Why does Permanent Portfolio work so well in the past few decades?

General Discussion on the Permanent Portfolio Strategy

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helpme
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Why does Permanent Portfolio work so well in the past few decades?

Post by helpme » Tue Aug 18, 2015 5:10 am

Permanent Portfolio provides good returns with low volatility. What characteristics about PP that makes it outperform despite the low volatility?
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ochotona
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Re: Why does Permanent Portfolio work so well in the past few decades?

Post by ochotona » Tue Aug 18, 2015 5:29 am

It does not OUT-perform. It is a moderate return, low volatility portfolio. Others are hotter, but give you a rougher ride.
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mathjak107
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Re: Why does Permanent Portfolio work so well in the past few decades?

Post by mathjak107 » Tue Aug 18, 2015 7:28 am

yep , it is low volatility /lower return for the most part .  a good combo if that is what you want
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Tyler
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Re: Why does Permanent Portfolio work so well in the past few decades?

Post by Tyler » Tue Aug 18, 2015 12:03 pm

The Permanent Portfolio generates good returns with disproportionately low volatility because it is far more diversified than most asset allocations and selects different assets to address specific economic conditions and not solely to optimize projected returns.  That allows it to continue to generate 3-6% real returns even in times when other more concentrated portfolios lose money for years or even decades, but the tradeoff is that you also miss out on the big runs.

If you haven't already, I highly recommend reading the book in the banner at the top of the forum.  It will teach you everything you'll want to know about the PP.
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Re: Why does Permanent Portfolio work so well in the past few decades?

Post by atrus138 » Tue Aug 18, 2015 12:19 pm

Tyler wrote: If you haven't already, I highly recommend reading the book in the banner at the top of the forum.  It will teach you everything you'll want to know about the PP.
Seconded. I was also really new to investing when I read it and it gave me a GREAT overview of the basics. Very helpful introduction.
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ochotona
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Re: Why does Permanent Portfolio work so well in the past few decades?

Post by ochotona » Tue Aug 18, 2015 12:20 pm

A great book.
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mathjak107
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Re: Why does Permanent Portfolio work so well in the past few decades?

Post by mathjak107 » Tue Aug 18, 2015 1:34 pm

my all time favorite uis harry's why the best laid investment plans usually go wrong . have my original copy decades now . whether i follow the pp or not the book has loads of useful info .
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Matthew19
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Re: Why does Permanent Portfolio work so well in the past few decades?

Post by Matthew19 » Tue Aug 18, 2015 10:02 pm

mathjak107 wrote: my all time favorite uis harry's why the best laid investment plans usually go wrong . have my original copy decades now . whether i follow the pp or not the book has loads of useful info .
Agreed. The Best Laid Investments book will stomp any inclining you have to outsmart the markets or take advice from someone who claims to be able to into the ground. Harry spends almost 250 pages doing just that and it was life changing for me.
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Re: Why does Permanent Portfolio work so well in the past few decades?

Post by Libertarian666 » Wed Aug 19, 2015 6:27 am

Matthew19 wrote:
mathjak107 wrote: my all time favorite uis harry's why the best laid investment plans usually go wrong . have my original copy decades now . whether i follow the pp or not the book has loads of useful info .
Agreed. The Best Laid Investments book will stomp any inclining you have to outsmart the markets or take advice from someone who claims to be able to into the ground. Harry spends almost 250 pages doing just that and it was life changing for me.
+1,000,000.
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Matthew19
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Re: Why does Permanent Portfolio work so well in the past few decades?

Post by Matthew19 » Wed Aug 19, 2015 9:47 am

I think it's also worth mentioning the effect that rebalancing has on generating more gains. Stableinvesting.com had a nice explanation of this sophisticated feature. It's almost like The PP is a product from Apple, simple and elegant on the surface but complex and brilliantly designed under the hood.
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mathjak107
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Re: Why does Permanent Portfolio work so well in the past few decades?

Post by mathjak107 » Wed Aug 19, 2015 12:12 pm

it tends to do well when conventional portfolio's lag but the pp lags during more normal times and usually long term by a lot ..

any portfolio or strategy can look brilliant , as long as it is its day in the sun .  that goes for the pp and conventional portfolio's .

the pp is really meant to be a "positive real return " investment under a variety of conditions  not a growth vehicle so comparing it is not really comparing apples to apples
Last edited by mathjak107 on Wed Aug 19, 2015 12:16 pm, edited 1 time in total.
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Kriegsspiel
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Re: Why does Permanent Portfolio work so well in the past few decades?

Post by Kriegsspiel » Sun Aug 23, 2015 12:35 am

1 vote for wizardry.
One should not praise men who are like to women, or women who are like to men. Unless some necessity overtake the woman.
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