Gyroscopic Investing

I'm curious how long folks have been running the PP. I started learning about it maybe 1.5 years ago, but only pulled the trigger around the new year (3 months ago). I'm curious how long others have allocated their funds as a PP.

I'm in the exact same boat as you Murphy. 

In my case, I am a first time "active" investor whose previous investing experience was simply throwing money into a set 403b TIAA-CREF retirement plan.  Having recently set early semi-retirement in 10 years as a personal goal, I started reading up about the PP last August, & implemented it on Jan 1.  The hardest psychological part for me at the time was coping with what I thought was the high price of gold when I first bought in.  Observing the interactions among the PP allocations over the last several months, as well as observing recent gold trends, has confirmed to me that Harry Browne knew what he was talking about.  Suddenly the gold I begrudgingly paid $1385-1420/oz for in January seems like a bargain.  Of course tomorrow the bottom could drop out, but today I feel warm & fuzzy knowing that if that does occur, my other PP components should protect me.

I've known about the PP since the late 90's.  However back then, if you weren't in stocks 100% or 200% if you had a margin account most people considered you to be a fool.  A co-worker of mine back then was on a three year retirement plan.  That didn't turn out to well. How times have changed.  Even though I had known about the PP for 10+ years I didn't start implementing the PP until early 2009.  I saw how the portfolio responded in 2008 and that sealed the deal for me.  I believe that once you get the idea of how the portfolio works, there's no better risk/return solution.  Think about it, you don't have to be glued to a computer screen or CNBC all day, you don't have to worry about a "flash crash", you don't have to rely on some "expert", you sleep better at night (at least I do), and you get more time to do more important things.  What more could you ask for? 

Three years.

One year this month. I began with about half my assets and later moved more into the PP.

only fully starting Jan this year, prior to that i had a boggle head style portfolio,  stocks, bonds, emergency cash, + gold in a near 25% split. when new money and Roth IRA space became available at the beginning of this year i swapped out the total bond market for some LT and rebalanced everything to 25%.

In about 1984 I started using PRPFX as the core position in my portfolio.  I supplemented it with a few gold and silver coins and a couple of 30 year $1,000 Treasury bearer bonds held in a safe deposit box.  By core I mean about 50% of my investments.  Holding PRPFX was difficult during the late 1990's when it seemed like everyone was getting rich in tech stocks. 

Upon retiring in 2003, I went to the straight DIY 4x25% PP with about 50% of our investments.  It is currently about 60% of our investments.

A bit of trivia:  I purchased the bearer bonds at a Treasury auction in September 1981.  They had a coupon rate of 13.875% and were the next to the last issue ever of bearer bonds by the Treasury.  Clipping and cashing in the semi-annual coupons was a big hassle (my bank levied a $5 per coupon service charge) so I converted them to registered form in 1985.  I finally sold them in 1986.  I sometimes wish I had held on to one of the bearer bonds with all the coupons attached.  It would be quite a collectible today -- basically a $5,162.50 bill.                 

Interesting, HB Reader.
I haven't heard bearer bonds mentioned since watching the Jodie Foster film, "The Panic Room."

HB Reader,

I really enjoy and appreciate your long exposure to all things Harry Browne.

It's nice to know that Browne's ideas don't get tired from long usage.

Yeah, Treasury stopped issuing bearer bonds in 1982, mainly because they were popular with tax evaders.  I think the Secret Service at Treasury also welcomed having one less item to protect from counterfeiters.  The bond and individual coupons were almost like cash.  Counterfeit bearer bonds (corporate, as well as government) were sometimes used as collateral for bank loans, especially in Europe.  Just by the nature of the transactions, the fraud sometimes didn't come to light for many years.  I think the last 30 year bearer bonds the Treasury issued had coupon rates of 14%.

MediumTex wrote:
I really enjoy and appreciate your long exposure to all things Harry Browne.

It's nice to know that Browne's ideas don't get tired from long usage.

I used to really look forward to getting his newsletter. 

I didn't follow his political writings nearly as closely.  Interestingly, in my 1974 reprint addition of his 1970 "How You Can Profit From the Coming Devaluation" he had a list of 22 common questions he had received in letters from readers in the first couple of years after the book came out.  The last question was, "What would you do if you were the President?"  His answer was, "I'd quit."  He had obviously changed his mind about that by 1996 when he ran on the Libertarian ticket. 

HB Reader wrote: The last question was, "What would you do if you were the President?"  His answer was, "I'd quit." 

To me, Libertarian politics are kind of like intraoffice politics. 

No one likes their boss, and everyone can think of a zillion things they'd do different if they were in charge.  Then, one day one of these critics get promoted and they discover how hard it is to be the head guy. 

It's easy to talk about cutting government programs, but I think if we actually implemented some of these shrink-government-policies as purely and abruptly as suggested by many a Libertarian, we would have big problems. 

As dysfunctional as it seems at times, I think it actually may be healthy that our government is unable to make extreme changes in an abrupt manner (although, some may argue that we are able to do things plenty quickly--ie Libya). 

Adam1226 wrote: It's easy to talk about cutting government programs, but I think if we actually implemented some of these shrink-government-policies as purely and abruptly as suggested by many a Libertarian, we would have big problems. 

Ronald Reagan was a textbook example of selling this storyline to the voters and then basically doing the exact opposite.

David Stockman (who was Reagan's first OMB Director and has recently been writing about the  current fiscal mess) wrote an excellent book in the 1980s about his experience in Reagan's administration called "The Triumph of Politcs."  Basically, he discovered that it is easy to cut taxes and hard to cut spending.  Duh.

Adam1226 wrote: I think it actually may be healthy that our government is unable to make extreme changes in an abrupt manner

Yes, I think the founders deliberately set things up that way, and that the advantages outweigh the disadvantages.

