Is the Permanent Portfolio Broken?

[johnnywitt]

Thanks for the link. Even if I don't always agree with the conclusions, it's good to see people talking about the Permanent Portfolio.

I could talk about several points in terms of Permanent Portfolio reasoning (seriously -- please don't swap treasuries for munis without understanding counter-party risk), but I'll focus on the conclusion since data is kinda my thing:

The original permanent portfolio looks great in the rear-view mirror. When you see stellar returns you have to ask “What led to this performance?” The permanent portfolio was lucky because it concentrated stock investments in the U.S. and owned long-term bonds during a multi-decade collapse in rates. For investors following this strategy, this post introduced three adjustments to ensure a portfolio stays permanent regardless of what the future holds.

The article claims that the PP performance is an artifact of starting in 1982 at the peak of interest rates and the beginning of a US stock bubble. The thing is, it's easy now to backtest the portfolio prior to that when nominal bond rates skyrocketed, inflation was double-digits, and real rates plunged below zero. And we can also look at specific timeframes like the one starting in 2000 when US stocks floundered for more than a decade, or the more recent years when cash rates have virtually evaporated. And in all of those timeframes, the performance of the PP was virtually the same! Basically, the assumption that the PP is an artifact of cherry-picked backtesting falls flat when one takes the time to test that assumption with real data.

The beauty of the Permanent Portfolio is not that every asset always has great future prospects. That will never be the case. It's that even when one or more assets completely tanks, the portfolio has a knack for continuing along like nothing happened. In a world of financial writers chasing the next big trend and running from the next big disaster, the PP is a model of consistency.

So no, I don't think the Permanent Portfolio is broken. It's just often misunderstood by people whose investing mindset follows a different paradigm.

This is why the PP will never be a Mainstream option: human hubris, folly & herd mentality will always prevent most Folks adoption of the strategy. It is supremely difficult to buy an Asset Class when it is loathed & supremely out of favor. Forced buying low and selling high sounds great in theory, but in practice, for most Investors, is nigh on impossible.

[ahhrunforthehills]

This is why the PP will never be a Mainstream option: human hubris, folly & herd mentality will always prevent most Folks adoption of the strategy. It is supremely difficult to buy an Asset Class when it is loathed & supremely out of favor. Forced buying low and selling high sounds great in theory, but in practice, for most Investors, is nigh on impossible.

There are many people that have both the understanding and discipline to maintain a PP allocation... but still ultimately decide it is either not optimal or no longer optimal.

Besides, there is limited data that supports how the PP would act in a prolonged rising inflation period. Bretton woods impacts gold prices in the 1940s-1970s dataset. That is why Tyler’s website excludes it. That is also why some sites like earlyretirmentnow are quick to dismiss Tyler’s data when it comes to the PP (no offense meant towards Tyler at all... I’m a fan).

I think that the PP is great for people that want an “easy” approach with a high chance of low volatility. But in all honesty, the PP is not as battle-tested as many people seem to think it is when it comes to macroeconomic shifts.

Is the PP a good strategy based on history? Definitely maybe

[ahhrunforthehills]

For the record, I have nothing against the PP.

I am merely trying to demonstrate that the “A-Ha” moment that people tend to experience when they finally “get it” in regards to the PP... well, there can be more “A-Ha” moments that make you realize things aren’t nearly as simple as HB would have liked you to believe.

[mathjak107]

This is why the PP will never be a Mainstream option: human hubris, folly & herd mentality will always prevent most Folks adoption of the strategy. It is supremely difficult to buy an Asset Class when it is loathed & supremely out of favor. Forced buying low and selling high sounds great in theory, but in practice, for most Investors, is nigh on impossible.

There are many people that have both the understanding and discipline to maintain a PP allocation... but still ultimately decide it is either not optimal or no longer optimal.

Besides, there is limited data that supports how the PP would act in a prolonged rising inflation period. Bretton woods impacts gold prices in the 1940s-1970s dataset. That is why Tyler’s website excludes it. That is also why some sites like earlyretirmentnow are quick to dismiss Tyler’s data when it comes to the PP (no offense meant towards Tyler at all... I’m a fan).

