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Re: Gold / Stock / Bonds at highs or near highs?

Posted: Sat Sep 28, 2019 12:53 pm
by jhogue
mathjak107 wrote:
Fri Sep 27, 2019 2:35 am
yep we are selling , not buying ... we were selling everything off since we don't want to be landlords in retirement . we want only liquid , passive investments that can be sold or swapped with the click of a button .

the new rental laws in new york make being a landlord here not desirable as well . in fact if we did not get a buyer the plan was to just walk away and let the remaining apartments default back to the building , our governor really put the screws to landlords with his new laws and changed the rules in mid stream .
mathjak:

See in today's Wall Street Journal, p. A11, the article entitled "How to Kill a Housing Market."

Re: Gold / Stock / Bonds at highs or near highs?

Posted: Sat Sep 28, 2019 2:53 pm
by mathjak107
Kind of like the company that had a very low profit margin , so they planned on making it up on volume.. then they need to process many more orders and employ more people with higher expenses ,more work and less margin

Re: Gold / Stock / Bonds at highs or near highs?

Posted: Sun Sep 29, 2019 5:12 am
by mathjak107
mathjak107 wrote:
Fri Sep 27, 2019 2:35 am
yep we are selling , not buying ... we were selling everything off since we don't want to be landlords in retirement . we want only liquid , passive investments that can be sold or swapped with the click of a button .

the new rental laws in new york make being a landlord here not desirable as well . in fact if we did not get a buyer the plan was to just walk away and let the remaining apartments default back to the building , our governor really put the screws to landlords with his new laws and changed the rules in mid stream .
the closing thankfully did take place on thursday. for the first time since 1987 i am actually tenant free ..... it is like they say about boats , the happiest days are the day you bought it and the day you sold it .....

being retired , there is nothing better to us than strictly passive investments and finally we reached the point we can do that...now the only question is what we will do with the money ... it will be a while since we are closing up the llc before making the final distribution

Re: Gold / Stock / Bonds at highs or near highs?

Posted: Mon Sep 30, 2019 8:32 am
by AdamA
vnatale wrote:
Wed Sep 18, 2019 8:24 pm

I am looking at where each of the three investments currently are and it seems that two - stock and bonds - are at the all time highs while gold is near an all-time high. This certainly goes counter to buy high / sell low.
If you search the term "all time high" on this forum, you'll get 17 pages of results. Here is a great one from 2011 that I think answers your questions.
Gumby wrote:
Fri Apr 29, 2011 10:07 am
If you look back at the past 40 years of returns of the Permanent Portfolio, you will notice that there was rarely a time when the Permanent Portfolio wasn't at its all time high. Understandably, that makes people very nervous.

To put it another way... in order to buy the PP, you must buy at least one or more asset at its all time high. Such as it is, all of us who have purchased the PP have risked purchasing at the peak. This is one of the hardest parts about jumping in, and its why so few people are able to bring themselves to do it.

But the part that nobody sees is that the potential upside of each asset is more powerful than its potential downside in a 4x25% portfolio.

The best advice I can give you is to listen to this five minute clip from Harry Browne:

https://web.archive.org/web/20160324133 ... DoBest.mp3
I recommend listening to the clip if you want to hear it straight from he horse's mouth.

Re: Gold / Stock / Bonds at highs or near highs?

Posted: Tue Oct 01, 2019 5:09 am
by mathjak107
it is not the issue of it being at a high . in this case the pp has very little history with rising rates as a trend the last 40 years ... that is my concern .

we had from the 1980's what amounted to speed bumps not trends in rising rates . it is rising rates that can be the pp's kryptonite . those who are using the pp for low volatility may be in for a much wilder ride when 3 asset classes move at once in the up or down direction . up is good but down may give the portfolio users much more of a ride then they bargained for ...TLT and GLD can be very volatile when they make 1-2% moves together and you have cash doing nothing and equities potentially down too if rates climb .

while the portfolio may still do okay i think users will have to get used to a lot more volatility as the new normal unless they adjust a bit in to intermediate term treasuries . so i think we are pretty much in uncharted waters today unlike the past and i would never go by what any asset did in the past even under similar conditions if we had them .

i will go on record here saying that my opinion is i think holding to much in long term treasuries is betting on the long shot of having negative rates here or betting on low rates to continue .. the portfolio which really is supposed to be neutral in design has ended up being a bet on low and lower rates and no longer neutral in the way assets are becoming strange bedfellows .

