2014 PP performance

General Discussion on the Permanent Portfolio Strategy

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Tom
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Re: 2014 PP performance

Post by Tom » Thu Jan 01, 2015 10:33 pm

Gosso - I must just be really really bad at math?  I'm calculating by subtracting my overall portfolio's ending value from teh starting value - dividing the difference by the starting value and multiplying by 100.  I'm getting 8.53% for my return.  I know there's differences between FSTVX vs SPY and PHYS vs GLD, but not that big of a difference for me to get 8.53% and you 9.8%
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Re: 2014 PP performance

Post by Ad Orientem » Thu Jan 01, 2015 10:47 pm

Tom wrote: Ad Orientum - turns out I'm dumb and had an error in my spreadsheet for calculating the percentage.  The truth is that my margin of error isn't nearly as bad as I thought.  From open Jan 2, 2014 to close Dec 31, 2014 is a gain of 8.53% - much more believable difference in performance.

So PHYS doesn't track the price of bullion AT ALL?  Even though you can actually redeem it for bullion?  Is it worth completely selling out of and switching to GLD?
8.5% is ball park for the PP's performance for this year. There will always be minor differences here and there. Regarding closed ended funds, I'm not saying they won't ever track the price of gold. I am saying that they frequently deviate based on market sentiment. If gold is hot, closed ended funds are likely to be smoking hot. If gold is cold, then these kinds of funds can smell like last weeks trash left to ferment in the furnace room. I'd stick to physical gold if at all possible. If you need or want a fund for ease of rebalancing then I'd probably just go with IAU.
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Re: 2014 PP performance

Post by Gosso » Thu Jan 01, 2015 10:55 pm

Tom wrote: Gosso - I must just be really really bad at math?  I'm calculating by subtracting my overall portfolio's ending value from teh starting value - dividing the difference by the starting value and multiplying by 100.  I'm getting 8.53% for my return.  I know there's differences between FSTVX vs SPY and PHYS vs GLD, but not that big of a difference for me to get 8.53% and you 9.8%
Well when I use fstvx and phys for your PP I get 9.2%, and once you add in the missing dividend of 1.3% from fstvx then your PP has a return of 9.5%.  The difference between our numbers could be from start dates, dividends/interest, or the data might not be fully up-to-date.
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Tom
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Re: 2014 PP performance

Post by Tom » Thu Jan 01, 2015 11:25 pm

Thanks Gosso!  I should clarify - I have two PPs.  One for my regular savings and one for retirement.  In my retirement I hold long term bonds directly and physical gold.

I hold funds for my regular savings b/c it's just easier and more liquid (particularly the gold portion) that way if I ever needed the cash in a hurry.  I went with PHYS since I'm likely to sell in the mid-term future and the tax treatment is better. Do I risk losing way more in gold beyond what bullion is losing by staying in PHYS?  If that's the case, I'm concerned, but this year and last weren't hot years for gold and it tracked fairly close to bullion both years. What is IAU about?

Thanks again!
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Re: 2014 PP performance

Post by Stunt » Fri Jan 02, 2015 8:28 am

Since I hold the Canadian PP, I thought I'd share how our results differ from what you guys had in 2014.

Stocks: +8.1%
Bonds: +11.5%
Gold: +4.4%
Cash: +0.1%
Total: +6.0%

As you can see the resource heavy Canadian stock market got hit hard by the pull back in oil price. However that exit of foreign investment and reduced economic activity resulted in lower currency value making gold positive relative to slight negative for US PP. Long bonds did not perform as good as the US I assume because of higher inflation since Canada imports a lot with a lower currency value.

Now one thing I've done with my PP that has helped this year is owning half Canadian, half US stock - helped with a 10-15% rise in currency and rise in US stock market. I just don't like how resource heavy the Canadian market is. In times of prosperity, the market won't necessarily go up since commodities are cyclical.  63% of the Canadian index is financials, mining and oil/gas - the S&P500 by comparison is 29%...
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Re: 2014 PP performance

Post by Gosso » Fri Jan 02, 2015 12:26 pm

Stunt wrote: Since I hold the Canadian PP, I thought I'd share how our results differ from what you guys had in 2014.

Stocks: +8.1%
Bonds: +11.5%
Gold: +4.4%
Cash: +0.1%
Total: +6.0%

As you can see the resource heavy Canadian stock market got hit hard by the pull back in oil price. However that exit of foreign investment and reduced economic activity resulted in lower currency value making gold positive relative to slight negative for US PP. Long bonds did not perform as good as the US I assume because of higher inflation since Canada imports a lot with a lower currency value.

