No where to hide

[MachineGhost]

In your eyes, the PP can do no wrong. Why don't you admit that it is not working as expected. Down 2/4 years or 50% of the time I have been invested.

If the PP is too risky for you as it is for me, I have come up with an alternative: the PP Jr.

[MachineGhost]

Yeah, where are those guys?

I heard that one of them ran off to Japan for awhile.

I thought it was Argentina?

And then one of them fled with his ill gotten cash to legally immigrate to New Zealand (of all places!).

[MachineGhost]

unconventional times may call for unconventional investing and i think integrated strategy's  using spia's and perhaps life insurance with your own ivesting may be the new answer for the new times for retirees  .

dead body's are a lot more predictable then markets and rates .

research is showing very good results with integrated  strategy's

I hope you start a new thread on this.  I've always been big on diversifying within the asset classes because human fads are unpredictable to be caught being dead all in one.

[mathjak107]

i didn't plan on it , i get enough grief here  ha ha ha 

[MachineGhost]

If you are going to make a statement like this, how about elaborating on what exactly it means? Without substance, the statement is just blather.

Me, blather?  Never!  I will start a new thread for your sake.

[4x4]

they may end up severely under funded  for that luxury and that is the danger.

There is no alternative.  Load up on obscenely overvalued stocks?  Load up on longest duration T-Bonds while they're at a 5,000 year low in interest rates, soon to reverse course starting in the next few days?  Load up on a useless, barbarous lump of shiny metal that is no longer money, never will be again and will only have demand in that short period of time where confidence in government and the financial system has been lost but is still standing like a mirage?

Seriously man, you better plan for a SWR way below what you expect historically because neither stocks nor bonds are going to offer that for the next 17 years.  Again, what is the alternative?

In reference to the portion above I bolded, truer words may have never been spoken.

Is there not ANY time in history we can look to to see how history will rhyme this time around???

[DragonJoey3]

they may end up severely under funded  for that luxury and that is the danger.

There is no alternative.  Load up on obscenely overvalued stocks?  Load up on longest duration T-Bonds while they're at a 5,000 year low in interest rates, soon to reverse course starting in the next few days?  Load up on a useless, barbarous lump of shiny metal that is no longer money, never will be again and will only have demand in that short period of time where confidence in government and the financial system has been lost but is still standing like a mirage?

Seriously man, you better plan for a SWR way below what you expect historically because neither stocks nor bonds are going to offer that for the next 17 years.  Again, what is the alternative?

In reference to the portion above I bolded, truer words may have never been spoken.

Is there not ANY time in history we can look to to see how history will rhyme this time around???

I think there is any number of different ways that things could work out for the better, and the idea that "the good times are over, and we're all screwed" is wrong.

Social Security/Medicare/Medicaid will bankrupt the US!

The most common age in America is now 22!  With the 2nd and third most common ages being 21 and 23! source.  Although millennials may get the rap for having "bad work ethic" so has every other generation for every decade ever, and like it or not they are entering the workforce in droves.  Like it or not old people die, and yes medical care in the US needs reform, but the baby boomers aside we are leveling out in population growth, and there is no reason to think that it won't remain solvent for years to come.

China/India/Brazil is going to overtake us and we will all be broke!

The list of former economic superpowers [Germany, Britain, etc...] has a long list of problems, but life went on in those countries, and life will continue in the US.  Of course China will overtake us in terms of economic output, they outnumber us 3 to 1, how could they not?  It will take time, and there is no reason that even if not the #1 economy in the world that the US will not continue to be prosperous and to provide one of the highest standards of living the world over.

Climate change will kill us all

The good news is many people are waking up to the reality that you can't just take trillions of tons of carbon out of the ground light it on fire and say "nah that won't cause any change at all!"  If scientific data is correct (and I know some reading this would question it) then yes, there will be problems in the future and pipers to pay, but the US is better positioned than most countries to deal with it (sorry Bangladesh you are done for.)

The US will go Japanese and deflation ad nauseum.

There are any number of reasons this won't happen, most of which are too complex to get into on a single comment ranging from exports/natural resources, to birth rates, to immigration and exchange with other countries.  Even if the US does go Japan and deflation continues, the fact is that many reading this are still much better off than their fellow man/ rest of the country.

