Price function is a bit confusing, moreover we have to make some assumptions for the calculations: I assume initial bond price is allways 100 with a coupon (rate) equal to last year ending price, then with Price function I calculate the ending price of a hypothetical 30 year bond (which equals price...

That's great, you shouldn't invest in anything you don't understand, checking the sorces and making your own calculation is part of the understanding process! About using real bonds and prices for calculations I agree is a better option to find real results. However, my aim in the blog was to show a...

The differences you've found with different bond maturities (including the EXX6) are expected: longer bonds are more volatile so you can expect bigger ups and downs with perfect correlation. However, with the e20y ETF you can expect some different behavior, as it includes less quality bonds, and my ...

On your website I see that you also use 30yr german bonds with a return of 10.68%. I am curious which bond you used in 2018, so I can check my calculations. I use the information published by the Bundesbank about 30 year bond yields, which are estimated from the yield curve of listed German bonds: ...

Bond prices never include interest payments, therefore you have to consider them to calculate historical returns. However, you must consider also the price paid for the bond to calculate the real interest (dividend) received with the coupons: In your examples, if you bought the first bund (2048) on ...

That's the "current yield", what is usually used as "yield" is the "yield to maturity":

https://www.investopedia.com/terms/y/yi ... turity.asp

Hi Tyler,
I hope you don't mind, but I used your pictures for a spanish post about the PP here:

http://www.rankia.com/blog/cartera-perm ... o-graficos

Some simple options:
-Sell only from the stocks found with less gains.
-Sell something now and something more in january
-Rebalance stocks to 30% or so, instead of 25% (we don't really know if stocks will be up or down next years, but we know for sure that you are going to pay taxes on the sellings).

The PP theory says gold should do well when inflation is high but the run up since 2002 seems to have very little to do with inflation and much more to do with the global increase in all commodity prices – steel, oil, etc. etc. based on the global (read Chinese) surge in consumption. Inflation was ...

It's a problem of reversion to the mean VS momentum, sometimes you will earn more with that rebalancing, sometimes you won't. However if you pay taxes the less rebalancing the better.

I posted a summary of this year's results. Looks like around -2.4% for the year: https://web.archive.org/web/20160324133409/http://www.crawlingroad.com/blog/2013/12/31/permanent-portfolio-2013-results/ As I said in the blog, if you check again 2013 returns in morningstar the results are a bit better

HB said that lots of things can happen, but whatever it is it will always lead to one of the 4 economic conditions. So financial repression is no exception, it's just a policy that can be consequence or cause of one of the 4 economic climates.

Big players (and the government is one of the biggest) allways try to manipulate markets, but markets have their own forces. You talk about bond market for example, of course government can try to lower rates and can get it for some time, but if people really think higher inflation is comming they w...

As I understood it, Mr. Bernstein's main criticism of the permanent portfolio is that 25% in long term bonds is a very expensive way to insure against what he considers to be a very low probability event. He believes that the biggest risk facing investors is, by a long shot, inflation. As an altern...

rickb gave a very good explanation and MediumTex's is intuitive too. However, there is still the question about how the hell Harry Browne made his calcs for the estimated long term Permanent Portfolio real returns. In fact, I think in his first books (3 decades ago) he estimated 5% real return, and ...

I think Bernstein is one of the few respected academics who understand and value Harry Browne's work. I allways enjoyed his books, the four pillars is one of my favourite investments books ever, but I haven't read his "investment for adults" series and it seems very interesting.

frommi wrote:

brownehead wrote: A PP without cash is far less stable, if you backtest it of course the CAGR is higher because the growing assets are the other 3, but DDs and volatility are much higher too!

Give me numbers!

You can backtest a lot of things here:

http://www.peaktotrough.com/hbpp.cgi

A PP without cash is far less stable, if you backtest it of course the CAGR is higher because the growing assets are the other 3, but DDs and volatility are much higher too!

The theory behind the PP is that it is a long term investment strategy. Makes a lot of sense. But when you get to near retirement age "long term" is relative. I  recently spent a few days making calculations and found that during my pre-PP 30-year investment history I averaged 6% annual r...

Harry Browne did the same. Cash doesn't cover recessions but he added it anyway, probably more for stability than anything else. Stocks, bonds and gold are the necessary ingredients for a PP. Beyond that it's personal preference. Harry himself suggested in his book 'why the best-laid...' that you c...

It has no sense to look for a new asset without a new economic scenario to cover. If you add new assets just for more "asset diversification" you have to find in which scenarios they work better and reduce the corresponding part from the standar PP. For example, if you add REIT and think t...

As far as 0% on the downside: I'm assuming there was never a point at which any asset was worth zero.  brownehead, can you tell us what the lowest point actually was for any asset in this simulation? Of course no asset went to zero, but gold almost did: minumum for stocks was 9.63% in 1979 (gold 71...

Btw, other "interesting" bands for a possible VP based on the PP assets: 0/50  ->  CAGR: 10.40%  stdev: 8.61 (best risk adjusted return, for that historical period) 0/62.5 ->  CAGR: 11.72%  stdev: 13.07 (best return, for that historical period) Thanks brownehead.  Very interesting. In sum...

I think the results aren't that much different for 20/30 rebalancing vs. 15/35..  I personally make rebalancing optional at 20/30 (based on my own discretion) and mandatory at 15/35. According to my backtests for a strict PP portfolio (with t-bills) there were some differences in CAGR and volatilit...

The key is the "strong urge", if it is because you dont't feel your portfolio safe enough with so many stocks, go ahead and get your pace of mind! The worst sceneario would be to lose some stock earnings... but chances of losing and winning are equal (I mean nobody know) so the pace of min...