I consider the IT-TE holings Tier 1 of the EF. I envy your optimism and would like to end the year in the black.DragonJoey3 wrote: I can say that when I decided to change my 6 month emergency fund over to be the PP instead of a savings account I did so Dec. 4 2012. Since that time the PP has been down almost consistently. Presently based on ETF Replay it should be down 1.5%, and based on my own tracking it's down 1.87% (because not all of it was invested at once.
That being said I don't regret the decision in the least. I suspect the PP will still end the year in the green and more so than the measly 1% I would have gotten in a bank account.
Oh how it hurts to see no gains
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- buddtholomew
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Re: Oh how it hurts to see no gains
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.
Re: Oh how it hurts to see no gains
Here's rolling 12-month returns for a 25% each TLT, GLD, SHY, VTI portfolio (rebalanced monthly, dividends reinvested)buddtholomew wrote:I consider the IT-TE holings Tier 1 of the EF. I envy your optimism and would like to end the year in the black.DragonJoey3 wrote: I can say that when I decided to change my 6 month emergency fund over to be the PP instead of a savings account I did so Dec. 4 2012. Since that time the PP has been down almost consistently. Presently based on ETF Replay it should be down 1.5%, and based on my own tracking it's down 1.87% (because not all of it was invested at once.
That being said I don't regret the decision in the least. I suspect the PP will still end the year in the green and more so than the measly 1% I would have gotten in a bank account.
April-13 March Feb Jan Dec-12 Nov Oct Sept Aug Jul Jun May
2.79% 4.34% 2.59% 2.90% 6.34% 5.58% 5.41% 11.17% 8.05% 10.60% 11.83% 9.07%
The previous year (May 2011 to April 2012), they were all above 9% (nearly all above 10%).
Over the past two years there have been two negative 6-month rolling returns (Feb and March this year, both about -0.5%), a few more negative 3-month returns (none worse than -2%), and quite a few (10, most between 0 and -1%, but a few larger losses up to nearly -2%) negative 1-month returns.
I don't think anyone has ever promised the PP will never go down. It clearly does. But the length of time it takes the PP to recover is much shorter than most investment strategies, because it goes down less often and goes down less. And over very long timeframes (decades) it seems to essentially match a 100% stock portfolio.
I don't have 40 years worth of data handy. Maybe one of the data wonks could figure out the longest period the PP has ever been under water (using monthly data). My guess is it's less than 2 years, meaning if you have money you don't want to spend for at least 2 years the PP would be a pretty safe place to put it. If you might need it in less than 2 years, you should probably think about something else.
If you want to be certain you're beating inflation, you're talking even longer. Again, I don't have the data but I'd be surprised if there was any 5 year interval where the PP failed to beat inflation. A 5 year CD is pretty much guaranteed to not beat inflation, so I suspect putting your money in a PP is virtually always better than buying a 5-year CD.
I think the PP is great for a medium to long term investment. But it's not 100% short term treasuries so there is some short term risk. FDIC insured bank accounts and money market funds both have risks the PP doesn't (that in a monetary collapse you'll lose all your money, and that over time you'll certainly lose out to inflation - the latter, but not the former, also applies to short term treasuries). But the PP also has risks bank accounts and money market funds generally (and short term treasuries definitely) don't, in particular the very real risk that you'll (at least temporarily) lose capital.
Re: Oh how it hurts to see no gains
The place to get greedy is in your VP, not your PP. You do have a VP, don't you?rhymenocerous wrote: MT once wisely counseled that greed would be people's biggest opponent to overcome when investing in the PP. Don't let the allure of greater returns sway you from decisions you made in more "stable" times.
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Re: Oh how it hurts to see no gains
I've been tracking 3 different hypothetical PP portfolios on Yahoo! Finance based on prices as of 1/1/13. Here is the YTD performance of each right now:notsheigetz wrote:My Morningstar tracking of SHY+TLT+IAU+VTI to approximate the PP is actually showing + 1.1% YTD so I don't know what y'all are looking at.sophie wrote: Are you sure you're down 2% for the year?
As of May 1st, my PP is down 0.34% since January 1.
TLT, PHAU.L, ZGLDUS.SW, SCHO, SCHB = -0.8% YTD
TLT, GLD, SHY, VTI = -0.9% YTD
EDV, PHYS, SGOL, SHY, VTI = -1.6% YTD
The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.