Re: Gold / Stock / Bonds at highs or near highs?

Posted: Sat Oct 05, 2019 7:14 pm
by stpeter
vnatale wrote:
Wed Sep 18, 2019 8:24 pm
In sum I was all set to go full into the Permanent Portfolio and was describing it to someone who then pointed out to me that all three of these were near their all time highs.

For those of you who have FULLY embraced the Permanent Portfolio and made your investment all at once can you reveal where each of the three volatile investments stood at the time of your investment? In other words, how close was each to its market high or low at the time of your investment.
Although other folks in this thread have told you "jump in, the water is fine" I'd like to provide a counterpoint. To me one of the supreme values of the PP is peace of mind. I recently completed the process of dollar cost averaging my way into the permanent portfolio over the course of 3 years. Sure, I might have missed some return, but I was completely comfortable with taking it slow and now I'm a PP investor for life. So I'd say "whatever helps you commit to the PP" is the best strategy for you to pursue.

Re: Gold / Stock / Bonds at highs or near highs?

Posted: Sat Oct 05, 2019 9:29 pm
by Kriegsspiel
There's a lot to be said for being chill as fuck.

Re: Gold / Stock / Bonds at highs or near highs?

Posted: Sun Oct 06, 2019 3:28 am
by mathjak107
stpeter wrote:
Sat Oct 05, 2019 7:14 pm
vnatale wrote:
Wed Sep 18, 2019 8:24 pm
In sum I was all set to go full into the Permanent Portfolio and was describing it to someone who then pointed out to me that all three of these were near their all time highs.

For those of you who have FULLY embraced the Permanent Portfolio and made your investment all at once can you reveal where each of the three volatile investments stood at the time of your investment? In other words, how close was each to its market high or low at the time of your investment.
Although other folks in this thread have told you "jump in, the water is fine" I'd like to provide a counterpoint. To me one of the supreme values of the PP is peace of mind. I recently completed the process of dollar cost averaging my way into the permanent portfolio over the course of 3 years. Sure, I might have missed some return, but I was completely comfortable with taking it slow and now I'm a PP investor for life. So I'd say "whatever helps you commit to the PP" is the best strategy for you to pursue.
Wouldn’t that logic say that you should sell everything now and start from zero again if slowly building up works so well ?

Re: Gold / Stock / Bonds at highs or near highs?

Posted: Sun Oct 06, 2019 10:18 am
by sophie
Moving into the PP gradually from cash gives up some returns on average, but if it's easier for you to handle then that's completely justified.

Another strategy: wait until the PP as a whole goes through a negative performing couple of months and then buy in.

Whatever you do though, don't buy in one asset at a time. That can be far riskier than buying them all equally.

Re: Gold / Stock / Bonds at highs or near highs?

Posted: Sun Oct 06, 2019 11:26 am
by ochotona
sophie wrote:
Sun Oct 06, 2019 10:18 am
Another strategy: wait until the PP as a whole goes through a negative performing couple of months and then buy in.
This is a great idea.

Re: Gold / Stock / Bonds at highs or near highs?

Posted: Sun Oct 06, 2019 12:14 pm
by mathjak107
ha ha ha , for a portfolio that is supposed to eliminate timing and the guess work , that is just what is required then to buy in if you do that ...

where is buying low ? we all thought low in 2008 was when the market fell 2000 points ..who know we had 4000 more to go ....

the problem is introducing timing can lead to the problems the portfolio is supposed to alleviate .

i mean yes that is how i would buy in , but then again i am a dirty lil market timer at heart

Re: Gold / Stock / Bonds at highs or near highs?

