Yay PP!

General Discussion on the Permanent Portfolio Strategy

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Vil
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Re: Yay PP!

Post by Vil » Tue Dec 21, 2021 3:20 am

ppnewbie wrote:
Mon Dec 20, 2021 10:03 pm
I moved to a PP in order to protect the wealth already created as I hopefully glide towards retirement.
+1 gazillion, exactly the same reason why I landed on PP. Moreover, still can't see (drug dealing also not being an option) how I can earn from investing the amount of money I am getting from my job without taking insane levels of risk.
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Re: Yay PP!

Post by mathjak107 » Tue Dec 21, 2021 3:27 am

ppnewbie wrote:
Mon Dec 20, 2021 10:03 pm
Just to echo what I believe Mathkak said, I moved to a PP in order to protect the wealth already created as I hopefully glide towards retirement. I would probably not choose this earlier in life. In fact I’m trying to decide the investing strategy for my kids. Is it better to limit losses with a golden butterfly. Or is it better to swing for the fences dollar cost averaging into 100 percent VTI over the next 25 years for them.
Absolutely 100% in equities in my opinion
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Re: Yay PP!

Post by mathjak107 » Tue Dec 21, 2021 3:43 am

D1984 wrote:
Mon Dec 20, 2021 7:47 pm
buddtholomew wrote:
Mon Dec 20, 2021 6:22 pm
D1984 wrote:
Mon Dec 20, 2021 5:14 pm
buddtholomew wrote:
Mon Dec 20, 2021 4:13 pm
I actually think of it more as community service.

I feel duped and I’m bitter because I wasted 10 years investing in 4x25 when I could have just stayed with a conventional portfolio and reaped the rewards. Veer off course and get burned. And what do you ask is the main differentiator between the PP and a conventional BH portfolio? Why, of course it’s GOLD.

I know I’m a broken record but I don’t want some young investor following in my shoes. 25% in gold is senseless, I know that now.

If the "conventional BH portfolio" you are comparing the PP against is a 60/40 stock/bond or a 100/0 stock/bond then you are playing a game with loaded dice.

No one with even two brain cells to rub together expects a portfolio with only 25% in equities to do as well as a portfolio with 60% (or 100%) in equities....at least not if the equities in all of said portfolios are of roughly equal risk and expected return.

If you want to compare apples to apples you need to compare the 4x25 PP against a classic BH portfolio that is only invested 25% in stocks (i.e. a 25/75 portfolio with 25% in stocks and the rest--the remaining 75%--either wholly in ITTs or split 50/50 in a barbell of LTTs and STTs or cash). This lets the only "variable" you are changing be "gold" i.e. the percentage of gold in the portfolio.

Here is that comparison from the earliest PV goes back to (1992 since VFITX and VFISX didn't exist until late 1991):

https://www.portfoliovisualizer.com/bac ... tion8_1=25

Portfolio 1 is the PP; portfolio 2 is the 25/75 using VFINX and ITTs; portfolio 3 is the 25/75 using VFINX, VUSTX, and VFISX in a 25/37.5/37.5 ratio. Not a whole lot of difference in performance between the 4x25 PP and the two versions of the 25/75 classic BH.

You should probably stop blaming gold for the difference in performance which is in actuality almost entirely caused by comparing an equity-heavy portfolio with one that only has 25% of its holdings in equities.
PP has been compared to a 60/40 on countless occasions and is a reasonable benchmark for a conservative portfolio.
"Has been compared"? Nice weaselly use of passive voice there.

Specifically who compared it to that? If they did, they were wrong and if you believed them, you were mistaken for believing them. Why would you believe a portfolio with 25% stocks was anywhere near equal in expected return to one with 60% in stocks? In what universe does that even begin to make sense?

Also, I'm not sure if you were saying that the PP was a reasonable benchmark for a conservative portfolio or that the 60/40 was but if the latter........

Sorry to break it to you, but 60/40 isn't a benchmark for a conservative portfolio....maybe for a moderate one.

Two points come to mind:

One, there's a reason Morningstar breaks down "conservative allocation" and "moderate allocation" funds into discrete categories like "Allocation--15% to 30% Equity, "Allocation--30% to 50% Equity", "Allocation--50% to 70% Equity", "Allocation--70% to 85% Equity", and "Allocation--85%+ Equity". It's so when you are trying to judge or choose between two different blended or allocation funds you aren't comparing apples and oranges by comparing two funds that are wildly different in stock allocation percentages.....yet by comparing the PP with the 60/40, this is exactly the mistake you are making.