I think that the PP is great for people that want an “easy” approach with a high chance of low volatility. But in all honesty, the PP is not as battle-tested as many people seem to think it is when it comes to macroeconomic shifts.

Is the PP a good strategy based on history? Definitely maybe

rising rates and inflation is likely the PP kryptonite

[Kbg]

This isn’t an endorsement or an objection to the HBPP. However, the criticisms being levied above about data pretty much apply to any portfolio that has assets beyond the US stock market or treasury bills/bonds.

You could eliminate HBPP and insert pretty much any modern portfolio and the same would be true. If one dives into the data, at least what to me becomes evident, is that you can have some reasonably decent performing portfolios without a ton of stock. Another thing that is evident is a simple concept: there is no such thing as a free lunch. If you want higher returns you take on more risk, if you want less risk you settle for lower returns. This is about as close as one can get in the world of finance that is near a physical law.

On this board we often talk about gold coming off the gold standard when it comes to performance and metrics. This period is somewhat important, but I think the real dividing line is around the late 80s to early 90s with the advent of the information age into finance and the markets. The impact has been profound in so many ways.

[mathjak107]

most conventional portfolios in the 40-60% equity range do not have that kind of potential for damage in the bond portion

[I Shrugged]

Rising rates could be kryptonite at this particular point in time, yes. I hope the gold will mitigate the effects.

Referring to another part of the thread, according to my notes, my Aha! moment was in 2004. That happens to match up with me realizing George Bush The Younger was a war criminal, and so I found libertarianism and Harry Browne. His PP ideas made so much sense. I started rolling my portfolio into PP mode then. 26 years with very good success, that's why it's going to take a lot to move me off of it.

[johnnywitt]

This is why the PP will never be a Mainstream option: human hubris, folly & herd mentality will always prevent most Folks adoption of the strategy. It is supremely difficult to buy an Asset Class when it is loathed & supremely out of favor. Forced buying low and selling high sounds great in theory, but in practice, for most Investors, is nigh on impossible.

There are many people that have both the understanding and discipline to maintain a PP allocation... but still ultimately decide it is either not optimal or no longer optimal.

Besides, there is limited data that supports how the PP would act in a prolonged rising inflation period. Bretton woods impacts gold prices in the 1940s-1970s dataset. That is why Tyler’s website excludes it. That is also why some sites like earlyretirmentnow are quick to dismiss Tyler’s data when it comes to the PP (no offense meant towards Tyler at all... I’m a fan).

I think that the PP is great for people that want an “easy” approach with a high chance of low volatility. But in all honesty, the PP is not as battle-tested as many people seem to think it is when it comes to macroeconomic shifts.

Is the PP a good strategy based on history? Definitely maybe

The PP has never been an optimal portfolio strategy. The PP is a very conservative portfolio designed to preserve one's purchasing power. The Variable Portfolio is the "optimal" portfolio.

[johnnywitt]

For the record, I have nothing against the PP.

I am merely trying to demonstrate that the “A-Ha” moment that people tend to experience when they finally “get it” in regards to the PP... well, there can be more “A-Ha” moments that make you realize things aren’t nearly as simple as HB would have liked you to believe.

Ultimately, I think it is as simple as HB would have you believe. Once again, it's a very conservative portfolio and an astute investor such as yourself can possibly do better. This is why Harry actually encouraged folks that have the investing itch to have a Variable Portfolio. He stated that by having a VP that would likely keep them from jacking with their PP.

