Gyroscopic Investing

Any thoughts on this vs. PP??

Lots of Bogleheads swear by it.  

http://www.bogleheads.org/wiki/Three-fund_portfolio

Try it out for yourself on http://www.riskcog.com/. You'll find that for most asset weightings, it barely beats a PP despite having 5-8 times the volatility. Portfolios like that are attractive for their simplicity, but there's no logic behind the chosen funds or their weightings like there is with the PP. As a result, an investor may be tempted to change the allocations over time to attempt to time the market in response to what's currently doing best, probably with poor results.

Pointedstick wrote: Try it out for yourself on http://www.riskcog.com/. You'll find that for most asset weightings, it barely beats a PP despite having 5-8 times the volatility. Portfolios like that are attractive for their simplicity, but there's no logic behind the chosen funds or their weightings like there is with the PP. As a result, an investor may be tempted to change the allocations over time to attempt to time the market in response to what's currently doing best, probably with poor results.

Thank great link.

I came up with a portfolio that I really like 20/20/20/40 - scv, em, gold and ltgb.
I've started implementing it.

dcllee wrote: Thank great link.

I came up with a portfolio that I really like 20/20/20/40 - scv, em, gold and ltgb.
I've started implementing it.

That looks like a portfolio that would do very well during periods of deflation and prosperity, but crater during a global recession or when interest rates rise if inflation doesn't follow suit. With no cash (short-term bonds) to react rapidly to rising interest rates and offset the fall in gold and long bonds, you'd lose a lot of money very fast. And I worry that the 20% gold allocation wouldn't be enough to protect you from a fall in the 40% stock allocation, especially the highly volatile emerging market exposure. Personally, I'd only implement a portfolio like this as a VP once I already had a PP or three set up.

I remember myself agonizing over slice-and-dice numbers before I discovered HBPP. This is very Bogleheadish. While the simplicity is a good thing one should remember that it is highly likely (and happened in 2008) that all three parts of this portfolio will go down in a major crisis.