Are you "staying the course"?

[turbo8214]

That's the popular phrase they use at Bogleheads. Stay the course, no matter what.

The PP is not tanking as much as the Boglehead-type portfolios. Stocks, bonds, AND gold have all been taking a beating, however.

Is the current scenario the one scenario where the Permanent Portfolio may up taking a big hit?

Do you all plan on staying the course?

[I Shrugged]

I plan on staying the course.
However, I feel that the world economy is going to be smashed. I don't think that is reflected in the prices. So I am thinking about reducing stocks instead of staying the course.

I can make either case.

We can afford to lose our investment in stocks. I guess that means we can afford to sell out of them too.

I am not thinking about selling LTTs or Gold. I wish I had more of them. And of course cash is good. So, only stocks are on my radar.

[Tortoise]

Yes, I plan to stay the course.

The extreme uncertainty and rapid day-by-day changes in government policies around the world during this pandemic have just underscored the importance of a "firewall"-based portfolio that's completely agnostic in its allocations to the asset classes (4x25).

It will be bad, it will likely get worse, but it will eventually get better. Eventually. The economy will eventually rebound. And when it does, my 25% allocation to stocks will be ready to reap the rewards. In the meantime, my gold and LTTs will help keep me afloat. Not every day, mind you, but probably in a weekly or monthly sense.

As we've seen over the past couple of weeks, things can change at a moment's notice. So I have zero interest in shifting my allocations around trying to predict the direction of this insanity.

[turbo8214]

I plan on staying the course.
However, I feel that the world economy is going to be smashed. I don't think that is reflected in the prices. So I am thinking about reducing stocks instead of staying the course.

I can make either case.

We can afford to lose our investment in stocks. I guess that means we can afford to sell out of them too.

I am not thinking about selling LTTs or Gold. I wish I had more of them. And of course cash is good. So, only stocks are on my radar.

Unfortunately, I think you're right. Shutting down everything like this is unprecedented. This could very well be bigger than the Great Recession.....and that recovery was very slow and anemic for years afterward.

Some are saying it's better to buy stock now than to sell it. I think I agree with you that there are still ways to go before the market hits bottom. It just went under 19k. It's not too far from 15 and who knows how much further it goes down from there. When the market is taking one step forward and two steps back every week, and there's very little good news, it's obvious which direction it's trending.

[pmward]

If anything, I want to buy more stocks and gold, haha.

[turbo8214]

Yes, I plan to stay the course.

The extreme uncertainty and rapid day-by-day changes in government policies around the world during this pandemic have just underscored the importance of a "firewall"-based portfolio that's completely agnostic in its allocations to the asset classes (4x25).

It will be bad, it will likely get worse, but it will eventually get better. Eventually. The economy will eventually rebound. And when it does, my 25% allocation to stocks will be ready to reap the rewards. In the meantime, my gold and LTTs will help keep me afloat. Not every day, mind you, but probably in a weekly or monthly sense.

I recently converted my IRA from 60/40 to the PP. I have considered going all cash. With the fed rate at zero (and possibly going into negative territory), there's been a lot of noise about Money Market funds possibly losing value as well.

Even if the PP takes a significant beating, I suppose it will take less of a beating than the other more commonly used portfolios.

As we've seen over the past couple of weeks, things can change at a moment's notice. So I have zero interest in shifting my allocations around trying to predict the direction of this insanity.

That's true. I'm thinking that maybe it would be best to stay away from the news and not look at my account balance for the next couple months.

[dualstow]

Do you all plan on staying the course?

Yes in the sense of not capitulating and selling stocks low.
I'll be buying stocks.

No in the sense of dumping munis and prime for a flight to quality (treasury mm).

[I Shrugged]

If you have the psychological wherewithal to buy stocks and wait what could be years, I think once the DJIA is <15,000, it's time to think about buying. If it actually happens to get down to 10,000 or less, back up the truck and fill it with stocks. If you can afford it, and if you think you can sit on them for a good long time. If we get to those levels, I will be buying.

But this is a different discussion than staying the course at these prices.

Let me be clear. I love the PP.
But there are one or two times in an investor's life where there will be a panic or value buying opportunity that makes it worth setting aside the slow and steady allocation. HB would say that's for the variable portfolio. I agree to a point. I would buy within the upper bounds of the PP bands, maybe a bit more. The stronger I believed in the value, the more I would want to be buying. If 15,000 comes and you don't believe, don't be buying.

[Kriegsspiel]

Yup, I'm sticking with the PP philosophy. I feel pretty good with the amount I have in the PP right now. I'd been shifting some money from stocks to cash in my formerly stock-only VP; I'll be shifting that back into stocks.

[barrett]

Yup, I'm sticking with the PP philosophy. I feel pretty good with the amount I have in the PP right now. I'd been shifting some money from stocks to cash in my formerly stock-only VP; I'll be shifting that back into stocks.

FWIW I just sold some Treasury MM and bought some stocks in our smaller IRA accounts. Nothing too dramatic. Will wait for another day to do the other accounts. Having things spread out over so many accounts, it's easier this way for me.