[johnnywitt]

most conventional portfolios in the 40-60% equity range do not have that kind of potential for damage in the bond portion

Yeah, but they sure as hell have it in the other asset classes.
Look at Japan vs other Portfolios and then look at the 1970's as well and the PP pretty well not only held up in Japan, but turned a profit in the 1970's.
If you think of the Life Experience of HB, I believe he hedged more against inflation with his portfolio than any possible deflationary event.
The only thing with the PP as far as an Achilles Heel is that you would need to stop all rebalancing in a Hyperinflation. I think anybody on this website is most likely savvy enough to recognize when a hyperinflation is occurring.
Hey, you guys can do your own thing. I came to this website because of the PP and to a lessor extent, the GB. I am, however, going with the PP.
I'll let you know how it goes as "nobody can predict the future" as old Harry would say.

[modeljc]

Rising rates could be kryptonite at this particular point in time, yes. I hope the gold will mitigate the effects.

Referring to another part of the thread, according to my notes, my Aha! moment was in 2004. That happens to match up with me realizing George Bush The Younger was a war criminal, and so I found libertarianism and Harry Browne. His PP ideas made so much sense. I started rolling my portfolio into PP mode then. 26 years with very good success, that's why it's going to take a lot to move me off of it.

I agree. Tried to talk about how a rise in long interets rate would affect the PP with Med Tex. My example was what if long rates went from 4% to 7%. Suggested the PP might hold 60% of its value. Stocks, gold, and long bond would tank.

[ahhrunforthehills]

most conventional portfolios in the 40-60% equity range do not have that kind of potential for damage in the bond portion

Yeah, but they sure as hell have it in the other asset classes.
Look at Japan vs other Portfolios and then look at the 1970's as well and the PP pretty well not only held up in Japan, but turned a profit in the 1970's.
If you think of the Life Experience of HB, I believe he hedged more against inflation with his portfolio than any possible deflationary event.
The only thing with the PP as far as an Achilles Heel is that you would need to stop all rebalancing in a Hyperinflation. I think anybody on this website is most likely savvy enough to recognize when a hyperinflation is occurring.
Hey, you guys can do your own thing. I came to this website because of the PP and to a lessor extent, the GB. I am, however, going with the PP.
I'll let you know how it goes as "nobody can predict the future" as old Harry would say.

I am interested to know where you are getting your Japan data.

For example, if you invested in the PP in Japan around 1987-1990, Tyler's data shows that you would have racked up 13 years of straight losses (followed by 25 years of no gains). When you factor in taxes and expenses, you probably lost money every year.

The 1970's is always a weird data set because of Bretton Woods. But I will play along... if i invested in a Japan PP around 1973-1974, it appears that this would have been my life:

"Time to periodically check my PP and rebalance if necessary". I get out my fancy calculator, news paper, and notebook.

- Hmmm... the market WAS doing pretty good before... but now it just keeps going down little by little. That sucks.
- Short Term Interest Rate are basically at 0%
- Woohoo! Gold has been doing pretty good (priced in Yen, it was similar to what we have recently seen in Gold in the US... a gradual almost doubling)
- Wait, WTF is happening to my LT Bonds?! Let me check that Quarterly CPI Inflation Rate... it basically TRIPLED!?! OMG, is this the start of hyperinflation!?! What should I do?! Okay, okay, keep calm... stay the course.

Even if I could stay the course with a PP, based on Tyler's data, I would have had 6 consecutive years of losses.

My only consolations would be that my losses were not as large as most of the people I knew. However, at that point I think most people would have already lost faith in the PP and would have moved on to some type of Peter Schiff strategy. There perception of a "Permanent Portfolio" that works all the time had already been popped.

I think the PP is fine as long as you are realistic in your expectations. However, HB's "philosophy" makes it sound a lot rosier than I think the allocation deserves.

A big reason why people like the PP is because of its Libertarian principles. However, the PP is a nice little portfolio because of its asset diversity as it has related to the environment it has existed in up until this point... not necessarily because of the libertarian narrative.

For investments, I want the science separated from the religion. In fact, calling it a "Permanent Portfolio" exacerbates the issue... IMHO, it should simply be called something like the "Low Volatility Portfolio" to set better expectations.

The "Permanent Portfolio" is based on a LOT of assumptions. HB said if X happens, than Y is the result. But, what if the definition of X has changed? What if the definition of Y has changed?

