Gold / Stock / Bonds at highs or near highs?

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

Post by ppnewbie » Fri Apr 24, 2020 12:30 am

I think there is a decent probability rates go negative. In real terms they are already negative. Return free risk anyone? And with the fed essentially admitting that there really aren’t any rules (at least for now). They gleefully say “we can just create unlimited ledger entries”. I don’t think they are following any specific rules.
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Re: Gold / Stock / Bonds at highs or near highs?

Post by Vil » Fri Apr 24, 2020 2:16 am

ppnewbie wrote:
Fri Apr 24, 2020 12:30 am
I think there is a decent probability rates go negative.
You may know better than me, but isn't there a sort of law (or regulation?) forbidding the rates going negative in US ? Can recall read this somewhere - was something like a law/regulation change have to be voted by Congress.. I am not necessarily saying that Congress cannot vote it, if that's what they see as needed.
But IMHO, in a country where people are used to make money out of other money, suddenly to expose a rule "you are taken money if you keep your account with us" will be hugely unpopular move and may have quite unpredictable market responses...
I am not good enough in economics but cannot see something dramatically improved here in Europe (or in Japan,etc) with negative rates in place, so I guess those guiding examples would be taken into account too...
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Re: Gold / Stock / Bonds at highs or near highs?

Post by Kriegsspiel » Fri Apr 24, 2020 7:55 am

Vil wrote:
Fri Apr 24, 2020 2:16 am
ppnewbie wrote:
Fri Apr 24, 2020 12:30 am
I think there is a decent probability rates go negative.
You may know better than me, but isn't there a sort of law (or regulation?) forbidding the rates going negative in US ? Can recall read this somewhere - was something like a law/regulation change have to be voted by Congress.. I am not necessarily saying that Congress cannot vote it, if that's what they see as needed.
But IMHO, in a country where people are used to make money out of other money, suddenly to expose a rule "you are taken money if you keep your account with us" will be hugely unpopular move and may have quite unpredictable market responses...
I am not good enough in economics but cannot see something dramatically improved here in Europe (or in Japan,etc) with negative rates in place, so I guess those guiding examples would be taken into account too...
I feel like I bring it up often (it's a fascinating concept to me), but the USA is one of the few places on the planet where we don't have experience with negative rates. Europe in particular I'm sure of, because in the medieval times they had demurrage currencies based on stocks of wheat. They'd lose value as time went on because of the cost of storage, wheat stores spoiling, or hungry rats. IIRC demurrage currencies were a big reason cathedrals and other structures got built.
I hated all the things I had toiled for under the sun, because I must leave them to the one who comes after me. Who knows whether that person will be wise or foolish? Yet they will have control over all the fruit of my toil into which I have poured my effort and skill under the sun. . . Nothing is better for a man than to eat and drink and enjoy his work.
- Ecclesiastes
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Re: Gold / Stock / Bonds at highs or near highs?

Post by Vil » Fri Apr 24, 2020 8:40 am

Kriegsspiel wrote:
Fri Apr 24, 2020 7:55 am
Europe in particular I'm sure of
Yes, we're quite inventive in that aspect, there are different weird ways of taking away money from people. Can recall how surprised I was, when saw a 'stamp duty' was applied on trades done from within Swiss accounts. Those 'stamp duties' came from centuries ago, think was the British Empire that invented them and they've applied them widely ...
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Re: Gold / Stock / Bonds at highs or near highs?

Post by jhogue » Fri Apr 24, 2020 10:03 am

vnatale wrote:
Thu Apr 23, 2020 9:11 pm
jhogue wrote:
Fri Sep 20, 2019 9:46 am
vnatale,
If there is any “flaw” in your thinking, it is that you have not fully considered the role that Cash plays in the HBPP. You are correct: all of the “volatile” PP assets are at/near all time highs. On the other hand, Cash is at/near an all time low. Years of ZIRP have convinced the consensus-driven herd on Wall Street that cash is trash. That should be the signal to you to invest in a high level of safe and liquid cash as you transition your portfolio to the HBPP.

I don’t worship at the altar of Warren Buffett, but I will note that there is a good and simple reason why this famous value investor is reportedly holding over $100 billion in Treasurys: he can’t find anything cheap to buy either. So don’t just be fearful when others are greedy. Be patient while others are impatient. Hold Cash and lots of it. You won't sorry when one of those high-flying assets comes crashing back to earth.
Rereading what you wrote....but first reflecting on what I initially wrote to start this....Cash and equities have gone done while long-term bonds and gold have increased. Which is somewhat is supposed to happen almost all the time under Permanent Portfolio theory? Some down while some up?

However, is not what you are advocating called market timing? Holding cash and waiting for the right time to buy something? If so, the eternal question is whenever is the "right time"?

Vinny
Vinny,
I am not advocating market timing. I am advocating a strategy that could get you over your fears of jumping into the PP at what you feared was the wrong time.

Think of it this way: Instead of moving straight into a 25/25/25/25 mix, create a 70/10/10/10 mix with cash high and and the equal amounts of stocks/bonds/ gold. As you begin to feel more confident with the PP's principles, use your cash to add to each of the volatile assets over a time period that you feel comfortable embracing.
Last edited by jhogue on Fri Apr 24, 2020 10:11 am, edited 1 time in total.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: Gold / Stock / Bonds at highs or near highs?

