New PPer needs guidance.

[Tyler]

I would personally worry less about a falling knife in the PP since it has three other bandages at the ready.  And don't forget it sounds like the OP is not sitting in cash but is heavy on miners.  A timely transition may be prudent.

FWIW, with that level of assets I'd primarily be concerned with the tax implications of changing allocations.  Before you do anything, put together a transition plan to minimize taxes.  Tax loss harvesting, saving some gains for next year, etc.

[dualstow]

  And don't forget it sounds like the OP is not sitting in cash but is heavy on miners. 

Well he said "liquid assets". I thought that meant cash or something close to it. Maybe the miners are in the rear-view mirror? Not sure.

[glennds]

At the risk of being accused of market timing, it may not be a bad idea to take the funds you've allocated for a Permanent Portfolio and ease in, perhaps over 3 or 4 quarters (in 33% or 25% increments). It just seems like markets are very volatile in recent times and phasing in may blunt some  of the effect the volatility could have.

Looking back on my own experience in 20/20 hindsight, it would have been better to have phased in instead of jumping all in like I did. I ended up buying gold at a comparative peak and the other assets were not in a trough enough to offset as it declined it so I feel like I started my PP journey with the wind in my face. Not the end of the world over a long enough holding period, but it would have been better to have eased in.

[ochotona]

At the risk of being accused of market timing, it may not be a bad idea to take the funds you've allocated for a Permanent Portfolio and ease in, perhaps over 3 or 4 quarters (in 33% or 25% increments). It just seems like markets are very volatile in recent times and phasing in may blunt some  of the effect the volatility could have.

Looking back on my own experience in 20/20 hindsight, it would have been better to have phased in instead of jumping all in like I did. I ended up buying gold at a comparative peak and the other assets were not in a trough enough to offset as it declined it so I feel like I started my PP journey with the wind in my face. Not the end of the world over a long enough holding period, but it would have been better to have eased in.

One thing that really puzzles me is that this odd little social group out here puts pressure on others for suggesting anything not strictly in "the HBPP canon". Of course it's a good idea to dollar cost average into a set of new investments, even if "The Books" say jump in at once.

If assets are near 52 week highs... don't whip out your wallet and get ready to buy a whole sh**load. Then people will ask, "Well how will you know?" Well, I don't know, I just know they're expensive now. Everything goes on sale eventually. "Well, how will you know it's on sale? What algorithm will you use?"

The algorithm is whatever is in the DNA of my Mother and my Wife, and it's probably missing from most men, that allow them to find great sale rack deals on a dress or whatever.

[iwealth]

One thing that really puzzles me is that this odd little social group out here puts pressure on others for suggesting anything not strictly in "the HBPP canon".

Given my other posts in this thread, I'm sure I'm considered a member of this "odd little social group" so I'll respond again. When a new user reads Harry Browne's book, comes to the HBPP discussion forum, posts in the "Permanent Portfolio Discussion" board about buying bonds directly or using TLT, and instead gets advised to market time bonds instead of establishing the full portfolio, admittedly I feel inclined to chime in and "pressure" him to stick with his original plan.

Then people will ask, "Well how will you know?" Well, I don't know, I just know they're expensive now. Everything goes on sale eventually. "Well, how will you know it's on sale? What algorithm will you use?"

The algorithm is whatever is in the DNA of my Mother and my Wife, and it's probably missing from most men, that allow them to find great sale rack deals on a dress or whatever.

So you don't know when to buy. But you know it's expensive now. And being able to spot the sale is as subjective as spotting a "deal" on a clothing sale rack? Strikes me this is exactly what the original poster is trying to avoid. And for that matter, ALL passive investors.

I'm not trying to be antagonistic, honestly. But if you go ahead and look at the SPY ETF from oh March, 2009 through today...at what point along that journey would it have been a bad time to invest in stocks? Obviously the answer is none; however, the predictions of doom and gloom were in full force during the dips in 2010 and 2011. Heck, even in July 2009 there were plenty of people screaming to get out. Investors who got out and stayed out waiting for that 25%-40% correction NEVER got in. That's a lot of money to leave on the table. Maybe that DNA driven impulse to buy would have hit you sooner, I dunno. But you can't offer "follow your gut" as if it was real advice.

[MediumTex]

One thing that really puzzles me is that this odd little social group out here puts pressure on others for suggesting anything not strictly in "the HBPP canon". Of course it's a good idea to dollar cost average into a set of new investments, even if "The Books" say jump in at once.

As I recall, what we said in the book was that there is little danger in jumping in all at once, but if it makes you more comfortable to go in a little at a time, that's fine too.

Harry Browne did suggest just jumping in all at once, but I don't recall him saying that moving in gradually would somehow cause the strategy not to work.

