Why the PP is better in accumulation than you think

General Discussion on the Permanent Portfolio Strategy

Moderator: Global Moderator

User avatar
MachineGhost
Executive Member
Executive Member
Posts: 10054
Joined: Sat Nov 12, 2011 9:31 am

Re: Why the PP is better in accumulation than you think

Post by MachineGhost » Tue Oct 27, 2015 4:08 pm

mathjak107 wrote: Can't say how long it will hold as no study was done giving us longer term results.
I'm sure someone here with a spreadsheet that is accurate can do it.  I can't seem to get the WR concept to work right.
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes

Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet.  I should not be considered as legally permitted to render such advice!
User avatar
mathjak107
Executive Member
Executive Member
Posts: 3384
Joined: Fri Jun 19, 2015 2:54 am
Location: bayside queens ny
Contact:

Re: Why the PP is better in accumulation than you think

Post by mathjak107 » Tue Oct 27, 2015 4:10 pm

Harry said that about silver in the 1980's in why the best laid investment plans go wrong.
User avatar
mathjak107
Executive Member
Executive Member
Posts: 3384
Joined: Fri Jun 19, 2015 2:54 am
Location: bayside queens ny
Contact:

Re: Why the PP is better in accumulation than you think

Post by mathjak107 » Tue Oct 27, 2015 4:13 pm

You gan google kitces article what is the 4% rule really based on for the details . I am on the nook and can't link.
User avatar
MachineGhost
Executive Member
Executive Member
Posts: 10054
Joined: Sat Nov 12, 2011 9:31 am

Re: Why the PP is better in accumulation than you think

Post by MachineGhost » Tue Oct 27, 2015 4:42 pm

mathjak107 wrote: Harry said that about silver in the 1980's in why the best laid investment plans go wrong.
Okay, that was in Oct. 1987 when he formally unveiled today's PP.  Within that context, silver would surely not work.  Before that, he was using the PRPFX portfolio allocation as far back as late 1982.  No idea what he recommended before that for the 1970's but I have his book coming in.  We will get to the bottom of this!
Last edited by MachineGhost on Tue Oct 27, 2015 4:45 pm, edited 1 time in total.
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes

Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet.  I should not be considered as legally permitted to render such advice!
User avatar
mathjak107
Executive Member
Executive Member
Posts: 3384
Joined: Fri Jun 19, 2015 2:54 am
Location: bayside queens ny
Contact:

Re: Why the PP is better in accumulation than you think

Post by mathjak107 » Sun Nov 01, 2015 3:45 am

which brings us back to my point . trying to back test it when it has no data is silly and serves no point anymore .

the trinity study , bill's safemax , were only tools that allowed  researchers  to find the worst time frames , identify them , and later on  find the common denominator  to the reason they were such bad times .

thanks to michael kitces's numbers crunching we know if it is passing muster in real time if you are trying to live off it  .  we know if any allocation is working  for that matter just by watching the real return average .

less than 2% is a red flag at any point but especially as you get closer and closer to the 15 year mark .


john boogle had an interesting  interview with morningstar the other day .

his math has a 50/50 mix returning only about 3.50-4% the next decade  because of valuations and  rates .


in his 2006 interview his math showed about a 6.50% return  for a 50/50 using index funds and boy did he get that pretty much on target .

so this 2% real return thingie is going to be very important to monitor  if you are spending down . 

i am using  bob clyatts dynamic spending method  to determine my years maximum budget so i recalculate every year  and it is done in real time .

each years max is dynamic  automatically inflation adjusting or cutting slightly back as the years unfold .

dec 31st  we take a snp shot of the portfolio.

we take 4% of the balance  or if markets are down we take what we did the previous year or 5% less , which ever is higher .

we dump that amount in our checking account , keep the same amount in cash  in another cash instrument for next years budget as a safety net and a small emergency fund .

we know know much we have left for the year at any point in time . 

when markets are up we can spend more and when down it forces us to spend a little less so i like the method .

while our bills are constant our  discretionary spending can be as high as we can go  as our retirement wants list and dreams list is far greater than our budget allows .. so we need to know some kind of limit each year to keep from going over .
Last edited by mathjak107 on Sun Nov 01, 2015 4:11 am, edited 1 time in total.
User avatar
mathjak107
Executive Member
Executive Member
Posts: 3384
Joined: Fri Jun 19, 2015 2:54 am
Location: bayside queens ny
Contact:

Re: Why the PP is better in accumulation than you think

Post by mathjak107 » Sun Nov 01, 2015 4:04 am

here is an excerpt from boggles interview

"Bogle: Well, for U.S. equities, I have a simple formula, as you know. It says divide it up into two segments: One is investment return and the other is speculative return. Investment return is the present dividend yield--a little over 2%--and the earnings growth that follows. And I think it's going to be a little bit of a push for that earnings growth to get to 6%--but I'm going to use 6%. So, that would be an 8% investment return on stocks.

Now, when you get to speculative return, that's whether the P/E ratio go up and pump that up or go down and deflate it. And I look at the P/E from the perspective of past reported earnings--GAAP earnings, as we say it--at being about 20 times. Wall Street looks at it through forward earnings, but forward expected earnings. So, they're using about a 17 P/E, and I'm using about a 20. I'm going to stick to my guns. To go from 20 to 17, that would be about a 2% annual loss. So, I think the best thing we can expect--and this is higher than I'm going to talk about tomorrow--is that 8%, [or 2% dividend yield and 6% earnings growth]. But in fact, I don't think earnings growth is going to be that good, and so I think the P/E could easily get to a more normal long-term range of 15. So, that would be 3% from that number. So, you'd have an investment return of 2% and 5% for 7%, minus 3% for speculative return. That would be 4% for stocks, and that's not a very good number.

And if you look at bonds, the mathematics is a little bit different. If you look at the current yield--as always--you can probably put a pretty good bond portfolio together. I bet you almost have to do better than the 2% or 2.2% on the 10-year Treasury. That's a high-quality relatively short, intermediate-term bond. But if you went a little bit longer--maybe instead of 10 years, you went 12 years--and had a bigger corporate position, which I think most people should have, you might be able to get a 3% yield out of the bonds. So, we've got a 4% return for stocks--maybe a little bearish, but we just don't know--and a 3% return for bonds. That's a 3.5% return on a balanced 50-50 portfolio.

Some important caveats: That's a nominal return. "

http://www.morningstar.com/cover/videoc ... ?id=718639
Last edited by mathjak107 on Sun Nov 01, 2015 4:06 am, edited 1 time in total.
barrett
Executive Member
Executive Member
Posts: 1585
Joined: Sat Jan 04, 2014 2:54 pm

Re: Why the PP is better in accumulation than you think

Post by barrett » Sun Nov 01, 2015 6:16 am

mathjak107 wrote: Some important caveats: "That's a nominal return."

http://www.morningstar.com/cover/videoc ... ?id=718639
That's a sobering piece with Jack Bogle. For those of you who don't watch the link, toward the end of the spot he also talks about fund expense, investor behavior & expected inflation of 2% driving investor returns effectively into negative territory.

So, (this is me now, not Jack Bogle) it stinks to be a 50/50 stock/bond investor for the next ten years. You have to have some combination of a big existing cushion, the ability to slash expenses drastically, and/or some kind of income stream.

Because this is, after all, a PP forum, we have to ask what cash and gold might do to returns. I would argue that Bogle's inflation & PE numbers might well be high and that we are more likely than not heading for more disinflation or - because there's not much room left for disinflation - outright deflation.

Long duration bonds should be the asset to own in that kind of environment because they keep making their coupon payments and you might get a pop in terms of price appreciation. Cash is also good, especially if some of your "cash" portion is in savings bonds. Stocks don't like deflation one bit and gold should be expected to tank. So you've got your PP firewalls but no growth engine.

This is all quite pessimistic but it certainly reflects the current situation where a PPer looks at their portfolio late in 2015 and sees it's right where it was a year ago.

Hmm, to hit "Post" or not to hit "Post."
User avatar
ochotona
Executive Member
Executive Member
Posts: 3214
Joined: Fri Jan 30, 2015 5:54 am

Re: Why the PP is better in accumulation than you think

Post by ochotona » Sun Nov 01, 2015 6:30 am

barrett wrote: Long duration bonds should be the asset to own in that kind of environment because they keep making their coupon payments and you might get a pop in terms of price appreciation. Cash is also good, especially if some of your "cash" portion is in savings bonds. Stocks don't like deflation one bit and gold should be expected to tank. So you've got your PP firewalls but no growth engine.

