Larry Swedroe?MachineGhost wrote:Burn's Fat Tail Minimization Portfolio.Stewardship wrote:Such as?MachineGhost wrote: There are less risky portfolios.
No where to hide
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Re: No where to hide
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Re: No where to hide
I looked for that briefly and couldn't find it, so does it have any significant amount of gold? If not, I don't consider it low-risk.MachineGhost wrote:Burn's Fat Tail Minimization Portfolio.Stewardship wrote:Such as?MachineGhost wrote: There are less risky portfolios.
Re: No where to hide
MG must mean Swedroe's Fat Tail Minimization Portfolio (Burns is the Couch Potato guy). Swedroe's Fat Tail Minimization Portfolio is 30% stock (half small cap value and half emerging markets), 35% TIPS, and 35% short term treasuries. No gold (Swedroe does not like gold).Libertarian666 wrote:I looked for that briefly and couldn't find it, so does it have any significant amount of gold? If not, I don't consider it low-risk.MachineGhost wrote:Burn's Fat Tail Minimization Portfolio.Stewardship wrote: Such as?
- Stewardship
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Re: No where to hide
+1Libertarian666 wrote: I looked for that briefly and couldn't find it, so does it have any significant amount of gold? If not, I don't consider it low-risk.
In a world of ever-increasing financial intangibility and government imposition, I tend to expect otherwise.
Re: No where to hide
Well, I guess from that we can say that government works for you. Bully.Ad Orientem wrote: Harry Browne was a smart guy but he was not infallible. Stating that government never works is just silly.
That's great you have an opinion and are not afraid to voice it. I am happy to allow you your opinion. My only wish -- it is a simple wish -- is that those of your point of view would allow me to have mine.
Seems only civilized.
But then, perhaps I'm "just silly."
Re: No where to hide
On where to hide: if the Permanent Portfolio is performing badly, perhaps the first question to ask should be:Stewardship wrote: Apologies for the conversation drift. I'll start a new thread if I want to discuss the different possible options for sewage
What economic state are we in?
Prosperity? Recession? Inflation? Deflation?
So what is the answer? If you have no answer to that question, perhaps best to hold off on action until you do have an answer. Otherwise, you're walking off blindfolded, and in a place with an awful lot of cliffs.
Re: No where to hide
Legendary Vanguard Group founder Jack Bogle warns that there is an "awful lot" to fear in the current stock market and investors have few “good options.”
"This is a hard time to invest because there aren't a lot of good options to stocks, and bond yields are extremely low," he told CNBC.
He said the Federal Reserve’s continued insistence on low interest rates has only artificially boosted stock prices.
"That's a scary thing because it can't stay that way forever," he said. "So, I do advocate a cautious approach to investing."
http://www.newsmax.com/Finance/StreetTa ... id/645782/
Cash anyone?
"This is a hard time to invest because there aren't a lot of good options to stocks, and bond yields are extremely low," he told CNBC.
He said the Federal Reserve’s continued insistence on low interest rates has only artificially boosted stock prices.
"That's a scary thing because it can't stay that way forever," he said. "So, I do advocate a cautious approach to investing."
http://www.newsmax.com/Finance/StreetTa ... id/645782/
Cash anyone?
- buddtholomew
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Re: No where to hide
He also mentioned to stay out of long-term treasuries...sure wish he added unless they are part of a well diversified portfolio.Reub wrote: Legendary Vanguard Group founder Jack Bogle warns that there is an "awful lot" to fear in the current stock market and investors have few “good options.”
"This is a hard time to invest because there aren't a lot of good options to stocks, and bond yields are extremely low," he told CNBC.
He said the Federal Reserve’s continued insistence on low interest rates has only artificially boosted stock prices.
"That's a scary thing because it can't stay that way forever," he said. "So, I do advocate a cautious approach to investing."
http://www.newsmax.com/Finance/StreetTa ... id/645782/
Cash anyone?
Poor guy...CNBC asked what he would tell the young investor who believes the entire market is manipulated? Mr. Bogle calmly attempted to explain dividends and earnings...I'm certain if any young investors were listening they most certainly would have already tuned out!
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.
- Stewardship
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Re: No where to hide
So he didn't answer the question?buddtholomew wrote: Poor guy...CNBC asked what he would tell the young investor who believes the entire market is manipulated? Mr. Bogle calmly attempted to explain dividends and earnings...
In a world of ever-increasing financial intangibility and government imposition, I tend to expect otherwise.
