Pushing your chips "all in" for the PP

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PFG
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Pushing your chips "all in" for the PP

Post by PFG » Wed Feb 12, 2014 11:41 am

It has been a little over a year since I read the book by Mr. Rowland and Mr. Lawson.

I'm young (under 30) and was searching for direction in how to invest. I had read stuff by Bogle, and a few other "lazy portfolio" books like Coffee House investor, etc. I picked up Permanent Portfolio, read it back to front. Repeated. Spent the next few months organizing my investments and assets into the PP arrangement.

But yesterday was the day I knew I was TRULY in, "all in" for the PP.

A big chunk of my cash - held in T-Bills - matured and rolled into my IRA sweet account. There it was. All that money sitting in a flat, no-money-earning T-Bill was now available. I thought about it. The little devil on one shoulder shouting: "Put it in stocks! Dump that into your index ETF that is rolling with the market - making you money instead of that boring T-Bill". And on the other shoulder, holding the PP book - the angel telling me to be smart, buy another year long T-Bill and follow the PP.

I resisted the urge to tinker. Resisted the urge to chase yield. It was harder then I thought, and the first real test of mine in this journey with the PP asset allocation. 

Yesterday was the day I knew I was "all in" for the PP. Pushed my chips all in.

When did you know you were "all in"? And what have been your challenges along the way?
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Re: Pushing your chips "all in" for the PP

Post by AdamA » Wed Feb 12, 2014 11:58 am

PFG wrote:
A big chunk of my cash - held in T-Bills - matured and rolled into my IRA sweet account. There it was. All that money sitting in a flat, no-money-earning T-Bill was now available. I thought about it. The little devil on one shoulder shouting: "Put it in stocks! Dump that into your index ETF that is rolling with the market - making you money instead of that boring T-Bill". And on the other shoulder, holding the PP book - the angel telling me to be smart, buy another year long T-Bill and follow the PP.

I resisted the urge to tinker. Resisted the urge to chase yield. It was harder then I thought, and the first real test of mine in this journey with the PP asset allocation. 
Nice job.  I think your decision will be rewarded.
When did you know you were "all in"? And what have been your challenges along the way?
I knew as soon as I started.  I had made enough bad investing decisions to see the wisdom behind the PP, so I think sticking to it has been easier for me than a lot of others.
Last edited by AdamA on Wed Feb 12, 2014 7:45 pm, edited 1 time in total.
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Re: Pushing your chips "all in" for the PP

Post by Aught_1 » Wed Feb 12, 2014 5:29 pm

AdamA wrote:
When did you know you were "all in"? And what have been your challenges along the way?
I knew as soon as I started.  I had made enough bad investing decisions to see the wisdom behind the PP, so I think sticking to it has been easier for me than a lot of others.
I can echo AdamA's sentiment. I've only been in the PP for a year, but I also had made many investing mistakes over the last 15 years. I followed the assets in my PP daily at first, and it wasn't going well for the PP last year, as you well know. It was tough to see those losses, but the thought I kept going back to was, "Well, where else do I put my money?" So I kept it in and didn't tinker with it. Now the PP is coming back up and I've never slept more soundly.

Another thing I think about is how incredibly tax efficient it is. On a portfolio worth about $250,000k, I will be paying only about $50 in taxes this year for last year's performance. I have my assets split between my IRA's (traditional and Roth), two brokerage accounts, an HSA, several savings/checking accounts and my cash value life insurance policy (that's a tweak I made as a substitute for some of my cash portion). I have been all-in on the PP for over a year now and am loving it.
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Re: Pushing your chips "all in" for the PP

Post by MediumTex » Thu Feb 13, 2014 8:02 pm

PFG,

Thanks for joining us here and I'm happy to hear that the PP book was valuable to you.

I think that the PP book has probably caused a lot of people to go back and read Harry Browne's books as well, which is a really good thing.  Browne had a lot of insightful things to say about investing and the world in general.
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Re: Pushing your chips "all in" for the PP

Post by ns3 » Thu Feb 13, 2014 10:30 pm

No more than two years ago I would not have believed I would be buying physical  gold bullion and storing it away.

And not because of all the stories on the internet and TV that you need to buy gold NOW to protect yourself from whatever, but because HB's strategy just made sense.
Last edited by ns3 on Thu Feb 13, 2014 10:32 pm, edited 1 time in total.
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Re: Pushing your chips "all in" for the PP

Post by rocketdog » Sun Feb 16, 2014 4:15 pm

MediumTex wrote: I think that the PP book has probably caused a lot of people to go back and read Harry Browne's books as well, which is a really good thing.  Browne had a lot of insightful things to say about investing and the world in general.
I recently purchased a (used) copy of each of HB's books on investing.  Haven't read any of them yet, but they're in my reading queue.  I'll have to post a review here once I get to them (it could be a while, so don't hold your breath  ;))
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Re: Pushing your chips "all in" for the PP

Post by rickb » Mon Feb 17, 2014 12:19 am

rocketdog wrote:
MediumTex wrote: I think that the PP book has probably caused a lot of people to go back and read Harry Browne's books as well, which is a really good thing.  Browne had a lot of insightful things to say about investing and the world in general.
I recently purchased a (used) copy of each of HB's books on investing.  Haven't read any of them yet, but they're in my reading queue.  I'll have to post a review here once I get to them (it could be a while, so don't hold your breath  ;))
Start with Why the Best-Laid Investment Plans Usually Go Wrong: And How You Can Find Safety and Profit in an Uncertain World.  A little bit dated.  A little bit long (a good editor could probably have trimmed it by 30%).  But overall I think it may be the best book on investing ever published (sorry Craig and MediumTex - your book is fine, but it's really not even in the same league).
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Re: Pushing your chips "all in" for the PP

Post by moda0306 » Mon Feb 17, 2014 9:34 am

PFG,

I run a modified PP at this point (less gold and in ETF form at this point, using I-bonds as deeper cash, some "growth funds" in my 401k as stocks), but overall it's pretty close to experiencing a lot of the fears/downsides of most investors going into a pure PP.