This is all quite pessimistic but it certainly reflects the current situation where a PPer looks at their portfolio late in 2015 and sees it's right where it was a year ago.
I don't own any long duration bonds because I refuse to take substantial bets on interest rates. I just bought a chunk of US Treasuries that mature in seven years. That's as long as I care to go. Because what if I'm wrong? I think it's really a coin toss. I'll take my 1.9% YTM, hold to maturity, and be happy about it. Someday the interest rate will normalize, it will take years to heal, though. When rates are high, and LT bonds lower, I will buy.

I know the idea is the volatility of LT Treasuries smashes up against the volatility of other assets, and they magically noise cancel like Bose headphones, but that's like saying, "Getting your leg broken is a good thing, because the docs might find bone cancer on the x-ray which would save your life". That may be true, but I'm a not volunteering to have my legs broken.

Same with gold. 200 day moving average still trending downward. When it starts going dead flat horizontal, the pain may be coming to an end. Maybe next year. My limit order is placed. The cash is set aside, ready to wire. It may sit there another year or two.

The poor return of stocks over the next decade is from a buy-and-hold perspective. At some point, there will be another bear market. Are we in one now? Is it 2016? 2017? Who knows, but from the bottom of that trough to the year 2025, returns may be better... low-normal instead of awful. That's a back-handed way of saying stocks are expensive, and it's risky to be in them now, and as much as it grinds people to talk about "market timing" or "tactical asset allocation", I think that has to be considered as a possible response.
Last edited by ochotona on Sun Nov 01, 2015 6:36 am, edited 1 time in total.
User avatar
mathjak107
Executive Member
Executive Member
Posts: 3384
Joined: Fri Jun 19, 2015 2:54 am
Location: bayside queens ny
Contact:

Re: Why the PP is better in accumulation than you think

Post by mathjak107 » Sun Nov 01, 2015 9:25 am

barrett wrote:
mathjak107 wrote: Some important caveats: "That's a nominal return."

http://www.morningstar.com/cover/videoc ... ?id=718639
That's a sobering piece with Jack Bogle. For those of you who don't watch the link, toward the end of the spot he also talks about fund expense, investor behavior & expected inflation of 2% driving investor returns effectively into negative territory.

So, (this is me now, not Jack Bogle) it stinks to be a 50/50 stock/bond investor for the next ten years. You have to have some combination of a big existing cushion, the ability to slash expenses drastically, and/or some kind of income stream.

Because this is, after all, a PP forum, we have to ask what cash and gold might do to returns. I would argue that Bogle's inflation & PE numbers might well be high and that we are more likely than not heading for more disinflation or - because there's not much room left for disinflation - outright deflation.

Long duration bonds should be the asset to own in that kind of environment because they keep making their coupon payments and you might get a pop in terms of price appreciation. Cash is also good, especially if some of your "cash" portion is in savings bonds. Stocks don't like deflation one bit and gold should be expected to tank. So you've got your PP firewalls but no growth engine.

This is all quite pessimistic but it certainly reflects the current situation where a PPer looks at their portfolio late in 2015 and sees it's right where it was a year ago.

Hmm, to hit "Post" or not to hit "Post."

which is why retirement planning is based on worst case scenario's , not even just  average outcomes .
User avatar
Cortopassi
Executive Member
Executive Member
Posts: 2777
Joined: Mon Feb 24, 2014 2:28 pm
Location: Illinois

Re: Why the PP is better in accumulation than you think

Post by Cortopassi » Sun Nov 01, 2015 11:50 am

All this is telling me that there is going to be blood in the streets in the next decade.  No pension plan can survive this level of return, and there is a limit to which citizens will be taxed to pay for pensions and such without revolt.  More municipalities are going to have to declare bankruptcy, and I do not look forward to what will happen!

