As regards the 40% 1-5 year ladder and 10% EDV instead of 25/25 STTs and coupon-bearing LTTs idea: I tried a backtest of that (well, sort of...I used 37.5% STTs and 12.5% zeros) from 1952-67 (the years I was concerned about the PP underperforming); it added about 17-18 basis points overall (to the ...

First, before we get too far away from it, that's a great post above.  Very thoughtful and detailed.  Thanks for taking the time to organize your thoughts in that way. MediumTex, 1979 was a year when gold rose 136%. If you expect gold to rise that much again then be my guest (that would put it at a...

The elephant in the room IMO is that the asset (cash) that is SUPPOSED to do OK in a rising rate environment simply does not have the volatilty that LTTs have when rates fall. No amount of tinkering with how many LTTs or what kind of LTTs you hold will change that. The PP thrives on volatility and ...

Overall, D1984, I think you make some really good points Thank you, systemskeptic and it appears you share the same concerns that I do. Yep....rising rates and what they'd do to the PP's returns (and how cash may not be powerful enough to prevent it) One thing to mention about the volatility of cas...

The OP is gone for a day and a half and the thread gains almost three pages... ;D lots of good points I want to address. Stone As regards equality  (and Japan vs the Anglo-American economies in this matter): Maybe it would be better if we were as equal as they were...maybe not. They are a totally di...

I think this needs to be re-iterated.  I believe this will prove to be the Achilles heel of the PP if (when) rates rise.  Gold, stocks, and LTT are all capable of throwing out 30% gains in a year but cash simply cannot do this, at best it can gain a few % per year over it's current value. Gold prot...

I was meaning the scenario just as you described where the assets just zigged and zagged around taking turns to rise and fall with no long term trend for any of them. That is what stocks have done for the past decade and perhaps is what they "normally" do if you exclude the freak event of...

Craigr, I wasn't saying that high inflation necessarily led to low unemployment (as I don't believe it typically does) but that given a choice, someone might not choose high deflation vs high inflation IF the opportunity cost of choosing high deflation (and by "high deflation" I mean defla...

The key thing from what I can see is that "savings" have much less scarcity value now than they did. That is basically the same thing as saying that there is a lot of treasury debt out there. As such isn't it hard to imagine interest rates going up? I presume that we will have a long peri...

And these are all possible points for sure. But what is your proposed alternative? I am asking because I have thought a lot about these issues in the past and realized that 1) I was usually wrong about what would happen. 2) Even if I was right I might not have been able to correctly guess how the m...

As I type this, interest rates (both short-term and 30-year) are at historical lows, gold is up almost sevenfold from just a dozen years ago, foreign stocks have been hammered fairly recently by what's going on in Europe, and US stocks (at least the S&P 500) have shown almost no nominal growth s...

And don't forget Japan's stock market declined 90% during WWII. I presume you mean in inflation-adjusted terms, not nominal; although my understanding was that most of the actual inflation-adjusted decline came in the immediate postwar years rather than during the war itself; ff you look at http://...

Clive, I have two questions as regards your chart of the Japanese PP vs the 15-15-70: One, why use the 15% US market (in yen) instead of a mix of say 60% EAFE ex-Japan in yen and 40% US market in yen for the 15% stock exposure (so 9% EAFE ex-Japan and 6% US TSM for a total of 15% )? Using only the U...

Given the answer to my query, YTD return for the HB classic.... how, or better yet, what equities are held? That is, when 10-12% return on the PP is given what is the equity/equities held? SPY or Windsor II (as per HB suggested back in '99)? Though LTT performed well, gold, has fallen badly and sto...

An Icelandic PP saved up for a trip to Disney Florida would have needed to be three times larger after the 2008 Icelandic event than before the event. So you could interpret it as a -66.6% event. It depends upon how you define 'well over 24%'. 33.3 / 24 = 38.75% higher in percentage terms - but in ...

Clive, If you hold each rung to maturity there's little difference between serial (buy all into a one year every year) or parallel (holding 1/5th in each). In some cases, such as in the UK, it can be more tax efficient to hold a ladder - for example we can buy Gilts with 5+ years inside an ISA (non ...

Extending Simba's spreadsheet to include silver and since 1972 a PP type blend of 12.5% in each of SCV, EM (more equal weighted type holdings), silver and gold and 25% weightings into 5 year treasury's (similar to a 5 year cash ladder) and LTT's, beat a Coffee House Portfolio (diverse 60% stock/40%...

What about holding 50% in PLW 1 to 30 year Treasury Ladder ETF as both the cash and LTT holdings. PLW (and the Ryan 1-30 year laddered Treasury index for 2006-2007 since it is an approximation of the same concept and predates the ETF by almost two years) does seem to perform fairly similarly on ave...

So theoretically if I don't want to dick around with carrying the card and using it to buy gum and get $100 cash back at a time, here's my suggested workflow that might work: You would actually only have to buy some gum once per month as well if you got $500 cash back at WalMart. I suggested gum or...

http://bucks.blogs.nytimes.com/2011/11/10/union-plus-prepaid-card-comes-with-a-high-yield-savings-account/ The prepaid card mentioned above is linked to a savings account that pays 5.01% on up to $5,000. One used to have to be an AFL-CIO member to sign up for this but apparently now can just join W...

You will not be selling the bond before it matures, so you will not have a loss. The point is that you only do this with a portion of your cash assets that you are highly unlikely to need to touch. Correction....you will not have a REALIZED loss (since you didn't sell or mark-to-market). That doesn...

Good idea....except that it defeats the whole purpose of holding short-term cash equivalent and near-cash instruments. The 30-year US Treasury bond is currently yielding around 2.95% . If 30-year yields rise (and I'm not even talking about Volcker-style rates; even a moderate rise would hurt, as I'm...

To get the annual T-Bond returns back to 1928, I linked 10 years, then 20 years, than 30 years from FRED. Ten-year T-bonds aren't really truly "long-term" bonds; look at what happened in the 1990s and 2000s when they were used in the Japanese PP (they worked as expected-prices rose as yie...

A couple of notes on performance of a hypothetical 4x25 PP in the late 1920s through early 1950s era that might shed some additional light on the poor "real" (inflation-adjusted) performance during the late 30s through 1951: One, as mentioned earlier in this thread, gold prices were contro...

The default on that calculator is 60 months (five years) but since it can be set for up to 360 months (since the settings for price, rate, months to maturity can all be changed)  it should work for testing out LTTs