Why do you use the PP?

[Smith1776]

I know the discussion has veered off from the OP, but I never answered this question. This thread was started before I became a member.

Tex enunciated it best in the original BH HBPP thread: the PP is designed to allow you to read the newspaper with total equanimity and without stress. That's why I use it.

There's really no other portfolio approach that gives me the same degree of peace of mind.

And if you want to goose up the potential return profile you can still maintain 4x25 by tilting. SCV Emerging markets anyone?

[boglerdude]

> maintain 4x25 by tilting

Are the assets supposed to be volatility matched? If gov issues 1,000 year bond with huge volatility, should you only hold enough of that to offset the volatility of the other assets?

[Smith1776]

> maintain 4x25 by tilting

Are the assets supposed to be volatility matched? If gov issues 1,000 year bond with huge volatility, should you only hold enough of that to offset the volatility of the other assets?

Personally, I'm less concerned about that than I used to be. The volatility of the underlying assets doesn't even stay constant. After I realized that, I just shrugged and said "good enough".

For instance, as interest rates go down the duration of the LT bonds goes up. I believe there are some funds out there with "dynamic" asset allocation strategies that account for this and have constantly shifting proportions. I'm not smart enough for that. I'll just keep 4x25.