cancel
Showing results for 
Search instead for 
Did you mean: 
     
bilperk
Participant ○○○

Re: R48 - pyramid up


@DJANG0 wrote:

Chang, have you considered "value averaging"? 

For example, I know I want to have $100,000 in a fund by year 5. I'm investing $5000 every quarter, or $20,000 annually, but I adjust each new contribution to incorporate performance. If the fund is up $500 since my last purchase, my next purchase is $4500. If the fund is down $500, my next purchase is $5500.

Admittedly, lump sum investing will unusually outperform value averaging, but for nervous investors like myself, value averaging provides a disciplined method of building a position over time and allows me to sleep a little better.


Value averaging probably works best when used in a systematic investment program where one is using new dollars from some source like wages instead of a choice between a lump sum or DCA.

0 Kudos
racqueteer
Participant ○○○

Re: R48 - pyramid up


@ElLobo wrote:

For those of us who focus on the divey/distribution cash flow thrown off by their investments, it makes absolutely no sense to PU, keeping a bucket of cash around earning diddly squat as opposed to all buckets in earning, say, 10%.  Think opportunity cost.

Like bonds, preferreds, or any/all high yield investments where the majority of the return comes from yield, not capital appreciation/depreciation!


The key word is, EARNING, not merely SENDING 10% (or any amount) to you, regardless of whether it's being earned or not.  And earning an honest 10% a year, year in and year out?  A little hopeful (not to mention unlikely), perhaps?  Heck, I'd LOVE for my investments to EARN 10% a year; year in and year out.

And I might be willing to pay you, say, a 10% divey (until I can't) if you want to send ME, say, $1M to invest in my, Racqueteer, Shoot for the Moon, super-special, Income Fund!  What could go wrong?  ;-)

0 Kudos
bilperk
Participant ○○○

Re: R48 - pyramid up


@cliff wrote:

 

Like I said, chang, you’re a smart guy. You’ll figure out the math.

 


What 48 never provides, because he can't, is how much money he has left on the table with this method as opposed to methods that encourage buying low, or at least DCA.  What you get is anecdotal stories of success that, even if true, don't prove anything.  For example, if Cliff buys an MLP at lower and lower prices, and it continues to go down, does that mean it will never go up again?  And when it does, he will have a ton of low priced shares working for him, while 48 may wait years to get back to his last price.

Nothing is certain in investing, but the historical bias is for the market, and its components, to trend up.  Buying hamburgers at high and higher prices doesn't keep you from getting fat, it just means you are eating overpriced hamburgers.  Buying hamburgers on sale makes more financial sense.

0 Kudos
bilperk
Participant ○○○

Re: R48 - pyramid up


@chang wrote:

@chang wrote:

But as I mentioned below, with my McCormick example, and PRIJX, and many others over the years, I am terrible at buying on the way up. I mean it - terrible. I guess I need to have more faith in momentum; in which I usually have very little faith at all.


One comment to add to this. Considering that the long-term trend of the stock market is up, it's a miracle that I managed to get a decent sum of money into the market over the years, and find myself in the green. All I can say is -- and I know R48 will agree and FD will roast me -- thank God for volatility! If every asset and fund rose gently upward in a uniform manner, I wouldn't have any money invested! I'm an incorrigible and unrepentant dip-buyer, and for someone like me volatility is a blessing.


Volatility is your friend while working and can be your friend if one has a lot more saved than 25X their expenses in retirement.  Otherwise, in retirement, volatility is no friend, it is just tolerated up of one's risk profile. 

0 Kudos
ElLobo
Participant ○○○

Re: R48 - pyramid up


@racqueteer wrote:

@ElLobo wrote:

For those of us who focus on the divey/distribution cash flow thrown off by their investments, it makes absolutely no sense to PU, keeping a bucket of cash around earning diddly squat as opposed to all buckets in earning, say, 10%.  Think opportunity cost.

Like bonds, preferreds, or any/all high yield investments where the majority of the return comes from yield, not capital appreciation/depreciation!


