PP Performance for 2016

[buddtholomew]

C'mon budd, you've been here long enough to know the drill; 3 steps forward, 2.88 steps back.

Oh I know the drill well...

[Mr Vacuum]

Thanks, Shrugged.

I have developed an even simpler method. I merely monitor threads like this.

Fiddling with XIRR is good, clean fun because your asset allocation and trades are off the table. All that counts are your start and end values and dates and amounts of contributions of withdrawals. The main temptation in looking at it is to contribute more money. (Please follow your personal family budget change process before doing this.)

I find it worthwhile to track inflows and outflows in one place, regardless. Then if you already have something set up to update prices, the XIRR calculation takes care of itself and you have your very own number. I download and import a Fidelity portfolio positions csv file when I want to check. That combined with automatic spot gold price updates is about the right amount of hassle for me to check easily but not constantly.

[ozzy]

Hi All,

For 2016 my "Juicy" Permanent Portfolio returned 9.69%. My sloppy website: http://www.tightwadweb.com/customportfolio.html

Make America Great Again!

[barrett]

For 2016 my "Juicy" Permanent Portfolio returned 9.69%. My sloppy website: http://www.tightwadweb.com/customportfolio.html

Thanks for posting, Ozzy. For those who don't go to the website (which is not as sloppy as Ozzy claims!), here's the asset breakdown:

30% LTTs
15% Gold (IAU)
55% Stocks
No Cash

Stocks are broken down as follows:

15% TSM
15% Mid-Cap
10% Small-Cap
15% Intl. Small-Cap

[thisisallen]

Wouldn't including Cash bring the CGAR in the Juicy Portfolio more in line with the traditional 4X25?

[Thomas Hoog]

It sounds like Gerard is holding a USD PP, and that some of the return this past year was the dollar increasing against the euro.

That worked out well this year, but you've taken on some currency risk that may not be necessary. The gold component is enough currency risk, since its price in local currency will reflect its value (high or low). I can understand wanting to hold US Treasuries rather than German long bonds, but are you also holding the cash allocation in dollars?

In my own portfeuille:
Equities are maybe 30 % $ based / 70 % € based
LT bonds are 25 % $ based / 75 % € based
Gold is 50 % $ based / 50 € based
Cash is 100 % € based.

The benchmark Euro standard PP portfeuille is 100 % € based.

[KevinW]

Most of our funds are in plain 4x25 PPs, so those were in the ballpark of the 5.88% Sophie cited. DW also has a PRPFX holding which, I see, was up about 9% in 2016.

No plans to do anything different in 2017; we'll just keep chipping in and rebalancing as needed.

[Cortopassi]

From Saxo Bank/Steen Jakobsen



https://mishtalk.com/2017/01/10/steen-j ... ties-gold/

Looks like his standard allocation is a PP, and he is varying greatly for 2017/Trump.

[buddtholomew]

From Saxo Bank/Steen Jakobsen



https://mishtalk.com/2017/01/10/steen-j ... ties-gold/

Looks like his standard allocation is a PP, and he is varying greatly for 2017/Trump.

Cortopassi, the only difference I see is -5% for equities and + 5% for commodities. 50% in fixed income is the same as 25% fixed income, 25% cash.

[I Shrugged]

He must be saying to use the cash to invest in bonds, on which he must be very bullish.

[buddtholomew]

It's all about duration.

[Cortopassi]

I thought it was just interesting with so many out there saying the bond bull is dead and gold is going nowhere, that you are always able to find differing opinions.