Now one thing I've done with my PP that has helped this year is owning half Canadian, half US stock - helped with a 10-15% rise in currency and rise in US stock market. I just don't like how resource heavy the Canadian market is. In times of prosperity, the market won't necessarily go up since commodities are cyclical.  63% of the Canadian index is financials, mining and oil/gas - the S&P500 by comparison is 29%...
Hmmm, my numbers are quite different.  Using the adjusted closing prices (includes dividends) from Yahoo! Finance I get the following:

Stocks (XIU) +11.9%    ((21.47 / 19.18) - 1)
Gold (IGT)    +7.8%
Bonds (ZFL) +17.4%
Cash (ZFS)  +2.3%

Canadian 4x25 PP +9.85% (includes dividends and interest)

Unhedged US stocks (SPY) priced in Canadian Dollars increased 24.2% (CAD weakened 9.3% against USD), so this would boost the returns for a Canadian PP depending on allocation to US stocks.
Last edited by Gosso on Fri Jan 02, 2015 2:20 pm, edited 1 time in total.
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Re: 2014 PP performance

Post by Stunt » Fri Jan 02, 2015 12:50 pm

Gosso wrote: Hmmm, my numbers are quite different.  Using the adjusted closing prices (includes dividends) from Yahoo! Finance I get the following:

Stocks (XIU) +11.9%    ((21.47 / 19.18) - 1)
Gold (IGT)    +7.8%
Bonds (ZFL) +17.4%
Cash (ZFS)  +2.3%

Canadian 4x25 PP +9.85% (includes dividends and interest)

Unhedged US stocks priced in Canadian Dollars increased 22.8% (CAD weakened 9.3%), so this would obviously boost the returns for a Canadian PP depending on allocation to US stocks.
I used XIU but I see the ETF starting 2014 at 19.6 and not 19.18.
Gold I used the raw value of the metal and not an ETF - most people (myself included) seem to buy physical.
Bonds I used XLB, not sure how that compares to ZFL and similarly for cash I used XSB.

I might have forgotten dividends...
Last edited by Stunt on Fri Jan 02, 2015 12:57 pm, edited 1 time in total.
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Re: 2014 PP performance

Post by tennpaga » Fri Jan 02, 2015 12:59 pm

Stunt wrote:
Gosso wrote: Hmmm, my numbers are quite different.  Using the adjusted closing prices (includes dividends) from Yahoo! Finance I get the following:

Stocks (XIU) +11.9%    ((21.47 / 19.18) - 1)
I used XIU but I see the ETF starting 2014 at 19.6 and not 19.18.
Yes, the actual closing price on December 31, 2013 was 19.69.  But the adjusted closing price (i.e. adjusted for dividends paid throughout 2014) was indeed 19.18.
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Re: 2014 PP performance

Post by Gosso » Fri Jan 02, 2015 1:47 pm

Stunt wrote:
Gosso wrote: Hmmm, my numbers are quite different.  Using the adjusted closing prices (includes dividends) from Yahoo! Finance I get the following:

Stocks (XIU) +11.9%    ((21.47 / 19.18) - 1)
Gold (IGT)    +7.8%
Bonds (ZFL) +17.4%
Cash (ZFS)  +2.3%

Canadian 4x25 PP +9.85% (includes dividends and interest)

Unhedged US stocks priced in Canadian Dollars increased 22.8% (CAD weakened 9.3%), so this would obviously boost the returns for a Canadian PP depending on allocation to US stocks.
I used XIU but I see the ETF starting 2014 at 19.6 and not 19.18.
Gold I used the raw value of the metal and not an ETF - most people (myself included) seem to buy physical.
Bonds I used XLB, not sure how that compares to ZFL and similarly for cash I used XSB.

I might have forgotten dividends...
For XLB I got 16.5% ((23.62/20.27)-1).  So I'm pretty sure the only thing you're missing are the dividends, which are accounted for in the adjusted close at Yahoo! Finance.  The default for calculating past returns should be the adjusted close, the only time the pure closing price is needed is for technical analysis.
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Re: 2014 PP performance

Post by tarentola » Mon Jan 05, 2015 4:20 am

Some Euro figures:

IMEU Euro shares +8.3%
IBGL Euro 15-30y bonds +26.6%
GBS Gold +1.5%
IBGS Euro 1-3y bonds +1.8%

Average = 9.6%, very close to USA figure.
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Re: 2014 PP performance

Post by MachineGhost » Mon Jan 05, 2015 5:09 am

"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes

Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet.  I should not be considered as legally permitted to render such advice!
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Re: 2014 PP performance

Post by sophie » Tue Jan 06, 2015 12:04 am

Thanks for that chart!

My PP return for 2014 was 9.58%.  Surprised me, as my PP started out a bit off balance. 

It's interesting how we so easily focus on the bad times, and forget to notice as the portfolio is forging steadily upward.  Like the tortoise that beats the hare to the finish line!
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