The important thing for most new PP investors is to just get started and see if the strategy is a good match for them.

At least one PP asset will almost always look like a terrible investment.

[dualstow]

You're being a bit disingenuous here, Ochotona, and I feel bad that iwealth is doing all the work on calling you out. (Edit: I see MT posted while I was typing this). I'd have more to say, but I'd rather have more eloquent people say it for me.

Of course it's a good idea to dollar cost average into a set of new investments, even if "The Books" say jump in at once.

I don't think dollar cost averaging is market timing. I don't see any difference between that and regular contributions. But that's not what you said. You said to wait.

I say wait for Treasuries to go down more and bounce before starting a buy program.

That is market timing.

[mukramesh]

At the risk of being accused of market timing, it may not be a bad idea to take the funds you've allocated for a Permanent Portfolio and ease in, perhaps over 3 or 4 quarters (in 33% or 25% increments).

Of course it's a good idea to dollar cost average into a set of new investments, even if "The Books" say jump in at once.

@ochotona: I think everyone is okay with dollar-cost-averaging into the PP. I think many take issue with you advising timing the individual components of the PP.

Regardless, you must at least agree that your posts and the subsequent conversation is off topic? I believe you have already started at least one other topic about your idea such as this one.-

http://gyroscopicinvesting.com/forum/go ... tion-rule/


@Mathew: To directly answer your question, I'd say the best way to own bonds is in a 401k/IRA due to tax efficiency. Like I said in my previous post, I have no problem doing this commission free in my Fidelity 401k through their BrokerageLink. If you prefer to do this in a taxable brokerage account, this should be equally easy.

I am not sure if you can access the secondary market in TreasuryDirect so I recommend using an actual brokerage to handle your Permanent Portfolio. I only use TD for I-Bonds which go under the 'cash' category. Besides, an actual brokerage service gives more flexibility in terms of using directly held bonds, ETFs, etc.

[dualstow]

Slight and friendly rant here...this is a stupid thread (not the question, but the answers).

No one but no one can answer this question accurately unless they can predict the future. So here is the only accurate and correct answer I've seen.

1. All assets go straight up or basically up from here...buy now, do not delay.

2. All assets go straight down or basically down from here...do not buy now and don't invest a dime unless you think something has stabilized/is basing, then buy.

3. Assets go nowhere for awhile (you determine how long "awhile" is)...dollar cost average as it will lower your overall basis.

...

I thought the question was

What's the consensus on the best way to own bonds?

[MachineGhost]

Falling knife - look at TLT during Feb / Mar / Apr / May / June 2015

What about the other assets?  Were they not rising fluffy pillows?

[MachineGhost]

Harry Browne did suggest just jumping in all at once, but I don't recall him saying that moving in gradually would somehow cause the strategy not to work.

A robust strategy would work whether or not you went in all at once, averaged in or market timed.  Fortunately, the PP works with all three!

And the consensus is to go with TreasuryDirect.

[LC475]

What's the consensus on the best way to own bonds?

Will treasurydirect accept a solo401k account? Would I do better just buying TLT?

The gold standard is to own the bonds themselves directly.  That way you eliminate various unlikely but possible risks.  Also you can get a longer duration -- you'll start out with virtually a full 30 years.  Also you can exercise direct control over your bonds, rather than the ETF controlling them.  You also avoid the drain of the expense ratio and fees charged by the ETF, fees that seem somewhat ridiculous and disproportionate, to me, considering the extreme ease of buying US Treasury Bonds and keeping the average duration above (in the case of TLT) 20 years.  There's virtually no management required!  What are you paying them for?  Why pay them for what you can trivially do yourself?  That's my perspective anyway.

I wish I knew more about solo 401ks.  A quick Google search, however, seems to show unequivocally that one *can* indeed purchase bonds in a solo 401k, no problem.  And so that is what I would recommend.

[LC475]

Also, Matthew, welcome and congratulations!  Yes, it is weird that so many of those here have encouraged you to not get into the PP, when the title of the forum is "Permanent Portfolio Discussion Forum".  Well, maybe they have lost confidence in the PP, but you know the real story, having read the book, so again congratulations, and come on in, the water's fine!

[dualstow]

The gold standard is to own the bonds themselves directly. 
...
I wish I knew more about solo 401ks.  A quick Google search, however, seems to show unequivocally that one *can* indeed purchase bonds in a solo 401k, no problem.  And so that is what I would recommend.

Yep, I own some 30-yr bonds in my Fidelity solo 401(k).
I don't know much about Treasury Direct, as I only have a taxable account with them and only hold savings bonds and I-bonds in there. But, the Fidelity holdings feel direct enough.

[LC475]

Fidelity also charges no fees for buying and selling Treasury bonds.