Posted: Sun Oct 06, 2019 2:39 pm
by ochotona
mathjak107 wrote:
Sun Oct 06, 2019 12:14 pm
ha ha ha , for a portfolio that is supposed to eliminate timing and the guess work , that is just what is required then to buy in if you do that ...

where is buying low ? we all thought low in 2008 was when the market fell 2000 points ..who know we had 4000 more to go ....

the problem is introducing timing can lead to the problems the portfolio is supposed to alleviate .

i mean yes that is how i would buy in , but then again i am a dirty lil market timer at heart

The issue is not the portfolio, the issue is human behavior. By transitioning into it slowly, the change is less stressful. Not everyone needs to do that kind of thing. "ha ha ha" means you're making fun of other people's psychic needs; not very mature for an older person. Hey, didn't you almost get run off from here before? {reaches for rope}

Re: Gold / Stock / Bonds at highs or near highs?

Posted: Mon Oct 07, 2019 3:05 am
by mathjak107
yes , the issue is the behavior that is recommended to be used is ironic ... the irony is that it is an all weather portfolio designed never to have a bad time so to speak .. but human nature being what it is tends to do what feels good many times and not what is the best logically or financially .

so the brains start taking a portfolio that is supposed to eliminate timing and turns it exactly in to that by trying to time the time frame to enter by waiting for that day it dips low enough that may never come .

Re: Gold / Stock / Bonds at highs or near highs?

Posted: Mon Oct 07, 2019 3:02 pm
by Cortopassi
MangoMan wrote:
Mon Oct 07, 2019 1:36 pm
ochotona wrote:
Sun Oct 06, 2019 11:26 am
sophie wrote:
Sun Oct 06, 2019 10:18 am
Another strategy: wait until the PP as a whole goes through a negative performing couple of months and then buy in.
This is a great idea.
I disagree. I think this is a terrible idea. What if the next time the PP has sustained negative returns is 10 years from now? You think waiting 10 years for that event is better than just jumping in or DCA?
It has not gone negative this year, for example. At least for me.

Re: Gold / Stock / Bonds at highs or near highs?

Posted: Mon Oct 07, 2019 5:44 pm
by mathjak107
exactly my point.....

Re: Gold / Stock / Bonds at highs or near highs?

Posted: Mon Oct 07, 2019 6:45 pm
by Tortoise
Trying to market-time one's transition into the PP is like deciding to go on one last bender before finally going sober.

Re: Gold / Stock / Bonds at highs or near highs?

Posted: Mon Oct 07, 2019 9:27 pm
by vnatale
Thank you for YOUR well thought out response! It alleviated a lot of my concerns!

Vinny
Pet Hog wrote:
Thu Sep 19, 2019 2:05 pm
vnatale wrote:
Wed Sep 18, 2019 8:24 pm
For those of you who have FULLY embraced the Permanent Portfolio and made your investment all at once can you reveal where each of the three volatile investments stood at the time of your investment? In other words, how close was each to its market high or low at the time of your investment.
I completed buying all the components of my PP in May 2013. Within about three months I was down 7%. Ouch. I guess I bought at some highs. (I'm now at almost 4% real annualized over the six years.) So I understand your concerns and everything you say sounds reasonable and well thought out.

Sure, I think we're due for some dramatic market turbulence in the next couple of years, but there seems to be so much doom and gloom in the personal finance world these days that perhaps it's already factored in (i.e., if everyone thinks we're going to crash it's unlikely to happen). If I were to make some bold predictions, I think treasury yields could go to zero or negative, gold could double, and stocks could halve. In that case, the PP would do very well and a rebalance or two would happen into then-very-affordable stocks. If we muddle through the next few years, then the PP will probably function as usual.

