakeven (and keeping the really profitable ones), I have not dismantled it.

If and when gold comes back in my lifetime, that will be the true test of whether or not I am satisfied. If I simply sell off the gold at breakeven, then no.

budd, from Zero Hedge, graph of the dislocation of long bonds and market the past couple months, and they are inferring a bond rally is coming.

Or not...

buddtholomew wrote: ↑Thu Dec 06, 2018 10:36 am Gold is going red and LTT’s now only .8 from 1.13 while stocks tank. Are you happy with the PP? Please explain how.

That one is easy -- on a day when stocks tank, 3/4 of your portfolio is protected. And it will do the same on bad days for gold or bonds, too. Unlike the vast majority of asset allocations that are heavily dependent on market cycles, the PP keeps doing its thing no matter how the winds blow.

BTW, it's important to not confuse uncorrelation with negative correlation. No two assets will ever perfectly mirror each other on a daily basis, and if they did the portfolio wouldn't work.

Tyler wrote: ↑Thu Dec 06, 2018 11:31 am

buddtholomew wrote: ↑Thu Dec 06, 2018 10:36 am Gold is going red and LTT’s now only .8 from 1.13 while stocks tank. Are you happy with the PP? Please explain how.

That one is easy -- on a day when stocks tank, 3/4 of your portfolio is protected. And it will do the same on bad days for gold or bonds, too. Unlike the vast majority of asset allocations that are heavily dependent on market cycles, the PP keeps doing its thing no matter how the winds blow.

BTW, it's important to not confuse uncorrelation with negative correlation. No two assets will ever perfectly mirror each other on a daily basis, and if they did the portfolio wouldn't work.

It’s not that easy...50% of the portfolio is already negative YTD so how exactly is that protected during a stock market decline. Seems to be blowing in the wind to me.

buddtholomew wrote: ↑Thu Dec 06, 2018 12:25 pm

Tyler wrote: ↑Thu Dec 06, 2018 11:31 am

buddtholomew wrote: ↑Thu Dec 06, 2018 10:36 am Gold is going red and LTT’s now only .8 from 1.13 while stocks tank. Are you happy with the PP? Please explain how.

That one is easy -- on a day when stocks tank, 3/4 of your portfolio is protected. And it will do the same on bad days for gold or bonds, too. Unlike the vast majority of asset allocations that are heavily dependent on market cycles, the PP keeps doing its thing no matter how the winds blow.

BTW, it's important to not confuse uncorrelation with negative correlation. No two assets will ever perfectly mirror each other on a daily basis, and if they did the portfolio wouldn't work.

It’s not that easy...50% of the portfolio is already negative YTD so how exactly is that protected during a stock market decline. Seems to be blowing in the wind to me.

budd,

Seems maybe a better course of action for you and some is to just buy puts as insurance? Go 100% stock market and buy an equivalent amount of protection with puts. Always going to eat away a good percentage of your gains, but you can sleep better?

I look at the PP as a smoothing function. Below is my allocation vs. S&P. Sure, still negative. But... the heightened sense of loss I would have right now knowing I *could* have sold out of my stocks in September at 10% gain, vs. being negative again...even though there's no way to have known...would be anxiety producing.

Cortopassi,

Could you extend the start date of your graph back to 1/1/2000 to illustrate to Buddtholomew why some people have a little more faith in the PP than he does?

I can't. This is from Personal Capital which I only started using late last year. But, we can use Portfolio Charts to shown the drawdown pain. Of course the CAGR is lower for the straight PP, but the ulcer index describes me perfectly and gives a good sense of the smoothing.

People might say gold is dead, and bonds multi-decade bull run is over, but who knows.

The stock market sure popped back today.

100% stocks:



Straight PP

Here's an image from Portfolio Visualizer showing the PP performance vs the S&P 500 for 2000 to 2018 (I hope that worked; I don't show images often):



Actually the PP has a higher CAGR and Sharpe ratio and quite a lower maximum drawdown. Of course, that start date is cherry picked, but comeon somebody has to give the PP a little love.

The image didn't take. I think this is the same as you setup. Portfolio 1 is PP, 2 is 100% US Market

Appreciate all the responses, thank you.
I bought more SCV today and I’m not sure I would have if I wasn’t invested in the PP.
I’m obviously watching too closely and it is bothering me.
Will try in the new year to stop this insanity.
Still trying to wrap my head around PP expectations, just don’t want to be caught again if/when stocks recover and Gold/LTT’s sell off.

I am a recovering Buddaholic. But today I had a good day.

I typed up a response (reaction) to Budd's latest. Accurate, filled with facts, witty, with a slight bit of snark...but then I deleted it.

Today, was a good day.

Kbg wrote: ↑Thu Dec 06, 2018 6:02 pm I am a recovering Buddaholic. But today I had a good day.

I typed up a response (reaction) to Budd's latest. Accurate, filled with facts, witty, with a slight bit of snark...but then I deleted it.

Today, was a good day.

You’ve made your point a few times already and I get it.
Thanks for being kind.

Kbg wrote: ↑Thu Dec 06, 2018 6:02 pm I am a recovering Buddaholic. But today I had a good day.

I typed up a response (reaction) to Budd's latest. Accurate, filled with facts, witty, with a slight bit of snark...but then I deleted it.

Today, was a good day.

Good one, Kbg. Your struggle is shared by many. As tiresome as the fallacies and repetition are, I guess it keeps us all sharp. But pity the fool who searches for “does the PP work?” and finds these threads.