No where to hide

General Discussion on the Permanent Portfolio Strategy

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LC475
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Re: No where to hide

Post by LC475 » Wed May 20, 2015 2:25 pm

Stewardship wrote: Apologies for the conversation drift.  I'll start a new thread if I want to discuss the different possible options for sewage
On where to hide: if the Permanent Portfolio is performing badly, perhaps the first question to ask should be:

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.
Reub
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Re: No where to hide

Post by Reub » Wed May 20, 2015 6:15 pm

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?
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buddtholomew
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Re: No where to hide

Post by buddtholomew » Wed May 20, 2015 6:25 pm

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?
He also mentioned to stay out of long-term treasuries...sure wish he added unless they are part of a well diversified portfolio.

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.
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Stewardship
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Re: No where to hide

Post by Stewardship » Wed May 20, 2015 10:09 pm

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...
So he didn't answer the question?
In a world of ever-increasing financial intangibility and government imposition, I tend to expect otherwise.
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Re: No where to hide

Post by Reub » Wed Jun 03, 2015 2:20 pm

buddtholomew wrote:
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?
He also mentioned to stay out of long-term treasuries...sure wish he added unless they are part of a well diversified portfolio.

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 PP really sucks recently! Is it yesterday's news?
As I said once before, the place to hide is in cash.
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I Shrugged
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Re: No where to hide

Post by I Shrugged » Wed Jun 03, 2015 9:07 pm

LC475 wrote:


What economic state are we in?

Prosperity?  Recession?  Inflation?  Deflation?

deflation
Stay free, my friends.
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ochotona
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Re: No where to hide

Post by ochotona » Thu Jun 04, 2015 5:14 am

Deflation, and no help from bonds!
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Re: No where to hide

Post by barrett » Thu Jun 04, 2015 7:44 am

LC475 wrote: What economic state are we in?

Prosperity?  Recession?  Inflation?  Deflation?
Since 2008 we are in the midst of a massive deleveraging which I think so far is generally deflationary.
ochotona wrote: Deflation, and no help from bonds!
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.
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Re: No where to hide

Post by 4x4 » Sun Jun 07, 2015 7:36 pm

I Shrugged wrote:
LC475 wrote:


What economic state are we in?

Prosperity?  Recession?  Inflation?  Deflation?

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?)
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Re: No where to hide

Post by flagator » Mon Jun 08, 2015 5:32 pm

Reub wrote:
buddtholomew wrote:
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?
He also mentioned to stay out of long-term treasuries...sure wish he added unless they are part of a well diversified portfolio.

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 PP really sucks recently! Is it yesterday's news?
As I said once before, the place to hide is in cash.
Hello everyone!

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.
                       
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I Shrugged
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Re: No where to hide

Post by I Shrugged » Mon Jun 08, 2015 6:45 pm

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. 
Stay free, my friends.
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Re: No where to hide

Post by Pet Hog » Mon Jun 08, 2015 7:15 pm

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.
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