The key word is, EARNING, not merely SENDING 10% (or any amount) to you, regardless of whether it's being earned or not.  And earning an honest 10% a year, year in and year out?  A little hopeful (not to mention unlikely), perhaps?  Heck, I'd LOVE for my investments to EARN 10% a year; year in and year out.

And I might be willing to pay you, say, a 10% divey (until I can't) if you want to send ME, say, $1M to invest in my, Racqueteer, Shoot for the Moon, super-special, Income Fund!  What could go wrong?  ;-)


Well, if the choice is between two funds, one of which you expect to appreciate 10%/year, in order for PU to work out for you, OR another, paying a 10% distribution, which would you choose?  What could go wrong in the first case is that the fund NAV goes down.  What could go wrong in the second case is that the distribution is cut!

Think 10% is too high?  That's the long term return of the stock market.  Howzabout 8.35%.  That's what PCI is currently distributing.  I wouldn't DCA or PU into it, nor would you ifn I sent that $1M to you!  You might, however, DCA or PU that $1M into SPY!  8-))

0 Kudos
yogibearbull
Valued Contributor

Re: R48 - pyramid up

GE is becoming good for recent bottom fishers. Today, it even generated a PyrUp buy signal [up-sloping 200-dMA and above 200-dMA]! It generated a false PyrUp buy signal in early-September.   https://stockcharts.com/h-sc/ui?s=GE&p=D&yr=0&mn=6&dy=0&id=p64614067548

YBB
0 Kudos
ElLobo
Participant ○○○

Re: R48 - pyramid up


@bilperk wrote:

@chang wrote:

@chang wrote:

But as I mentioned below, with my McCormick example, and PRIJX, and many others over the years, I am terrible at buying on the way up. I mean it - terrible. I guess I need to have more faith in momentum; in which I usually have very little faith at all.


One comment to add to this. Considering that the long-term trend of the stock market is up, it's a miracle that I managed to get a decent sum of money into the market over the years, and find myself in the green. All I can say is -- and I know R48 will agree and FD will roast me -- thank God for volatility! If every asset and fund rose gently upward in a uniform manner, I wouldn't have any money invested! I'm an incorrigible and unrepentant dip-buyer, and for someone like me volatility is a blessing.


Volatility is your friend while working and can be your friend if one has a lot more saved than 25X their expenses in retirement.  Otherwise, in retirement, volatility is no friend, it is just tolerated up of one's risk profile. 


Volitility is your friend even in retirement.  Think rebalancing, buy low sell high.  Especially ifn your retirement withdrawal strategy doesn't involve selling shares to fund a withdrawal, where your total portfolio distribution cash flow completely covers it, hence SOR risk isn't an issue! 8-)

Remember, just like you have PU, you have Pyramid Down and just like you have DCA, you have Reverse Dollar Cost Averaging!

0 Kudos
retiredat48
Participant ○○○

Re: R48 - pyramid up


@bilperk wrote:

@DJANG0 wrote:

Chang, have you considered "value averaging"? 

For example, I know I want to have $100,000 in a fund by year 5. I'm investing $5000 every quarter, or $20,000 annually, but I adjust each new contribution to incorporate performance. If the fund is up $500 since my last purchase, my next purchase is $4500. If the fund is down $500, my next purchase is $5500.

Admittedly, lump sum investing will unusually outperform value averaging, but for nervous investors like myself, value averaging provides a disciplined method of building a position over time and allows me to sleep a little better.


Value averaging probably works best when used in a systematic investment program where one is using new dollars from some source like wages instead of a choice between a lump sum or DCA.


+1

I consider value averaging could provide a small enhancement to straight Dollar Cost Averaging.  However, to me in the past, VA requires one to steadily keep  fund tracking data, and to do the calculations that may signal a continuing buy.  Many investors reported it is  cumbersome.

R48

 

0 Kudos
retiredat48
Participant ○○○

Re: R48 - pyramid up


@ElLobo wrote:

PU is a useful tool for those who invest and focus on funds/investments that they expect to appreciate and to avoid capital losses.  For those of us who focus on the divey/distribution cash flow thrown off by their investments, it makes absolutely no sense to PU, keeping a bucket of cash around earning diddly squat as opposed to all buckets in earning, say, 10%.  Think opportunity cost.

