clacy wrote:"Why should ______ continue to go up?"
You can substitute many things for PP in that questions..... Real estate, 60/40, any number of lazy portfolios, farm land, silver, muni bonds, etc, etc.
Unfortunately no one can ever answer these with certainty.
My belief is that balanced portfolios stand the test of time better than going all in on one asset class. And I happen to think that the PP tends to be the best situated of all the standard balanced/lazy portfolios.
So with that said, a better question is what asset allocation do you think will outperform it in the next 5 years?
Reality check: we don't invest in the PP because we believe it's gonna deliver superior returns. We invest in it in order to shield us from massive losses in case we're wrong. Even holding cash could lead to massive losses if we get hyperinflation (like the double digit inflation rates of the late 70s and early 80s.) Back in the beginning of 2013, I had a strong intuition that stocks were gonna be the winner that year and I was right, but I had chosen the PP which lost 3% vs stocks which gained 30%. On the other hand, Gold and Bonds both lost around 20% and had I picked the wrong asset, I could have been staring at those losses instead of the mere -3%.
The purpose of the PP, as stated by Harry Browne, is to protect the purchasing power of your assets, not to deliver superior real returns, without knowing what the future holds. So far, it seems to be doing its job well, but if you're still not satisfied with the returns you're getting, there's always the VP.