[glennds]

It is very possible that the Permanent Portfolio has not yet shown us its shine under the present shock. If I recall correctly, when the financial crisis hit the fan, the PP dropped and then after a several weeks, both buckets of long bonds and gold took over carrying the load. The bonds I think because it was a deflationary period, and the gold I think because there was a post-trauma flight to safety and a fear that QE would prompt inflation. The point being, the nature of the correlations is not instant, there is a period of transition from one asset class pulling the train to another. The markets need time to fully react to a change in economic condition.

So yes, the losses have been blunted, but I think we may be in for a pleasant ride soon if history repeats itself and another class (gold and/or treasuries) picks up the slack.

On the other hand, we could just head straight into a recession in which case nothing will do well and the train just slows down. But even then losses should be fairly contained in a PP.

[Smith1776]

I've got more confidence in the PP than ever before.

I remember Craig once said that the PP's assets responding to a crisis was like a rudder on a ship. It's not instantaneous, but the ship turns after a moment or two.

[turbo8214]

If you have the psychological wherewithal to buy stocks and wait what could be years, I think once the DJIA is <15,000, it's time to think about buying. If it actually happens to get down to 10,000 or less, back up the truck and fill it with stocks. If you can afford it, and if you think you can sit on them for a good long time. If we get to those levels, I will be buying.

But this is a different discussion than staying the course at these prices.

Let me be clear. I love the PP.
But there are one or two times in an investor's life where there will be a panic or value buying opportunity that makes it worth setting aside the slow and steady allocation. HB would say that's for the variable portfolio. I agree to a point. I would buy within the upper bounds of the PP bands, maybe a bit more. The stronger I believed in the value, the more I would want to be buying. If 15,000 comes and you don't believe, don't be buying.

That sounds like a good strategy.

My 401 is still in a 60/40 due to limited options. Have thought about cashing out now and then buying back in when it hits 15k. I don't see how it does not go down to 15k with all the bad news.

[turbo8214]

Do you all plan on staying the course?

Yes in the sense of not capitulating and selling stocks low.
I'll be buying stocks.

No in the sense of dumping munis and prime for a flight to quality (treasury mm).

Are you buying now or waiting until it goes down another 20-30%?

[turbo8214]

Yup, I'm sticking with the PP philosophy. I feel pretty good with the amount I have in the PP right now. I'd been shifting some money from stocks to cash in my formerly stock-only VP; I'll be shifting that back into stocks.

You're expecting the market to go down much further? I did something similar and went from a 90/10 target fund to a 60/40 in my 401, which lessened the blow a bit. Now thinking about increasing stock to cash ratio by 5% for every 1k the dow drops. For example:

If the Dow hits 19k, move to 65/35
18k - 70/30
15k - 85/15
12k - 100% stocks

Whether I go through with that or not is another story. Easier said than done tho (especially if employment is affected).

[turbo8214]

It is very possible that the Permanent Portfolio has not yet shown us its shine under the present shock. If I recall correctly, when the financial crisis hit the fan, the PP dropped and then after a several weeks, both buckets of long bonds and gold took over carrying the load. The bonds I think because it was a deflationary period, and the gold I think because there was a post-trauma flight to safety and a fear that QE would prompt inflation. The point being, the nature of the correlations is not instant, there is a period of transition from one asset class pulling the train to another. The markets need time to fully react to a change in economic condition.

I do think I vaguely remember that happening (all three of them down). That is an interesting explanation for the phenomenon. It should hopefully not last long! I suspect it will change once the government stimulus checks are mailed out....and then gold starts increasing.

On the other hand, we could just head straight into a recession in which case nothing will do well and the train just slows down. But even then losses should be fairly contained in a PP.

I know it's not officially a recession until GDP contracts, but it seems like the economy is already in one with the huge unemployment spike over the past week or two.

[pmward]

If you have the psychological wherewithal to buy stocks and wait what could be years, I think once the DJIA is <15,000, it's time to think about buying. If it actually happens to get down to 10,000 or less, back up the truck and fill it with stocks. If you can afford it, and if you think you can sit on them for a good long time. If we get to those levels, I will be buying.

But this is a different discussion than staying the course at these prices.

Let me be clear. I love the PP.
But there are one or two times in an investor's life where there will be a panic or value buying opportunity that makes it worth setting aside the slow and steady allocation. HB would say that's for the variable portfolio. I agree to a point. I would buy within the upper bounds of the PP bands, maybe a bit more. The stronger I believed in the value, the more I would want to be buying. If 15,000 comes and you don't believe, don't be buying.

That sounds like a good strategy.

My 401 is still in a 60/40 due to limited options. Have thought about cashing out now and then buying back in when it hits 15k. I don't see how it does not go down to 15k with all the bad news.

At this point it's already too late to sell stocks, imo. Most of the bad news is already priced in.