Like bonds, preferreds, or any/all high yield investments where the majority of the return comes from yield, not capital appreciation/depreciation!


R48 reply:  While Capecod does, I do not use PyrUp for bonds/preferreds/or other high yield type investments...like PCI.

R48

 

0 Kudos
retiredat48
Participant ○○○

Re: R48 - pyramid up


@bilperk wrote:

@cliff wrote:

 

Like I said, chang, you’re a smart guy. You’ll figure out the math.

 


What 48 never provides, because he can't, is how much money he has left on the table with this method as opposed to methods that encourage buying low, or at least DCA.  What you get is anecdotal stories of success that, even if true, don't prove anything. 

R48 in blue: Simply not true.

First, PyrUp works 100% of the time.  You sacrifice a little on the upside after  a full position is achieved, in a strong upward bull market.  However, if either a flat or down market, (where only partial positions were taken) you lose far less than with dollar cost averaging, or lump sum, the two other alternatives.

Second, I have demonstrated PyrUp real time. for several years, in a continuous thread called R48, Norbert and Chinwhisker's Investment Challenge, whereby many posters kept portfolios real-time.  All trades posted real time on M*.  I finished in first place.  Max drawdown during the 2008/9 bear market was about 10%.  Huge gains since.

For example, if Cliff buys an MLP at lower and lower prices, and it continues to go down, does that mean it will never go up again?  And when it does, he will have a ton of low priced shares working for him, while 48 may wait years to get back to his last price.

No.  I explained below how PyrUp saved my rear end in my MLP ownerships.

Second, the rules of PyrUp I promote (and use) are:  When you hit the six month point, without making new purchases, you essentially START OVER.  Assess what is wrong with your fund or situation.  Normally, you invest elsewhere, starting with  new bucket sizes.  You do not sit and wait.  Rather, you pour a glass of champaign to R48, for PyrUp saved you from sitting there for years with "dead money."  If you go years and want to buy further into MLPs, you simply "start over" with PyrUp.  Rather simple.

 

Nothing is certain in investing, but the historical bias is for the market, and its components, to trend up.  Buying hamburgers at high and higher prices doesn't keep you from getting fat, it just means you are eating overpriced hamburgers.  Buying hamburgers on sale makes more financial sense.

A strawman type comment.  People accumulate money to invest over the years.  They mostly have to buy at higher and higher prices.  Like, in thirty years I have never held a Capital loss position in my portfolio.  Further,  with the stock market hitting an all time high yesterday, if I incorporated your viewpoint, I would never be able to add to my mutual funds, because it would be at higher prices.  I would be sitting maybe forever.

Lastly, there are always markets/segments where prices are not at these highs you talk about.  Like today, Emerging Markets...or Financials.  Always an opportunity somewhere.

R48 in blue.


 

0 Kudos
retiredat48
Participant ○○○

Re: R48 - pyramid up


@ElLobo wrote:

@bilperk wrote:

@chang wrote:

@chang wrote:

But as I mentioned below, with my McCormick example, and PRIJX, and many others over the years, I am terrible at buying on the way up. I mean it - terrible. I guess I need to have more faith in momentum; in which I usually have very little faith at all.


One comment to add to this. Considering that the long-term trend of the stock market is up, it's a miracle that I managed to get a decent sum of money into the market over the years, and find myself in the green. All I can say is -- and I know R48 will agree and FD will roast me -- thank God for volatility! If every asset and fund rose gently upward in a uniform manner, I wouldn't have any money invested! I'm an incorrigible and unrepentant dip-buyer, and for someone like me volatility is a blessing.


Volatility is your friend while working and can be your friend if one has a lot more saved than 25X their expenses in retirement.  Otherwise, in retirement, volatility is no friend, it is just tolerated up of one's risk profile. 


Volitility is your friend even in retirement.  Think rebalancing, buy low sell high.  Especially ifn your retirement withdrawal strategy doesn't involve selling shares to fund a withdrawal, where your total portfolio distribution cash flow completely covers it, hence SOR risk isn't an issue! 8-)

Remember, just like you have PU, you have Pyramid Down and just like you have DCA, you have Reverse Dollar Cost Averaging!


