The Reason to Quit PP

General Discussion on the Permanent Portfolio Strategy

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frugal
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The Reason to Quit PP

Post by frugal » Thu Sep 17, 2015 2:56 am

Hello PP-fellows,

what must happen to you PERMANENT PORTFOLIO or to the world that makes you quit from having a PP ?

3-4 years falling?




Regards!
Live healthy, live actively and live life!
barrett
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Re: The Reason to Quit PP

Post by barrett » Thu Sep 17, 2015 5:27 am

Even if I see my PP fall for three or four years, I'd still have to make a choice about either going all cash or some other asset mix that I like going forward. Right now I see gold, bonds and stocks all more or less as fairly priced given how low rates are here in the US. So to me the PP seems fundamentally sound. I guess in the next year or so I can easily imagine gold, stocks and bonds going up by 20% or falling by 20%. I just don't think those rises and falls will all happen at the same time. We are in a period of low investment returns so maybe the best outcome is that the PP just kind of treads water until the conditions are right for one asset to really take off.
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Tom
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Re: The Reason to Quit PP

Post by Tom » Thu Sep 17, 2015 10:01 am

barrett wrote: Even if I see my PP fall for three or four years, I'd still have to make a choice about either going all cash or some other asset mix that I like going forward. Right now I see gold, bonds and stocks all more or less as fairly priced given how low rates are here in the US. So to me the PP seems fundamentally sound. I guess in the next year or so I can easily imagine gold, stocks and bonds going up by 20% or falling by 20%. I just don't think those rises and falls will all happen at the same time. We are in a period of low investment returns so maybe the best outcome is that the PP just kind of treads water until the conditions are right for one asset to really take off.
I think one of the biggest mistakes people make is changing strategies.  In the end, probably just about any strategy can work out over a long enough time period and with the proper timing for drawing down.  There's not much that would make me abandon what I've built and stuck with this long (8 years) b/c I recognize that there's no perfect portfolio and anything I switch into could just as well lose money and potentially even more, for even longer.  I'm not smart enough to know how to time which strategy will do best when, so I've just picked one I'm comfortable with and sticking with it.

I don't really understand why this is such a commonly discussed topic. 
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Desert
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Re: The Reason to Quit PP

Post by Desert » Thu Sep 17, 2015 10:55 am

frugal wrote: Hello PP-fellows,

what must happen to you PERMANENT PORTFOLIO or to the world that makes you quit from having a PP ?

3-4 years falling?




Regards!
Wouldn't 3-4 years of falling lead to one of the best times to ENTER a portfolio?  Buy low, sell high...
Our greatest fear should not be of failure, but of succeeding at something that doesn't really matter. 
- D.L. Moody

Diversification means always having to say you're sorry.
stuper1
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Re: The Reason to Quit PP

Post by stuper1 » Thu Sep 17, 2015 11:21 am

Tom wrote: I don't really understand why this is such a commonly discussed topic.
Greed.
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Cortopassi
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Re: The Reason to Quit PP

Post by Cortopassi » Thu Sep 17, 2015 11:34 am

No reason to quit it.  Maybe small tweaks at most.  Every asset it holds is a superstar or stinker at some point, and it is much easier for me to rationalize that since I can't predict which will be doing well or poorly I should just stay diversified across them.
But what do I know?
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buddtholomew
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Re: The Reason to Quit PP

Post by buddtholomew » Thu Sep 17, 2015 11:45 am

stuper1 wrote:
Tom wrote: I don't really understand why this is such a commonly discussed topic.
Greed.
Personally, it's fear and not greed that motivated me to invest in the PP.
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.
stuper1
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Re: The Reason to Quit PP

Post by stuper1 » Thu Sep 17, 2015 12:08 pm

buddtholomew wrote:
stuper1 wrote:
Tom wrote: I don't really understand why this is such a commonly discussed topic.
Greed.
Personally, it's fear and not greed that motivated me to invest in the PP.
The topic under discussion is "why to quit the PP" not "why to invest in the PP".
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Re: The Reason to Quit PP

Post by Pointedstick » Thu Sep 17, 2015 12:18 pm

I think the reason to quit the PP would be if you realize that your investment goals and volatility tolerance are substantially different from what the PP delivers.
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sophie
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Re: The Reason to Quit PP

Post by sophie » Thu Sep 17, 2015 12:52 pm

Desert wrote: Wouldn't 3-4 years of falling lead to one of the best times to ENTER a portfolio?  Buy low, sell high...
I've been thinking the same thing!!  I've been hoping the PP stays low for at least several months, because I'm not going to be buying any new assets for a while yet.

And therein lies the problem with getting out of portfolios when they're doing badly, and into ones that are flying high.  That makes the most sense psychologically but it's disastrous for investment returns.  Unfortunately, psychology and investing just don't mix.  You have to pick the strategy that meets your goals the best and then stick with it.  If you have to quit looking at the markets and your portfolio in order to do that, then that's what you should do.
"Democracy is two wolves and a lamb voting on what to have for lunch." -- Benjamin Franklin
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rocketdog
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Re: The Reason to Quit PP

Post by rocketdog » Thu Sep 17, 2015 1:00 pm

frugal wrote: what must happen to you PERMANENT PORTFOLIO or to the world that makes you quit from having a PP ?
3-4 years falling?
The PP has never had 2 back-to-back years of negative returns.  So put 3 of them together and I would be very, very concerned.  Of course, that would also mean that there were likely to be much bigger and more serious problems occurring in the economy, so I'd have to look at the big picture. 

Also, if the PP's overall rolling returns keep sloping downward as they've done over the past 30 years or so, that will concern me as well.  I'm hoping it stabilizes around 8%.  See the charts I posted here:

http://gyroscopicinvesting.com/forum/pe ... #msg129953
The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.
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Tom
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Re: The Reason to Quit PP

Post by Tom » Thu Sep 17, 2015 1:45 pm

stuper1 wrote:
buddtholomew wrote:
stuper1 wrote: Greed.
Personally, it's fear and not greed that motivated me to invest in the PP.
The topic under discussion is "why to quit the PP" not "why to invest in the PP".
I understand what the topic under discussion is.  I'm saying I don't understand why that is a topic so commonly discussed amongst people that picked a strategy that is meant to be stable.  It doesn't guarantee a positive return every single year and no portfolio can do that.  It's down 3% and people are acting like it's the end of the world and wanting to abandon it.
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