How to handle PP / Variable Portfolio Mix?

General Discussion on the Permanent Portfolio Strategy

Moderator: Global Moderator

Post Reply
MiniB

How to handle PP / Variable Portfolio Mix?

Post by MiniB »

The only thing I hear Harry talk about a lot is not rebalancing the VP back from the PP.  It makes sense that if you are speculating in your VP, you dont want to suck away the money in your PP that is "precious" to you and you cannot afford to lose.

That's a given and I understand it.

How do you handle things going forward?  If I contribute new money to either the VP or PP, depending on which is doing worse at the time, then essentially I am market timing, and may be indirectly shifting PP into VP due to fungibility of money.

One option is to split new contributions 50-50 to each.  This seems to make sense in my situation since I am planning to set up a 50% PP 50% VP split.  Perhaps someone with 90% PP and 10% VP may want to contribute 90% of new money to PP, and 10% to VP.

I came to a 50%-50% split because I have been a very good saver, and very lucky in my speculating, such that I have twice as much money as I "need" for my age.  I'm under 30 and have twice as much in my IRA as the average American 50 year old.  So even if my VP drops to zero, I will still be above the bell curve.

Or perhaps one could say ALL new contributions go to PP only.  The theory being that you are using the VP because you feel you can beat the PP.  And if that's correct, you shouldn't need new money added to the VP because your PP will always be lagging :)
Last edited by MiniB on Tue Oct 19, 2010 12:49 am, edited 1 time in total.
Post Reply