All bets are off on comparisons to history for everything, IMO.
Test of the signature line
User avatar
mathjak107
Executive Member
Executive Member
Posts: 3384
Joined: Fri Jun 19, 2015 2:54 am
Location: bayside queens ny
Contact:

Re: Why the PP is better in accumulation than you think

Post by mathjak107 » Sun Nov 01, 2015 12:24 pm

except as as always , things not even on the radar totally alter what we think is a given when it comes to doom and gloom
User avatar
MachineGhost
Executive Member
Executive Member
Posts: 10054
Joined: Sat Nov 12, 2011 9:31 am

Re: Why the PP is better in accumulation than you think

Post by MachineGhost » Sun Nov 01, 2015 1:06 pm

I don't see any realistic alternative but to think outside the box.

Either we go the way of the high inflation 1970's and a dollar crisis all over again where real assets shine, including the gold heavy PP.

Or we we got the way of Japan where everything sucks, including the PP, but it eeks out a meager miserable existence.  I think the latter is more likely due to the operational reality of the world we live in.  At least for a while.  Eventually we'll shift to the former.

The bigger question is, where will substantial portfolio growth come from?  I need growth and I'm having trouble seeing it coming from anywhere but startup investing, real estate and P2P lending.  And that may be less true growth than a bubble, but I can't afford to be picky.

If the PP had a downside risk more in line with its meager expected returns, it would be academic in worrying about it.  Even mathjak realizes this since he gave up after just a week.
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes

Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet.  I should not be considered as legally permitted to render such advice!
User avatar
mathjak107
Executive Member
Executive Member
Posts: 3384
Joined: Fri Jun 19, 2015 2:54 am
Location: bayside queens ny
Contact:

Re: Why the PP is better in accumulation than you think

Post by mathjak107 » Sun Nov 01, 2015 1:44 pm

My portfolios are never static forever so wherever the longer term trends go the portfolio adapts just as it always has.
Even in poor markets there are funds that bet against the markets .

I never believed in trying to make something work forever
User avatar
Cortopassi
Executive Member
Executive Member
Posts: 2777
Joined: Mon Feb 24, 2014 2:28 pm
Location: Illinois

Re: Why the PP is better in accumulation than you think

Post by Cortopassi » Sun Nov 01, 2015 4:40 pm

mathjak107 wrote: except as as always , things not even on the radar totally alter what we think is a given when it comes to doom and gloom
I hope you are correct!
Test of the signature line
User avatar
mathjak107
Executive Member
Executive Member
Posts: 3384
Joined: Fri Jun 19, 2015 2:54 am
Location: bayside queens ny
Contact:

Re: Why the PP is better in accumulation than you think

Post by mathjak107 » Sun Nov 01, 2015 4:41 pm

So do all of us
User avatar
ochotona
Executive Member
Executive Member
Posts: 3214
Joined: Fri Jan 30, 2015 5:54 am

Re: Why the PP is better in accumulation than you think

Post by ochotona » Sun Nov 01, 2015 9:41 pm

Maybe we have to go global and emerging for growth, after some of this current severe decline abates.

Maybe the 21st Century PP is 50% US stocks, 50% non-US, and a big slice of those Emerging markets.20% REIT, 20% Gold, 20% US Treasuries... ooops, that's Meb Faber's Ivy-5 portfolio. The backtesting shows Faber's has almost 3% more CAGR for similar Sharpe ratio. MAXDD is large but isn't terrible at 21.64%.
Last edited by ochotona on Sun Nov 01, 2015 9:46 pm, edited 1 time in total.
User avatar
MachineGhost
Executive Member
Executive Member
Posts: 10054
Joined: Sat Nov 12, 2011 9:31 am

Re: Why the PP is better in accumulation than you think

Post by MachineGhost » Sun Nov 01, 2015 11:00 pm

ochotona wrote: Maybe the 21st Century PP is 50% US stocks, 50% non-US, and a big slice of those Emerging markets.20% REIT, 20% Gold, 20% US Treasuries... ooops, that's Meb Faber's Ivy-5 portfolio. The backtesting shows Faber's has almost 3% more CAGR for similar Sharpe ratio. MAXDD is large but isn't terrible at 21.64%.
I don't like unbalanced risk like that.  They don't consider that equal weight diversification into a similar asset class is not real diversification.  You ultimately need to decide on your top level strategic allocation and then fit everything equally into those three quadrants as the PP does.  The Volatility PP Sr is a good start, but the equity exposure is rather low.  I think the only guideline we really have is the safe withdrawal rates chart otherwise it seems like a crapshoot to decide what to use for strategic.
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes

Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet.  I should not be considered as legally permitted to render such advice!
User avatar
mathjak107
Executive Member
Executive Member
Posts: 3384
Joined: Fri Jun 19, 2015 2:54 am
Location: bayside queens ny
Contact:

Re: Why the PP is better in accumulation than you think

Post by mathjak107 » Mon Nov 02, 2015 3:08 am

ochotona wrote: Maybe we have to go global and emerging for growth, after some of this current severe decline abates.