Post by vnatale » Fri Apr 24, 2020 10:07 am

jhogue wrote:
Fri Apr 24, 2020 10:03 am
vnatale wrote:
Thu Apr 23, 2020 9:11 pm
jhogue wrote:
Fri Sep 20, 2019 9:46 am
vnatale,
If there is any “flaw” in your thinking, it is that you have not fully considered the role that Cash plays in the HBPP. You are correct: all of the “volatile” PP assets are at/near all time highs. On the other hand, Cash is at/near an all time low. Years of ZIRP have convinced the consensus-driven herd on Wall Street that cash is trash. That should be the signal to you to invest in a high level of safe and liquid cash as you transition your portfolio to the HBPP.

I don’t worship at the altar of Warren Buffett, but I will note that there is a good and simple reason why this famous value investor is reportedly holding over $100 billion in Treasurys: he can’t find anything cheap to buy either. So don’t just be fearful when others are greedy. Be patient while others are impatient. Hold Cash and lots of it. You won't sorry when one of those high-flying assets comes crashing back to earth.
Rereading what you wrote....but first reflecting on what I initially wrote to start this....Cash and equities have gone done while long-term bonds and gold have increased. Which is somewhat is supposed to happen almost all the time under Permanent Portfolio theory? Some down while some up?

However, is not what you are advocating called market timing? Holding cash and waiting for the right time to buy something? If so, the eternal question is whenever is the "right time"?

Vinny
Vinny,
I am not advocating market timing. I am advocating a strategy that might get you over your fears of jumping into the PP at what you feared back in September 2019 was the wrong time.

Think of it this way: Instead of moving straight into a 25/25/25/25 mix, create a 70/10/10/10 mix with cash high and and the equal amounts of stocks/bonds/ gold.
But won't it still be market timing to decide when to go to 25 /25 /25/ 25? Once I finally go Permanent Portfolio I will do it in a pure, black and white way. No decisions to make on my part. The next part, though, may sound paradoxical. I will be doing so once I finish this long quest of asking questions, getting answers, making some tentative decisions along the way, and internalizing as much necessary information as possible.

Vinny
"I only regret that I have but one lap to give to my cats."
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Re: Gold / Stock / Bonds at highs or near highs?

Post by jhogue » Fri Apr 24, 2020 10:17 am

Vinny,

Just. Do. It.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: Gold / Stock / Bonds at highs or near highs?

Post by vnatale » Fri Apr 24, 2020 10:32 am

jhogue wrote:
Fri Apr 24, 2020 10:17 am
Vinny,

Just. Do. It.
Not a simple task on my end, starting with having 7 different retirement accounts covering every possible different tax treatment for each of them.

Vinny
"I only regret that I have but one lap to give to my cats."
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Re: Gold / Stock / Bonds at highs or near highs?

Post by vnatale » Fri Apr 24, 2020 10:35 am

vnatale wrote:
Fri Apr 24, 2020 10:32 am
jhogue wrote:
Fri Apr 24, 2020 10:17 am
Vinny,

Just. Do. It.
Not a simple task on my end, starting with having 7 different retirement accounts covering every possible different tax treatment for each of them.

Whenever I'm going to do something of consequence I take my time to get all my questions answered, don't rush into it, and, consequently, generally have ZERO regrets or wish I'd done it differently. I've too oftentimes seen others rush into doing it then wish they'd done it differently. Not my style.


Vinny
"I only regret that I have but one lap to give to my cats."
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Re: Gold / Stock / Bonds at highs or near highs?

Post by stpeter » Fri Apr 24, 2020 11:07 am

vnatale wrote:
Fri Apr 24, 2020 10:32 am
jhogue wrote:
Fri Apr 24, 2020 10:17 am
Vinny,

Just. Do. It.
Not a simple task on my end, starting with having 7 different retirement accounts covering every possible different tax treatment for each of them.

Whenever I'm going to do something of consequence I take my time to get all my questions answered, don't rush into it, and, consequently, generally have ZERO regrets or wish I'd done it differently. I've too oftentimes seen others rush into doing it then wish they'd done it differently. Not my style.


Vinny
Do what you're comfortable with. I DCA'd my way into the PP over a few years and that worked for me, whereas others just take the plunge. IMHO neither method is "right".
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Re: Gold / Stock / Bonds at highs or near highs?

Post by pmward » Fri Apr 24, 2020 11:08 am

Vil wrote:
Fri Apr 24, 2020 2:16 am
ppnewbie wrote:
Fri Apr 24, 2020 12:30 am
I think there is a decent probability rates go negative.
You may know better than me, but isn't there a sort of law (or regulation?) forbidding the rates going negative in US ? Can recall read this somewhere - was something like a law/regulation change have to be voted by Congress.. I am not necessarily saying that Congress cannot vote it, if that's what they see as needed.
But IMHO, in a country where people are used to make money out of other money, suddenly to expose a rule "you are taken money if you keep your account with us" will be hugely unpopular move and may have quite unpredictable market responses...
I am not good enough in economics but cannot see something dramatically improved here in Europe (or in Japan,etc) with negative rates in place, so I guess those guiding examples would be taken into account too...
Long bond rates are not set by the Fed. Matter of fact, if you look back at history, the Fed follows the market NOT the other way around. Every time the Fed tries to ignore the market and do their own thing (think Q4 2018 as the most recent example) the market eventually forces them to comply. If the market takes rates negative, the Fed will take rates negative. The market is what controls rates, the idea that the Fed controls rates is an illusion. Moreover, by buying bonds, they are actually helping to force rates down... So it may very well be the Fed itself that creates the situation where they have to go negative. It's not a coincidence that the countries with negative rates also have done extreme levels of QE. What are we doing now? Extreme levels of QE.
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Re: Gold / Stock / Bonds at highs or near highs?

Post by ochotona » Fri Apr 24, 2020 12:09 pm

jhogue wrote:
Fri Apr 24, 2020 10:17 am
Vinny,

Just. Do. It.
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