The Permanent Portfolio May Be About To Break

[Cortopassi]

It's probably fair to say that the "smart money" worldwide thinks US LTTs are the place to be right now. If so, is that encouraging?
I don't particularly like riding a wave of high velocity smart money. Then again, HB would say that's exactly what has to happen with one or more components during crazy times.

You've been "riding a wave of high velocity smart money" in stocks for 12 years now. What's the difference? There will always be something being bid up, and you'll always own it. Isn't it funny how when stocks are going up and hitting all-time highs nobody questions anything. But the minute bonds hit all-time highs, we all start to question their very worth as an investment altogether (I'm guilty of questioning a bit myself in recent weeks). When bonds are down, we feel ok, but when they are up we feel panicked. Doesn't this seem backwards when we really step back and look at it? We will all likely do the same thing when gold finally hits all-time highs, whenever that inevitable day hits. We love stocks making us money, but we hate bonds and gold making us money. Why do we all (myself included) have this almost innate double-standard?

In order, the pp parts that stress me out the most:

--Gold, when it goes down.
--Stocks, when they go up
--Bonds and cash, I never even give a second thought

I know, strange.

[Kbg]

In order, the pp parts that stress me out the most:

--Gold, when it goes down.
--Stocks, when they go up
--Bonds and cash, I never even give a second thought

I know, strange.

I believe long bonds are going to be the most "interesting" part of the portfolio going forward, by a long shot.

[pmward]

I believe long bonds are going to be the most "interesting" part of the portfolio going forward, by a long shot.

+1

[Tortoise]

I believe long bonds are going to be the most "interesting" part of the portfolio going forward, by a long shot.

+1

Long bonds have already been the most "interesting" part of the portfolio for the past 10 years that I've been a PP investor.

They always seem to pop up out of nowhere and carry the portfolio when nobody expects them to. Each time, I think it's the last, yet it keeps happening.

[johntaylor]

Very pleased to meet you Craig. Two years into german PP now and your book is always near me.

I'm likely to just rebalance according to plan. I don't have any better options or ideas right now. Each person is different and I can't offer specific advice due to varying circumstances. Ask me again when they are 0%.

I can tell you from negative yielding Germany everything still holding strong ... sofar. But unlike you PP is keeping me up at night right now

[pmward]

Very pleased to meet you Craig. Two years into german PP now and your book is always near me.

I'm likely to just rebalance according to plan. I don't have any better options or ideas right now. Each person is different and I can't offer specific advice due to varying circumstances. Ask me again when they are 0%.

I can tell you from negative yielding Germany everything still holding strong ... sofar. But unlike you PP is keeping me up at night right now

Let me ask you this, is there a portfolio you would sleep better with? Is the the bonds specifically that keep you up at night? Or is it the negative interest rates in general, and other economic uncertainties that keep you up?

[johntaylor]

Very pleased to meet you Craig. Two years into german PP now and your book is always near me.

I'm likely to just rebalance according to plan. I don't have any better options or ideas right now. Each person is different and I can't offer specific advice due to varying circumstances. Ask me again when they are 0%.

I can tell you from negative yielding Germany everything still holding strong ... sofar. But unlike you PP is keeping me up at night right now

Let me ask you this, is there a portfolio you would sleep better with? Is the the bonds specifically that keep you up at night? Or is it the negative interest rates in general, and other economic uncertainties that keep you up?

I guess it is a combination of it. And: I am new to investing. Till two years ago I just had my savings in a savings account.

[KevinW]

Just stick to the plan. Weeks like this are where the adage about "you should be able to read the newspaper without worry" comes into play.

[belgo]

I am one of the few EU PP investors as well. I started in 2016 when the Long Term German Bond (2046) was already trading below 1% yield. It has been fascinating to see how a totally unpredicted event such as Corona proved PP works. Equity markets crashed and all equity gains since 2016 have been wiped out. But as Bunds have gone up 36% (adding coupons) since Jan 2016 and Gold +55% with cash at close to 0%, the average return has been 5.5% or 4.3% after inflation. You cannot expect more from a conservative portfolio. What is nice is that EU PP is down only 1.25% since Jan 1st whereas all mixed portfolios have lost at least 10-15%. So even at negative bond yields there is juice left, is it unlimited? Maybe not. But in Europe we also have a 100 Year Austria Bond we could use. That one certainly has firepower currently at 0.99% yield. Its price movements are extreme. https://markets.businessinsider.com/bon ... 0000a1xml2

[jalanlong]

I read a comment from someone on Seeking Alpha that characterized current markets as:

Good news = good news
Bad news = FED intervention = good news.
Really bad news = massive FED intervention = good news.