+1, El Lobo.

I personally have not let volatility sway me while investing in retirement.  Partly because I use Pyr Up to get in.

And yes, I Pyramid down, for want of a better term, when I sell also.  Or do same day switches to something new.

Lastly, retirees would be well-served to realize that holding the more volatile investments (which are usually high risk/high reward) it means you can own a lesser portfolio allocation, and get the same bang for the buck.  Like, instead of 50/50 Portfolio, you can hold 40/60 (more fixed income), if the 40% stocks is in higher risk/higher volatility.  Example...investor author/guru Larry Swedroe's portfolio is 15/85.  Fifteen percent in small cap stock funds; 85% muny bond funds.  Get the drift.

R48

 

0 Kudos
bilperk
Participant ○○○

Re: R48 - pyramid up


@retiredat48 wrote:

@bilperk wrote:

@cliff wrote:

 

Like I said, chang, you’re a smart guy. You’ll figure out the math.

 


What 48 never provides, because he can't, is how much money he has left on the table with this method as opposed to methods that encourage buying low, or at least DCA.  What you get is anecdotal stories of success that, even if true, don't prove anything. 

R48 in blue: Simply not true.

First, PyrUp works 100% of the time.  You sacrifice a little on the upside after  a full position is achieved, in a strong upward bull market.  However, if either a flat or down market, (where only partial positions were taken) you lose far less than with dollar cost averaging, or lump sum, the two other alternatives.

  You don't "lose" just because your fund is down at some point.  You buy more shares at lower prices.  Of course, you have to choose a decent fund that hast been around awhile with good managers (ie anything from Vanguard).  Markets don't goi in nice clean bull, bear, or flat.  The fluctuate like a staircase, both an up staircase and a down staircase but more up staircases overall.  There are plenty of opportunities to buy on the way up at lower prices than at 3-5% NAV increases, for example, buying after a distirbution.

Second, I have demonstrated PyrUp real time. for several years, in a continuous thread called R48, Norbert and Chinwhisker's Investment Challenge, whereby many posters kept portfolios real-time.  All trades posted real time on M*.  I finished in first place.  Max drawdown during the 2008/9 bear market was about 10%.  Huge gains since.

Again, anecdotal and not indicative of the simple math that says buying lower beats buying higher, again if one is buying stable funds for the long haul.

For example, if Cliff buys an MLP at lower and lower prices, and it continues to go down, does that mean it will never go up again?  And when it does, he will have a ton of low priced shares working for him, while 48 may wait years to get back to his last price.

No.  I explained below how PyrUp saved my rear end in my MLP ownerships.

So what?  Even if true it means nothing.  Your MLP "losses" may have been temporary.  And I'm not talking about MLPs or individual stocks anyway.  I'm talking about stable mutual funds.

Second, the rules of PyrUp I promote (and use) are:  When you hit the six month point, without making new purchases, you essentially START OVER.  Assess what is wrong with your fund or situation.  Normally, you invest elsewhere, starting with  new bucket sizes.  You do not sit and wait.  Rather, you pour a glass of champaign to R48, for PyrUp saved you from sitting there for years with "dead money."  If you go years and want to buy further into MLPs, you simply "start over" with PyrUp.  Rather simple.

Rather not simple.  Most of us don't want the "start over" as often as you do or hold 30 or 40 funds.  You may well be good at what you do, but it is complicated and time consuming. 

Consider this.  If you and I buy X number of shares of XYZ fund today, 3 years from now the NAV of the fund will be the same for both of us   If I buy 5 times on a dip, and you buy 5 time on a 3% increase in NAV, I will have more money in my account nad I will have spent less to buy my shares.  What you are pushing is a psychological crutch, but it makes no real investment sense.

 

Nothing is certain in investing, but the historical bias is for the market, and its components, to trend up.  Buying hamburgers at high and higher prices doesn't keep you from getting fat, it just means you are eating overpriced hamburgers.  Buying hamburgers on sale makes more financial sense.