Terrorists will kill us all.

There are many fewer terrorists than you might think.

Nuclear war with Russia.

Well that's always a possibility, but I don't really think Russia wants that.  At the moment most Russians just want to be able to afford toilet paper.

AND ON AND ON IT GOES!

Back in the "glory days" of the US we had just emerged from WWII, where unemployment was 0%.  We had the highest debt to GDP ratio ever, we went off the gold standard, we were in constant fear of A-bombs falling "Duck and Cover anyone?", we were certain the world would end at any moment, and what followed?  One of the greatest technological and financial growth periods in modern history.  The US went from the superpower that saved the world, to the superpower that owned the world!

I think far too many people look at history, they see 4% as the safe return from the over 100 years of stock market history, and they think, "yea, that'll never last, this time is different."

I think the PP does a great job at providing economic safety in the worst of times, and decent prosperity in the best.  Living in a country that supports free-markets, living below your means, investing the rest, and saving for the future -- these are some of the core tenants of the PP, and they will work.

Perhaps there are dark times ahead, but in the words of Albus Dumbledore ~ "Happiness can be found, even in the darkest of times, if one only remembers to turn on the light.'

[Cortopassi]

Good post to remind us all, especially the older ones among us, that things are never as bad as they might seem.

I still have a good job, a good family, a nice house, smart kids and look forward to the same or better being available to them.  It is very easy to get caught up in the "we're all doomed" mindset.

In fact, I bookmarked the site below a few days ago, just to remind me the majority of people in this world are decent.

http://www.huffingtonpost.com/good-news/

[MediumTex]

The most common age in America is now 22!  With the 2nd and third most common ages being 21 and 23! source.  Although millennials may get the rap for having "bad work ethic" so has every other generation for every decade ever, and like it or not they are entering the workforce in droves.  Like it or not old people die, and yes medical care in the US needs reform, but the baby boomers aside we are leveling out in population growth, and there is no reason to think that it won't remain solvent for years to come.

Our demographics aren't as bad as some other places around the world, but there is still an enormous population that is about to exit the workforce, which will create a set of economic headwinds as the economy tries to structurally contract based upon a lower level of aggregate demand (old people don't buy as much stuff, especially when they don't have any money).

Here is where we are today.  This is unhealthy.  Too many people exiting their peak earning years and the cohort behind them isn't large enough to replace their spending and productivity, while ALSO supporting the people who are leaving the workforce.

[img width=480]http://www.indexmundi.com/graphs/popula ... d-2014.gif[/img]

Back in 1950, we had some rocking demographics.  With everyone smoking, driving unsafe cars, and eating a lot of fat, the herd had been thinned considerably by the time people got to retirement age.  And if you look at that fattest bar at the bottom, that was the baby boomers getting ready for a long life of productivity, consumption and entitlement.

[img width=480]http://2.bp.blogspot.com/-8--qv51wYOE/U ... .35+PM.png[/img]

[Cortopassi]

"Back in 1950, we had some rocking demographics.  With everyone smoking, driving unsafe cars, and eating a lot of fat, "

I think you need to replace the eating a lot of fat with "starting to consume a lot of carbs, esp. sugar"  but that is another discussion.

[MediumTex]

Good post to remind us all, especially the older ones among us, that things are never as bad as they might seem.

I still have a good job, a good family, a nice house, smart kids and look forward to the same or better being available to them.  It is very easy to get caught up in the "we're all doomed" mindset.

In fact, I bookmarked the site below a few days ago, just to remind me the majority of people in this world are decent.

http://www.huffingtonpost.com/good-news/

In the U.S., we freak out when unemployment hits 9% and a few bad cops shoot people during traffic stops.  In many parts of the world, the population has never known unemployment levels below 20% and the military and police kill citizens regularly, and reporters who dare to cover it are often killed as well.

People in the U.S. have this weird tendency to lament the smallest setbacks, blaming them on everyone but themselves, and not realizing that to the rest of the world we must seem like a bunch of spoiled whiny children.  Considering what typically follows a generational financial crisis, the U.S. economy since 2008 has been doing great, but because it hasn't done as well as the 1980s and 1990s, all people want to do is complain.  Babies.