The problem with Libertarians (keep in mind that I am one) is that we righteously feel that the world will "return to normal" one day. We say things like "but things can't go on like this forever" and "if government would just stop manipulating those prices...".

But you know the saying... "if ifs and buts were candy and nuts it would be Christmas everyday."

Libertarians don't typically make the best investors. Their doomsday supplies also tend to expire before they ever get a chance to use them.

Again, I prefer the science separated from the religion.

[mathjak107]

The PP has almost a cult like following... that can really make for a stronger belief than just religion ...which can be good or bad depending on how things go .

We are finding today a whole lot more is involved then basic relationships to the economy ....we see assets like gold and long term treasuries taking the same path as stocks now , as many times leverage and margin calls make them the asset of choice to be sold .

Just like other factors tend to outweigh golds movements compared to daily inflation , so do other factors effect and overwhelm the movement of bonds today .

Bonds can not be counted on to stand up to a bad down turn in stocks ..the volatility of long term bonds can over accent the days fall instead of cushioning it

I am no more confident of the pp than I am in any other diversified portfolio of similar equity weighting

[ahhrunforthehills]

I am no more confident of the pp than I am in any other diversified portfolio of similar equity weighting

Well said.

[mathjak107]

Which is why I use the high volatility of gold and long term treasuries to trade in and out ..if I don’t ,I find in the blink of an eye within a few days all the gains are now losses.

Just the other day I sold Tlt in the morning and was up almost 3 or 4k in a matter of days of buying it , I would have to look to see the exact numbers...but by the close I rebought back in for thousands less in the same day

[ahhrunforthehills]

Which is why I use the high volatility of gold and long term treasuries to trade in and out ..if I don’t ,I find in the blink of an eye within a few days all the gains are now losses.

Just the other day I sold Tlt in the morning and was up almost 3 or 4k in a matter of days of buying it , I would have to look to see the exact numbers...but by the close I rebought back in for thousands less in the same day

How are you determining when to get in/out?

[mathjak107]

Total seat of my pants. It just seems to follow that every dip that is about 3-4k is followed by a gain and then it repeats.

If I don’t take advantage of the dip the gain just seems to evaporate

[johnnywitt]

most conventional portfolios in the 40-60% equity range do not have that kind of potential for damage in the bond portion

Yeah, but they sure as hell have it in the other asset classes.
Look at Japan vs other Portfolios and then look at the 1970's as well and the PP pretty well not only held up in Japan, but turned a profit in the 1970's.
If you think of the Life Experience of HB, I believe he hedged more against inflation with his portfolio than any possible deflationary event.
The only thing with the PP as far as an Achilles Heel is that you would need to stop all rebalancing in a Hyperinflation. I think anybody on this website is most likely savvy enough to recognize when a hyperinflation is occurring.
Hey, you guys can do your own thing. I came to this website because of the PP and to a lessor extent, the GB. I am, however, going with the PP.
I'll let you know how it goes as "nobody can predict the future" as old Harry would say.

I am interested to know where you are getting your Japan data.

For example, if you invested in the PP in Japan around 1987-1990, Tyler's data shows that you would have racked up 13 years of straight losses (followed by 25 years of no gains). When you factor in taxes and expenses, you probably lost money every year.

The 1970's is always a weird data set because of Bretton Woods. But I will play along... if i invested in a Japan PP around 1973-1974, it appears that this would have been my life:

"Time to periodically check my PP and rebalance if necessary". I get out my fancy calculator, news paper, and notebook.

- Hmmm... the market WAS doing pretty good before... but now it just keeps going down little by little. That sucks.
- Short Term Interest Rate are basically at 0%
- Woohoo! Gold has been doing pretty good (priced in Yen, it was similar to what we have recently seen in Gold in the US... a gradual almost doubling)
- Wait, WTF is happening to my LT Bonds?! Let me check that Quarterly CPI Inflation Rate... it basically TRIPLED!?! OMG, is this the start of hyperinflation!?! What should I do?! Okay, okay, keep calm... stay the course.

