@frugal - Unfortunately I don't know a thing about Euro investing, so I wouldn't be much help in replicating any of this for a EU PP, sorry. @Arturo - Good questions... let me address them as I can: 1.  I'm not aware of prior backtesting which showed annual rebalancing with a higher CAGR.  To me, th...

So my prediction was the markets already priced the uncertainty in and nothing would really happen. In total in terms of the Permanent Portfolio, that's pretty much what transpired. Total value was barely moved over the last few days of the year… Except that we didn't go over the cliff. You're sayi...

ISTJ
I (moderate) S (moderate) T (heavy) J (heavy)

Interesting to see so many I's posting on a public Internet forum

Following up from my reply to MG above... I took a moment and did what you suggested and created a new column using MaxDD as the risk component.  It turns out that it does materially change the optimum allocations using that ratio, and that the standard deviation and max drawdown do not have a linea...

I wouldn't say the optimal allocation is close to 25/4, but it depends on how you define risk.  Volatility is not risk.  If you use max drawdown for your risk criteria in Sharpe, then the optimal allocation will be much different as I posted in another thread (probably gone due to the forum softwar...

I was wondering how the rebalance bands were applied in these different scenarios. Wouldn't 15/35 rebalance bands only apply to the 25x4 portfolio? That is an excellent question!  And to be honest, one I hadn't given a whole lot of thought before running this simulation... Here's the way it works c...

frugal wrote:What I also would like to have is a daily chart of HBPP performance for the same period. Can you publish it?

I'll do one better... you can generate your own here:

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

Have fun. 

You're worried about the Fed printing 1.1 trillion dollars next year… what if I told you that the private money supply was contracting by that amount or more? Or that banks refused to lend it... or that people refused to borrow it... or that borrowers refused to spend it. Pointedstick is right on t...

Some of you are aware I have been working on some backtesting code for the HBPP.  I've been able to put together something that allows me to choose arbitrary dates and spit out the CAGR, max draw down, standard deviation, etc for the portfolio over a given time period. Having built and tested that t...

Upon review of the answers, I think some clarification is in order for one of the options. The market cannot have priced in a *certainty* of going off the cliff because it has not happened, and is not 100% certain to happen.  What the market has priced in is the current likelihood of going off the c...

melveyr wrote: If we go over the cliff in a nasty way LLT will shoot up, stocks will shoot down, and gold is a wild card depending on how bernanke responds, but it would probably move down because bernanke is out of policy ammo.

I'll second that.

From 12-20-2002 to 12-20-2012:

CAGR:  9.44%
Std Deviation:  6.59%
Max drawdown:  14.37%

All of my work has led to me believe the PP is overweight gold, but the arbitrary symmetry of the 4 way split makes it easy to explain and look at. I had the same suspicion, so I decided recently to analyze *every* permutation of dividing a portfolio into the 4 assets (from 1-100%).  Yes, all 176,8...

Yes, but I provided examples of where tyrannical governments were overthrown (relatively quickly) without the need for overwhelming firepower. It is kind of hard for a "government" to rule when the majority of citizens are out in the streets even though they might just be carrying rocks a...

I for one don't really understand the tyrannical government argument that gun advocates make. That's most likely because you're 250 years removed from being under the thumb of an overseas, tyrannical government that facilitated that line of thinking.  The framers were, fortunately, prescient enough...

Thanks for the review site, BearBones.  I hadn't seen that before, and I'm researching online metals dealers at the moment so it's very timely! Not to hijack a thread, but I can't find the answer to a seemingly simple question:  Does a US resident pay sales tax when buying gold from an online dealer?

You're right, an 18% drawdown is not insignificant.  But you have to keep it in perspective... Over that same period, a 100% stock portfolio had a MDD of 55%. A 60% stock, 40% LTT had MDD of 34%. Both of those had similar returns to the HBPP, so on a risk-adjusted basis, the HBPP absolutely crushed ...

Interesting tidbid from this Schwab article : While there's no guarantee that any ETF (or any other investment, for that matter) will continue operating indefinitely, a good rule of thumb is to stick with ETFs with more than $100 million in assets. The vast majority (89%) of ETFs that have closed ha...

Honest question:  In what way is IAU less appealing than other gold ETF alternatives for taxable accounts?

If you reinvest dividends and rebalance on 35/15 bands, my data shows a 18.4% maximum drawdown from January 1980 to March 1980.

2008 is another interesting year because although the HBPP ended basically flat, there was a 14% drawdown from March to November of that year.

MediumTex wrote:The good news is that there probably won't be any serious inflation for a long time.

But but but... Berknanke!  Printing!  AHHH!   

Ok, but that's not a margin call.  Most if not all jurisdictions will let you cure any "default" as minimal as insurance issues.  I've never heard of a home loan with an acceleration clause based on equity/market value.  In fact, in non-recourse states, attempting to foreclose an underwat...

Here are the results from Jan 1, 1972 to yesterday's close.  This assumes you can buy fractional shares of everything, and there are no transaction costs. Rebalance Daily http://www.peaktotrough.com/images/rebal-daily.jpg Rebalance 35/15 Bands http://www.peaktotrough.com/images/rebal-3515.jpg Rebala...

Say what you will, but PERM sure seems to be tracking well with the HBPP since inception... these both start and end on the day the fund began trading.  Note the scales are not the same, however... HBPP http://www.peaktotrough.com/images/hbpp-vs-perm1.png PERM http://www.peaktotrough.com/images/hbpp...

dragoncar wrote:1) No margin calls on your mortgage

Yes and no.  Many of them are callable by the mortgagee under the default provisions under the note.  Bear in mind that "default" could potentially be something as minor as letting your home owners insurance lapse...