Maybe the 21st Century PP is 50% US stocks, 50% non-US, and a big slice of those Emerging markets.20% REIT, 20% Gold, 20% US Treasuries... ooops, that's Meb Faber's Ivy-5 portfolio. The backtesting shows Faber's has almost 3% more CAGR for similar Sharpe ratio. MAXDD is large but isn't terrible at 21.64%.
at some point europe and emerging markets will be where the action is again but still to early .  i don't subscribe to  that buy low sell high crap . i don't want to fight a trend or try to catch a  falling a  knife . i want to buy high and sell higher .

which is why my plan has always been dynamic  just nudging things slightly towards the longer term trends with the best possibility of playing out , but even if wrong the effect of being wrong is tiny .

just picking up an extra 1% over 30 years is a big difference in performance and balance .
Last edited by mathjak107 on Mon Nov 02, 2015 3:50 am, edited 1 time in total.
User avatar
mathjak107
Executive Member
Executive Member
Posts: 3384
Joined: Fri Jun 19, 2015 2:54 am
Location: bayside queens ny
Contact:

Re: Why the PP is better in accumulation than you think

Post by mathjak107 » Mon Nov 02, 2015 3:16 am

MachineGhost wrote:
ochotona wrote: Maybe the 21st Century PP is 50% US stocks, 50% non-US, and a big slice of those Emerging markets.20% REIT, 20% Gold, 20% US Treasuries... ooops, that's Meb Faber's Ivy-5 portfolio. The backtesting shows Faber's has almost 3% more CAGR for similar Sharpe ratio. MAXDD is large but isn't terrible at 21.64%.
I don't like unbalanced risk like that.  They don't consider that equal weight diversification into a similar asset class is not real diversification.  You ultimately need to decide on your top level strategic allocation and then fit everything equally into those three quadrants as the PP does.  The Volatility PP Sr is a good start, but the equity exposure is rather low.  I think the only guideline we really have is the safe withdrawal rates chart otherwise it seems like a crapshoot to decide what to use for strategic.

the chert is a guideline but the ultimate guideline will still be monitoring your own results for that proverbial 2% real return  the first 15 years  of retirement .

don't forget how the 1960's had the worst possible sequences  the first  15 years and the best market run up in history the next 15 but it was to little to late .  they already over spent down their assets the first 15 years .

with results from all asset classes pointing to below average performance this is really going to make things tough to go by what was in the past .

it figures i would retire smack in to it . but luckily our plan has a lot of discretionary spending in it so cutting withdrawals a bit may not be much fun  but it can be done .

the good news is the safe withdrawal rates are called safe because they are already so conservative  just because they are based around the worst conditions we have had  and they were already pretty nasty .

the other good thing is that  we will be not only dynamic with the portfolio  but dynamic with the budget as each year will be based not on some fixed percentage of an opening balance but on the actual balance yearly  .

the issue i have with the "4% rule " is 90% of the time you died with more than you started . not enjoying more things in life that cost money  that you could have is not a good thing either .

so even if you go the standard 4% withdrawals inflation adjusted you still need a  means of increasing withdrawals or risk  leaving to much unspent on the table .

to conservative is no good either ,.

bob clyatt's dynamic spending method automatically gives you more when markets are up .

it can be hard as heck trying to come up with a spending plan using the 4% rule as any increases in a good market can't easily be spent since you are going to need them as a cushion in a down market since the income stream has to remain constant .

the dynamic method does not have a constant income stream . it can vary on the upside unlimited and is limited to just 5% cuts  each year on the down side .

but spending methods in retirement are a whole other topic  and could be their own discussion and this topic is about the pp in the accumulation stage not the decumulation stage ..
Last edited by mathjak107 on Mon Nov 02, 2015 3:54 am, edited 1 time in total.
barrett
Executive Member
Executive Member
Posts: 1585
Joined: Sat Jan 04, 2014 2:54 pm

Re: Why the PP is better in accumulation than you think

Post by barrett » Mon Nov 02, 2015 5:58 am

MachineGhost wrote: I don't see any realistic alternative but to think outside the box.

