Gyroscopic Investing

Held my nose and purchased additional TLT to restore FI duration to 5.6 years.
Feels awful and I feel like an idiot, but you have to believe and follow the plan.

I still have about 35 minutes to decide.

Of course, if I want to be correct about it, I should sell some stock portion which is above my % target.

Tough to do either.

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buddtholomew wrote:

Cortopassi wrote:I still have about 35 minutes to decide.

Of course, if I want to be correct about it, I should sell some stock portion which is above my % target.

Tough to do either.

I had the same decision to make.
Selling SPY to replenish TLT was the right thing to do.
I decided to use cash on-hand instead.

Either way, you will bring the % allocated to stocks and bonds closer together. That can't be too bad.

I balanced out TLT, GLD, and left domestic stocks a little heavy. I am still short on international stock exposure and cash heavy, but that's ok.

Anyone ever do an analysis, do interim rebalancing tweaks on big market moves help or hurt over the long haul? Should we have just waited for an annual rebalance, or bands? I wonder. But it is hard to resist an over 4% drop in TLT. Could look stupid in a few days.

Cortopassi wrote:I balanced out TLT, GLD, and left domestic stocks a little heavy. I am still short on international stock exposure and cash heavy, but that's ok.

Anyone ever do an analysis, do interim rebalancing tweaks on big market moves help or hurt over the long haul? Should we have just waited for an annual rebalance, or bands? I wonder. But it is hard to resist an over 4% drop in TLT. Could look stupid in a few days.

This is my perspective.
Can't hurt too much as long as you stay within the 4x25 framework.
Even with today's TLT decline, my personal PP was lower less than a percent.

Maybe this will make you feel better?
TLT is down peak to trough 13.2%
Not bad if you're a buyer...

I also bought VNQ (US Reit) in my retirement accounts as this asset class has fallen ~15% since recent 52 weeks highs as well.

I dealt with the long bond drop by buying a bit of TLT (8 shares!) for our daughter's mini PP account. Also picked up a bit of stock and talked to her about risk parity (in one ear and out the other, I'm sure!). Sometimes it just feels good to tweak a bit.

Alas, I didn't catch the TLT bottom and lost her $4.11 for the day. Oh the humanity!

And in overseas news...

The Nikkei regained all its 11/9 losses overnight and the German 30-year bund is getting rocked today. Looks like it could be another long day for bond prices here in the US. I heard a lot of speculation about what would happen to financial markets if Trump were elected but didn't hear anyone claim that bonds would get clobbered.

For the moment, at least, we don't have to obsess about whether or not we'd ditch long bonds at 1%, 1.5% or whatever.

My take is that tariffs are inflationary but I've only put about five seconds into coming up with that explanation.

I bought some TIPS bonds they seem to holding up better than conventional long US Treasuries. ETF is SCHP.

Looks like we should have waited on buying gold and bonds. Oh well.

Jeez, in the past few weeks the drawdown from PP highs this year is about 7%. Sucks.

What the hell does this world have against gold, dammit!

Cortopassi wrote:Looks like we should have waited on buying gold and bonds. Oh well.

Jeez, in the past few weeks the drawdown from PP highs this year is about 7%. Sucks.

What the hell does this world have against gold, dammit!

I feel you buddy.
Knew it was you when I got the notification.

A part of me wants to take my gains this year in gold and be done with it...

A warning... just added a little physical gold and silver... be ready for a continued drop next week, probably to low $1100s!

If it makes anyone feel better, the coin shop dealer (a Trump supporter) was shocked at what happened, he expected what was happening during election night to persist, stocks dumping and gold rising. But he says this is all relatively temporary, nothing is magically fixed with Trump and expects gold to continue back up in the next few months.

Cortopassi wrote:If it makes anyone feel better, the coin shop dealer (a Trump supporter) was shocked at what happened, he expected what was happening during election night to persist, stocks dumping and gold rising. But he says this is all relatively temporary, nothing is magically fixed with Trump and expects gold to continue back up in the next few months.

Don't they always? They're worse than a broken record.

Here's my take on the decline.
The equity decline (800 points) took place overnight and only those in futures were able to take advantage of purchasing lower.
The correction has happened and gold/bonds are being sold off again.

How long will it continue is anyone's guess.
Just adding to declining assets to DCA cash in.

MG?

buddtholomew wrote:MG?

Good God MG, what algo is that! The $WTIC crude oil prediction is breathtaking! Scary as hell for me in the oil industry... up past $60 then down back to $30? It look provocative, but how was it made? The gold one is what I am hoping for... revisit the $1050 area one more time.

ochotona wrote:Good God MG, what algo is that! The $WTIC crude oil prediction is breathtaking! Scary as hell for me in the oil industry... up past $60 then down back to $30? It look provocative, but how was it made? The gold one is what I am hoping for... revisit the $1050 area one more time.

It's just a composite of different time cycle lengths. It's not completely science, so don't take it 100% seriously, but use it as a rough guide.

I think the charts are suggesting a recession starting in January. Perhaps some new tumoil in the Middle East causes it? Maybe Russia invades a NATO member to test Trump's resolve? Or Iran launches a nuke they've been secretly building under the bullshit treaty?

Or, it could be another tight money situation after the Fed rate hike. That's more likely.

It could also be the spreading contagion from energy and subprime auto to junk and investment debt. When Fed raises rates, it crimps subprime auto lending net interest margin because it is very expensive to service even though they charge 20%+. Lending is already collapsing 29-38% yoy. Kind of interesting that P2P lenders recently decided to go in on auto lending (though it isn't subprime AFAIK)... that's always a sure sign of a top when you are late to the game. If you look at Hertz's collapse recently it is because there's an oversupply of used cars and prices are dropping rapidly. It's like all the excess real estate supply coming onto market after the subprime bubble. But I am unclear why subprime auto borrowers are having trouble paying their sharks.

If the price scenarios were to unfold as shown, momentum traders will be out of the SP500 for most of 2017, and the PP would continue to suffer due to gold and bonds. Sobering. Of course, Fourier Analysis or whatever made these charts can't forecast the future really...