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

[buddtholomew]

Stocks down 3%.  PP down 0.45%.  And people take that as a reason to complain about the PP because it didn't go up.  That's a classic signal to take a break from thinking about investments for a little while.

For comparison, other stock-centric forums are even more unhappy.  Focus on money all day every day and you'll drive yourself crazy and rationalize that just about everything you've done is either wrong or could be much better.  Go outside and enjoy the nice weather!

Not complaining that it didn't go up, but rather that the PP has declined in lockstep with equities. Equities rise, PP flat and equities fall, PP declines. Not a good combination.

[mathjak107]

This forum's morale more than most desperately needs a big equities correction. I'm sure most concerns will abate if equities drop another 15%. That of course assumes the PP doesn't drop with them.

+1 on the -15%

speaking about the supposed 7 year curse :

the time frame following the event  over the next 7 years made the event a non event , as example

lets see how markets did s following the events over the next 7 years  . all of these had a major market event year 1 and another one 7 years later . .

1973 - 1980 --- 8.85% average return

1980-1987 -- 16.84%

1987--1994 -- 12.60%

2001-2007 4.47%

2008-2014 9.85%

[mathjak107]

Stocks down 3%.  PP down 0.45%.  And people take that as a reason to complain about the PP because it didn't go up.  That's a classic signal to take a break from thinking about investments for a little while.

For comparison, other stock-centric forums are even more unhappy.  Focus on money all day every day and you'll drive yourself crazy and rationalize that just about everything you've done is either wrong or could be much better.  Go outside and enjoy the nice weather!

Not complaining that it didn't go up, but rather that the PP has declined in lockstep with equities. Equities rise, PP flat and equities fall, PP declines. Not a good combination.

that is just the points i have been making about the pp in the age of the new normal .  maybe i should write my own book on investing under conditions today  and it will not be about assets that fight each other  but rather play nice  together , support each other and let the usual lead player run with the ball when he gets it . since that lead player over and over has usually been equity's and  the fastest one out of the gate  when it is time ..

i would want to help what has been the star player over and over and not block his efforts so he has an easier time if the going gets tough.

the other players take supporting roles and not try to be the star themselves since that would be speculating on the long shot that this time is different and that has been the losing bet over most of the  longer time frames with few exceptions .  you can see from my list of major market killers every 7 years that in the end the market killer was a non event over time  because equity's tend to recover faster than most other assets do .

better to bet on the normal course of events playing out  rather than depend on the long shot of an extended calamity in my opinion for your financial success to happen .

while we all want to make money and have little volatility and low risk eventually you reach a point in time  in my opinion where the strategy  that did that reaches conditions where things alter the results to the point they work poorly .

ala stocks plunging and foreigners owning so much in treasury's their selling kills the reliability of the asset as having  a consistent  response to a situation , something harry never had on the radar as a possible obstacle .

today the real speculating may be within the pp as the bet is against the norm playing out where equity's carry the ball faster than anything else  in possibly a rising rate environment  and that may now be a wager that can lead the pp to be bogged down in losses with no horse in the race with enough pull .

to be honest i do not see anymore safety in the pp at this point  than conventional .  conventional is betting on equity's  and the normal sequence that happens and the pp is betting on a calamity to pull it out .  both are no more guarantee than the other .  the logic of it all says to me bet on the usual lead player  and not the extended flyer because it has to be extended otherwise like every time in history as soon as the fear ebbs things revert back to business as usual

[mathjak107]

we are seeing a repeat of the same thing today . markets up over 100 while the pp is down as TLT AND GOLD  pull things in reverse

[buddtholomew]

Don't waste your breath Math.
The diehards here will tell you everything is great.

[dualstow]

Don't waste your breath Math.
The diehards here will tell you everything is great.

I for one am not thrilled with how things are going, but I'd rather assess the pp at the end of the year than every single day during these strong market swings.

Rereading mortalpawn's theories in the other thread about why long bonds are not soaring...
(Reply #25)

[buddtholomew]

Don't waste your breath Math.
The diehards here will tell you everything is great.

I for one am not thrilled with how things are going, but I'd rather assess the pp at the end of the year than every single day during these strong market swings.