Even if I could stay the course with a PP, based on Tyler's data, I would have had 6 consecutive years of losses.

My only consolations would be that my losses were not as large as most of the people I knew. However, at that point I think most people would have already lost faith in the PP and would have moved on to some type of Peter Schiff strategy. There perception of a "Permanent Portfolio" that works all the time had already been popped.

I think the PP is fine as long as you are realistic in your expectations. However, HB's "philosophy" makes it sound a lot rosier than I think the allocation deserves.

A big reason why people like the PP is because of its Libertarian principles. However, the PP is a nice little portfolio because of its asset diversity as it has related to the environment it has existed in up until this point... not necessarily because of the libertarian narrative.

For investments, I want the science separated from the religion. In fact, calling it a "Permanent Portfolio" exacerbates the issue... IMHO, it should simply be called something like the "Low Volatility Portfolio" to set better expectations.

The "Permanent Portfolio" is based on a LOT of assumptions. HB said if X happens, than Y is the result. But, what if the definition of X has changed? What if the definition of Y has changed?

The problem with Libertarians (keep in mind that I am one) is that we righteously feel that the world will "return to normal" one day. We say things like "but things can't go on like this forever" and "if government would just stop manipulating those prices...".

But you know the saying... "if ifs and buts were candy and nuts it would be Christmas everyday."

Libertarians don't typically make the best investors. Their doomsday supplies also tend to expire before they ever get a chance to use them.

Again, I prefer the science separated from the religion.

I looked at the Insights article on Tyler's Website that showed the PP performance both in the 1970's and in Japan. It held up about as good, or better, than any other portfolio. Look, if you want to speculate, or "bet on the future" then by all means, do so. You will probably do quite well. For me, I will stick to a fixed portfolio and asset allocation for money I can't afford to lose and realize that I can't predict the future. I will keep the speculation confined to my VP.

[johnnywitt]

The PP has almost a cult like following... that can really make for a stronger belief than just religion ...which can be good or bad depending on how things go .

We are finding today a whole lot more is involved then basic relationships to the economy ....we see assets like gold and long term treasuries taking the same path as stocks now , as many times leverage and margin calls make them the asset of choice to be sold .

Just like other factors tend to outweigh golds movements compared to daily inflation , so do other factors effect and overwhelm the movement of bonds today .

Bonds can not be counted on to stand up to a bad down turn in stocks ..the volatility of long term bonds can over accent the days fall instead of cushioning it

I am no more confident of the pp than I am in any other diversified portfolio of similar equity weighting

Yeah, typically Bonds & Stocks are highly correlated throughout history. The Bonds offsetting stocks during the last 30 years or so is anomalous from a historical perspective. Stocks and Bonds got creamed in the 1970's from a purchasing power perspective. I expect to see that repeat, but for my core portfolio I would speculate on it.

[ahhrunforthehills]

Total seat of my pants. It just seems to follow that every dip that is about 3-4k is followed by a gain and then it repeats.

If I don’t take advantage of the dip the gain just seems to evaporate

Yeah, I noticed how hard that pendulum has been swinging lately. There has been a lot of volatility that is why outside of the norm. I printed the following graphic to keep me reminded how abnormal this year has been: https://i2.wp.com/financialsamurai.com/ ... =1456,9999

[ahhrunforthehills]

most conventional portfolios in the 40-60% equity range do not have that kind of potential for damage in the bond portion

Yeah, but they sure as hell have it in the other asset classes.
Look at Japan vs other Portfolios and then look at the 1970's as well and the PP pretty well not only held up in Japan, but turned a profit in the 1970's.
If you think of the Life Experience of HB, I believe he hedged more against inflation with his portfolio than any possible deflationary event.
The only thing with the PP as far as an Achilles Heel is that you would need to stop all rebalancing in a Hyperinflation. I think anybody on this website is most likely savvy enough to recognize when a hyperinflation is occurring.
Hey, you guys can do your own thing. I came to this website because of the PP and to a lessor extent, the GB. I am, however, going with the PP.
I'll let you know how it goes as "nobody can predict the future" as old Harry would say.