Re: No where to hide
The PP really sucks recently! Is it yesterday's news?buddtholomew wrote:He also mentioned to stay out of long-term treasuries...sure wish he added unless they are part of a well diversified portfolio.Reub wrote: Legendary Vanguard Group founder Jack Bogle warns that there is an "awful lot" to fear in the current stock market and investors have few “good options.”
"This is a hard time to invest because there aren't a lot of good options to stocks, and bond yields are extremely low," he told CNBC.
He said the Federal Reserve’s continued insistence on low interest rates has only artificially boosted stock prices.
"That's a scary thing because it can't stay that way forever," he said. "So, I do advocate a cautious approach to investing."
http://www.newsmax.com/Finance/StreetTa ... id/645782/
Cash anyone?
Poor guy...CNBC asked what he would tell the young investor who believes the entire market is manipulated? Mr. Bogle calmly attempted to explain dividends and earnings...I'm certain if any young investors were listening they most certainly would have already tuned out!
As I said once before, the place to hide is in cash.
- I Shrugged
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Re: No where to hide
deflationLC475 wrote:
What economic state are we in?
Prosperity? Recession? Inflation? Deflation?
Stay free, my friends.
Re: No where to hide
Deflation, and no help from bonds!
Re: No where to hide
Since 2008 we are in the midst of a massive deleveraging which I think so far is generally deflationary.LC475 wrote: What economic state are we in?
Prosperity? Recession? Inflation? Deflation?
Yes, not in the short term but bonds performed strongly in 2008, 2011 & 2014. I'm not ready to dump mine yet. Ride them when they are doing well, take some profits, endure some bond pain, and (hopefully) repeat.ochotona wrote: Deflation, and no help from bonds!
Re: No where to hide
I Shrugged wrote:deflationLC475 wrote:
What economic state are we in?
Prosperity? Recession? Inflation? Deflation?
Ding, Ding, Ding, we have a winner imho.
I think without the manipulation of markets through interest rates, this would be painfully obvious to all. This central planning that adjusting interest rates to move markets, and might even place rules making items such as gold to be less appealing to the masses, makes it even more difficult to analyze markets and profit from an active management approach.
This makes the PP's agnostic approach even more appealing imho. For those believing they can time the market and fearful of losses, cash is likely a good place to be. For how long is the question? I have come to doubt my ability to time markets, and as such am still fascinated w PP as an option. Not to say VPs aren't also a viable way to augment one's investment strategy, if used wisely, i.e. with money you won't need soon (afford to loose might be the common description, but imo who has money to loose?)
Re: No where to hide
Hello everyone!Reub wrote:The PP really sucks recently! Is it yesterday's news?buddtholomew wrote:He also mentioned to stay out of long-term treasuries...sure wish he added unless they are part of a well diversified portfolio.Reub wrote: Legendary Vanguard Group founder Jack Bogle warns that there is an "awful lot" to fear in the current stock market and investors have few “good options.”
"This is a hard time to invest because there aren't a lot of good options to stocks, and bond yields are extremely low," he told CNBC.
He said the Federal Reserve’s continued insistence on low interest rates has only artificially boosted stock prices.
"That's a scary thing because it can't stay that way forever," he said. "So, I do advocate a cautious approach to investing."
http://www.newsmax.com/Finance/StreetTa ... id/645782/
Cash anyone?
Poor guy...CNBC asked what he would tell the young investor who believes the entire market is manipulated? Mr. Bogle calmly attempted to explain dividends and earnings...I'm certain if any young investors were listening they most certainly would have already tuned out!
As I said once before, the place to hide is in cash.
I am new here.
I just recently went all in by investing in the PP on 4/22/15.
As of today I am -7.27 on long term treasuries
-0.48 on short term treasuries
-1.05 stocks
-1.27 gold
I have lost 2.52 % of my investment in just a bit over a month.
I feel like there is really no place to hide and all the components are going down simultaneously.
I did not expect this at all. I am not sure what kind of environment we have in the economy because the data provided by govt are very suspicious. I do not know what to do from here on, but I am certainly racking up losses pretty steeply.
Any comments would be appreciated.
- I Shrugged
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Re: No where to hide
The beatings will continue until morale improves.
Honestly, if I was starting out with cash to invest, I'd sit on it and wait for some blood in the streets. I know that is not what any top notch long term passive investment plan says to do. But that's what I would do at this time.
Honestly, if I was starting out with cash to invest, I'd sit on it and wait for some blood in the streets. I know that is not what any top notch long term passive investment plan says to do. But that's what I would do at this time.
Stay free, my friends.
Re: No where to hide
Hi Flagator, welcome to the board.
