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.