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General Discussion on the Permanent Portfolio Strategy

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Cortopassi
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Post by Cortopassi » Thu Apr 30, 2015 9:11 am

Seem to be quite a lot of these days lately.  Looks like any 2015 gains I had are now gone.  Gold to the woodshed, yet again, even after another delay in rate hikes.  It can't win.
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Post by buddtholomew » Thu Apr 30, 2015 9:26 am

I am at a loss for words...this portfolio is very disappointing and it has trailed my 60/40 allocation substantially since 2009. No matter what anyone says, if gold sucks the PP sucks.
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.
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Post by dualstow » Thu Apr 30, 2015 10:04 am

After such a long run, I don't know how we can expect gold to do anything fantastic anytime soon. Best not to pay attention to these short term movements, regardless of whether they're up to 13xx or down to 11xx.

I just wish I had enough cash to buy more gold for the future.
forcemeat, ie stuffing, is etymologically related to ‘farce’. When you say something is a farce, a joke, you’re saying something is a bunch of stuffing.
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Post by iwealth » Thu Apr 30, 2015 10:09 am

Dollar is strong, commodities are weak, global deflation, US rate hikes around the corner, strong stock market, relative geopolitical calmness...gold being in the pits is about as surprising as the sun coming up in the morning.

The PP is supposed to be a "market agnostic" portfolio, but it doesn't mean the market itself is agnostic. The market very much so believes it can predict the future and it's saying no inflation or WW3 likely any time soon, so lay off the gold and enjoy the free money and rising equities.

And once you do that it'll be sure to promptly chop your manhood right off.
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Post by ochotona » Thu Apr 30, 2015 10:14 am

iwealth wrote: Dollar is strong, commodities are weak, global deflation, US rate hikes around the corner, strong stock market, relative geopolitical calmness...gold being in the pits is about as surprising as the sun coming up in the morning.

The PP is supposed to be a "market agnostic" portfolio, but it doesn't mean the market itself is agnostic. The market very much so believes it can predict the future and it's saying no inflation or WW3 likely any time soon, so lay off the gold and enjoy the free money and rising equities.

And once you do that it'll be sure to promptly chop your manhood right off.
I remember hearing / reading those housing bubble news stories during 2005-2006-2007 and thinking, "OMG this can't last".
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dualstow
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Post by dualstow » Thu Apr 30, 2015 11:03 am

iwealth wrote: And once you do that it'll be sure to promptly chop your manhood right off.
Are you watching the Bruce Jenner interview or something?  ;)
forcemeat, ie stuffing, is etymologically related to ‘farce’. When you say something is a farce, a joke, you’re saying something is a bunch of stuffing.
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Post by KevinW » Thu Apr 30, 2015 11:27 am

Guys, we've been through this.

The PP is designed to achieve moderate returns, low volatility, and protect a portion of your wealth against a local economic collapse.

It is not designed to achieve high returns, go up every single day, or track a stock-heavy index allocation.

We're only 4 months into 2015. It's too early to give up on the year. One day's returns are irrelevant.

You can't expect a bicycle to work like a car or for chocolate ice cream to taste like strawberry. Likewise you can't expect the PP to perform to a standard different than the one to which it was designed. If you can't tolerate a one-day drawdown then you should probably be in a portfolio designed to prevent that, such as 100% cash or short term bonds. If you can't tolerate tracking error vs. a conventional portfolio then you should probably be in a conventional portfolio. Sorry, but that's how the cookie crumbles.
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Post by barrett » Thu Apr 30, 2015 11:35 am

Cortopassi wrote: ...Looks like any 2015 gains I had are now gone...
Yeah, as I have said a couple of times, with interest rates this low, even if we are expecting rolling real returns of 4% - 5%, we are likely to have more weeks, months & years with negative nominal PP returns. The real returns will just be clustered around a lower number and the portfolio is bound to feel as if it's going nowhere until (If? When?) some inflation kicks in. With inflation at 4% to 5% you would expect a CAGR of around 9% and that would mean doubling your money every 8 years. If there is no inflation and we use a real return of 4.5%, your money doubles in 16 years. Just a slow upward crawl with lots of ups and downs around that line of best fit. At least that is what I am hoping for.

For sure there is a better allocation going forward but I don't know what it is. But, yes, definitely a couple of crappy days and it's best not to be checking balances or attaching too much self worth to net worth (I have nothing against the latter in good times!). Chins up, I say.
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Post by Ad Orientem » Thu Apr 30, 2015 1:30 pm

KevinW wrote: Guys, we've been through this.

The PP is designed to achieve moderate returns, low volatility, and protect a portion of your wealth against a local economic collapse.

It is not designed to achieve high returns, go up every single day, or track a stock-heavy index allocation.

We're only 4 months into 2015. It's too early to give up on the year. One day's returns are irrelevant.

You can't expect a bicycle to work like a car or for chocolate ice cream to taste like strawberry. Likewise you can't expect the PP to perform to a standard different than the one to which it was designed. If you can't tolerate a one-day drawdown then you should probably be in a portfolio designed to prevent that, such as 100% cash or short term bonds. If you can't tolerate tracking error vs. a conventional portfolio then you should probably be in a conventional portfolio. Sorry, but that's how the cookie crumbles.
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Cortopassi
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Post by Cortopassi » Thu Apr 30, 2015 2:08 pm

I know, I know.  All I am doing is bitching.
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Post by dragoncar » Thu Apr 30, 2015 2:28 pm

Cortopassi wrote: I know, I know.  All I am doing is bitching.
I find bitching is just a regular part of the PP.  It's really 20% stocks, 20% gold, 20% bonds, 20% cash, and 20% bitching.  Bitching is high right now so you probably need to rebalance out of it.
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Post by iwealth » Thu Apr 30, 2015 2:48 pm

dragoncar wrote:
Cortopassi wrote: I know, I know.  All I am doing is bitching.
I find bitching is just a regular part of the PP.  It's really 20% stocks, 20% gold, 20% bonds, 20% cash, and 20% bitching.  Bitching is high right now so you probably need to rebalance out of it.
Typically as a hedge one holds a high % of bitching when stocks are outperforming. Bitching allocations are then moderate to low when bonds are doing really well. And nobody holds any bitching whatsoever when gold is on a tear. People actually short bitching and buy more gold when this happens.
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