I began my PP just over two years ago, after about 15 years with no firm investing philosophy. I had doubled my money as a newbie during the dotcom era, then lost about 80% of that using a combination of stupidity, ignorance, inexperience, and blind trust. Eventually resorted to CDs, gold, and TIPS to protect my remaining "wealth," then discovered the PP, which got me back into stocks. I completed my PP in mid-May 2013. I took an instant hit of about 6% by the end of June 2013. But by the end of 2013, I was back at breakeven. And last year I was up 10%. This year, slightly down. So overall, I am up about 9% nominal in two years; about 2% real CAGR.
My experience with the PP was just like yours: a significant loss within the first six weeks. But I was (still am) convinced of the track record of the PP, having read this forum for at least a year before implementing it, having crunched a lot of numbers, and having been amazed by its consistent real performance over 40+ years. I cannot think of a better strategy for someone who doesn't want to see big losses, wants real growth, and who doesn't want to make emotional investing decisions.
A loss of 2.52% in six weeks sure does suck, but it is hardly "steep." Such losses are quite common with this portfolio. Also, bear in mind that we were up 4% in January, so you will also experience steep rises!
My gut feeling is that now is an average, or somewhat favorable, time to be starting a PP. I think gold is fairly priced considering its trajectory over the last 10 years, a 30-year treasury yield of 3.11% seems reasonable considering its trajectory since the early 80s, and the SP500 has been hovering above 2000 for over nine months with no major hiccups. Perhaps stocks have considerable room to fall from their recent all-time high, but something is always overvalued with this portfolio. It's the nature of having non-correlated volatile assets.
My advice would be to stick with the PP for at least a year before complaining, or rejoicing, about its performance. In fact, don't get emotional about it for at least three years. You should have real gains by then.
I began my PP just over two years ago, after about 15 years with no firm investing philosophy. I had doubled my money as a newbie during the dotcom era, then lost about 80% of that using a combination of stupidity, ignorance, inexperience, and blind trust. Eventually resorted to CDs, gold, and TIPS to protect my remaining "wealth," then discovered the PP, which got me back into stocks. I completed my PP in mid-May 2013. I took an instant hit of about 6% by the end of June 2013. But by the end of 2013, I was back at breakeven. And last year I was up 10%. This year, slightly down. So overall, I am up about 9% nominal in two years; about 2% real CAGR.
My experience with the PP was just like yours: a significant loss within the first six weeks. But I was (still am) convinced of the track record of the PP, having read this forum for at least a year before implementing it, having crunched a lot of numbers, and having been amazed by its consistent real performance over 40+ years. I cannot think of a better strategy for someone who doesn't want to see big losses, wants real growth, and who doesn't want to make emotional investing decisions.
A loss of 2.52% in six weeks sure does suck, but it is hardly "steep." Such losses are quite common with this portfolio. Also, bear in mind that we were up 4% in January, so you will also experience steep rises!
My gut feeling is that now is an average, or somewhat favorable, time to be starting a PP. I think gold is fairly priced considering its trajectory over the last 10 years, a 30-year treasury yield of 3.11% seems reasonable considering its trajectory since the early 80s, and the SP500 has been hovering above 2000 for over nine months with no major hiccups. Perhaps stocks have considerable room to fall from their recent all-time high, but something is always overvalued with this portfolio. It's the nature of having non-correlated volatile assets.
My advice would be to stick with the PP for at least a year before complaining, or rejoicing, about its performance. In fact, don't get emotional about it for at least three years. You should have real gains by then.
Re: No where to hide
Flagator,
Here's what you do: just ride it out, and don't worry about it. Whatever you do, don't sell at a loss and lock in your losses. Look back at the PP performance over a multi-year time frame, not just year-to-date. You're in it for the long-haul, not the short term. You'd be in just as bad a position if you were in a 60/40 stock/bond blend.
When I started my PP in 2013, gold took a major beating almost right afterwards, and I was wondering what I'd gotten myself into, but then everything turned around in 2014. 2015 doesn't look so great right now, but that can change. Every portfolio has volatility. The PP just happens to not have as much volatility as many portfolios, and it still produces good gains on average. The real beauty of the PP is that you now have a system to follow, rather than just making blind emotion-fueled guesses that end up lowering your rate of return dramatically.
Here's what you do: just ride it out, and don't worry about it. Whatever you do, don't sell at a loss and lock in your losses. Look back at the PP performance over a multi-year time frame, not just year-to-date. You're in it for the long-haul, not the short term. You'd be in just as bad a position if you were in a 60/40 stock/bond blend.