[DragonJoey3]

"Economic Headwinds" does not equate to "Economic Collapse."

I agree that there will be some strain on the economy, but I think Social Security is far from "about to collapse."  A large part of that is due perhaps to the irony that many Baby-Boomers have failed to save for retirement and continue to cling to their jobs.  Thanks to our move to a more service-oriented society many people continue to work into their 60's.

The greatest place the strain will be felt is no doubt the medical system.  But I still see no reason to expect the PP to perform "sub-par" even for years where America is experiencing said "Headwinds."  Though I think in 20 years it will be a great time to be a mortician.

[MediumTex]

Though I think in 20 years it will be a great time to be a mortician.

If an ambitious young person asked me what to do with his life today, I would confidently advise him to become a funeral director, reality TV star, or corporate lobbyist.

The future is bright!

[Reub]

Though I think in 20 years it will be a great time to be a mortician.

If an ambitious young person asked me what to do with his life today, I would confidently advise him to become a funeral director, reality TV star, or corporate lobbyist.

The future is bright!

Now there's a better profession for our resident blood drinker!

[dualstow]

I would confidently advise him to become a funeral director, reality TV star, or corporate lobbyist.

How about a corporeal lobbyist?

[yankees60]

That's pretty much what I switched into, about 26 months ago.  I still like the PP, and think it's a great portfolio.  But I prefer something closer to 30% equity, 60% 5-10YT, and 10% gold.  10% gold happens to be about the max I'm comfortable holding in physical form as well, so it's a good match for me personally.  I don't expect any long term real return from gold, so I hold it almost entirely as a sort of disaster insurance.  And it's also very shiny.

Glad that I'm not the only one who chose this deviation from the 4x25.  I still have abundant respect for those who have stayed the course with the 4x25, it's just not for me right now.

It's quite funny and sad to see how everybody is scared to hold gold..
It is by F A R the safest asset if you compare it to the other 3. (obviously not in paper form)

Sometimes it is not that a person is scared to hold gold, fearful of price declines.  Rather, as Desert points out, there is the real-world problem of holding large amounts of physical gold bullion.  I have yet to hear of a reasonable solution.  Getting a bunch of safe deposit boxes at banks, getting a heavy home safe, hiding coins in your walls and inside your peanut butter jars and bags of rice, keeping it at the Perth Mint, holding paper ETFs, etc.......I have never gotten comfortable with any of these solutions, so now I just don't have much of a gold allocation, even though I think that gold is probably the most reasonably priced of the 4 PP components.

Tonight finished reading Rickards's End of Money book.

In his concluding chapter he recommended holding 10% to 20% in gold (but no more).

He also recommended holding it in physical form but NOT in banks. He did not get more specific beyond that. No answers to any of the real questions Austen Heller asks above regarding holding gold in physical form.

By the way, he had a long, long chapter about how various entities DO manipulate the price of gold.

Vinny

[ochotona]

Not more than 20%. Interesting.

[yankees60]

We're 100% invested in a 4x25 PP and have been for several years.  My experience has been great -- it has been nice and steady through ups and downs.  I have the benefit of remembering when the PP stood firm while various components tanked (including stocks, which freaked out everyone else) and can compare that to previous experiences before I got into the PP, so I have context to fall back on when it struggles for short periods.  I'll add that in my personal situation the PP is fantastic from a tax and liquidity perspective compared to other investment options which makes it even more appealing.  Right now I can't imagine a better portfolio for my personal needs.  Trust me -- I've looked.  And if one ever comes along, I'll happily share it with everyone here. 

For all the hand-wringing about short-term PP performance compared to whatever is hot at the moment, I have yet to find any better way to invest especially once I balance the life tradeoffs for tinkering all the time.  My eventual choice to follow the PP, walk away with my hands off, and turn my financial attention to minimizing my spending and maximizing my savings rather than stressing over markets I can't control was the best financial decision I've ever made.  The opportunity cost of fancying myself an active investor held me back for years by distracting me from the real financial opportunities in life, and I've watched friends and family repeat the same mistakes over and over.