Two, almost all (around or just under 92% to be exact; see https://thehedgefundjournal.com/the-ris ... -stocks-2/ ) of a 60/40 portfolio's actual risk contribution comes from stock performance and not bond performance; any portfolio that has nearly 19/20ths of its risk coming from equities can hardly be called a "conservative" portfolio.

Don't be angry at the PP just because you chose a portfolio that wasn't high enough in equities to suit you and then got pissed because said portfolio wasn't equaling or outperforming the high-equity allocation (and thus higher expected return) portfolio you otherwise could've chosen.

Harry Browne himself (you know, the guy who invented the PP) stated that it was meant mostly to be a wealth preservation portfolio, not a capital growth portfolio; he believed that you grow your wealth through working hard at your career and diligently saving money, not by investment.
I am not so sure the volatility in the pp is any less today with all assets moving in concert far to many times

in fact it certainly exceeds my basic core model in that respect.there are days the pp moves like it is 75% equities
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Re: Yay PP!

Post by jhogue » Tue Dec 21, 2021 9:36 am

Anyone who actually holds 25% in Cash knows that it is not moving in tandem with the other PP assets. In fact, real returns on Cash have been zero or negative. Thus the recency bias that characterizes mathjak's posts.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: Yay PP!

Post by dualstow » Tue Dec 21, 2021 9:47 am

ppnewbie wrote:
Mon Dec 20, 2021 10:03 pm
Just to echo what I believe Mathkak said, I moved to a PP in order to protect the wealth already created as I hopefully glide towards retirement. I would probably not choose this earlier in life. In fact I’m trying to decide the investing strategy for my kids. Is it better to limit losses with a golden butterfly. Or is it better to swing for the fences dollar cost averaging into 100 percent VTI over the next 25 years for them.
viewtopic.php?f=10&t=12421
(wealth accumulaton for child, thread by jalanlong)
another day, another North Korean missile
let 2022 be the year of GOLD
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Re: Yay PP!

Post by mathjak107 » Tue Dec 21, 2021 10:06 am

jhogue wrote:
Tue Dec 21, 2021 9:36 am
Anyone who actually holds 25% in Cash knows that it is not moving in tandem with the other PP assets. In fact, real returns on Cash have been zero or negative. Thus the recency bias that characterizes mathjak's posts.
There is only one question to ask yourself

Is your view that we will not be seeing rising rates across the curve and higher inflation or do you see rising rates and higher inflation

There is no question that the pp is weighted for low rates and lower inflation. If you are comfortable with the fact you think things won’t change then the pp is fine

If you think not then the pp can be like cement shoes.

Either way you need to weight one way or another and your choice has ramifications effecting your portfolio

Personally I like diversifying the gold

Today we now have gold down but bitcoin and commodities are up nicely.

With the fed hawkish that is a negative for gold despite rising inflation and even fear of covid can’t stop Tlt from sliding
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Re: Yay PP!

Post by jhogue » Tue Dec 21, 2021 1:46 pm

The question that mathjak has to answer is whether equity-heavy portfolios like his will experience regression to the mean.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: Yay PP!

Post by mathjak107 » Tue Dec 21, 2021 2:40 pm

jhogue wrote:
Tue Dec 21, 2021 1:46 pm
The question that mathjak has to answer is whether equity-heavy portfolios like his will experience regression to the mean.
Equity heavy portfolio ? Do you even read my posts before commenting .. I have less equities than the butterfly.

I have stated it over and over ..obviously you are pulling that comment out of the air since no where did I indicate I have an equity heavy portfolio..

Thanks for playing
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Re: Yay PP!

Post by Xan » Tue Dec 21, 2021 2:55 pm

mathjak107 wrote:
Tue Dec 21, 2021 2:40 pm
jhogue wrote:
Tue Dec 21, 2021 1:46 pm
The question that mathjak has to answer is whether equity-heavy portfolios like his will experience regression to the mean.
Equity heavy portfolio ? Do you even read my posts before commenting .. I have less equities than the butterfly.

I have stated it over and over ..obviously you are pulling that comment out of the air since no where did I indicate I have an equity heavy portfolio..

Thanks for playing
I think he means "equity-heavy portfolios like the ones you constantly advocate here" rather than necessarily referring to your own portfolio at this moment.
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Re: Yay PP!

Post by mathjak107 » Tue Dec 21, 2021 3:01 pm

I advocate 100% equities for the accumulation stage that’s for sure ….there is no financial logic to mitigating temporary dips for an investor with decades to go . I dont like individual stocks either , I like broad based funds with no individual company risk on top of the already market volatility

If they don’t have the pucker factor for it then my advice is get a manager to do it for you ..