I am interested to know where you are getting your Japan data.

For example, if you invested in the PP in Japan around 1987-1990, Tyler's data shows that you would have racked up 13 years of straight losses (followed by 25 years of no gains). When you factor in taxes and expenses, you probably lost money every year.

The 1970's is always a weird data set because of Bretton Woods. But I will play along... if i invested in a Japan PP around 1973-1974, it appears that this would have been my life:

"Time to periodically check my PP and rebalance if necessary". I get out my fancy calculator, news paper, and notebook.

- Hmmm... the market WAS doing pretty good before... but now it just keeps going down little by little. That sucks.
- Short Term Interest Rate are basically at 0%
- Woohoo! Gold has been doing pretty good (priced in Yen, it was similar to what we have recently seen in Gold in the US... a gradual almost doubling)
- Wait, WTF is happening to my LT Bonds?! Let me check that Quarterly CPI Inflation Rate... it basically TRIPLED!?! OMG, is this the start of hyperinflation!?! What should I do?! Okay, okay, keep calm... stay the course.

Even if I could stay the course with a PP, based on Tyler's data, I would have had 6 consecutive years of losses.

My only consolations would be that my losses were not as large as most of the people I knew. However, at that point I think most people would have already lost faith in the PP and would have moved on to some type of Peter Schiff strategy. There perception of a "Permanent Portfolio" that works all the time had already been popped.

I think the PP is fine as long as you are realistic in your expectations. However, HB's "philosophy" makes it sound a lot rosier than I think the allocation deserves.

A big reason why people like the PP is because of its Libertarian principles. However, the PP is a nice little portfolio because of its asset diversity as it has related to the environment it has existed in up until this point... not necessarily because of the libertarian narrative.

For investments, I want the science separated from the religion. In fact, calling it a "Permanent Portfolio" exacerbates the issue... IMHO, it should simply be called something like the "Low Volatility Portfolio" to set better expectations.

The "Permanent Portfolio" is based on a LOT of assumptions. HB said if X happens, than Y is the result. But, what if the definition of X has changed? What if the definition of Y has changed?

The problem with Libertarians (keep in mind that I am one) is that we righteously feel that the world will "return to normal" one day. We say things like "but things can't go on like this forever" and "if government would just stop manipulating those prices...".

But you know the saying... "if ifs and buts were candy and nuts it would be Christmas everyday."

Libertarians don't typically make the best investors. Their doomsday supplies also tend to expire before they ever get a chance to use them.

Again, I prefer the science separated from the religion.

I looked at the Insights article on Tyler's Website that showed the PP performance both in the 1970's and in Japan. It held up about as good, or better, than any other portfolio. Look, if you want to speculate, or "bet on the future" then by all means, do so. You will probably do quite well. For me, I will stick to a fixed portfolio and asset allocation for money I can't afford to lose and realize that I can't predict the future. I will keep the speculation confined to my VP.

Respectfully, the PP is still "speculating" (despite what HB says). EVERYTHING is speculating.

In the PP, you are speculating that market dynamics would be repeatable from the 70's. You are speculating that Bretton Woods was not a massive contributing factor in the backtest data. For Japan, you are speculating that having world reserve currency status would have made no difference. The list goes on and on.

You are also speculating that the PP will continue to "work" because of the inverse relationship of asset classes. That you will ALWAYS be protected by the PP investing system. However, those dynamics can change in specific situations.

Ironically, HB told people to avoid investing systems with great track records... but then somehow the PP should be exempt from his advice?

The internal gears of the PP machine are not fixed and are not guaranteed.

The reality is that most (if not all) of us are seeking maximum return with very low volatility and risk. Thinking that people with the same objective are "speculating" only reinforces my previous post. IMHO, a prudent investor should consider separating the PP allocation from the PP dogma. I am not trying to be alarmist... just practical.