My experience has been that there wasn't a time during the last six years when it was possible to say, "now is a great time to invest in the PP!" -- it's always been seemingly overvalued/scary. But I'm very content with my holdings and I expect to do OK going forward. I'm not going to cash out my PP today; flip that logic on its head and I would have to be happy to buy into it today. With the three volatile assets seemingly overvalued, I suspect that you prefer to hold 100% cash. Given the two choices, I'll stick with the PP. Who knows what will happen. Not me!

Re: Gold / Stock / Bonds at highs or near highs?

Posted: Mon Oct 07, 2019 9:31 pm
by vnatale
Thank you for this response.

I'm basically a binary person, which means in just about everything I do I'm either all in or all out. Therefore, in embracing the Permanent Portfolio that would mean FULLY implementing it in ALL ways, and not making a gradual transition to it.

Vinny
sophie wrote:
Sat Sep 21, 2019 7:08 am
At any given time, at least one of the PP assets will be at an "all time high". That's called "getting returns on your investments". It kind of makes me laugh, because the phrase "all time high" suggests an exceptional situation, not something that's expected - it's why you're buying that asset in the first place, isn't it?

The problem is you can't predict where each asset will go, except you can be pretty confident that at least one asset will go down. There's no pre-defined ceiling on any of the assets. Did anyone at the start of this year predict the transient bump in bonds, with the 30 year dropping to a 2% yield? I bet not. We all thought bonds were at their bottom. Similarly, no one thought gold would be going up. Might it go up further? Sure, why not? The current shock in the money market system might well trigger something like that, and if it doesn't, something else could. A week ago we didn't have any idea that a crisis was about to hit money markets.

So what if gold and bonds do go down? If they are, it means stocks are rising, probably a lot. Cash also provides a good ballast. In 2013 there was a big drop in gold, but with the PP's structure the portfolio was (as usual) quite stable. My own PP was actually flat for the year, plus I got to tax loss harvest.

If you're a bit skittish about buying in, then transferring in gradually over time might be easier than holding your nose and jumping all in. It does help to set things up in a way that will let you tax loss harvest when appropriate.

Re: Gold / Stock / Bonds at highs or near highs?

Posted: Mon Oct 07, 2019 9:34 pm
by vnatale
Thank you for your response. This one also helps allay my "highs" concerns.

Vinny
zosoo7 wrote:
Sun Sep 22, 2019 11:52 pm
I understand your hesitation. I am in a similar situation with my non-retirement accounts and decided to move forward and go all in on PP last week. I personally feel the PP can be entered into at any time because the underlying belief is to remove speculation, and the 4 assets classes theoretically give you protection against drastic losses.

While purely anecdotal and historical, I moved all my retirement accounts into the PP ~ 1 year ago. At the time, it was against all logic to put 25% of my savings into long term treasuries, I mean interest rates could only go up causing bond prices to drop, right? At the time, TLT was trading for $119 a share, and now look at it (~ $141). It's an example of why I like the PP so much, it accepts the irrationality of the market and prevents you from having to worry about it. So I agree it's unsettling seeing stocks, gold, and long term treasuries "high" right now, but the truth is nobody knows what's going to happen next.

Re: Gold / Stock / Bonds at highs or near highs?

Posted: Mon Oct 07, 2019 9:46 pm
by vnatale
Well over 15 years ago I was (good) brainwashed into the belief of NO market timing!

Therefore as I stated earlier tonight, when I finally go Permanent Portfolio I will be going into it fully with no transitioning into it over a period of time. To the contrary, once I start implementing I want to do it ALL in as short a time period as possible.

Vinny
Tortoise wrote:
Mon Oct 07, 2019 6:45 pm
Trying to market-time one's transition into the PP is like deciding to go on one last bender before finally going sober.

Re: Gold / Stock / Bonds at highs or near highs?

