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General Discussion on the Permanent Portfolio Strategy

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stuper1
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Re: No where to hide

Post by stuper1 » Mon Jun 08, 2015 7:20 pm

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.
Reub
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Re: No where to hide

Post by Reub » Mon Jun 08, 2015 8:34 pm

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
Last edited by Reub on Mon Jun 08, 2015 8:49 pm, edited 1 time in total.
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MediumTex
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Re: No where to hide

Post by MediumTex » Tue Jun 09, 2015 11:03 am

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.
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MachineGhost
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Re: No where to hide

Post by MachineGhost » Tue Jun 09, 2015 11:34 am

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!
flagator
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Re: No where to hide

Post by flagator » Tue Jun 09, 2015 12:11 pm

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.
barrett
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Re: No where to hide

Post by barrett » Tue Jun 09, 2015 1:01 pm

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.
FLAGATOR,

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.
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Re: No where to hide

Post by LC475 » Tue Jun 09, 2015 2:52 pm

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.
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Re: No where to hide

Post by dualstow » Tue Jun 09, 2015 3:22 pm

LC475 wrote: The Permanent Portfolio is as sound as ever.  Naysayers are always going to neigh. 
You can't always get what you want, but wild horses couldn't drag me away from the P.P.
“As a white person of colour, I am extremely concerned about the rise of black whiteness.” — Titania McGrath
pariah — 1610s member of a low caste in S. India; Tamil (Dravidian) “drummer”, as members of the lowest caste played drums at festivals. “social outcast,” 1819.
Reub
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Re: No where to hide

Post by Reub » Tue Jun 09, 2015 5:23 pm

How does anyone know that the PP will perform well in the future?
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Re: No where to hide

Post by Libertarian666 » Tue Jun 09, 2015 5:34 pm

Reub wrote: How does anyone know that the PP will perform well in the future?
The giant asteroid with our name on it could be headed this way right now and wipe us all out in 6 months.
Thus, no one can know anything with absolute certainty about the future.
fi50@fi2023
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Re: No where to hide

Post by fi50@fi2023 » Tue Jun 09, 2015 7:18 pm

I hope NASA et al. could warn us of an asteroid 6 months out.
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MachineGhost
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Re: No where to hide

Post by MachineGhost » Tue Jun 09, 2015 7:43 pm

Reub wrote: How does anyone know that the PP will perform well in the future?
We don't know, but history is our guide.  I have my doubts a vanilla PP will always perform, so I advocate smarter diversification in the equity and real parts.  Anticipate the unexpected and expect the unanticipated!
"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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