[Dieter]

I know many musician / artist / part-time teacher types, and the combination of AB5 and Coronavirus has destroyed their income sources.

[dualstow]

Do you all plan on staying the course?

Yes in the sense of not capitulating and selling stocks low.
I'll be buying stocks.

No in the sense of dumping munis and prime for a flight to quality (treasury mm).

Are you buying now or waiting until it goes down another 20-30%?

For now, I'm merely throwing a few hundred dollars into it every day, rain or shine. If it goes down another 20% or so, I might take $10K at a time from T-bills and *really* buy. Variable Portfolio stocks. Just have to make sure I have enough cash remaining to call it an emergency fund because:
• The virus could come back, like just when Vinny thought he was going to play basketball in September.
• Some other calamity could hit: Al Qaeda shenanigans, natural disasters, who knows.
I'm definitely not a doomer, but who knows when we'll really be out of the woods.

[Kriegsspiel]

Yup, I'm sticking with the PP philosophy. I feel pretty good with the amount I have in the PP right now. I'd been shifting some money from stocks to cash in my formerly stock-only VP; I'll be shifting that back into stocks.

You're expecting the market to go down much further? I did something similar and went from a 90/10 target fund to a 60/40 in my 401, which lessened the blow a bit. Now thinking about increasing stock to cash ratio by 5% for every 1k the dow drops. For example:

If the Dow hits 19k, move to 65/35
18k - 70/30
15k - 85/15
12k - 100% stocks

Whether I go through with that or not is another story. Easier said than done tho (especially if employment is affected).

I dunno. If it does, I'll probably just rebalance in my PP because I'll have hit 15% stocks, or somewhere close to that. Your strategy isn't bad either.

[mathjak107]

I know many musician / artist / part-time teacher types, and the combination of AB5 and Coronavirus has destroyed their income sources.

The 50th anniversary tour I was doing some shows in has been suspended for now ....my buddy was right in the middle of a worldwide Bowie alumni tour and it was suspended .....they worked with Bowie when he did the glass spyder tour ....they got together ,got new singers and booked arenas world wide selling out shows ...

My one day a week job is suspended too

[turbo8214]

If you have the psychological wherewithal to buy stocks and wait what could be years, I think once the DJIA is <15,000, it's time to think about buying. If it actually happens to get down to 10,000 or less, back up the truck and fill it with stocks. If you can afford it, and if you think you can sit on them for a good long time. If we get to those levels, I will be buying.

But this is a different discussion than staying the course at these prices.

Let me be clear. I love the PP.
But there are one or two times in an investor's life where there will be a panic or value buying opportunity that makes it worth setting aside the slow and steady allocation. HB would say that's for the variable portfolio. I agree to a point. I would buy within the upper bounds of the PP bands, maybe a bit more. The stronger I believed in the value, the more I would want to be buying. If 15,000 comes and you don't believe, don't be buying.

That sounds like a good strategy.

My 401 is still in a 60/40 due to limited options. Have thought about cashing out now and then buying back in when it hits 15k. I don't see how it does not go down to 15k with all the bad news.

At this point it's already too late to sell stocks, imo. Most of the bad news is already priced in.

It seems to be the beginning of the crisis with ways to go yet. Someone in the administration had a baseball game analogy and said we're in the second inning or something to that affect.

I just figured why not sell now to stop the bleeding and then buy back in once it is down further.

Something told me I should have sold a few weeks ago but I kept thinking "stay the course". At the time, it seemed like the market could also go back up. I don't think anyone expected this much of the economy to be shut down.

[turbo8214]

I know many musician / artist / part-time teacher types, and the combination of AB5 and Coronavirus has destroyed their income sources.

Those government stimulus checks should hopefully help. They are talking about $1000 in April and another $1000 in May. How can anyone live on that though? As much as I agree with Harry's philosophy, the government does need to step in here.

[Dieter]

I know many musician / artist / part-time teacher types, and the combination of AB5 and Coronavirus has destroyed their income sources.

Those government stimulus checks should hopefully help. They are talking about $1000 in April and another $1000 in May. How can anyone live on that though? As much as I agree with Harry's philosophy, the government does need to step in here.

Yup, that would help a lot.

[turbo8214]

Do you all plan on staying the course?

Yes in the sense of not capitulating and selling stocks low.
I'll be buying stocks.

No in the sense of dumping munis and prime for a flight to quality (treasury mm).

Are you buying now or waiting until it goes down another 20-30%?

For now, I'm merely throwing a few hundred dollars into it every day, rain or shine. If it goes down another 20% or so, I might take $10K at a time from T-bills and *really* buy. Variable Portfolio stocks. Just have to make sure I have enough cash remaining to call it an emergency fund because:
• The virus could come back, like just when Vinny thought he was going to play basketball in September.
• Some other calamity could hit: Al Qaeda shenanigans, natural disasters, who knows.
I'm definitely not a doomer, but who knows when we'll really be out of the woods.

Sounds like a good plan.

There has been talk that the virus could be under control by the summer, and then return with a vengeance in the fall.