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Re: Oh how it hurts to see no gains
You might want to check again. Here were the closing prices of those funds on 12/31/2012:notsheigetz wrote:My Morningstar tracking of SHY+TLT+IAU+VTI to approximate the PP is actually showing + 1.1% YTD so I don't know what y'all are looking at.sophie wrote: Are you sure you're down 2% for the year?
As of May 1st, my PP is down 0.34% since January 1.
SHY 84.42
TLT 121.18
IAU 16.28
VTI 73.28
Here were the closing prices on 5/17/2013:
SHY 84.46
TLT 117.07
IAU 13.17
VTI 86.08
Based on these numbers, a 4x25 PP invested in these funds would have been down 1.25% YTD at market close on 5/17. (NOTE: This calculation does not include reinvested dividends).
Last edited by rocketdog on Tue May 21, 2013 11:27 am, edited 1 time in total.
The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.
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Re: Oh how it hurts to see no gains
I think mine does show reinvested dividends and also I think I started tracking on the first day the market opened in 2013 making my initial figures slightly different than yours.rocketdog wrote:You might want to check again. Here were the closing prices of those funds on 12/31/2012:notsheigetz wrote:My Morningstar tracking of SHY+TLT+IAU+VTI to approximate the PP is actually showing + 1.1% YTD so I don't know what y'all are looking at.sophie wrote: Are you sure you're down 2% for the year?
As of May 1st, my PP is down 0.34% since January 1.
SHY 84.42
TLT 121.18
IAU 16.28
VTI 73.28
Here were the closing prices on 5/17/2013:
SHY 84.46
TLT 117.07
IAU 13.17
VTI 86.08
Based on these numbers, a 4x25 PP invested in these funds would have been down 1.25% YTD at market close on 5/17. (NOTE: This calculation does not include reinvested dividends).
Last edited by notsheigetz on Tue May 21, 2013 4:13 pm, edited 1 time in total.
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Re: Oh how it hurts to see no gains
In that case, what a difference a day makes!notsheigetz wrote:I think mine does show reinvested dividends and also I think I started tracking on the first day the market opened in 2013 making my initial figures slightly different than yours.
The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.
- H. L. Mencken
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Re: Oh how it hurts to see no gains
According to ETFreplay.com the VTI/GLD/TLT/SHY portfolio's YTD return is -0.4% (including dividends) as of 5/21.
http://etfreplay.com/combine.aspx
http://etfreplay.com/combine.aspx
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Re: Oh how it hurts to see no gains
Don't worry, it will be much lower after today's close. POS.
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.
Re: Oh how it hurts to see no gains
Seems like we are playing against a rigged table... Without POMO Tuesdays, the DOW would be up only 0.5%...
http://www.zerohedge.com/sites/default/ ... 1_EOD1.jpg
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Re: Oh how it hurts to see no gains
Seems cash is poised to be today's big winner. Good thing I have a quarter of my portfolio in it.buddtholomew wrote: Don't worry, it will be much lower after today's close. POS.
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Re: Oh how it hurts to see no gains
Congratulations.Pointedstick wrote:Seems cash is poised to be today's big winner. Good thing I have a quarter of my portfolio in it.buddtholomew wrote: Don't worry, it will be much lower after today's close. POS.
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Re: Oh how it hurts to see no gains
Just trying to provide a little perspective. A day like today hurts everyone except the cash-heavy, and PP-holders are more cash-heavy than most. I mean, who else did well today? Besides people who shorted stocks, bonds, and gold, that is?
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Re: Oh how it hurts to see no gains
Today was also particularly brutal because of the wicked 180 degree turn the market took after about 10:15am. Can't say I've had many top-10 best performance days reverse into top-10 worst performance days in such short order.
But yeah Budd, at least today 100% stocks is faring worse than the PP.
But yeah Budd, at least today 100% stocks is faring worse than the PP.
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Re: Oh how it hurts to see no gains
Please do not continue to make reference to me and a 100% stock portfolio. I have never compared the PP to a 100% stock portfolio (that I recall), but rather a traditional BH 60/40 allocation.iwealth wrote: Today was also particularly brutal because of the wicked 180 degree turn the market took after about 10:15am. Can't say I've had many top-10 best performance days reverse into top-10 worst performance days in such short order.
But yeah Budd, at least today 100% stocks is faring worse than the PP.
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.
Re: Oh how it hurts to see no gains
How did the 60/40 portfolio do today compared to the PP? Just curious.buddtholomew wrote:Please do not continue to make reference to me and a 100% stock portfolio. I have never compared the PP to a 100% stock portfolio (that I recall), but rather a traditional BH 60/40 allocation.iwealth wrote: Today was also particularly brutal because of the wicked 180 degree turn the market took after about 10:15am. Can't say I've had many top-10 best performance days reverse into top-10 worst performance days in such short order.