To be fair, the PP reminds me of an airline insurance policy. It can make you feel safe. Will it protect you in most circumstances? Sure. Does that safety come at a cost? Yes. If you read the fine print does it make you feel a lot less safe? Yes. Are there better alternatives for the price? Sometimes. Is it good for those that just want to "set-it-and-forget-it"? YES!

Keep in mind that the PP was primarily designed to give you freedom in your life. Simple investing rules so that you can go live have a happy libertarian life without the stress of your investments. That "ease" is obviously going to negatively impact the overall low-risk/high-return objective. It was never meant to be an optimal investing strategy... it was meant to be an optimal life strategy that would include your investments.

[Tyler]

You are speculating that Bretton Woods was not a massive contributing factor in the backtest data.

Love your thought process and contribution, but that part is not speculation.

https://portfoliocharts.com/2020/08/21/ ... d/#returns

[ahhrunforthehills]

You are speculating that Bretton Woods was not a massive contributing factor in the backtest data.

Loqve your thought process and contribution, but that part is not speculation.

https://portfoliocharts.com/2020/08/21/ ... d/#returns

Nice article Tyler!

I wish I could feel more warm and fuzzy about the 70’s data. I don’t have my notes in front of me, but I believe prices peaked on Dec 31, 1974 (the day that gold ownership was legalized again). Then you had 2 years of collapsing prices. It took another 2 years before it hit that previous high. At that point we are almost into the 80’s and our testing period would soon run out due to the environment changing.

It is still too hard for me to tell with certainty whether gold was actually behaving normally or whether it was experiencing aftershocks from the legalization of gold ownership and/or possible gold manipulation, etc..

Whenever I try to make sense of gold in that period it always feels like I’m doing a study with a ridiculously low sample size and a lot of noise. There is just no way for me to be confident in the data with so little to go on in a climbing rate environment.

Great article though. Your science reference sent me down a wormhole learning about asteroids delivering our current supply of gold because all of Earth’s original gold would have sank to the core. Thanks for the read

[mathjak107]

The PP has almost a cult like following... that can really make for a stronger belief than just religion ...which can be good or bad depending on how things go .

We are finding today a whole lot more is involved then basic relationships to the economy ....we see assets like gold and long term treasuries taking the same path as stocks now , as many times leverage and margin calls make them the asset of choice to be sold .

Just like other factors tend to outweigh golds movements compared to daily inflation , so do other factors effect and overwhelm the movement of bonds today .

Bonds can not be counted on to stand up to a bad down turn in stocks ..the volatility of long term bonds can over accent the days fall instead of cushioning it

I am no more confident of the pp than I am in any other diversified portfolio of similar equity weighting

Yeah, typically Bonds & Stocks are highly correlated throughout history. The Bonds offsetting stocks during the last 30 years or so is anomalous from a historical perspective. Stocks and Bonds got creamed in the 1970's from a purchasing power perspective. I expect to see that repeat, but for my core portfolio I would speculate on it.

assets do not correlate well to each other ever . but they do tend to correlate to specific economic outcomes . you can likely set your watch to that relationship .

but there are so many things today like leverage , margin calls , liquidity in etf's which really are untested products in very bad times , etc that cause what should be in to what maybe or ain't.

we saw that in march as equities plunged , long term treasuries plunged more as liquidity and margin calls caused havoc in the market place . it wasn't until the fed stepped in that things improved as far as liquidity

[AdamA]

I am no more confident of the pp than I am in any other diversified portfolio of similar equity weighting

What's the saying..."It's not the investment, it's the investor."

At some point you have to pick a reasonable strategy and just stick to it.

So much is bound to change over a 30-40 year investment period that you could justify bailing on any investment plan multiple times each decade.

At some point you just have to buckle your seatbelt and trust the plan.

If the risks described by Adam Collins or even Ray Dailo were foregone conclusions, the markets would reflect that.