Rereading mortalpawn's theories in the other thread about why long bonds are not soaring...
(Reply #25)

Theories are irrelevant. It's the results that matter.
I for one hope that the argument "money has to flow to one of the assets" is put to bed.
This is a breakdown in the PP. Global conditions overruling the US economic climate.

[Pointedstick]

Who is saying everything's great? I don't think anybody's particularly thrilled, in an absolute sense, with the performance of the PP or any major assets, for that matter. There aren't a lot of gains to be had at the moment. Harry Browne described this as "tight money recession," and he admitted that the PP would lose ground during this time, but that everything else would probably lose worse. If that's where we're headed, the only asset that won't suck is cash--and in fact, that's where we are right now. My cash is the only PP asset I own that's yielded a positive return YTD. 100% cash is probably the only alternative to the PP that I would consider at this particular moment in time.

The name is funny, though. In this era of massive deficit spending and expansionary monetary policy, maybe we should call it a "loose money recession."

[barrett]

Budd, Not really sure there are so many "diehards" on this forum. Many of us question the PP. I am curious what you think a good asset mix is? And do you think it's possible to pick a mix that will work over a long time, meaning that it doesn't need to be tweaked depending on whatever environment we find ourselves in? Thanks.

[Jack Jones]

Theories are irrelevant. It's the results that matter.

Sure, but you seem to be evaluating your results on too short of a timescale. When dieting, one doesn't weigh himself several times a day to see how things are progressing.

I for one hope that the argument "money has to flow to one of the assets" is put to bed.

I wasn't aware of this argument. Is this something that you believed?

[barrett]

I for one hope that the argument "money has to flow to one of the assets" is put to bed.

I wasn't aware of this argument. Is this something that you believed?

I'll save Budd the trouble of answering this one. The idea has been posted on here a number of times... basically that if money is flowing out of one of the PP assets, it has to be flowing into one of tho others. It may generally be true but it certainly doesn't guarantee that one PP asset will be going up as another is going down.

[Tortoise]

I for one hope that the argument "money has to flow to one of the assets" is put to bed.

Right now money is flowing into cash, which is one of the PP's four assets. So the argument still holds.

Cash doesn't rise in value when money pours into it, but it's not meant to. That behavior is unique to the three volatile assets of the PP.

[buddtholomew]

I for one hope that the argument "money has to flow to one of the assets" is put to bed.

Right now money is flowing into cash, which is one of the PP's four assets. So the argument still holds.

Cash doesn't rise in value when money pours into it, but it's not meant to. That behavior is unique to the three volatile assets of the PP.

Gee...flowing into cash at 1%
So glad I gave up all those stock returns so that money can flow to cash.
What's the purpose of gold and treasuries?

[barrett]

I for one hope that the argument "money has to flow to one of the assets" is put to bed.

Right now money is flowing into cash, which is one of the PP's four assets. So the argument still holds.

Cash doesn't rise in value when money pours into it, but it's not meant to. That behavior is unique to the three volatile assets of the PP.

The argument holds in a technical sense but what Budd is talking about is the implication/claim that something in the PP will be going up when something else is going down.

Ah, I see Budd has just posted. Have I phrased this correctly, Budd?

[buddtholomew]

I for one hope that the argument "money has to flow to one of the assets" is put to bed.

Right now money is flowing into cash, which is one of the PP's four assets. So the argument still holds.

Cash doesn't rise in value when money pours into it, but it's not meant to. That behavior is unique to the three volatile assets of the PP.

The argument holds in a technical sense but what Budd is talking about is the implication/claim that something in the PP will be going up when something else is going down.

Ah, I see Budd has just posted. Have I phrased this correctly, Budd?

That's correct Barrett. I am probably the most risk averse investor on this board and I am more comfortable with my 70/30 than the PP. I know what I'm getting with the former and the latter is a pipe dream or better yet provides security from a rent a cop.

[dualstow]

Theories are irrelevant. It's the results that matter.
...
This is a breakdown in the PP. Global conditions overruling the US economic climate.

Just another irrelevant theory.

[Cortopassi]

Who the heck here should be happy, whether in a PP or some other ratioed asset holdings right now?  At least year to date, NO ONE.  All are down.  About 3.5 to 5.5% currently.

Except the cash portion.  So does anyone want to really be 100% cash?  Sure, we'd all like to be in cash right now if the crystal ball worked, and then we'd get right back into those other assets at appropriate ratios when the crystal ball told us to.

