PSA: I now have a 3-year period with no gains

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mathjak107
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Re: PSA: I now have a 3-year period with no gains

Post by mathjak107 » Fri Aug 28, 2015 5:31 pm

but none with zero % interest rates . as well  the fall of interest rates bottoming out and except for an occasional quick flight to safety now is basically fighting investors who have been bidding bonds higher since feb, and gold that has fallen and still falling . 

like the fed is just about out of ammo at zero rates the pp with the tail end of a 40 year bull run in bonds except for some speed bumps is also out of ammo for now .

with 3 asset classes watering down the only game left ,equity's it can't seem to get any traction .  interest rates and commodity's tend to run very long cycles and sometimes can bee  longer  than a few of us will live . equity's seem to have much shorter recovery's , especially because there are different market segments .

midcaps recovered way before large caps did in 2000 .
Last edited by mathjak107 on Fri Aug 28, 2015 5:35 pm, edited 1 time in total.
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Re: PSA: I now have a 3-year period with no gains

Post by MediumTex » Fri Aug 28, 2015 5:40 pm

mathjak107 wrote: but none with zero % interest rates . as well  the fall of interest rates bottoming out and except for an occasional quick flight to safety now is basically fighting investors who have been bidding bonds higher since feb, and gold that has fallen and still falling . 

like the fed is just about out of ammo at zero rates the pp with the tail end of a 40 year bull run in bonds except for some speed bumps is also out of ammo for now .

with 3 asset classes watering down the only game left ,equity's it can't seem to get any traction .  interest rates and commodity's tend to run very long cycles and sometimes can bee  longer  than a few of us will live . equity's seem to have much shorter recovery's , especially because there are different market segments .

midcaps recovered way before large caps did in 2000 .
Haven't interest rates been at 0% since 2009?

It seems like we've had 6 years to see how the PP does in a 0% interest rate environment.
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Re: PSA: I now have a 3-year period with no gains

Post by mathjak107 » Fri Aug 28, 2015 5:51 pm

yep and long treasury bonds did great!  they were the growth engine for the pp. in fact the pp did well when equity's plunged because of them .  they continued to do okay hitting a speed bump every now and then but still continuing their drop until February when they bottomed and reversed direction .

odds are at these levels that is over . yeah you will get short term pops when trouble hits but once it simmers down bond rates are trying to rise as they have been doing since feb until the last couple of weeks made them a safe haven . but that is short lived as we saw them get hit when stocks took off  again . basically i think you will see the interest and that is about it going forward ..

i think the pp has kind of ended up after 40 years at a point where it reached a point where it has no guns.

the guns that do the heavy lifting when gold is on vacation  are pee shooters .

25% equity's is okay with a total bond fund  , the equity's at these valuations stand a chance of adding lift . but battling against falling long term  treasury's and gold is more than can get traction .  with little end in sight short of a long term meltdown and extended flight to safety  the pp can't get out of the hole it is stuck in .


the yield on the 10-year Treasury was every bit as volatile as the equity market. But as investors lost their fear of stocks, Treasury yields worked their way higher, . Having at one point fallen below 2%, the 10-year finished the week up 13 basis points to 2.18% - roughly where it started the year.



of course these are my own opinions and not intended to say my way is the way it will play out .

it is only my reason why i stopped doing it almost immediately once i saw what the market action was doing to it ..
Last edited by mathjak107 on Fri Aug 28, 2015 6:23 pm, edited 1 time in total.
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Re: PSA: I now have a 3-year period with no gains

Post by Gosso » Fri Aug 28, 2015 6:26 pm

Math,

But what about stocks being overvalued as well:

Image
http://www.multpl.com/shiller-pe/

"It's not that easy being green B&H"
Image

Maybe we should all sit in cash and wait for the Great Resettm
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Re: PSA: I now have a 3-year period with no gains

Post by mathjak107 » Fri Aug 28, 2015 6:35 pm

they are and that is why i feel gains will be tepid going forward and being they are still the best house in the worst neighborhood anything that impedes those below average gains is going to be a killer to performance .