Odds are very high There will end up being a severe difference in wealth accumulation mitigating dips that don’t matter in the long haul .

Most of us can only save bits and pieces and it is the power of compounding that turns those little bits and pieces into meaningful sums over decades .

But I have never advocated equity heavy portfolios for retirement or even pre retirement glide paths
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Re: Yay PP!

Post by ppnewbie » Tue Dec 21, 2021 3:53 pm

I may take a hybrid approach which is buy what’s cheap. Basically not sure if buying at a current CAPE of 40 will compound as fast as if it drops to 15. In the meantime, their may buy other things that may be better for compounding.
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Re: Yay PP!

Post by ppnewbie » Tue Dec 21, 2021 11:13 pm

dualstow wrote:
Tue Dec 21, 2021 9:47 am
viewtopic.php?f=10&t=12421
(wealth accumulaton for child, thread by jalanlong)
Thanks for the link to the thread.
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Re: Yay PP!

Post by Vil » Wed Dec 22, 2021 6:42 am

jhogue wrote:
Tue Dec 21, 2021 1:46 pm
.. whether equity-heavy portfolios like his will experience regression to the mean.
On a funny note, a very old post (dragoncar, 2015, but I vividly recall it), related to what might be referred as the "Golden Bitching"-PP portoflio ;D

I find bitching is just a regular part of the PP. It's really 20% stocks, 20% gold, 20% bonds, 20% cash, and 20% bitching. Bitching is high right now so you probably need to rebalance out of it.
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Re: Yay PP!

Post by dockinGA » Wed Dec 22, 2021 7:16 am

Mathjak, out of curiosity, what was the time frame/dates you were 100% in equities?

As a response to Budd, I will bring up once again that when I decided the PP (or slight deviations from it like the GB) was right for me in 2014, it was with the understanding the portfolio was 'predicted' at it's creation to deliver about 3-6% real return. That's not world beating compared to the potential with 100% stocks, but still decent. And since 2014, it's delivered 4.5%, exactly at the midpoint of the range that 'I signed up for', so to speak. 100% equities has delivered way better than that, bitcoin has trounced the PP, etc., but I can't get mad at the world, or mad at gold, or mad at the investors on this forum because I didn't get those astronomical returns. I got exactly what I signed up for.
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Re: Yay PP!

Post by dualstow » Wed Dec 22, 2021 7:30 am

Vil wrote:
Wed Dec 22, 2021 6:42 am
jhogue wrote:
Tue Dec 21, 2021 1:46 pm
.. whether equity-heavy portfolios like his will experience regression to the mean.
On a funny note, a very old post (dragoncar, 2015, but I vividly recall it), related to what might be referred as the "Golden Bitching"-PP portoflio ;D

I find bitching is just a regular part of the PP. It's really 20% stocks, 20% gold, 20% bonds, 20% cash, and 20% bitching. Bitching is high right now so you probably need to rebalance out of it.
O0 priceless!
another day, another North Korean missile
let 2022 be the year of GOLD
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Re: Yay PP!

Post by jhogue » Wed Dec 22, 2021 2:17 pm

That makes mathjak our resident guru in "deep bitching." budd seems preoccupied with normal everyday bitching.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: Yay PP!

Post by mathjak107 » Wed Dec 22, 2021 2:18 pm

As long as my portfolio choice keeps working out the way it has been I will take that title…..
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Re: Yay PP!

Post by jhogue » Wed Dec 22, 2021 2:20 pm

You seem more interested in our portfolios than yours.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: Yay PP!

Post by mathjak107 » Wed Dec 22, 2021 3:57 pm

I like all financial discussions…….and I do like comparing since we both run pretty close to the same equity level .

The pp bets heavier on low rates and low inflation , i am betting heavier on higher rates and higher inflation .

I likely won’t get badly hurt if I am wrong just like the pp wil not get badly hurt if you are wrong …we just will not do as well as if the portfolios were able to flourish under the conditions they are weighted for .
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Re: Yay PP!

Post by Hal » Wed Dec 22, 2021 3:58 pm

mathjak107 wrote:
Tue Dec 21, 2021 3:01 pm
I advocate 100% equities for the accumulation stage that’s for sure ….there is no financial logic to mitigating temporary dips for an investor with decades to go . I dont like individual stocks either , I like broad based funds with no individual company risk on top of the already market volatility
Light hearted solution - the Permanent BelangP :D

1. When young start with BelangP's 65/35 share/gold portfolio
2. Slowly increase your gold/cash/bond allocation on a glide path to retirement to a final 4x25% allocation.
3. The steepness of the glide path depends on the B.I. (Bitching Index)- Patent Pending.