A strawman type comment.  People accumulate money to invest over the years.  They mostly have to buy at higher and higher prices.  Like, in thirty years I have never held a Capital loss position in my portfolio.  Further,  with the stock market hitting an all time high yesterday, if I incorporated your viewpoint, I would never be able to add to my mutual funds, because it would be at higher prices.  I would be sitting maybe forever.

Lastly, there are always markets/segments where prices are not at these highs you talk about.  Like today, Emerging Markets...or Financials.  Always an opportunity somewhere.

R48 in blue.

Well you should tell that to the folks who recommend DCA on a regular basis.  Hundreds of references exist to this method as prices do go up and down, but none to your method.  Like Cliff says, when one thinks about it, MAKING A RULE TO ONLY BUY HIGHER AND HIGHER is obviously not an optimal system for wealth accumulation.


 

0 Kudos
ElLobo
Participant ○○○

Re: R48 - pyramid up


@retiredat48 wrote:

@ElLobo wrote:

PU is a useful tool for those who invest and focus on funds/investments that they expect to appreciate and to avoid capital losses.  For those of us who focus on the divey/distribution cash flow thrown off by their investments, it makes absolutely no sense to PU, keeping a bucket of cash around earning diddly squat as opposed to all buckets in earning, say, 10%.  Think opportunity cost.

Like bonds, preferreds, or any/all high yield investments where the majority of the return comes from yield, not capital appreciation/depreciation!


R48 reply:  While Capecod does, I do not use PyrUp for bonds/preferreds/or other high yield type investments...like PCI.

R48

 


I don't use PyrUp for anything since I never INVEST in low yield ANYTHING!  8-))

My lowest yielding fund is SDYL, the 2X leveraged stock fund with the SDY ETF as its base.  It's currently distributes 5.36% and is all 20 year divey aristrocrats within the S&P1500, not debt or preferreds.  I also hold PCI and PFFL

0 Kudos
ElLobo
Participant ○○○

Re: R48 - pyramid up


@retiredat48 wrote:

@ElLobo wrote:

@bilperk wrote:

@chang wrote:

@chang wrote:

But as I mentioned below, with my McCormick example, and PRIJX, and many others over the years, I am terrible at buying on the way up. I mean it - terrible. I guess I need to have more faith in momentum; in which I usually have very little faith at all.


One comment to add to this. Considering that the long-term trend of the stock market is up, it's a miracle that I managed to get a decent sum of money into the market over the years, and find myself in the green. All I can say is -- and I know R48 will agree and FD will roast me -- thank God for volatility! If every asset and fund rose gently upward in a uniform manner, I wouldn't have any money invested! I'm an incorrigible and unrepentant dip-buyer, and for someone like me volatility is a blessing.


Volatility is your friend while working and can be your friend if one has a lot more saved than 25X their expenses in retirement.  Otherwise, in retirement, volatility is no friend, it is just tolerated up of one's risk profile. 


Volitility is your friend even in retirement.  Think rebalancing, buy low sell high.  Especially ifn your retirement withdrawal strategy doesn't involve selling shares to fund a withdrawal, where your total portfolio distribution cash flow completely covers it, hence SOR risk isn't an issue! 8-)

Remember, just like you have PU, you have Pyramid Down and just like you have DCA, you have Reverse Dollar Cost Averaging!


+1, El Lobo.

I personally have not let volatility sway me while investing in retirement.  Partly because I use Pyr Up to get in.

And yes, I Pyramid down, for want of a better term, when I sell also.  Or do same day switches to something new.

Lastly, retirees would be well-served to realize that holding the more volatile investments (which are usually high risk/high reward) it means you can own a lesser portfolio allocation, and get the same bang for the buck.  Like, instead of 50/50 Portfolio, you can hold 40/60 (more fixed income), if the 40% stocks is in higher risk/higher volatility.  Example...investor author/guru Larry Swedroe's portfolio is 15/85.  Fifteen percent in small cap stock funds; 85% muny bond funds.  Get the drift.

