Scott Burns' Co on the PP

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pugchief
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Scott Burns' Co on the PP

Post by pugchief » Mon Jul 11, 2016 9:52 pm

Written by Burn's colleague Andrew Hallam, the article give kudos to Craigr and MT [although refers to Craig as Greg] on their 'excellent' book and the PP concept, but then shows how return suffers in the name of stability.

https://assetbuilder.com/knowledge-cent ... go-haywire
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Re: Scott Burns' Co on the PP

Post by Xan » Mon Jul 11, 2016 10:32 pm

The article seems to be entirely about a single 30-year period. This guy badly needs to visit Tyler's site.
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Re: Scott Burns' Co on the PP

Post by Kbg » Tue Jul 12, 2016 12:39 am

It's true and is exactly why I go with a leveraged PP.
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Re: Scott Burns' Co on the PP

Post by MachineGhost » Tue Jul 12, 2016 12:57 am

Xan wrote:The article seems to be entirely about a single 30-year period. This guy badly needs to visit Tyler's site.
The stagflationary 70's didn't happen for everyone. Essentially, the Baby Boomers have been driving the market consistently upwards into Overvaluation Nirvana since 401K funds became practical in 1989. The problem is the normal investing horizon is far too short to prioritize tank-like safety ala the PP to reach investment goals, unless you're already got a high paying job that makes saving have more than a marginal future impact or you already have a lot of financial assets.

As a Gen Xer, I'm very acutely aware of the irreparable damage that the absolutely spoiled Baby Boomers have done and continue to do to the U.S. economy and political system. Their greedy gains over the past 27 years is my permanent loss of capital risk. It's a very dangerous time right now as we zoom closer and closer to The Great Unwinding.

I really don't know what is going to happen to the "all weather" concept, but when you have 50% of the portfolio returning cash-like returns but with orders of a magnitude more risk, it doesn't really make rational sense to be in anything other than cash and gold. Short term gains are irrelevant because its how much you ultimately keep and not make in the interim while everyone is still partying it up. Recall, the PP had a -25% maximum drawdown in 1981 on "Fight Inflation" ballyhoo and the situation is now far beyond that in terms of destructive potential.

Did I just talk myself out of the PP again? ::) I guess the real problem at this point is there's just not enough assets to invest in that are priced to deliver long-term returns to justify taking the risk. It's very frustrating.
"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!
barrett
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Re: Scott Burns' Co on the PP

Post by barrett » Tue Jul 12, 2016 6:03 am

pugchief wrote:Written by Burn's colleague Andrew Hallam, the article give kudos to Craigr and MT [although refers to Craig as Greg] on their 'excellent' book and the PP concept, but then shows how return suffers in the name of stability.

https://assetbuilder.com/knowledge-cent ... go-haywire
Yeah, good ol' Greg Rowland. Damn financial writers and their lack of attention to detail. If stocks repeat their performance from 1987 to present (or 1982 to present) for the next 30 years, then, yes, a heavy bet on stocks will have delivered a superior return. But the PP isn't built on the hope that the economy will grow evenly and forever. In fact apathy seems to be the best emotion for a PP'er.

As usual, no reference to real returns. In real terms the PP has had 28 winning years and 13 losing years since 1975 (the latest date that everyone seems to agree on as a fair starting point for gold). So roughly one year in three is a down year. What attracts most of us, I think, is that it has tended to not stay down for long periods.

Agree with MG that assets are pricey but for me that's all the more reason to diversify across asset classes. The PP is for stability and moderate real growth. I don't think it's a coincidence that Harry Browne's #1 rule is that "Your career provides your wealth." And number two is, "Don't assume you can replace your wealth."

Work hard, save and take a balanced approach with your investments. Everything else is just tweaking around the edges. Now, if you'll all excuse me, I have to go obsess about my portfolio.
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Re: Scott Burns' Co on the PP

Post by Kbg » Tue Jul 12, 2016 10:46 am

MG,

I have one small quibble on your DD stats for 1981...the hellaciously good returns the two years before. What was the max intraday DD not counting 1981?
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Re: Scott Burns' Co on the PP

Post by jason » Tue Jul 12, 2016 1:41 pm

I'm not sure it's really fair to compare the returns of a 60/40 portfolio (without cash) to the PP when cash is yielding around zero. Has anyone run numbers on a 33.3/33.3/33.3 PP without cash (maybe there is an existing thread on this forum about this)? I'm also curious about what the optimal re-balancing bands would be for that.
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Re: Scott Burns' Co on the PP

Post by Tyler » Tue Jul 12, 2016 3:15 pm

Xan wrote:The article seems to be entirely about a single 30-year period. This guy badly needs to visit Tyler's site.
No kidding. Picking a single particularly favorable start date to "prove" a financial point is so passé. ;)
Mechanical engineer, history buff, treasure manager... totally not Ben Gates
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Re: Scott Burns' Co on the PP

Post by Kbg » Tue Jul 12, 2016 3:54 pm

jason wrote:I'm not sure it's really fair to compare the returns of a 60/40 portfolio (without cash) to the PP when cash is yielding around zero. Has anyone run numbers on a 33.3/33.3/33.3 PP without cash (maybe there is an existing thread on this forum about this)? I'm also curious about what the optimal re-balancing bands would be for that.
From 2005 to yesterday using ETFs...9.63 CAGR/-19.47 Max DD
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Re: Scott Burns' Co on the PP

Post by curlew » Tue Jul 12, 2016 4:15 pm

MachineGhost wrote:
Xan wrote: As a Gen Xer, I'm very acutely aware of the irreparable damage that the absolutely spoiled Baby Boomers have done and continue to do to the U.S. economy and political system. Their greedy gains over the past 27 years is my permanent loss of capital risk.
Well, since you're not greedy for gains like we were everything should be all right then.
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Re: Scott Burns' Co on the PP

Post by jason » Tue Jul 12, 2016 4:16 pm

Kbg wrote:
jason wrote:I'm not sure it's really fair to compare the returns of a 60/40 portfolio (without cash) to the PP when cash is yielding around zero. Has anyone run numbers on a 33.3/33.3/33.3 PP without cash (maybe there is an existing thread on this forum about this)? I'm also curious about what the optimal re-balancing bands would be for that.
From 2005 to yesterday using ETFs...9.63 CAGR/-19.47 Max DD
Thanks! Where did you get that figure? How does it compare to a regular PP with cash? What re-balance rules did you use? I'd be interested to see it going all the way back to 1972. It can be done with peaktrough, but re-balancing options are limited. Perhaps 43/23 or 40/20 would work well?
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Re: Scott Burns' Co on the PP

Post by curlew » Tue Jul 12, 2016 4:16 pm

MachineGhost wrote: As a Gen Xer, I'm very acutely aware of the irreparable damage that the absolutely spoiled Baby Boomers have done and continue to do to the U.S. economy and political system. Their greedy gains over the past 27 years is my permanent loss of capital risk.
Well, since you're not greedy for gains like we were everything should be all right then.
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