Gyroscopic Investing

i'm looking for thoughts on using EDV as hedge to a VP which is heavily into precious metals and mining shares (precious metals, rare earths, uranium)..i came up with the idea after hearing some of the discussion of EDV.

murphy_p_t wrote: i'm looking for thoughts on using EDV as hedge to a VP which is heavily into precious metals and mining shares (precious metals, rare earths, uranium)..i came up with the idea after hearing some of the discussion of EDV.

Wow, you just described my VP!  I've been 80% in physical precious metals and mining shares for a while now.  I'm not hedged but I do have a cash account equal to 2 year's expenses.  Precious metals volatility is not for the faint of heart (some junior miners down 80-90% in 2008).  But I'm a big believer in adaptation, so the 30-50% swings that are commonplace don't affect me like they used to.  If you are considering this type of portfolio, do a big gut-check on your risk tolerance--especially during major corrections.  The last thing you need is to panic at a bottom.

Out of curiosity, I plugged in a 33-33-33 GLD/GDX/EDV into smartmoney.com starting 1.1.06.  As of today, total return is about 61% and the largest correction appeared to be in '08 @ about 30% drawdown.  

How about a barbell of EDV and GDXJ at 10% each and 80% 10 year treasurys?

MediumTex wrote: How about a barbell of EDV and GDXJ at 10% each and 80% 10 year treasurys?

For GDXJ, can't go back further than about a year and a half.

KevD wrote: But for anyone just getting their feet wet, the wild swings can be TERRIFYING.   :o

Only if they are down, right? 

According to ETFreplay, the correlation between GDX and EDV ranges between +0.25 and -0.25.

well...i'm learning about volatility in the uranium explorers:(

EDV barely budged, by comparison

doubling down today...