R48

 


Leverage gives you twice the return for the same buck.  My retirement portfolio is fully leveraged, using 6 funds (5 ETNs, 1 CEF).  Here is what it looks like.  Unleveraged, it would yield just under 6%.  At 2X leverage, the volatility is twice that with no leverage:

 AllocationYield
Preferreds (PFFL)23%9.82%
Stocks, growth (SDYL & DVYL)23%5.36% & 7.58%
Bonds (PCI)20%8.35%
Stocks, MREITs (MRRL)17%21.90%
CEFs (CEFL)17%17.10%
Weighted Average for portfolio 11.88%
Overall allocation40/43 + CEFL 
0 Kudos
PatMorgan
Explorer ○

Re: R48 - pyramid up


@cliff wrote:

 

Like I said, chang, you’re a smart guy. You’ll figure out the math.

 


Not chang, but the math that I have figured out is at odds with the statement that R48 made in a post a few hours ago that "PyrUp works 100% of the time." PyrUp does not work 100% of the time in the sense of better return than lump sum or DCA 100% of the time.

In that post, R48 includes the rule: "When you hit the six month point, without making new purchases, you essentially START OVER."  That rule was not in the post that R48 made on Monday. That post had an example of one buy rule:

Can you calculate let's say 3% of an NAV, and add it to your previous  purchase price? Like, if you bought a fund at $10.00/share, the next buy should not be make until the fund share price gets at or above $10.30, the next buy-in price.

Then that's all there is.  There are no exceptions.  Quite simple, no?

It looks as if that is not all there is. There are exceptions: such as the recent statements about a six month reset and that "Investors can buy the dips using Pyramid Up." Quite simple? No.

0 Kudos
norbertc
Contributor ○○

Re: R48 - pyramid up

"First, PyrUp works 100% of the time." @retiredat48 

No system in the history of investing has worked 100% of the time.  R48's system is the first to achieve a perfect record.  We're witnessing history being written as we speak.

No doubt our R48 is going to be nominated for the 2020 Nobel Prize in Economic Sciences. You read about it here first.

N.

0 Kudos
retiredat48
Participant ○○○

Re: R48 - pyramid up


@PatMorgan wrote:

Not chang, but the math that I have figured out is at odds with the statement that R48 made in a post a few hours ago that "PyrUp works 100% of the time." PyrUp does not work 100% of the time in the sense of better return than lump sum or DCA 100% of the time.

 

 

 


R48 reply:  Except I did not say that it is always "better returns"!  Here are my posted words:  "First, PyrUp works 100% of the time.  You sacrifice a little on the upside after  a full position is achieved, in a strong upward bull market.  However, in either a flat or down market, (where only partial positions were taken) you lose far less than with dollar cost averaging, or lump sum, the two other alternatives."

I did not claim the returns are always superior.  I clearly stated that YOU SACRIFICE A LITTLE ON THE UPSIDE, AFTER A FULL POSITION IS ACHIEVED, IN A STRONG UPWARD BULL MARKET.

Yes, this is the insurance you pay with PyrUp.  You greatly protect yourself on the flat or downside market, giving up some total return on the  case of straight up markets.  But the added benefit is you get started.  We have posters on these forums who have not invested in the market since the 2009 bear market...because they couldn't get started.

Bottom Line:  Lump sum, DCA, and PyrUp each work 100% of the time in that you get the risk/reward you select.  PyrUp is the best approach to meeting Buffett's rule one:  Never lose money; and his rule 2: re-read rule one.

R48

 

0 Kudos
Community Manager RyanM Community Manager
Community Manager

Re: R48 - pyramid up

Locker room talk removed. Apologies if some on-topic posts were caught up in the clean sweep. 

0 Kudos
Howaya
Explorer ○

Re: R48 - pyramid up

Phooey, I likely missed some truly funny stuff.  By the time I read Norbert's entry I was already laughing pretty hard.

0 Kudos
Fishingrod
Explorer ○○

Re: R48 - pyramid up

Yes, Howaya

M*Ryan took care of that problem lickety -split.

0 Kudos
Announcements

To learn more about the recent changes to Morningstar.com, please see the updated FAQ.

See recent posts and all our forums or access the old forums here.
 

You can read the community guidelines in