Are you "staying the course"?

General Discussion on the Permanent Portfolio Strategy

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turbo8214
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Are you "staying the course"?

Post by turbo8214 » Wed Mar 18, 2020 1:11 pm

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?
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I Shrugged
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Re: Are you "staying the course"?

Post by I Shrugged » Wed Mar 18, 2020 1:18 pm

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. :o

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.
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Tortoise
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Re: Are you "staying the course"?

Post by Tortoise » Wed Mar 18, 2020 1:27 pm

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
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Re: Are you "staying the course"?

Post by turbo8214 » Wed Mar 18, 2020 1:28 pm

I Shrugged wrote:
Wed Mar 18, 2020 1:18 pm
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. :o

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.
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Re: Are you "staying the course"?

Post by pmward » Wed Mar 18, 2020 1:31 pm

If anything, I want to buy more stocks and gold, haha.
turbo8214
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Re: Are you "staying the course"?

Post by turbo8214 » Wed Mar 18, 2020 1:36 pm

Tortoise wrote:
Wed Mar 18, 2020 1:27 pm
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.
Tortoise wrote:
Wed Mar 18, 2020 1:27 pm
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.
Last edited by turbo8214 on Wed Mar 18, 2020 1:37 pm, edited 1 time in total.
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Re: Are you "staying the course"?

Post by dualstow » Wed Mar 18, 2020 1:37 pm

turbo8214 wrote:
Wed Mar 18, 2020 1:11 pm
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).
we have arrived at a situation in which well-intentioned liberal people often can’t bring themselves to say that lawless violence is wrong. —Gary Morson ,WSJ
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I Shrugged
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Re: Are you "staying the course"?

Post by I Shrugged » Wed Mar 18, 2020 1:43 pm

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.
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Kriegsspiel
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Re: Are you "staying the course"?

Post by Kriegsspiel » Wed Mar 18, 2020 2:36 pm

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.
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Re: Are you "staying the course"?

Post by barrett » Wed Mar 18, 2020 2:53 pm

Kriegsspiel wrote:
Wed Mar 18, 2020 2:36 pm
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.
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Re: Are you "staying the course"?

Post by glennds » Wed Mar 18, 2020 4:09 pm

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.
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Re: Are you "staying the course"?

Post by Smith1776 » Wed Mar 18, 2020 4:18 pm

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.
Check out the Goldsmith PP: https://www.gyroscopicinvesting.com/forum/viewtopic.php?f=1&t=9613
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