also the shiller cape was revised and you can't compare to past years , it isn't apples to apples but i still agree by any measure we were to high .  but you have the fed back stopping them . if things pick up and the fed raises rates after the first round it means the economy is doing better and that is good for stocks .

if the economy isn't doing well  qe4 is on deck .

i think we reached a point in time that without taking on more volatility an overly conservative portfolio will be at best a struggle to keep pace . it is basically depending on calamity to give it lift and not the new normal times .  that is really kind of betting against the house  . we are still the most desirable place in the world to invest .  .

i think the new normal requires a portfolio that complements each other and plays nice  and unlike the past does not fight each other's efforts  so strongly .
Last edited by mathjak107 on Fri Aug 28, 2015 7:03 pm, edited 1 time in total.
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Re: PSA: I now have a 3-year period with no gains

Post by frommi » Sat Aug 29, 2015 1:01 am

Thanks Gosso for your posts!
I stopped using the PP in late 2013 but started a 3xPP two months ago with 25% of my networth. If history is any guide (and especially when i read the latest comments here) its the perfect time for that. Won`t take long until either inflation picks up or the FED has to ease again, both should be net positive for the PP.
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Re: PSA: I now have a 3-year period with no gains

Post by mathjak107 » Sat Aug 29, 2015 2:46 am

inflation  picking up is bad for bonds and so far gold has not shown a good response to inflation . maybe if inflation was running out of control but so far it has lagged inflation for most of it's more modern life .

so i don't see that being a good thing for it .
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Re: PSA: I now have a 3-year period with no gains

Post by 4x4 » Sat Aug 29, 2015 8:58 pm

Are you confusing the role of the PP w that of the VP?

Why not keep money you can't lose in the PP and allocate that which is more discretionary to a VP?
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Re: PSA: I now have a 3-year period with no gains

Post by helpme » Sat Aug 29, 2015 10:31 pm

dragoncar wrote: I started investing in the PP in mid-2011.  My gains are now equal to those I saw in August, 2012.  In other words, I haven't made any money in the PP in three years.

The caveat is that I've been regularly and aggressively contributing to the PP.  So my early gains in 2011/2012 were small as a percent of my current total portfolio value.  Losses in 2015 are applied to a much higher portfolio value.  Hopefully that makes sense.

Overall, not super happy with this portfolio.  I might try to move out of it by continually rebalancing into stocks but never rebalancing out of stocks until my allocation is more boglehead like.
Did the gain calculation include stock dividends and bond income?
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Re: PSA: I now have a 3-year period with no gains

Post by frommi » Sun Aug 30, 2015 1:31 am

4x4 wrote: Are you confusing the role of the PP w that of the VP?

Why not keep money you can't lose in the PP and allocate that which is more discretionary to a VP?
Because i am not a sheep of HB.
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Re: PSA: I now have a 3-year period with no gains

Post by 4x4 » Sun Aug 30, 2015 1:58 am

frommi wrote:
4x4 wrote: Are you confusing the role of the PP w that of the VP?

Why not keep money you can't lose in the PP and allocate that which is more discretionary to a VP?
Because i am not a sheep of HB.
Well whether you are a sheep, goat, or donkey, I have no idea... However, you seem to be a bit confused about something....
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Re: PSA: I now have a 3-year period with no gains

Post by frommi » Sun Aug 30, 2015 2:47 am

4x4 wrote: Well whether you are a sheep, goat, or donkey, I have no idea... However, you seem to be a bit confused about something....
No i am not, and the beauty of the PP idea is that i don`t have to be right on anything and still can make a profit. The best time to start an investment is when nobody likes it, in case of the PP its the same. Personally i think gold will play a major role in the next years returns for the PP, but who cares?

Btw. the reason why most PP years end in green is because the PP erases most drawdowns in the last months of the year.
Last edited by frommi on Sun Aug 30, 2015 2:53 am, edited 1 time in total.
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