Posted: Tue Oct 08, 2019 8:44 am
by sophie
MangoMan wrote:
Mon Oct 07, 2019 1:36 pm
ochotona wrote:
Sun Oct 06, 2019 11:26 am
sophie wrote:
Sun Oct 06, 2019 10:18 am
Another strategy: wait until the PP as a whole goes through a negative performing couple of months and then buy in.
This is a great idea.
I disagree. I think this is a terrible idea. What if the next time the PP has sustained negative returns is 10 years from now? You think waiting 10 years for that event is better than just jumping in or DCA?
Remember this is for people who are hesitant about jumping into the PP. There is a cost to going in gradually from cash too, don't forget.

For the record I bought in all at once in 2012. Gold, stocks and bonds all looked like they were overvalued at the time (relative to the recent past), and cash was yielding nothing. It felt like a crazy thing to do, because no asset class looked attractive. We all thought interest rates were at rock bottom and we still had that post-2009 deep suspicion of stocks. Gold seemed like the safest bet. Look how that turned out!

Re: Gold / Stock / Bonds at highs or near highs?

Posted: Tue Oct 08, 2019 10:32 am
by Tyler
I recently added a new chart to the site, and I think it might be helpful for this discussion.

Image

The dark line represents every inflation-adjusted annual return for the PP since 1970. Each light gray line represents the annual returns for one of the four underlying assets in the PP.

To me the big takeaway is that trying to time the portfolio by watching the individual assets is not only a losing proposition but also misses the point of how the PP works. By owning several unpredictable, volatile assets, the PP is specifically designed to be far less volatile than stocks, bonds, or gold on their own. You can sorta think of it as noise cancellation applied to portfolio theory, and buying into each asset separately just won't have the same effect as committing to the full program.

So if you're going to DCA, I would recommend purchasing every asset in the right proportion with each new contribution. And if you buy in at once, make an effort to not look at the returns of the individual assets. Focus on the portfolio as a whole (that has been remarkably consistent for nearly 50 years) and you'll be fine.

Re: Gold / Stock / Bonds at highs or near highs?

Posted: Tue Oct 08, 2019 12:42 pm
by mathjak107
tyler , with 40 of those 50 years actually in a down trend in rates i think the high correlations we see when rates rise may play out very differently ...

those speed bumps the last 50 years were really just that as rates continued lower and lower right up until today . in my opinion i dont think we actually have enough past data in decades of rising rates to really tell a thing about future consistency . i mean you can ski down the last 40 years it
is so sloped downward . in my opinion i think counting on the consistency of the past and the decades of the lowering of rates we saw , would be a bet in itself on low rates continuing for decades longer ... we just don't know how things will react or where they go but it seems to me by design the portfolio is heavily weighted towards low rates continuing .

Image

Re: Gold / Stock / Bonds at highs or near highs?

Posted: Tue Oct 08, 2019 12:57 pm
by Tyler
I hear ya. It's true that we don't have a lot of data for rising rates. But we do have a full decade of truly skyrocketing rates. And during that time the PP still stayed right within its normal band of returns.

Personally, I don't think the PP was driven by falling rates any more than it was driven by gold coming off the gold standard or the record stock bubble in the 90's. With any portfolio, one can point out reasons to doubt any individual asset. To me, the beauty of the PP is that it truly internalizes this doubt and doesn't place its bets on any of them. And that's exactly how it is so stable over time even in the face of market turmoil.

Re: Gold / Stock / Bonds at highs or near highs?

Posted: Tue Oct 08, 2019 2:41 pm
by ochotona
MangoMan wrote:
Mon Oct 07, 2019 1:36 pm
ochotona wrote:
Sun Oct 06, 2019 11:26 am
sophie wrote:
Sun Oct 06, 2019 10:18 am
Another strategy: wait until the PP as a whole goes through a negative performing couple of months and then buy in.
This is a great idea.
I disagree. I think this is a terrible idea. What if the next time the PP has sustained negative returns is 10 years from now? You think waiting 10 years for that event is better than just jumping in or DCA?
Didn't mean to try to wait years before jumping in. I meant start buying when everyone on the forum is complaining, which is several times a year.

End of 2015. End of 2016. One year ago. Those times. Did you forget already? Usually coincident with whats-his-name "Budd" being an ash.