MediumTex wrote: Ronald Reagan was a textbook example of selling this storyline to the voters and then basically doing the exact opposite.

I have always thought that the 1980 election marked a turn for the worse in modern US history.  In retrospect, it seems like we essentially chose the easy thing over the right thing...

Just my opinion, and I know likely to be controversial.

On the original topic, I've been fully in the PP since January.  I first heard of the PP in spring 2009 and my first reaction was similar to craigr's, this is complete bull#&*^.  However the historical performance was incontrovertible so I listened to the radio show.  At that point I was a Boglehead, and as I listened to the show and read the books I went through the five stages of grief, eventually being convinced to switch to the PP.

Hello everyone,

Back to the original question in the post, I learned about the permanent portfolio a couple of months ago, I think it was, when Richard Russell of Dow Theory Letters first started to mention the fund PRPFX.  I did a lot of reading, and then found this site.  The concept clicked, and about a week ago, I started to shift assets around to get to the 4x25% allocation.  Whew.  A simple concept, but not that easy to implement.  I've been on a vertical learning curve, reading here and listening to Craig's podcasts. Bought my first long bonds last week. 

I notice that most of the voters in this poll (70%) are new, as I am, and I wanted to say thanks to the few seasoned pp investors who take the time to post and give advice here.  I have a lot of questions to ask so thanks in advance for y'all's input.

Maggie

MediumTex wrote:
Ronald Reagan was a textbook example of selling this storyline to the voters and then basically doing the exact opposite.

I think Reagan tried to do what he wanted to do, but one man -- even if President -- can only do what so much.  But right now I'd take a Reagan over any of the major party contenders in a New York minute.

Well, I started buying it 5 yrs ago and now have 30% of my security position in PRPFX. And, it has been good to me, up 19% last yr and up 4.5% YTD. Before this board starts talking about alternatives perhaps you should consider will they do as well? Also, do you wish to adjust you allocations and pick stocks? The S&P is up 6% YTD. I feel better with 4 1/2% of PP somehow.

I have been running with 1/3rd of my investable assets in the HBPP for less than two months now.  I recently found out about HB/PP reference while perusing the Morningstar board.  That led me to the bogleheads threads and then to this.  I was looking for a mean reversion strategy at the time, to complement my momentum strategies and looked into Lichello's AIM system, which is more of a DCA/re-balancing strategy.  I wasn't sold on it (AIM), and kept looking.  As soon as I started reading about the PP, I knew instantly that it had a place for me.  

As a side note, I had listened to Julian Rubenstein's advertisement/radio program for American Asset Management even before stumbling on the bogleheads HBPP threads.  I listened to his pitch several times and found it to be very interesting.  As soon as I started reading about PP, I figured that he was using the PP.  He posts on this board, and has confirmed that he is a PP enthusiast.  Cheers to him for managing a lot of wealth in the HBPP vein and thinking outside the typical money manager dogma.  

I've read both threads at boglehead forum, as well as most posts here.  I've listened to all of HB's investment shows and read two of his books in short order.  

I plan on listening to more of his archived political talk shows as well.  I really admire him, as he was very savvy in politics as well as investing and I match up well with his ideologies.  I regret not having found him before he passed away.  It's a shame that he wasn't able to pontificate for another decade or two.  

clacy wrote:
As a side note, I had listened to Julian Rubenstein's advertisement/radio program for American Asset Management even before stumbling on the bogleheads HBPP threads.  I listened to his pitch several times and found it to be very interesting.  As soon as I started reading about PP, I figured that he was using the PP.  He posts on this board, and has confirmed that he is a PP enthusiast.  Cheers to him for managing a lot of wealth in the HBPP vein and thinking outside the typical money manager dogma.  

Interesting.  I had not heard of American Asset Management before.  While I admire him for being true to the PP, a tip of the hat to HB would have been nice, although certainly not required.

I also would have inserted the word "likely" before "will be" in the statement below which I found on the website:

"No matter what economic cycle the country is experiencing, one or more of our asset classes will be rising to provide a positive return for the year".  

The PP has lost money over a calendar year before, and there is no guarantee such a loss won't occur again.

Pkg Man wrote: I think Reagan tried to do what he wanted to do, but one man -- even if President -- can only do what so much.  But right now I'd take a Reagan over any of the major party contenders in a New York minute.

Why does this nation have such fond memories of the Reagan presidency? 

Was Jimmy Carter really so bad?

Adam1226 wrote:

Pkg Man wrote: I think Reagan tried to do what he wanted to do, but one man -- even if President -- can only do what so much.  But right now I'd take a Reagan over any of the major party contenders in a New York minute.

Why does this nation have such fond memories of the Reagan presidency?  

Was Jimmy Carter really so bad?

1) The list is too long for one reply.  However, here's a start. http://www.presidentreagan.info/reagan_budgets.cfm

2) Yes.

I think a huge part of the Carter/Reagan difference in popularity was pure luck.  Carter oversaw extremely high oil prices, and they went down significantly during the 80's.  Further, Reagan really started the running of defecits and benefitted from the smart fed policy of Carter-appointee Paul Volker.  I really don't buy that Carter was that bad or Reagan that great.  That said, 70% tax rates were completely out of line.

TBV wrote: 1) The list is too long for one reply.  However, here's a start. http://www.presidentreagan.info/reagan_budgets.cfm
2) Yes.

I've heard the argument made that the main reason Jimmy Carter's presidency was not successful was because he was not willing to use the military to essentially bully other countries out of resources.  Myth?

Not my opinion, but I wonder about this whenever I hear people talk about the Reagan era, and how much better everything got.