Should we be all in cash?

[senecaaa]

I have been reading and learning about the PP (and the GB) and what I like about these portfolios is that there is always a part of the portfolio that is doing great, while others are not so great.

But if we look at the current situation:
- stocks: a never-ending bull market
- gold: higher than ever (almost)
- LT treasuries: time for interest rates to come up?

It almost seems (I know, we can't predict the future) that all assets have no upside left. Have we historically ever been in a similar situation?

[dualstow]

Let’s put it this way: we’ve nearly always been in the situation where someone is asking that question.

Sure, the whole portfolio will go down at some point, making people wish they had taken profits.
How does one know when to get back in?
The pp is already as agnostic as it gets.

[mathjak107]

over priced really is hard to define . from jan 1 2017 to jan 1 2020 the s&p is up just 18% despite record earnings .

gold had a good year but how do you value gold at the end of the day other than what ever someone wants to pay


bonds have had a good year but long term treasuries trade like stocks based on fear , greed and perception . no matter where rates are a spook in the markets can see bonds soar .

[senecaaa]

Let’s put it this way: we’ve nearly always been in the situation where someone is asking that question.

Haha, that is the perspective I was looking for!

Sure, the whole portfolio will go down at some point, making people wish they had taken profits.
How does one know when to get back in?
The pp is already as agnostic as it gets.

Yes, you're right. I really need to get over my fears and trust the portfolio.

[senecaaa]

over priced really is hard to define . from jan 1 2017 to jan 1 2020 the s&p is up just 18% despite record earnings .

gold had a good year but how do you value gold at the end of the day other than what ever someone wants to pay


bonds have had a good year but long term treasuries trade like stocks based on fear , greed and perception . no matter where rates are a spook in the markets can see bonds soar .

All valid points! Thanks! Most ppl in other forums start screaming at me when I mention gold or LT bonds. No such reaction for ppl who like to be in 100% stocks.

[ochotona]

"Should we all be in cash?"

It depends! If you can demonstrate numerically that you can fund your lifetime needs with pure cash, why not be in cash? On the other hand, few have enough cash to be able to do this.

[mathjak107]

he problem is you need a lot of cash ... the draw rate on cash only , has to be very low , making inefficient use of your hard earned money .

so you may need 2 to 3x the amount to make up for it .

cash instruments have failed to last at 4% draws and are considered is very unsafe .

but remember while a 3% draw had the income hold , the balance left over is another factor . don't forget a 50/50 to 60/40 has left you at the end of 30 years with more than ytou started 90% of all 119 cycles to date and 2x what you started with 67% of the time . 50% of the time you ended with 3x what you started . so it is also about the balance left at 30 years too

FIRECalc Results
Your spending in every year after the first year will be adjusted for inflation, so the spending power is preserved.

FIRECalc looked at the 119 possible 30 year periods in the available data, starting with a portfolio of $1,000,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 119 cycles. The lowest and highest portfolio balance at the end of your retirement was $-517,560 to $2,349,575, with an average at the end of $190,047. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 64 cycles failed, for a success rate of 46.2%.
----------------------------------------------------------------------------------------
if you take a 25% pay cut to 3% you can do it .


FIRECalc Results
Your spending in every year after the first year will be adjusted for inflation, so the spending power is preserved.

FIRECalc looked at the 119 possible 30 year periods in the available data, starting with a portfolio of $1,000,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 119 cycles. The lowest and highest portfolio balance at the end of your retirement was $-150,643 to $3,001,030, with an average at the end of $612,348. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 11 cycles failed, for a success rate of 90.8%.

[Kriegsspiel]

"Should we all be in cash?"

It depends! If you can demonstrate numerically that you can fund your lifetime needs with pure cash, why not be in cash? On the other hand, few have enough cash to be able to do this.

Even then, though, I wouldn't want to be all in cash. What if the government implements devastating monetary policy? Hyperinflation? Cyber-attacks? Black Swan X? All your eggs are in one basket, and you can't protect that basket. I think the PP (or a similar highly diversified, gyroscopic strategy) is a better way to go if you want "cash-like" stability.

[senecaaa]

"Should we all be in cash?"

It depends! If you can demonstrate numerically that you can fund your lifetime needs with pure cash, why not be in cash? On the other hand, few have enough cash to be able to do this.

Well, it would be until one of the other assets dropped significantly.

[senecaaa]

"Should we all be in cash?"

It depends! If you can demonstrate numerically that you can fund your lifetime needs with pure cash, why not be in cash? On the other hand, few have enough cash to be able to do this.

Even then, though, I wouldn't want to be all in cash. What if the government implements devastating monetary policy? Hyperinflation? Cyber-attacks? Black Swan X? All your eggs are in one basket, and you can't protect that basket. I think the PP (or a similar highly diversified, gyroscopic strategy) is a better way to go if you want "cash-like" stability.

Yeah, I see now that with my question I'm trying to time the market. Not a good idea :-)

[dualstow]

^ Yes, +1 what kriegs said.
The pp would be an excellent portfolio for a multimillionaire or even a mega lottery winner.
The only thing that would change is that I wouldn’t be able to fit all my gold in one safe box. I’d have to consider other forms of storage or maybe splurge on security and insurance.

[ochotona]

^ Yes, +1 what kriegs said.
The pp would be an excellent portfolio for a multimillionaire or even a mega lottery winner.
The only thing that would change is that I wouldn’t be able to fit all my gold in one safe box. I’d have to consider other forms of storage or maybe splurge on security and insurance.

A great allocation for inheritances also (functionally the same as winning the lottery).

[mathjak107]

^ Yes, +1 what kriegs said.
The pp would be an excellent portfolio for a multimillionaire or even a mega lottery winner.
The only thing that would change is that I wouldn’t be able to fit all my gold in one safe box. I’d have to consider other forms of storage or maybe splurge on security and insurance.

we have accumulated multiple 7 figures over the years from investing ... i have always owned dynamic portfolios that shift with the times .. not major betting the ranch changes but more like steering a ship to keep it on course .

i used my fidelity insight 50/50 model for most of the bull .... now that gains are substantial i use my "modified pp" with some trading on tlt and gld and the income model from fidelity insight which is 25% equities and the rest more conservative bond funds with higher yields and less rate sensitivity then the pp .

if we dip enough i will move the pp money back to the growth and income model .

we are retired and live off our portfolios