Gyroscopic Investing

Posted: **Wed Mar 16, 2022 11:40 pm**

How would it be performing right now? Would you be rebalancing from gold into stocks and bonds?

Posted: **Thu Mar 17, 2022 3:09 am**

Matthew19 wrote: ↑Wed Mar 16, 2022 11:40 pm How would it be performing right now? Would you be rebalancing from gold into stocks and bonds?

With Russian stocks, bonds and RUB together, the only thing to keep you afloat is the gold, but given the long term estimations for the Russian economics you need to have nerves of highest grade steel to do rebalancing. Cannot think of the Russian bonds having the 'safe haven' sticker any time soon (guess you know their cool idea to pay back the debt taken in foreign currency in RUB). Not to say that since 28 Feb any activities on MOEX exchange are suspended until further notice (till 18 Mar for sure), so even if you'd like to rebalance you wouldn't have that chance.

Will repeat myself, but some local HBPP and GB implementations don't have any resemblance to their USA/USD counterparties, the same concepts cannot be just applied - I mean the fact you can live on Earth, does not mean you can live on Mars, even though both are planets in the Solar system ...

Posted: **Thu Mar 17, 2022 3:33 am**

HB addressed this in his radio show when speaking to an Indian caller. He stated that " If everything went kablooey you still had your gold."

Over the years I have come to the opinion that the PP is a failsafe portfolio, not an invincible one. In any of the four economic climates, it will survive. But in a currency collapse, war etc you still have the fallback position of gold stored outside your country. In normal times gold s negatively correlated and reduces volatility. In extremis, you have something to survive on.

I'm sure people holding a Ukrainian PP, aren't worrying about rebalancing.....

Posted: **Thu Mar 17, 2022 9:08 am**

When I was there in the mid-90s we immediately exchanged our rubles for “hard currency”, ie US $, at one of the many kioks as soon as possible. Just like the locals did.

And now they keep freezing the Russian stock market, so you might not be able to rebalance even if you wanted to.

As Vil said, foreign pp’s don’t all work.

Posted: **Thu Mar 17, 2022 2:36 pm**

Wouldn't be unreasonable IMO for a Russian to hold US stock, gold, domestic cash/bonds.

Code: Select all

,,,RubleperUSD
Year,USstockgain(USD),Goldgain(USD),0.46
1993,10.6%,17.7%,1.25
1994,-0.2%,-2.2%,3.55
1995,35.8%,1.0%,4.62
1996,21.0%,-4.6%,5.54
1997,31.0%,-21.4%,5.94
1998,23.3%,-0.8%,19.99
1999,23.8%,0.9%,26.80
2000,-10.6%,-5.4%,27.97
2001,-11.0%,0.8%,30.09
2002,-21.0%,25.6%,31.84
2003,31.4%,19.9%,29.44
2004,12.5%,4.7%,27.92
2005,6.0%,17.8%,28.81
2006,15.5%,22.6%,26.29
2007,5.5%,30.5%,24.57
2008,-37.0%,4.9%,28.13
2009,28.7%,24.0%,29.94
2010,17.1%,29.3%,30.85
2011,1.0%,9.6%,31.45
2012,16.3%,6.6%,30.74
2013,33.4%,-28.3%,32.89
2014,12.4%,-2.2%,55.41
2015,0.3%,-10.7%,69.66
2016,12.5%,8.0%,62.18
2017,21.1%,12.8%,58.59
2018,-5.3%,-1.9%,67.30
2019,30.7%,17.9%,62.94
2020,20.9%,24.8%,74.05
2021,25.6%,-4.2%,73.72
recent,,,102.75

Factor in inflation (deflation)

Code: Select all

	InflationIndex
1993	874.25
1994	307.72
1995	197.41
1996	47.75
1997	14.76
1998	27.69
1999	85.75
2000	20.8
2001	21.48
2002	15.79
2003	13.66
2004	10.89
2005	12.69
2006	9.67
2007	9.01
2008	14.11
2009	11.65
2010	6.85
2011	8.44
2012	5.07
2013	6.75
2014	7.82
2015	15.53
2016	7.04
2017	3.68
2018	2.88
2019	4.47
2020	3.38

and 50/50 US stock/gold for a Russian would have gained around +55% annualized real from the early 1990's up to before the start of the Ukraine war. For the current year to date I'd guesstimate US stock/gold up around +25% real in Ruble/Russian terms. With domestic cash having lost around -12% of purchase power (inflation). Bonds ?? So overall likely down, but maybe not by much and relative to +31% annualised real gains from holding US stock/gold since the start of 2010 I guess you'd still be comfortably placed.

Not being able to rebalance might actually be a healthy position compared to otherwise reducing stocks/gold gains to add to more Ruble cash/bonds.

Gyroscopic Investing

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