Stocks Crashing! Thank God For The PP!!

[jafs]

[sophie]

CraigR has something to say about TIPS - check the Gold FAQ or his website.  Among other issues, TIPS won't compensate for losses in other assets the way gold will.  At best it will tread water, and that's if you have 100% faith in the CPI.

The last several posts here should probably be moved to the Variable Portfolio section.  You guys are essentially talking about market timing with some of the PP assets.  Which could work out very well, but it's not a PP.  Nor is it passive investing, so it would also not qualify as a Boglehead allocation.

Just want to make sure a spade is being called a spade, for the benefit of those who are coming here looking for information on the Permanent Portfolio and could easily be getting confused.

[var]

CraigR has something to say about TIPS - check the Gold FAQ or his website.  Among other issues, TIPS won't compensate for losses in other assets the way gold will.  At best it will tread water, and that's if you have 100% faith in the CPI.

The last several posts here should probably be moved to the Variable Portfolio section.  You guys are essentially talking about market timing with some of the PP assets.  Which could work out very well, but it's not a PP.  Nor is it passive investing, so it would also not qualify as a Boglehead allocation.

Just want to make sure a spade is being called a spade, for the benefit of those who are coming here looking for information on the Permanent Portfolio and could easily be getting confused.

Sophie your right but.
This forum doesn't have too many posts.  I think it's probably better to concentrate in one post to spark more discussion.  Thus you have more user participation. 

Otherwise the forum will get stale people will start to leave. Etc.

PP so well covered in 2 books now.  It's simple to implement.  I can't see to many people asking questions about it.  Other the. Complaining about recent return.

[sophie]

New threads are always welcome.  Why don't you start one?

[buddtholomew]

I agree, let's try and keep threads on topic as much as possible. The HBPP has performed admirably during the recent equity decline. It has also reminded purists why they are invested in the 4x25 allocation. There are as many ice cream flavors as variants of the permanent portfolio, but one item that we can all agree on - to qualify as a HBPP, the investor includes stocks, long-term treasuries, gold and short-term treasuries in their portfolio.

[l82start]

the moderation staff likes to stay with a traditional post content allocation, and allow the topic to drift within the 15% bands before resorting to re-balancing or ....God forbid... slice and dice thread splitting 

[MediumTex]

I agree with Sophie on TIPS, and I'll also add that when inflation is accompanied by rising rates, the value of TIPS can fall even if the CPI is rising.  This is only for medium to longer term durations, of course.

For anyone who hasn't seen it before, "TIPSymandias":

I met a traveller from an antique land
Who said: I have seen a curious bond
This bond made a promise rare among men and kings,
Backed by full faith and credit

The bond made it clear to all who bought, purchasing power is safe
Those who look upon the bond are counseled to take comfort
That which is will always be, a promise made is a promise kept,
And other assorted platitudes and assurances.

On the back of the bond these words appear:
"Inflation is tamed for all time!
Gold is a barbarous relic,
Inflation look upon this mighty bond and despair!"

No record of the issuer of the bond remains.
Round the decay
Of this curious promise,
Boundless and bare,
The lone and level sands of change stretch far away.

[dualstow]

TIPSymandias
Still brilliant. 

Breaking Bad (and poets) has influenced this board so much.

[Professor Disorientation]

Markets go down as well as up and this is why I invested in the PP. When all the news is negative and the market is tanking, I can live my life because the PP is going to perform nicely in a market like this. I rebalanced my PP and bought more gold the last week in December.
I personally love the agnostic quality of the PP. Timing the market is a fool's game. Sure you may get lucky once or twice, but I would not want to market time my way to success. The market brings out emotions in all of us. If stocks are doing well, we lament that only 25% of the PP is in stocks. Harry must be wrong or misguided. Gold is a loser. Long-term bonds can't possibly go up in an environment like this. Cash is paying nothing. It goes on and on. The market is emotions. If you can't control your emotions, you will do the wrong thing at the wrong time. The PP is for the humble and for those who don't know what tomorrow may bring. I am sticking with the PP and I make no apologies to anyone for doing this. In Aesop's fable of the Tortoise and the Hare, the tortoise wins the race. Sure the hare is confident, faster and flashy. But the Tortoise is disciplined, focused and unfazed by the hare. I liken the PP to the Tortoise.

Michael

[Pointedstick]

Hehe, where is that from?

[rocketdog]

Why?

If anything, now seems like the time to be buying stocks, not selling them.

Stocks are still insanely overvalued.

But they are less overvalued than they were when everyone thought buying them was a good idea.

The best time to buy stocks is when everyone hates the stock market the most, but it's not a terrible time to buy when only most people hate the stock market a lot.

I advise any investor to adopt a contrarian attitude, at least to some extent.  Nobody likes to see the value of their portfolio go down, but unless you need the cash flow you have to look at it as "Everything is on sale!"  As long as you're still dollar-cost averaging into your investments, don't sweat the short-term gyrations. 

After all, do you waste time tracking the daily changes in the value of your house and then fret whenever it dips? (assuming you're not about to sell it, of course.)

[rocketdog]

+1

Yup buy on nice pull backs that said. A few more down days I'll start buying. 
That's why don't even watch CNBC they'll talk PE. China down. Etc.  then at some point
You'll be. In panic.

Also correct me if I am wrong.  Boggle heads don't use TLT.  they rather use diversified bond fund. 
I think TLT is a key pp criteria.

So how will you feel in October 2016 if the shares you buy next week "on the dips" based on gut feel are worth half of what you paid for them?

My guess is, you'll be selling them to me at that time.

