Year-to-date Returns

General Discussion on the Permanent Portfolio Strategy

Moderator: Global Moderator

Post Reply
User avatar
vnatale
Executive Member
Executive Member
Posts: 9423
Joined: Fri Apr 12, 2019 8:56 pm
Location: Massachusetts
Contact:

Year-to-date Returns

Post by vnatale » Sat Oct 01, 2022 4:01 pm

Today was supposed to have been a day of hearing music from noon to 2 AM at three places. However, once I saw that today was going to be cold AND rainy, which is no fun for me when being outside, I decided my time would be better spent sitting at this table and getting various things done on this computer.

First task was to update all in Quicken - Income, Expenses, Investment transactions.

After completing that I realized that I could give here a complete first three quarters of the year report of how my risky investments had done.

Until I ever get to change over to Permanent Portfolio my inertia has kept me exactly where I have been since January 2003, nearly 20 years ago.

After reading a few of Bernstein's books I made my equity and bond allocations decisions and then made my investments. Not a penny has gone in or out of those accounts since except for a Vanguard Growth Index Fund which I used for charitable contributions, taking advantage of getting full credit for the amount of the contributions while avoiding paying any taxes on any of the gains in that fund.

All new investing since January 2003 has been in cash (i.e., money market funds). Bad when things are going up equity-wise. Great when we are going through times like this.

This is where I made my investments in January 2003:

Capture.JPG
Capture.JPG (43.2 KiB) Viewed 1304 times


First column is the return for each of those funds from 12/31/21 to yesterday (9/30/22). The next two columns show what percentage of the total investment each fund was.

Of that overall loss of 20% for the year-to-date .... 53% of it has come in the time period of 9/13/22 to 9/30/22 ... the last 14 trading days of this past month.

If, instead, all had been flat during that time period the loss would have been reduced to 10%. But no if's in investing, right??!!!

To put that in perspective .... from 2/21/20 to 3/23/20 I lost 2.5 times as much as I did during this recent 14 trading days. But by 12/17/20 the entire loss (+8%) had been recouped.

This is now the fifth big-time downturn I've experienced in my investing life:

2000-2002
2008-2009
2018
February - March 2020
Now

During all those times I did nothing except for during the February-March 2020 time period. Then I converted all my Vanguard Federal Money Market to Vanguard Treasury Money Market. I viewed it as a barbell concept. I was taking enough risk on one end that I wanted totally riskless on the other end.

That leads to my cash investments and how the above and the cash fit in overall.

This is where I stood for total assets allocation for the end of last year (2nd column) and as of yesterday (1st column)

Equities 47% 53%
Bonds 8% 8%
Cash 45% 39%
100% 100%

I could go into further breakdowns as to how much are in non-retirement accounts and how much in retirement accounts and then how much is in each different type of retirement account. But I will not do that now.

When I was looking at the daily losses I've had this year ... it's jarring in the following terms.

I believe it is real money. I totally agree with mathjak that every day you are making an investment decision even though it's just to keep what you have. I could have avoided losses if any day I had decided to go all cash. But I didn't and I don't. But it is still real money I'm losing. Big, big amounts. How does that fit with when I'm at Stop & Shop I'm still oriented towards buying the cheaper house Stop & Shop brands. It's literally tiny, tiny percents of money compared to these losses.

One thing these losses did was to give me the incentive to spend a lot of money on my house since April. But that "a lot of money" is still quite small compared to how the size of the losses I've had in all those time period stated above. Sometimes less money in total spent on my house than I've lost in just one day!

It's all the same money whether you make money by investing or you earn it by working. Or, you lose it from investing or you consciously spend it on something or some experience.

EDIT: I realized I should give a total return including the cash investments - that 20% loss comes down to a 13% loss.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
User avatar
Hal
Executive Member
Executive Member
Posts: 1349
Joined: Tue May 03, 2011 1:50 am

Re: Year-to-date Returns

Post by Hal » Sat Oct 01, 2022 5:12 pm

Hi Vinny,

Just a quick question. What are your thoughts on Anthony Dedens/BelangP's philosophy of maintaining a constant cashflow and not worrying about the market value.

I think an example given was a baker. If his business generated the same cashflow each week, why should he worry about what someone values his business at?

PS: Deden link in case anyone is interested => https://edelweissjournal.com
Aussie GoldSmithPP - 25% PMGOLD, 75% VDCO
User avatar
mathjak107
Executive Member
Executive Member
Posts: 4456
Joined: Fri Jun 19, 2015 2:54 am
Location: bayside queens ny
Contact:

Re: Year-to-date Returns

Post by mathjak107 » Sat Oct 01, 2022 6:41 pm

For one thing draws in retirement are based on total portfolio value

How much of a draw you can sustain is also based on portfolio real returns over a certain amount of years

For anyone who only cares about only cash flow go give an insurance company your money and buy an annuity since you don’t care about your balance

The baker needs to worry about inflation and he can also have good business years and bad years and can’t have a constant cash flow

Nor can he count on beating inflation every year so in some years the cash flow won’t cut it if it’s constant

That premise makes no sense since a business produces a product to sell and a retirement draw needs the portfolios value to keep up or you are spending the goose laying the golden egg
User avatar
mathjak107
Executive Member
Executive Member
Posts: 4456
Joined: Fri Jun 19, 2015 2:54 am
Location: bayside queens ny
Contact:

Re: Year-to-date Returns

Post by mathjak107 » Sat Oct 01, 2022 7:07 pm

The unicorn of investing is the mythical portfolio that spins of whatever inflation adjusted income you need yet never varies in value itself

It never requires you to spend down more in years then others and it’s value can be worth half of what it was , yet the income never varies


Good luck with finding such a thing.

An annuity is about as close as you can get and not be dependent on value
User avatar
Hal
Executive Member
Executive Member
Posts: 1349
Joined: Tue May 03, 2011 1:50 am

Re: Year-to-date Returns

Post by Hal » Sun Oct 02, 2022 8:46 am

Thanks Mathjak,

Oh well, got an indexed army pension, so that's my annuity. Don't suggest spending 20 years of your life to get it though...
Aussie GoldSmithPP - 25% PMGOLD, 75% VDCO
Post Reply