Either we go the way of the high inflation 1970's and a dollar crisis all over again where real assets shine, including the gold heavy PP.

Or we we go the way of Japan where everything sucks, including the PP, but it eeks out a meager miserable existence.  I think the latter is more likely due to the operational reality of the world we live in.  At least for a while.  Eventually we'll shift to the former.
And what might cause that shift? Japan has certainly been trying to get the juices flowing to no avail. And if there is a reasonable chance of high inflation happening in the next few years, then it certainly make sense to hedge against it, right?
MachineGhost wrote: The bigger question is, where will substantial portfolio growth come from?  I need growth and I'm having trouble seeing it coming from anywhere but startup investing, real estate and P2P lending.  And that may be less true growth than a bubble, but I can't afford to be picky.

If the PP had a downside risk more in line with its meager expected returns, it would be academic in worrying about it...
Yeah, that seems to be the crux of the angst in this thread at the moment. We are hedging for everything but don't see the potential for assets to really shine... only to not stink too badly if conditions are right.

In an effort to bring this topic back to where Tyler started, yes, I believe that the PP has been a fine growth portfolio up until now. What we are questioning is what will power it going forward?
User avatar
mathjak107
Executive Member
Executive Member
Posts: 3384
Joined: Fri Jun 19, 2015 2:54 am
Location: bayside queens ny
Contact:

Re: Why the PP is better in accumulation than you think

Post by mathjak107 » Mon Nov 02, 2015 7:33 am

japan blew it day one and there central bank continued to do the wrong thing 2 or 3x . plus japan had very little inflation . they needed very little in gains to sustain life , as well as they  did not just have to invest in the Japanese markets .

we are not a japan by any long shot .
Last edited by mathjak107 on Mon Nov 02, 2015 7:45 am, edited 1 time in total.
User avatar
MachineGhost
Executive Member
Executive Member
Posts: 10054
Joined: Sat Nov 12, 2011 9:31 am

Re: Why the PP is better in accumulation than you think

Post by MachineGhost » Mon Nov 02, 2015 11:18 am

barrett wrote: And what might cause that shift? Japan has certainly been trying to get the juices flowing to no avail. And if there is a reasonable chance of high inflation happening in the next few years, then it certainly make sense to hedge against it, right?
The former seems like it will occur when all the foreign sovereign USD-denominated debt at near zero interest rates starts blowing up once the Fed raises.  It will be like dominoes collapsing around the world and then eventually it will hit the last man standing, the US.  So depending on how slow/clueless/idiotic the ruling/bureaucratic class is at the Fed, NGOs, etc. the SHTF may last a couple of years or it may be nipped in the bud rather quickly as the USD is replaced as the world's reserve currency.  Foreign nations will be demanding its replacement because their stupidity would have been no different than the pegging of their currencies to gold in the 1930's.  Pegs ALWAYS fail, everywhere and anywhere without exception.  If we're very lucky, the US come out of this standing alive.  A lot could depend on whether or not we shift to the right politically because you know progressive liberals like Sanders or Clinton would throw us under the bus to sing Kumbaya! with the incestuous NGOs.  Those are the same NGO's "advising" the current EU clusterfuck.  Not holding my breath here.

OTOH, I think Japanization will occur if voters are again stupid and elect more Nanny-State NeoConners, like Sanders, Clinton, Rubio, etc.  Pretty much all of the top tier lot except for Trump, Fiorina, Kasich and Christie.  We need a wholesale shakeup of overregulation, not more of the same Bullshit That Has Gone Before.  Stagnation and loss of confidence is what causes persistent deflation.  Japan has a lack of immigration, women are second class citizens, a ridiculously huge and aged population and they don't date, bother to have sex or get married.  It's a whole litany of social issues that we really don't have yet, so economic overregulation is the immediate #1 risk, i.e. turning more and more into that socialist basketcase called France.

Its also quite possible we can have both scenarios occuring one after another or even at the same time!

I think we have a few years left while the Middle Eats does their stupid religious war.  There's not enough retail participation in the equity market for another bubble top yet, but I think legal startup investing will light a fire under their ass.