[Matthew19]

Thanks for all of the comments everyone. It's a bit hard to believe in any type of market timing after reading the Best Laid Investments book. I mean, I watched Peter Schiff predict the housing market bust and simultaneously lose lots of money for his clients because he didn't understand how the markets would react.

I'm about 70% cash right now with the rest split between miners and foreign stocks. I have about 60k in paper losses on the miners, which absolutely makes me sick considering how hard I have to work for that.

What does everyone use to track their PP as a whole? Iv looked at Google Finance, where you just plug in your buys and get a nice overview.

[MachineGhost]

What does everyone use to track their PP as a whole? Iv looked at Google Finance, where you just plug in your buys and get a nice overview.

I use Quicken, but I would recommend you use: https://www.personalcapital.com/

[sophie]

Welcome to the forum Matthew19!

I have a solo 401K at Fidelity, and managing it couldn't be easier.  Give them a call and they'll walk you through it.  It behaves just like a regular account except that you can't simply transfer money into the account directly.  A very nice Fidelity rep helped me set up a billpay to the account from my bank though - brilliant little workaround.  You can buy anything you want in it, including Treasury bonds and bills.  And I am completely sold on the ability to make "profit sharing" contributions - it's like having an extra large 401K!

Hope the gold miners are in taxable so you can harvest the losses.  Good luck with the transition, and feel free to post specific questions.  BTW there's a stickied thread on PP spreadsheets that you might want to check out.

[Matthew19]

Thanks Sophie! I'm assuming you're not using a Roth solo 401k since fidelity doesn't  offer one? I can't quite wrap my head around if there are benefits to a Roth vs traditional. Btw I only have about 30k in tax sheltered accounts so I need to get some big contributions if possible. 

[sophie]

That's right, it doesn't.  I don't know your situation of course but a Roth 401K doesn't seem to be the best choice for a high income.  I played with some numbers once (yes, there's a thread) and tax deferral won big under all scenarios.  You can still make your annual "back-door" Roth contributions, once you've rolled your IRAs into the solo 401K.

To be fair, Vanguard and I think other brokerages also have solo 401Ks, and Vanguard has the Roth flavor.  If you've got a favorite brokerage already you could certainly call and ask for specifics.

First though, ask a tax attorney or knowledgeable accountant about solos.  They aren't ERISA accounts and don't have the same protection from lawsuits, so you should know about that before jumping in.

[LC475]

What does everyone use to track their PP as a whole?

I use Personal Capital.  It's a Mint-type financial account aggregator to track spending and income, combined with an investment portfolio side.  If you own actual Treasury Bills for your cash portion, you may have to e-mail them and ask them to change the categorization of those (but not your long bonds) from bonds to cash.  I did.  Then you'll get a nice 4X25 pie that you can log in and look at whenever you... want to look at a nice 4X25 pie.    I don't know -- it's reassuring, OK!

They have apps and stuff.  Then you can check on your pie and make sure it's still looking beautiful every five minutes with your Apple Watch.  What a wonderful world.

[Professor Disorientation]

Welcome Matthew,

When to begin the PP always presents a dilemma. One or more of the asset groups may seem overvalued while other asset groups are tanking and looking for a bottom. I just jumped in December 2014 and allotted my 25% to the four asset groups and I have not looked back. I checked this morning and I am down -1.5%. TLT and IAU are down for me. This doesn't mean the PP is faulty and asset groups going up and down are to be expected.
Others on the forum have been with the PP a lot longer than I have. But the issue of timing the market is anathema to the PP philosophy. What I do is put additional cash in my PP weekly and when the cash portion of my PP hits 35% then I will reallocate to the original 25% for each asset group. This keeps the spirit of the PP alive. The great plus of Harry's philosophy is that no one can time the market consistently. I believe this. That's why the PP has a valuable place in my overall financial scheme.
Good luck. No one knows what will happen in the years ahead. The PP has weathered financial shocks before and it will do it again.

[buddtholomew]

Run as far away as fast as possible...I could not be more sincere. This portfolio is not what they make it out to be. This is the 7th day of straight losses...the money you can't affort to lose...my a$$

[Matthew19]

Thanks for the tips on the personal capital app. If I didnt have a good way to zoom out and see the portfolio as a whole it would be harder to accept and implement.

I feel like I understand everything except the cash portion. Is a treasury note ladder a pain to manage and would I be better with a money market fund?

[Matthew19]

Run as far away as fast as possible...I could not be more sincere. This portfolio is not what they make it out to be. This is the 7th day of straight losses...the money you can't affort to lose...my a$$

I'm sorry for the losses but I really don't plan to run. I can appreciate that this is a strange market and while it adjusts the PP will have some short term stagnation. I don't plan to look at it daily or even weekly, I run a business and have a family, I'd rather enjoy life.