Gold / Stock / Bonds at highs or near highs?

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

Post by vnatale » Thu Apr 23, 2020 9:36 pm

mathjak107 wrote:
Sun Sep 22, 2019 3:52 am
exactly my point ... we have little in the way of data points with all 3 moving up together when bond rates are so low . bonds at this level are the ones i worry about the most ..we saw tlt plunge 7% in a matter of days before a bounce ...at these levels i would be very careful with long term treasuries and go mostly intermediate term ...
Maybe the "prudent" thing to say? But mathjak does not get the "prophet" crown for this one.

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

Post by vnatale » Thu Apr 23, 2020 9:44 pm

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.
Now today at $170!!!

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

Post by pmward » Thu Apr 23, 2020 9:45 pm

vnatale wrote:
Thu Apr 23, 2020 9:36 pm
mathjak107 wrote:
Sun Sep 22, 2019 3:52 am
exactly my point ... we have little in the way of data points with all 3 moving up together when bond rates are so low . bonds at this level are the ones i worry about the most ..we saw tlt plunge 7% in a matter of days before a bounce ...at these levels i would be very careful with long term treasuries and go mostly intermediate term ...
Maybe the "prudent" thing to say? But mathjak does not get the "prophet" crown for this one.

VInny
Everybody here loves to hate on the long bonds, but they just keep delivering. Some day long bonds will go down, just like some day all assets will go down... but the day is not today. Matter of fact, with the $170 break out today from weeks of bullish consolidation, if we get follow through tomorrow I'm planning on buying into it in my VP.
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Re: Gold / Stock / Bonds at highs or near highs?

Post by vnatale » Thu Apr 23, 2020 9:49 pm

KevinW wrote:
Mon Sep 23, 2019 11:34 pm
All I can say is, I've been talking about the PP online since 2008 (11 years and counting!) and the entire time, people have been constantly asking this question. "I like the PP but this moment seems like a bad time to buy in because reasons, what should I do?"

Throughout this time the PP has worked as predicted. After some time passes, it almost always turns out that the moment in question was a fine time to buy in. While it's true that there have been a few brief single-digit dips, the portfolio recovered and reverted to the mean. (And this modest negative volatility is predicted as well.)

The market clearing price is the one that puts bull and bear attitudes in balance. So at any given moment one can make a bearish argument that convinces roughly half of market participants, or a bullish argument that accomplishes the same. The premise of the PP is that it allows you to act without necessarily buying into any of these narratives.
zosoo7 wrote:
Sun Sep 22, 2019 11:52 pm
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).
This is a good example of how this usually pans out.
Absolutely LOVE reading posts like this one!

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

Post by vnatale » Thu Apr 23, 2020 10:07 pm

mathjak107 wrote:
Tue Sep 24, 2019 2:36 am
The kryptonite to the pp today is rising rates .. in that case time will tell but it may not be very well hedged under todays conditions and that is the scary part ...as rates go lower and lower the odds of them reversing course become greater and greater ... i think counting on negative rates here would be the long shot... as Bernstein said , the problem is you are placing equal amounts of money on outcomes that stand anything but equal amounts of chances of playing out ... so as much as we like to think the pp is neutral , at times it may not be as rising rates can hurt all 3 asset classes at once and with the pull each asset class has act like a 75% equities portfolio would under the wrong outcome as the 3 classes get yanked down together . we saw that recently when rates headed up past 3% ... . .

for most of the pp history , except for some speed pumps along the way , the trend was for rates to fall .

Image
On the other hand, I've read this one by mathjak several times and each time I read it it comes across as full of sound logic.

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

Post by vnatale » Thu Apr 23, 2020 10:09 pm

mathjak107 wrote:
Wed Sep 25, 2019 11:12 am
Nasty day today for gold and long term treasuries....this is what scares me about the way they seem to be joined at the hip...the supposed yin and yang can be quite powerful and nasty when things that are supposedly uncorrelated stay bedfellows

However, on the flip side.....

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

Post by vnatale » Thu Apr 23, 2020 10:13 pm

mathjak107 wrote:
Thu Sep 26, 2019 2:42 am
plus not only are gold and rates joined at the hip but we have equities at a high at the same time ... that makes for some wild moves in the pp which can be right on par with high equity portfolio volatility wise . yesterday we saw a .70% move in the pp with gold losing almost 2% and bonds losing 1.50%, that .70 % move is almost like a 200 point move in the dow for comparison gain or loss wise on 100% equity .

so we are really in uncharted waters with the pp .. so i can see why those deciding to enter the pp now are looking at this and questioning whether they are guaranteeing themselves losses from here for years to come unless the remote odds of negative interest rates happen .

40 years of pp history since the 1980's having a trending down in rates for the most part may have little in common with the future
once rates bottom and reverse with so much correlation between powerful asset classes .

we are also now uncharted in the instantaneous news world as well as uncharted social media influence on investments.

time will tell but it can be a wild ride if this keeps up .

i think if i was looking to invest a sizable sum today ,which i will be if our closing goes through today on some investment property , i would divide it in 3 . i would only put 1/3 in something like the pp at this stage , 1/3 in my fidelity insight income model which is a more conventional 25% equity model with far shorter duration's and no gold and the last 1/3 in to the insight 60/40 growth and income model which also has far shorter durations on the bond side .
From the point of view of today how "remote" do those possibilities now seem?

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

Post by vnatale » Thu Apr 23, 2020 10:17 pm

mathjak107 wrote:
Tue Oct 01, 2019 5:09 am
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 .

So far that particular bet has seemed to have paid off?

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

Post by vnatale » Thu Apr 23, 2020 11:20 pm

Tyler wrote:
Tue Oct 08, 2019 12:57 pm
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.
Another one of those "gem" paragraphs by Tyler.

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

Post by vnatale » Thu Apr 23, 2020 11:22 pm

Kbg wrote:
Tue Oct 08, 2019 3:44 pm
This isn't unique to the PP but every time the PP has had a bad year, the next year has been one of its best years. However, given the DDs experienced historically I don't see any point to waiting to invest.
DD's = ????

Daily drawdowns?

Daily dips?

??????

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

Post by Vil » Thu Apr 23, 2020 11:52 pm

vnatale wrote:
Thu Apr 23, 2020 11:22 pm
DD's = ????
Think its just DrawDown. The same way as MDD is Max DrawDown. Those are the notations I have seen so far..
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Re: Gold / Stock / Bonds at highs or near highs?

Post by Vil » Thu Apr 23, 2020 11:55 pm

By the way, do not know about the others, but I found it nice the way you ressurect some old stuff. That really helps lazy guys like me ^-^
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