First off, a couple of the downsides:

1) Lower accepted rate of return during the good times:  Just accept it... BUT think of it this way... How much do you make?  How many more years do you have left to work?  What kind of raises do you hope/think you'll get?  Run all that through a financial calculator, and the vast majority of people will see a present value that's FAR higher than their net worth.  This is your biggest asset, and if it's correlated with anything, it's the stock market. 

This should help illustrate why we don't need to be loading up on the equity market considering all the correlated risks to our careers.

2) "What if we're wrong?"  What if treasuries aren't nominally risk-free?  It kind of breaks the whole thing, with the exception of hoping gold will come in to save the day, but our portfolio is designed much better for a sovereign fiat currency where there is no nominal risk to our T-bills/bonds.  This is why, especially in this interest rate environment, I'd hold  good chunk of your "cash" personally.  If your "opportunity cost" is .2% in your checking account, or .3% in a T-bill, fine.  I-bonds are a bit sweeter of a pot, but they still aren't liquid for one year.

3) Shortt-term volatility:  Anything with a lot of gold, LTT's, and equities, at some points, is going to see some awful days.  The whole idea being, though, is that these assets are so macroeconomically opposed, that I really don't care when the portfolio has a bad year.... I really can look at it as a "buying opportunity," as opposed to when you invest in one asset class, and have to wonder whether you're throwing good money after bad.  The PP has so many fundamentals on its side that it's not even funny.


So overall I don't look at going all in to the PP as "putting all my chips in."  I look at it as saying, "fellas, I'm out, enjoy the rest of the game," and taking my poker money to buy an ownership stake in the casino.

I think there's some room for debate around:

1) whether we're putting too much gold in the portfolio @ 25%, or

2) whether we should diversify into other sovereign fiat bond markets (Japan, UK), or

3) whether holding physical cash is a better idea than a bunch of T-bills.

But, overall, don't look at this like putting all your money on red, but leaving the casino never to gamble again... unless your previous position was cash, but even that has its own problems mid/long-term.
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Re: Pushing your chips "all in" for the PP

Post by vnatale » Thu Mar 26, 2020 7:43 pm

PFG wrote:
Wed Feb 12, 2014 11:41 am
It has been a little over a year since I read the book by Mr. Rowland and Mr. Lawson.

I'm young (under 30) and was searching for direction in how to invest. I had read stuff by Bogle, and a few other "lazy portfolio" books like Coffee House investor, etc. I picked up Permanent Portfolio, read it back to front. Repeated. Spent the next few months organizing my investments and assets into the PP arrangement.

But yesterday was the day I knew I was TRULY in, "all in" for the PP.

A big chunk of my cash - held in T-Bills - matured and rolled into my IRA sweet account. There it was. All that money sitting in a flat, no-money-earning T-Bill was now available. I thought about it. The little devil on one shoulder shouting: "Put it in stocks! Dump that into your index ETF that is rolling with the market - making you money instead of that boring T-Bill". And on the other shoulder, holding the PP book - the angel telling me to be smart, buy another year long T-Bill and follow the PP.

I resisted the urge to tinker. Resisted the urge to chase yield. It was harder then I thought, and the first real test of mine in this journey with the PP asset allocation. 

Yesterday was the day I knew I was "all in" for the PP. Pushed my chips all in.

When did you know you were "all in"? And what have been your challenges along the way?

This one deserves to be resurrected!

Vinny
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Re: Pushing your chips "all in" for the PP

Post by Kbg » Mon Mar 30, 2020 10:42 pm

Younger people...more stock, really. 25% is not enough at your age.
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Re: Pushing your chips "all in" for the PP

Post by Smith1776 » Mon Mar 30, 2020 11:31 pm

I don't want to open up a can of worms, but if the young PP investor is set on 25% equity, factor tilting (ala Swedroe) can really come in handy.
For the money you can't afford to lose, why would you invest it in anything other than the PP? ???
Check out the Goldsmith PP: https://www.gyroscopicinvesting.com/forum/viewtopic.php?f=1&t=9613
The government causing inflation and giving us TIPS is like breaking our legs and giving us crutches.
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Re: Pushing your chips "all in" for the PP

Post by ppnewbie » Mon Mar 30, 2020 11:48 pm

I became more open to the HBPP when I started to understand gold more and when I realized how artificially inflated and fragile the market was. Also my taxable account is nearly a hundred percent in buffet style value stocks. It was built over many years. So I figured I would have one gyroscope (the GB / HBPP) that lagged a bit in returns but was steady and one roller coaster that may outperform in the long run.

This way when I retire I can choose which one to draw down on.

You may want to read some of Tyler’s stuff on portfolio charts.com about the accumulation phase because your fairly young.

Now that you have saved yourself from this market thrashing - I agree with KBG - I think you should own more stock.

Good luck!
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