Hey, that's just my opinion, but I could be wrong!
Last edited by MachineGhost on Mon Nov 02, 2015 11:28 am, edited 1 time in total.
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes

Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet.  I should not be considered as legally permitted to render such advice!
User avatar
Kriegsspiel
Executive Member
Executive Member
Posts: 3478
Joined: Sun Sep 16, 2012 5:28 pm

Re: Why the PP is better in accumulation than you think

Post by Kriegsspiel » Tue Nov 03, 2015 6:06 am

MachineGhost wrote:
barrett wrote: And what might cause that shift? Japan has certainly been trying to get the juices flowing to no avail. And if there is a reasonable chance of high inflation happening in the next few years, then it certainly make sense to hedge against it, right?
The former seems like it will occur when all the foreign sovereign USD-denominated debt at near zero interest rates starts blowing up once the Fed raises.  It will be like dominoes collapsing around the world and then eventually it will hit the last man standing, the US.  So depending on how slow/clueless/idiotic the ruling/bureaucratic class is at the Fed, NGOs, etc. the SHTF may last a couple of years or it may be nipped in the bud rather quickly as the USD is replaced as the world's reserve currency.  Foreign nations will be demanding its replacement because their stupidity would have been no different than the pegging of their currencies to gold in the 1930's.  Pegs ALWAYS fail, everywhere and anywhere without exception.  If we're very lucky, the US come out of this standing alive.  A lot could depend on whether or not we shift to the right politically because you know progressive liberals like Sanders or Clinton would throw us under the bus to sing Kumbaya! with the incestuous NGOs.  Those are the same NGO's "advising" the current EU clusterfuck.  Not holding my breath here.

OTOH, I think Japanization will occur if voters are again stupid and elect more Nanny-State NeoConners, like Sanders, Clinton, Rubio, etc.  Pretty much all of the top tier lot except for Trump, Fiorina, Kasich and Christie.  We need a wholesale shakeup of overregulation, not more of the same Bullshit That Has Gone Before.  Stagnation and loss of confidence is what causes persistent deflation.  Japan has a lack of immigration, women are second class citizens, a ridiculously huge and aged population and they don't date, bother to have sex or get married.  It's a whole litany of social issues that we really don't have yet, so economic overregulation is the immediate #1 risk, i.e. turning more and more into that socialist basketcase called France.

Its also quite possible we can have both scenarios occuring one after another or even at the same time!

I think we have a few years left while the Middle Eats does their stupid religious war.  There's not enough retail participation in the equity market for another bubble top yet, but I think legal startup investing will light a fire under their ass.

Hey, that's just my opinion, but I could be wrong!
You may be right about all this. Except for the sex part. The Japanese DO have sex, it's just with tentacle monsters.
One horse can carry 125 kg on its back, but it can drag 2500 kg on a cart. If it pulls a barge along a river, it can drag 30,000 kg, 30 tonnes, and it can drag 50 tonnes if the weight is on a barge in quiet water, i.e., on a canal.
User avatar
mathjak107
Executive Member
Executive Member
Posts: 3384
Joined: Fri Jun 19, 2015 2:54 am
Location: bayside queens ny
Contact:

Re: Why the PP is better in accumulation than you think

Post by mathjak107 » Tue Nov 03, 2015 7:57 am

i have a yen for a japanese call girl    ha ha ha
portart
Executive Member
Executive Member
Posts: 278
Joined: Mon Feb 11, 2013 8:20 am

Re: Why the PP is better in accumulation than you think

Post by portart » Tue Nov 03, 2015 10:14 am

I am retiring in two years. I have the classic 25% PP. If I retired two years ago and drew out 4%, I am guessing I would down close to 8% since PP earned next to nothing in this time period. Assuming this is the case, what would I have to drop down to the the third year to avoid depleting my portfolio to the point that it would not come back to par as far as not outliving the money, assuming another 25 years of life? The original PP had money rates earning something in the 5% range. The money portion is now dead in the water with almost negative rates. Stocks and bonds keep the combination from outperforming enough to over come the shortfall in the cash portion. Gold is a wild card mainly for protection which can go many years before rebounding and can drop even futher due to its extreme volatility. What's everyone's take on this?
Post Reply