See, I'm a contrarian, so whenever that happens I think "Sweet!  It's even more attractively priced now!  Time for me to stock up!"  I never sell an investment at a loss.  I have the patience of a saint and can wait years for my bets to pay off.  That's the beauty of the market cycle: it's a cycle.

That happened when I bought some VDE about a year ago, partly as an inflation hedge.  Oil of course has tanked since then, so as soon as it seems to bottom out I'll scoop up some more VDE at firesale prices to lower my cost basis.  Might be a while before it bounces back, but I've got a 10+ year time horizon, and the world's energy needs are not about to diminish.

Who says you can't catch a falling knife? 

[Libertarian666]

Who says you can't catch a falling knife? 

I don't think anyone says you can't, just that you shouldn't.

Not that I'm against being a contrarian, of course.

[var]

+1

Yup buy on nice pull backs that said. A few more down days I'll start buying. 
That's why don't even watch CNBC they'll talk PE. China down. Etc.  then at some point
You'll be. In panic.

Also correct me if I am wrong.  Boggle heads don't use TLT.  they rather use diversified bond fund. 
I think TLT is a key pp criteria.

So how will you feel in October 2016 if the shares you buy next week "on the dips" based on gut feel are worth half of what you paid for them?

My guess is, you'll be selling them to me at that time.

I will be fine that's what asset allocations about.  If spy goes down and Tlt will go up.

[var]

My guess.  We get a big nasty drop.  And we go right back up again. 

[MediumTex]

In Aesop's fable of the Tortoise and the Hare, the tortoise wins the race. Sure the hare is confident, faster and flashy. But the Tortoise is disciplined, focused and unfazed by the hare. I liken the PP to the Tortoise.

What is less well known about the story of the tortoise and the hare is that the hare was one of the worst trash talkers in the whole forest racing league and played mind games with his opponents relentlessly.

In the lead up to the race with the hare, it's reported that the tortoise traveled with an entourage of professional greyhound racing dogs, each of whom wore a collar with a rabbit's foot dangling from it.  Prior to the race starting, the tortoise is reported to have said: "I feel like a great chef preparing to make a giant batch of rabbit stew."

During the race, when the tortoise finally passed a mentally and physically exhausted hare gasping for breath, the tortoise is reported to have whispered in his ear: "Don't worry, the dogs will be here soon."

[dualstow]

Hehe, where is that from?

I can't remember. That link is just to photobucket, but if I can find where I posted it a couple of months ago on this forum, it's probably the link to the original, which I will edit in below. First saw it on reddit.

EDIT: I googled

Code: Select all

finance app heisenberg other income

The real link would make your iTunes open with a message that it's available in the UK but not US store, so here's a link to a blurb about it instead:
http://www.blameitonthevoices.com/2015/ ... f-day.html

[var]

I will be fine that's what asset allocations about.  If spy goes down and Tlt will go up.

That's not always the case, though it's been pretty consistent in the past few decades of declining interest rates.  Before that period, the correlations weren't negative, they were closer to zero.

of course.  i checked it out in bogglehead simba spreadsheet. nothing perfect, but its close enough for me...

i dont want over tinker with my AA.

[Jack Jones]

I never sell an investment at a loss.  I have the patience of a saint and can wait years for my bets to pay off.

This is a common speculating mistake that Harry discusses in "Why the Best-Laid Plans...".

[MediumTex]

the moderation staff likes to stay with a traditional post content allocation, and allow the topic to drift within the 15% bands before resorting to re-balancing or ....God forbid... slice and dice thread splitting 

I actually use a newsletter to moderate. 

[Pointedstick]

Welcome to the forum, Mr (Mrs?) blood! I love your user name. Great perspective.

[MediumTex]

Welcome to the forum, Mr (Mrs?) blood! I love your user name. Great perspective.

Yep.

Good stuff from CacklingBloodSlurper.

Strong first post from the latest member of the PP coven.

[dualstow]

I never sell an investment at a loss.  I have the patience of a saint and can wait years for my bets to pay off.

This is a common speculating mistake that Harry discusses in "Why the Best-Laid Plans...".

Thank you for reminding me of this. I found it in the hardcover. In case anyone wants to read along with the class:

Chapter 15
"Other Ways the Best-Laid Plans Go Wrong." p 219: "And a positive mental attitude can cause several bad things. The sense that you're sure to succeed can encourage you to hang on to a losing investment too long, to ignore defects in your strategy..."

p 224 'Going Wrong Avoiding Losses' "One of the qualities of a successful speculator is his readiness to accept losses...To say 'I can't sell because I don't want to lose money' is to hide from the problem. You already have a loss if the investment's value has declined from the price at which you bought. Selling only acknowledges the loss, it doesn't create it. It's true that selling now destroys all hope that the investment could someday be a winner. But keeping the investment makes you a prisoner to it, while selling the investment frees you to buy anything you want."

// end book quote
I struggle with this myself.

----
edited for formatting several times. I really f'ed this up in emacs.

[Reub]

Welcome to the forum, Mr (Mrs?) blood! I love your user name. Great perspective.

Yep.

Good stuff from CacklingBloodSlurper.

Strong first post from the latest member of the PP coven.

mathjak started out strong too!

[MediumTex]

Welcome to the forum, Mr (Mrs?) blood! I love your user name. Great perspective.

Yep.

Good stuff from CacklingBloodSlurper.

Strong first post from the latest member of the PP coven.

mathjak started out strong too!

But he never claimed to drink blood, so that's a big difference right there.

I don't think we've ever had a blood drinker here who turned into a bad citizen.