When I started my PP in 2013, gold took a major beating almost right afterwards, and I was wondering what I'd gotten myself into, but then everything turned around in 2014. 2015 doesn't look so great right now, but that can change. Every portfolio has volatility. The PP just happens to not have as much volatility as many portfolios, and it still produces good gains on average. The real beauty of the PP is that you now have a system to follow, rather than just making blind emotion-fueled guesses that end up lowering your rate of return dramatically.
Re: No where to hide
There is no reason to go all in if you don't want to. Possibly for you 25% or 50% of your overall portfolio might be the ideal PP percentage. Possibly none. Have you explored the Boglehead approach, other investing styles? If you do decide to invest in the PP I would recommend dollar cost averaging in over, say a year. I would even say to enter slowly over a 2 year period in equal amounts. The rest can be parked in a 1% FDIC money market fund for safety in the interim.
“I’ve given you a great gift, George;” said Clarence, “the chance to see what the world will be like now that QE has driven the prospective return of every risky asset class to zero.”
http://www.hussmanfunds.com/wmc/wmc150608.htm
“I’ve given you a great gift, George;” said Clarence, “the chance to see what the world will be like now that QE has driven the prospective return of every risky asset class to zero.”
http://www.hussmanfunds.com/wmc/wmc150608.htm
Last edited by Reub on Mon Jun 08, 2015 8:49 pm, edited 1 time in total.
Re: No where to hide
If 40 years of performance is what made the PP attractive to you, I wouldn't let six weeks of performance shake your confidence too badly.
Just let it do its thing. Looking all the time is very tempting, but it's not productive.
Just let it do its thing. Looking all the time is very tempting, but it's not productive.
Q: “Do you have funny shaped balloons?”
A: “Not unless round is funny.”
A: “Not unless round is funny.”
- MachineGhost
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Re: No where to hide
Averaging in over three years might be prudent since that is the longest flat period.
"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!
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!
Re: No where to hide
Thank you for all your responses so far. I really appreciate them.
For those who recommended gradually investing in the PP over the next year or two or three, would you suggest I book my losses now, and then ease back in?
I am already fully invested.
Moreover, I am already semi retired so to speak, so in all likelihood, I am not going to be adding any more funds in the portfolio in the foreseeable future. This makes it a bit more challenging I believe.
Again, thank you very much for your input.
For those who recommended gradually investing in the PP over the next year or two or three, would you suggest I book my losses now, and then ease back in?
I am already fully invested.
Moreover, I am already semi retired so to speak, so in all likelihood, I am not going to be adding any more funds in the portfolio in the foreseeable future. This makes it a bit more challenging I believe.
Again, thank you very much for your input.
Re: No where to hide
FLAGATOR,FLAGATOR wrote: Thank you for all your responses so far. I really appreciate them.
For those who recommended gradually investing in the PP over the next year or two or three, would you suggest I book my losses now, and then ease back in?
I am already fully invested.
Moreover, I am already semi retired so to speak, so in all likelihood, I am not going to be adding any more funds in the portfolio in the foreseeable future. This makes it a bit more challenging I believe.
Again, thank you very much for your input.
Welcome to the forum. There are others on here who are also retired and fully invested in the PP (I'll be there in a few short years myself) . The question of whether or not to "book your losses" depends on a lot of factors. You might want to lock in some losses for tax purposes if you have corresponding gains. I would recommend to think in terms of tax efficiency when pondering any moves. Try to think long term on the withdrawal strategy. If you are pulling cash from a few different accounts (or even just one), the other assets will have time to recover.
You are holding three really volatile assets and there are bound to be times when two or three will move down together even though in general they tend not to.
Have a look at the PP data on peaktotrough.com. You can plug in a starting date (go back 10 or 20 years). Set the "Result View" to monthly and then hit "Calculate Returns". You'll see that there are plenty of times that the portfolio is down for two or three months and then comes back with positive returns. I just went back to 1/1/1990 and found only two periods with four losing months in a row.
Are we in a new era? I don't know but there is a good track record and a lot of thought behind this asset mix.
Also, don't forget that depending on how you have your stocks and bonds invested, you may have some "phantom" dividend or interest gains that have not yet posted.
Finally, focus on real returns. If you haven't look at Tyler's real return charts (recently re-posted and re-formatted), or can't find them for some reason, someone will point you in the right direction. We are in a low nominal return environment but the real returns should still be positive on a rolling basis... at least that is what we are all hoping for!
Good luck.
Re: No where to hide
The Permanent Portfolio is as sound as ever. Naysayers are always going to neigh. I would just sit tight, sit back, and let the returns come in. But that's just me.
- dualstow
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Re: No where to hide
You can't always get what you want, but wild horses couldn't drag me away from the P.P.LC475 wrote: The Permanent Portfolio is as sound as ever. Naysayers are always going to neigh.