My best advice: The next time markets let you down, don't ask how you should invest differently.  Stop thinking like a victim or a financial pawn.  Ask whether investments are really your best and only opportunity for securing financial freedom.  Find a reasonable "good enough" investment method you can stick with and largely ignore (PP or not -- it really doesn't matter), and take charge of things you can actually control.  Walk away from the message boards and stock tickers and ask for a raise.  Look at your credit card statement and calculate how much more money you'd have in ten years if you actually learned to cook and stopped eating out every day.  Sell your stupid large house and buy a smaller one closer to work.  Laugh with your wife.  Play with your kids.  There's more to life (and wealth!) than CAGR. 

Another "classic" from Tyler that needs to be resurrected so that it can be reread by some or read for the first time by others.

Vinny

[yankees60]

My gold allocation is 100% IAU right now.  But I think holding some physical gold is a great idea and I plan to buy some in the future when rebalancing requires it. 

I'm a natural optimizer so I messed around with various funds and vehicles while generally over-thinking things my first year.  Analysis paralysis started to cost me, so settling on a simple VTI/TLT/IAU/SCHO portfolio was my compromise to let myself chill out and not sweat the small stuff.  It's already light years better than how I used to invest, and I have plenty of time to improve on the foundation as I go. 

Never let the search for theoretical long-term perfection block you from a positive tangible near-term improvement. 

How are you currently doing your gold allocation?

Vinny

[yankees60]

Our small business liability/fire insurance now includes an optional rider for terrorism coverage, by default. At an additional cost, of course.

I've been seeing those for decades now. And, as much as I can, decline the coverage.

Has anyone EVER read of any policy paying out on a terrorism claim?

VInny

[yankees60]

The Permanent Portfolio is as sound as ever.  Naysayers are always going to neigh. 

You can't always get what you want, but wild horses couldn't drag me away from the P.P.

I see that we have a Rolling Stones fan here!!!!

But can anyone explain to me the meaning of Trump playing "You Can't Always Get What You Want" at his rallies? In other words, what message is he trying to convey with that song?

I also see dissonance between the messages at the rallies for conservatives and the lyrics of some of the rock songs that they play at them. I always wonder am I the only one who is perplexed how anyone can choose those songs to be played?

Vinny

[yankees60]

Hello everyone!

I am new here.
I just recently went all in by investing in the PP on 4/22/15.

As of today I am -7.27 on long term treasuries
                        -0.48 on short term treasuries
                        -1.05 stocks
                        -1.27 gold

I have lost 2.52 % of my investment in just a bit over a month.

I feel like there is really no place to hide and all the components are going down simultaneously.

I did not expect this at all. I am not sure what kind of environment we have in the economy because the data provided by govt are very suspicious. I do not know what to do from here on, but I am certainly racking up losses pretty steeply.

Any comments would be appreciated.

Hi FLAGATOR, I feel your pain. Tyler's charts posted elsewhere on this Forum show that the entry year does make a difference sometimes in how the PP performs for a few years post-entry, and if those three years are so painful to the new investor that they bail, then that's not a good thing.

I have advocated being more adaptive as far as getting into the portfolio. This is what I am doing at present. I guess you could say I'm still transitioning in since October 2014.

For better or worse, I follow the opinions of a market watcher who thinks gold will go below $1000 within the next year, then it will stabilize and head higher. Doomer Harry S. Dent thinks gold could go down to $250 by 2020. People who sell gold will always tell you that gold is going to go up starting tomorrow, so you better buy some today! I'm right now at 10.7% gold, my target allocation is 14%, if it goes below $1000 I'm going to my full target, if it drops to $250-$500 then I'm "all in" with a 25% Classic PP allocation.

After getting hammered with everyone else with long bonds since February 1, I hopped out to shorter bond durations. I swapped long Treasuries for SCHZ, the Schwab total bond ETF. It's much less volatile than TLO or TLT. Yes, it has corporate bonds and some high yield, no I don't think all of the issuers are going to default really soon, and it's diversified. My aim is to wait for TLO to go down another 14%-15%, to $58, then re-enter.