But yeah Budd, at least today 100% stocks is faring worse than the PP.
Re: Oh how it hurts to see no gains
PP(VTI/TLT/SGOL/SCHO): -0.8%
60/40 (VTI/TLT): -1.2%
60/40 (VTI/TLT): -1.2%
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Re: Oh how it hurts to see no gains
Don't make the assumption that individuals who invest in a 60/40 allocation hold long-term treasuries. My personal results for today were as follows.Tyler wrote: PP(VTI/TLT/SGOL/SCHO): -0.8%
60/40 (VTI/TLT): -1.2%
PP - down .98%
60/40 - down .68%
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Re: Oh how it hurts to see no gains
If you think about it, a 60/40 with stocks and cash represents a more optimistic view of the economy, allowing you to profit from prosperity more than twice as much as the PP. When the stock market is struggling, the cash causes you to lose less, but it doesn't have any means to actually make money other than the dividends and coupon payments from the cash.
The story it's telling you is, "I'm prepared to make lots of money when the economy is doing well, and lose less than everybody else when it's not!"
Seen in this light, I can absolutely understand the appeal of such a portfolio. It seems like it's very psychologically well suited for someone whose two major goals are participating to a large extent in the stock party, but losing less than others when the party ends.
The story it's telling you is, "I'm prepared to make lots of money when the economy is doing well, and lose less than everybody else when it's not!"
Seen in this light, I can absolutely understand the appeal of such a portfolio. It seems like it's very psychologically well suited for someone whose two major goals are participating to a large extent in the stock party, but losing less than others when the party ends.
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Re: Oh how it hurts to see no gains
It doesn't do as well as the PP during periods of inflation or deflation, which is consistent with the prosperity bias you are describing.Pointedstick wrote: If you think about it, a 60/40 with stocks and cash represents a more optimistic view of the economy, allowing you to profit from prosperity more than twice as much as the PP. When the stock market is struggling, the cash causes you to lose less, but it doesn't have any means to actually make money other than the dividends and coupon payments from the cash.
The story it's telling you is, "I'm prepared to make lots of money when the economy is doing well, and lose less than everybody else when it's not!"
Seen in this light, I can absolutely understand the appeal of such a portfolio. It seems like it's very psychologically well suited for someone whose two major goals are participating to a large extent in the stock party, but losing less than others when the party ends.
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Re: Oh how it hurts to see no gains
Right, it's more connected with the stock market. It's not a "real return in any environment" portfolio. It's a "less risky than 100% stocks" portfolio.
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Re: Oh how it hurts to see no gains
Yeah, that makes sense. But I'd personally also be upset at missing out on the cash and gold parties. With the PP there's always a party!Pointedstick wrote: Seen in this light, I can absolutely understand the appeal of such a portfolio. It seems like it's very psychologically well suited for someone whose two major goals are participating to a large extent in the stock party, but losing less than others when the party ends.
(Still enjoying the party pics, MT)
Re: Oh how it hurts to see no gains
I think I understand the pros and cons of the PP and plan to stick with it for the long haul. But I have to admit it's been a pretty dull party for almost a year...Tyler wrote: Yeah, that makes sense. But I'd personally also be upset at missing out on the cash and gold parties. With the PP there's always a party!
Re: Oh how it hurts to see no gains
I did not intend to make that reference. Actually I'm quite supportive of your concerns about the PP. Was just stating that at least there was some solace today in that stocks finally underperformed the PP. Albeit not by much.buddtholomew wrote:Please do not continue to make reference to me and a 100% stock portfolio. I have never compared the PP to a 100% stock portfolio (that I recall), but rather a traditional BH 60/40 allocation.iwealth wrote: Today was also particularly brutal because of the wicked 180 degree turn the market took after about 10:15am. Can't say I've had many top-10 best performance days reverse into top-10 worst performance days in such short order.
But yeah Budd, at least today 100% stocks is faring worse than the PP.
Re: Oh how it hurts to see no gains
Jbuddtholomew wrote:Don't make the assumption that individuals who invest in a 60/40 allocation hold long-term treasuries. My personal results for today were as follows.Tyler wrote: PP(VTI/TLT/SGOL/SCHO): -0.8%
60/40 (VTI/TLT): -1.2%
PP - down .98%
60/40 - down .68%
PP down .8%
S&P down .7%
Often budd simply states what I'm (and I assume many others) are already feeling