So you get near 100% equity growth when young and 100% PP low volatility when retiring.

Edit: Proper title: PJ portfolio - Permanent Jak 8)
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Aussie GoldSmithPP - 25% PMGOLD, 75% VDCO
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Re: Yay PP!

Post by mathjak107 » Thu Dec 23, 2021 11:45 am

mathjak107 wrote:
Wed Dec 22, 2021 3:57 pm
I like all financial discussions…….and I do like comparing since we both run pretty close to the same equity level .

The pp bets heavier on low rates and low inflation , i am betting heavier on higher rates and higher inflation .

I likely won’t get badly hurt if I am wrong just like the pp wil not get badly hurt if you are wrong …we just will not do as well as if the portfolios were able to flourish under the conditions they are weighted for .
Love these kinds of days

All assets in the green ….it is rare gold , bitcoin and commodities are all up together along with stocks .. looks like only downer is bonds …Tlt down to 148.25 at the moment .

It may be time to do a small speculation in it ..it has been beaten up daily , it is due for a pop even if short lived.. even shy has been getting hit , a money market has been a better choice ..but not worth me speculating in .
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Re: Yay PP!

Post by dockinGA » Thu Dec 23, 2021 6:03 pm

mathjak107 wrote:
Thu Dec 23, 2021 11:45 am
mathjak107 wrote:
Wed Dec 22, 2021 3:57 pm
I like all financial discussions…….and I do like comparing since we both run pretty close to the same equity level .

The pp bets heavier on low rates and low inflation , i am betting heavier on higher rates and higher inflation .

I likely won’t get badly hurt if I am wrong just like the pp wil not get badly hurt if you are wrong …we just will not do as well as if the portfolios were able to flourish under the conditions they are weighted for .
Love these kinds of days

All assets in the green ….it is rare gold , bitcoin and commodities are all up together along with stocks .. looks like only downer is bonds …Tlt down to 148.25 at the moment .

It may be time to do a small speculation in it ..it has been beaten up daily , it is due for a pop even if short lived.. even shy has been getting hit , a money market has been a better choice ..but not worth me speculating in .
It looks like it was up on 12/22(yesterday), slightly, and is up 1.3% and is the best performing PP/GB asset over the last month. I think it's down a whopping 0.4% for the past 5 days, at least according to yahoo's data.
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Re: Yay PP!

Post by Hal » Sat Dec 25, 2021 4:59 pm

ppnewbie wrote:
Mon Dec 20, 2021 10:03 pm
Just to echo what I believe Mathkak said, I moved to a PP in order to protect the wealth already created as I hopefully glide towards retirement. I would probably not choose this earlier in life. In fact I’m trying to decide the investing strategy for my kids. Is it better to limit losses with a golden butterfly. Or is it better to swing for the fences dollar cost averaging into 100 percent VTI over the next 25 years for them.
Just my opinion ;)
For your children, I would average into 100% shares as above. Maybe consider a whole world share ETF if its going to be 25 years, a lot can change in a 1/4 century. Switch to a PP to preserve funds when there is enough.
Aussie GoldSmithPP - 25% PMGOLD, 75% VDCO
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Re: Yay PP!

Post by buddtholomew » Fri Jan 14, 2022 10:19 am

Sad that a PP investor gives up all the returns on the upside only to feel the pain on the downside too.

Garbage in, Garbage out
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Re: Yay PP!

Post by mathjak107 » Fri Jan 14, 2022 10:24 am

In defense of any portfolio, looking at a bull market only and not seeing a downside or recession calculated in is a poor way to judge .


I just think with the fear of rising rates the pp Which was likely sold on a low volatility bill of goods , that with 3 or 4 asset classes moving down together that they are experiencing some heavy duty moves on quite a few days.

Certainly more than many bargained for compared to other conservative portfolios less rate sensitive….


But if rising rates and inflation slow us down the pp may lose less .

If I look at only the 25% equity insight income model last year all by itself it clocked in at 5.50% vs the pp at 4.50% using Morningstar numbers .


So for 25% equities it wasn’t a lot worse so it seems pretty much in the ball park for what it is
Last edited by mathjak107 on Fri Jan 14, 2022 10:39 am, edited 1 time in total.
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