Cash? I have the full cash allocation. Ally Bank, 0.99%. Some I-Bonds at 1%. A bit of paper in the safe.

Stocks? Because I am light on gold, my bonds and stocks were both at 32% instead of 25%. I like to keep the ratio 1:1. 25% of my stocks are non-US. Stocks will go down, but I'll see if they grind higher. I don't plan on selling stocks no matter how bad they get in a correction, I kept all my stocks even in 2008-2009, and rebalanced after the blood was flowing in the streets.

So in summary, I am treating gold and long bonds as special cases, because gold has a very volatile recent history (1975-2011) of extreme ups and downs in real terms, and you don't want to overpay for it. Long bonds have just come off the top of a QE policy driven bull market which has no where left to go but down (with volatility), so why stand in the way of the truck while it races towards you? You know it's coming, you hear the engine; stand aside, just for a while. Maybe as short as a few months. But I acknowledge that is not without risks either... long bonds prices could go back up and stay up for years! No one can predict. I'm just sick of the volatility. I'm choosing to take a sedative for a while.

But truly, once I'm "in" the PP, at at least a 14% gold allocation, and my long bonds are restored, I intend to put it to sleep and go on the regular rebalance plan. It's just a matter of easing in, so one don't feel cheated by fate.

My specific advice to you, take it with a grain of salt:

I agree with others who say not to sell your positions, except if you can harvest tax losses to your advantage. If you feel adventurous, trade some of your long bonds for shorter maturities (the very shortest maturity being cash) and wait for long bonds to go on sale... which may not happen for a long time, or it might happen soon.

Can anyone document a Harry Dent prediction becoming true??!!!

VInny

[yankees60]

I converted to the PP  on monday. so far  total portfilio lost .85%  .

An historic post from mathjak!

Vinny

[yankees60]

it counts heavily on trends . gold has been a loser , bonds a loser and stocks treading water,.  the other conservative model i used  was up 1.10% this year  and was a heavy bet on good times and low rates,

i swapped it this week for the permanent portfolio and put over 7 figures in.  i think it is a safer bet since once we get something negative happening the pp can make some money

mathjak,

You came in with optimisim!

Vinny

[yankees60]

That in a nutshell is why you're driving yourself crazy.  It's also why you are perfectly happy with the PP when your other portfolio struggles.  At some point you need to let go and just be satisfied with your choices.  Otherwise you're going to be perpetually unhappy one way or another. 

On a side note, I know from other posts you already have a very sizable portfolio.  Small fluctuations should not really affect you at all in real life.  Why does money cause so much stress, and what are all the ways (not simply portfolio choice) you can constructively address that? You don't necessarily need to answer here.  Just take some time to think about it.

Not to speak for Budd here as I'm sure his portfolio is more sizable than mine, not to mention he's still working and replacing lost investment money, but anyway..

Large portfolios + frugality lends itself to an interesting mix of emotions. 1% on a $2 mil portfolio is $20k. Some guys can shrug that off like it's no big deal, just a rounding error. A frugal guy may look at that as having lost an entire year's+ worth of rent. Or groceries for the next 3 years. The family entertainment budget for 5 years, poof, gone with one bad market day. And I'm guessing that only gets worse as the portfolio grows. Or in the case of the PP keeps falling forever 

This is it for me.  I'm trying to retire early... I'm at the grocery store trying to save a few dollars here, a few dollars there.  To, at the same time, shrug off a daily loss in the thousands, instigates a kind of cognitive dissonance and causes me stress.

This is the first time I've read what I experience at times.

I can be Mr. Frugal to the utmost and, then, when I look at how much I make or lose in a day in my investments, which absolutely pale next to what I save on purchases (e.g., buying the grocery store house brand rather than the name brand, only trying to buy certain items on the grocery when they are on sale and doing without when they are not) I always ask myself how do those two things fit together?

The only answers I ever come up with is 1) wanting the best value is part of my DNA and 2) #1 is one of the major reasons why I experience such large gains or losses. If I'd not been so careful and frugal with my money (in other words, NOT a spendthrift) I've never have got to the position of having so many large daily gains and losses.

Vinny