Wait for peaks in assets, move to cash.  Wait for lows move back in.

None of us have the crystal ball and no one here is likely a day trader, or survived at day trading very long.

If you think you can call long term, short term or medium term market trends, go ahead, change your allocations appropriately.  I can't.

Convince yourself that you can.  And then plug VTI/GLD/TLT into a comparison chart on Yahoo and flip between 1 week, 1 month, 3 month, YTD, 1 Year, 2 Year, 5 Year, 10 Year etc. timeframes and see if you are still convinced that you could have successfully moved into and out of the appropriate assets at the right times.

This is all just me talking to convince myself I made the right choice, of course.  But I still believe it.

[buddtholomew]

Theories are irrelevant. It's the results that matter.
...
This is a breakdown in the PP. Global conditions overruling the US economic climate.

Just another irrelevant theory.

just like you...irrelevant.

[iwealth]

So glad I gave up all those stock returns so that money can flow to cash.

What did you really give up? You hold 50% stocks. If not for the PP, you'd hold what, 60% stocks? You're risk averse enough to seek out something like the PP, so I don't imagine you'd be more stock heavy than that.

So that's 10% more stocks. Even if stocks were running 50% ahead of the PP, that's a grand total of 5% drag on your portfolio. Correct me if I'm wrong, I'm sure you've done these calculations.

[mathjak107]

Budd, Not really sure there are so many "diehards" on this forum. Many of us question the PP. I am curious what you think a good asset mix is? And do you think it's possible to pick a mix that will work over a long time, meaning that it doesn't need to be tweaked depending on whatever environment we find ourselves in? Thanks.

i wish we all knew the perfect asset mix going forward .

i believe going forward no one asset mix is forever . to many things changed in the world and the usa is to globally linked .

while not  reacting to short term noise is a given , nudging things like steering that big ship to keep it on course to navigate the big picture is another .

i think a lot of indicators point to raising rates , short and long and although we don't know when odds are it is coming unless we hit a recession again but so far to me  it looks like that is not  in the cards .

but if it is the portfolio may need some nudging .

no one ever said investing can be simple ,easy or buy and die .

in fact unorthodox times may call for unorthodox products to help our investing along in retirement with insurance products .

so i think diversified funds  and intermediate to short term bonds and some cash may be the order of battle .

if equity returns are weak i want nothing inhibiting them like you have seen happen in the pp.

of course you may see things differently  and may be you will call it right better than me .

we can only do what we feel is our best shot individually

[buddtholomew]

So glad I gave up all those stock returns so that money can flow to cash.

What did you really give up? You hold 50% stocks. If not for the PP, you'd hold what, 60% stocks? You're risk averse enough to seek out something like the PP, so I don't imagine you'd be more stock heavy than that.

So that's 10% more stocks. Even if stocks were running 50% ahead of the PP, that's a grand total of 5% drag on your portfolio. Correct me if I'm wrong, I'm sure you've done these calculations.

Don't forget to add the 20% decline in gold to your calculations.

[ochotona]

if equity returns are weak i want nothing inhibiting them like you have seen happen in the pp.

Signal to noise ratio problem

[Reub]

This is why I complain about absent management here at the forum. After Craig and MT spent so much time and energy promoting the PP and setting up a website for it they now disappear for months at a time as if they never had such a great effect on getting us to join in. When the PP has underperformed the general stock market by over a hundred percent is when we need to hear from them. Not when things are going well.  I'm not talking about a full time commitment here, just an occasional post or two on a regular basis. I'd actually like to know why they stopped doing that.  Have they themselves become demoralized with the PP?

[mathjak107]

i am not picking on them or the pp but in general things only work until they don't whether it is moving averages , technicals or the best trading system in the world .

the pp had a great run because of 40 years of falling interest rates except for a few bumps and a strong stock market .

perhaps  the pp met its waterloo due to a changing world and ways people invest . . it just took a lot longer .

look at that tail wind in bonds the pp had , it is almost a flat slope

[dualstow]

Theories are irrelevant. It's the results that matter.
...
This is a breakdown in the PP. Global conditions overruling the US economic climate.

Just another irrelevant theory.

just like you...irrelevant.

Aww, that's not very nice. I aspire to have posts as productive and insightful as yours have been. Give me time.