Gyroscopic Investing

Someone forwarded this article to me, and I thought I'd pass it along. The conclusion should not be too surprising to anyone here.

http://proactiveadvisormagazine.com/gol ... portfolio/

Nice. I'm reading Part I.

Very interesting. HB was pretty smart!

Tyler wrote:Someone forwarded this article to me, and I thought I'd pass it along. The conclusion should not be too surprising to anyone here.

http://proactiveadvisormagazine.com/gol ... portfolio/

Actually, is surprising when it's not on this forum and not 0%.

If the start date of their analysis was a few years (i.e.76-80) later my guess is it would suggest a lower allocation.
(Would be interesting to hear Desert comment on that)

Another article along the same lines...

http://actuary-info.blogspot.com.au/201 ... escue.html

Hal

The Ned Davis Three-Way Portfolio is a trendfollowing cashless HBPP, and it can go 100% into gold! (temporarily)

http://mebfaber.com/2015/06/16/three-way-model/

What does it cost mine gold? Does that limit how high it can go?

ochotona wrote:The Ned Davis Three-Way Portfolio is a trendfollowing cashless HBPP, and it can go 100% into gold! (temporarily)

http://mebfaber.com/2015/06/16/three-way-model/

My read of this was 1/3 each of stocks, bonds and gold, but with the asset being replaced by t-bills when it didn't have momentum. Meb Faber likes his momentum. I think it suffers from recency bias particularly for USA. The past does not indicate the future. The clear ups-downs of SP500 model well with momentum but that advantage appears to disappear with eg non-US markets. I also think there is an inherent risk by not eg. being in bonds if stocks suddenly tank. And then the tax implications from the churn of frequency short trades when markets going side ways....

boglerdude wrote:What does it cost mine gold? Does that limit how high it can go?

The supply of "new" gold from mining every year is only a percent or two of the overall supply because most gold isn't consumed but stored. This is quite unlike all non-monetary commodities, where the new supply comprises most of the available stock at any time.

It is also very difficult and expensive to increase gold mining output, and there is only so much gold to be mined.

For both of these reasons, mining supply has little to do with the gold price.

My latest thinking... thinking about the amount of gold to have as # of ounces per million dollars in a portfolio.

I'm after Desert Portfolio levels, 10%, so I'm thinking... 80 ounces per $1 million. Keep that constant over time.

Then how much gold costs becomes less important. It fades a bit.

But that's not a constant, right?
Shouldn't the US$ price or one's home currency price matter more?


Separately, my dream of having my weight in gold is not going to happen. Too rich for my blood.

dualstow wrote: But that's not a constant, right?
Shouldn't the US$ price or one's home currency price matter more?

Separately, my dream of having my weight in gold is not going to happen. Too rich for my blood.

Then perhaps you should go on a diet.

Ha! Well, the way I see it, it's more fun to buy some spanikopitas from Trader Joe's anyway. AND cheaper.