The thing I like best about PP...

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Stewardship
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The thing I like best about PP...

Post by Stewardship » Mon Mar 10, 2014 6:34 pm

The thing I like best about the PP is that unlike most portfolios, it doesn't place, as termed by Pope Francis in Evangelii Gaudium, "a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system."
In a world of ever-increasing financial intangibility and government imposition, I tend to expect otherwise.
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Re: The thing I like best about PP...

Post by Fragile Bill » Tue Mar 11, 2014 12:23 pm

1
Kshartle
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Re: The thing I like best about PP...

Post by Kshartle » Tue Mar 11, 2014 1:50 pm

It's interesting how two people can view something so differently.

The thing I dislike about the PP is that I see it as "a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system."


:)

When I look at it, objectively I hope......I see 50% of the assets in the form of promises to pay from those wielding economic and military power. No one can force them to pay, and they control how much of those slips of paper are printed. They have a means of defaulting, and you have no recourse. And they have strong incentive to default by devaluing.

I like the idea of wide diversification, it's just that so much of the assets are concentrated in investments that you hope the powers that be will make good on. I don't trust they'll ever repay and at some point in my life the losses in that half will be catastrophic. In the meantime there is no hope for long-term gain there so I stay away.
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Re: The thing I like best about PP...

Post by Lowe » Tue Mar 11, 2014 2:17 pm

Political risk can be mitigated by creating a PP in another country.
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Re: The thing I like best about PP...

Post by Kshartle » Tue Mar 11, 2014 2:46 pm

Lowe wrote: Political risk can be mitigated by creating a PP in another country.
Ahh but then it's not a PP right!

That's the thing I said when I joined the forum back in 2011 or 2010.

Diversify your stocks by going global and diversify your bonds by having an ex-US ST bond fund, since there are no good long-term options.

This idea was considered a big risk or something. I saw it as risk mitigation.
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Re: The thing I like best about PP...

Post by tennpaga » Tue Mar 11, 2014 4:43 pm

Kshartle wrote:
Lowe wrote: Political risk can be mitigated by creating a PP in another country.
Ahh but then it's not a PP right!
Actually, Lowe has it exactly right.

"Creating a PP in another country", i.e., holding that country's stocks, bonds, and cash, would indeed mitigate political risk (assuming one also held a PP in her home country).

However, holding stocks in country A and bonds/cash in country B would not be a PP.
Last edited by tennpaga on Tue Mar 11, 2014 4:56 pm, edited 1 time in total.
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Re: The thing I like best about PP...

Post by AdamA » Tue Mar 11, 2014 4:55 pm

Kshartle wrote:
The thing I dislike about the PP is that I see it as "a crude and naïve trust in the goodness of those wielding economic power...
Even though it holds 25% physical gold?
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Re: The thing I like best about PP...

Post by moda0306 » Tue Mar 11, 2014 5:22 pm

AdamA wrote:
Kshartle wrote:
The thing I dislike about the PP is that I see it as "a crude and naïve trust in the goodness of those wielding economic power...
Even though it holds 25% physical gold?
As in 25% is too much or not enough?
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Re: The thing I like best about PP...

Post by ns3 » Tue Mar 11, 2014 5:42 pm

Kshartle wrote: The thing I dislike about the PP is that I see it as "a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system."
Say what?

I read Harry Browne's political writings long before I read any of his investment advice and if there was any trust in "the goodness of those wielding economic power" I totally missed it.

If there is a bias toward the belief that those who wield economic power will continue to do so and we should act accordingly, that sounds reasonable to me but trust them? Definitely don't see that with HB.
Last edited by ns3 on Tue Mar 11, 2014 5:45 pm, edited 1 time in total.
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Re: The thing I like best about PP...

Post by Kshartle » Wed Mar 12, 2014 5:56 am

ns3 wrote:
Kshartle wrote: The thing I dislike about the PP is that I see it as "a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system."
Say what?

I read Harry Browne's political writings long before I read any of his investment advice and if there was any trust in "the goodness of those wielding economic power" I totally missed it.

If there is a bias toward the belief that those who wield economic power will continue to do so and we should act accordingly, that sounds reasonable to me but trust them? Definitely don't see that with HB.
50% of the assets are in the bonds of one government. They control the printing press and long-term inflation rate (as Yellen said), and if they default no one can seize thier assets like a corporations might be seized. Yes, currency issuing countries have defaulted outright, rare as it may be.

This is a lot of faith in the powers that be.

Let's not forget they control the economic rules of trade in this land. Yes the US stock market is the biggest and many of the companies are global but I think 50-60% of the S&Ps revenues still come from domestic spending. If the taxes and regs tighten in this country there's a good chance it hurts the US market more than non-US stocks.

It doesn't matter what Browne said, I've read all his books. Look at it objectively. He's not a God....although close.
Last edited by Kshartle on Wed Mar 12, 2014 6:45 am, edited 1 time in total.
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Re: The thing I like best about PP...

Post by Kshartle » Wed Mar 12, 2014 5:59 am

TennPaGa wrote:
Kshartle wrote:
Lowe wrote: Political risk can be mitigated by creating a PP in another country.
Ahh but then it's not a PP right!
Actually, Lowe has it exactly right.

"Creating a PP in another country", i.e., holding that country's stocks, bonds, and cash, would indeed mitigate political risk (assuming one also held a PP in her home country).

However, holding stocks in country A and bonds/cash in country B would not be a PP.
Ok how many different PPs can I have before you don't consider me having a PP.

What if I have 20 different PPs.......can you really say I ascribe to the PP theory?

My argument is that a global PP is safer, especially in the long-run.
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Re: The thing I like best about PP...

Post by Lowe » Wed Mar 12, 2014 9:27 am

Since there isn't much political risk in a country as wealthy as the US, one more would likely be enough.  As long as it is in a politically stable country, and one not closely tied to the US.  Japan and Switzerland come to mind.
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