Asset Allocation in the Most Painful Month

General Discussion on the Permanent Portfolio Strategy

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Tyler
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Asset Allocation in the Most Painful Month

Post by Tyler » Mon Mar 23, 2020 11:45 am

For anyone watching their Permanent Portfolio balances and wondering how other portfolios are holding up right now, I ran some numbers.

Image

The insights of Harry Browne never cease to amaze me. :)

For lots more info, here's the full writeup: Asset Allocation in the Most Painful Month
Mechanical engineer, history buff, treasure manager... totally not Ben Gates
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ochotona
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Re: Asset Allocation in the Most Painful Month

Post by ochotona » Mon Mar 23, 2020 12:06 pm

Fantastic bar chart!
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Tortoise
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Re: Asset Allocation in the Most Painful Month

Post by Tortoise » Mon Mar 23, 2020 12:27 pm

Behold, the gyroscope!
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Re: Asset Allocation in the Most Painful Month

Post by pmward » Mon Mar 23, 2020 12:34 pm

Great article!
Kevin K.
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Re: Asset Allocation in the Most Painful Month

Post by Kevin K. » Mon Mar 23, 2020 12:41 pm

When it comes to being a voice of financial sanity and reason in these unprecedented times you're the CDC, WHO and Dr. Anthony Fauci all rolled into one Tyler. Thank you so much.
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Re: Asset Allocation in the Most Painful Month

Post by LittleDinghy » Mon Mar 23, 2020 1:36 pm

Thank you so much Tyler!
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dualstow
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Re: Asset Allocation in the Most Painful Month

Post by dualstow » Mon Mar 23, 2020 2:32 pm

Fantastic chart, Tyler.
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Re: Asset Allocation in the Most Painful Month

Post by senecaaa » Mon Mar 23, 2020 3:07 pm

Awesome Tyler, this really helps putting things in perspective again. My EU GB is holding up as well, although it is hard to calculate exactly as I was DCAing during the drop.
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sophie
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Re: Asset Allocation in the Most Painful Month

Post by sophie » Mon Mar 23, 2020 3:22 pm

I had noticed the same thing - I set my "rebalance check" spreadsheet to report current value of the portfolio compared to a reference date (i.e. the date of last rebalance), and set the portfolio value at that date to $1.

My golden butterfly is shows current value of 0.89 (an 11% drop in value since 1/1/2020). The 60/40 three-fund portfolio (what I use in my gold-restricted retirement accounts) shows current value of 0.81. That's a 19% drop.

There is a reason why we are all here, and this is it!!! This plus the cash allocation makes the PP (and its variant, the GB) pure gold - as it were.
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Dieter
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Re: Asset Allocation in the Most Painful Month

Post by Dieter » Mon Mar 23, 2020 3:32 pm

Thanks Tyler.

And SCV - ouch.

A lesson in expected vs actual or some such.
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Smith1776
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Re: Asset Allocation in the Most Painful Month

Post by Smith1776 » Mon Mar 23, 2020 5:36 pm

Fantastic stuff as usual, Tyler. Your content is always invaluable.
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Re: Asset Allocation in the Most Painful Month

Post by CT-Scott » Mon Mar 23, 2020 8:14 pm

This certainly looks quite impressive when you compare the PP to the 80-90% stock-holders (that seem oddly prevalent on the Bogleheads forum these days), or compared to numerous other recommendations.

But at the risk of sounding like someone "peeing on the Cheerios" wouldn't a more-perfect strategy produce positive (or, at least, flat) gains during a market-crash scenario?

In a short/medium-term crash timeframe, cash stays flat. I'm very ignorant about gold's past performance to comment on whether that typically goes up/down/flat (please comment on that, so I can learn).

I strongly suspect that there are other investment opportunities (that can't be bought inside of a 401k fund), but I don't have specific thoughts on that, yet.
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