[mathjak107]

the world changes all the time .

last year at this time all the building blocks were in place for a good stock market year . rates were still coming down , corporate profit estimates were lowered so company's were going to find it easier to meet or exceed their numbers and we had a lower stock market from temporary black swan events .

all in all equity's were a good place to be , this year is a lot tougher as rates are rising and the economy is stronger . market moves are never really great when company's are doing better , markets move up when the perception of the future is they will do better .

so having said that , stocks are counting on trump's plans to perform .

odds are the sell off in gold and bonds was way over done and as some of trumps plans work others will not so my feeling is we will not get the inflation and soaring bond rates anticipated ,especially because of the condition of the rest of the world .

so while i thought equity's should be the lead horse last year ,which they were , this year i think will be different .

so since the sell off in gold and long term bonds i have added a position back in , which so far is up nicely and hopefully will continue to do nicely .

so strategy's change as the big picture changes and that is why opinions vary . i am still not a fan of the pp but the gb does make a whole lot more sense to me .

[mathjak107]

as far as the relationship between corporate profits and market moves :

gains and corporate profits dont flow together more often than not.

in the book a random walk down wall street 548 nyse issues were tracked and analyed over 5 year periods and the results were the performance had no relationship between the technical and fundamental signals and the actual stock performance ..

ned davis research took another look at the relationship and going as far back as 1927 they found when profits rose more than


20% the s&p returned a mere 1.3% in gains

10 to 20% saw 5.8% in gains

(-10% to + 10% in profits saw a 9.3% jump in gains

(-10%) to (-25%) drop in profits saw 28.6% gains

(-25%) and lower saw a -28% drop in share price.

[Cortopassi]

Quite a similar start to the PP compared to last year, gold and bonds rising and stocks taking a breather. No complaints.

[barrett]

Back to the point earlier in the thread about unlucky PP entry timing... Both my wife and I opened TD Ameritrade accounts back in March or so of 2014 for our Solo 401(k)s and our Solo 401(k) Roths. The money was almost all invested after early-in-the-year runups in the PP. Because our overall PP is spread out over several accounts, these accounts are roughly 40% SPY, 35% TLT, 15% IAU and 10% Cash. Total return over that time works out to be about .2%. We've made a couple hundred bucks on about $110,000. Ouch! Fortunately our timing hasn't always been so bad and most of our other investments have done better.

We are both self-employed people and just tend to throw whatever we can in retirement accounts around March when we are doing our taxes. Obviously three years is not a super long time frame, but this certainly demonstrates how important one's entry point is. And hopefully I've given a few people their daily dose of Schadenfreude!

[mathjak107]

traditionally markets tend to spend about 2/3's of the time up over our long term investing time frames and down only 1/3 . so weighting for prosperity makes the most sense .

the gb makes far greater sense to me than the pp . yeah , those small caps will get hit hard in a downturn along with the equity's but along with it likely other assets will do fine and just the fact that the odds of being up are more likely over your long term investing time frame says the outcome will likely be better despite the greater weighting in to stocks . .

as peter lynch said 30 years ago "more money has been lost preparing for downturns and in anticipation of downturns than has been lost in any downturns in this country . it still has been pretty true .

[Mr Vacuum]

Ouch, that an unpleasant "period of underperformance." I started around the same time but returned 2.5% in 2014-2016 (including the first four months of 2014 in 80% stocks, which were mostly flat). 2015 wasn't pleasant, but at least it came back.

You also missed a chunk of early 2016 gold run-up by contributing later in the year at tax time. I suspect that bit plus your overall lower gold allocation in that spread accounts for lower performance over that particular time period. Not only does the start time matter but also the sequence of all the moves within the time. I also lost a surprising amount of 2016 run-up by being incidentally cash heavy at the beginning of the year.

[sophie]

Sorry about the bad timing barrett. It's a risk whenever you plow a single large contribution into any investment portfolio. If you have more to invest, why not spread it out over several contributions to minimize the chances of that happening again?

"Dollar cost averaging" from cash overall doesn't win over lump sum investing on average, but it will protect you from these discouraging situations.

[dualstow]

heads up, rickb

I know the schedule does not always dovetail with Fidelity's, but I see 2-year notes as well as other notes and bills for sale at auction at Vanguard. If they're not available at Fidelity, they should be soon.

Hey rickb, Can you please explain how you are doing your treasury ladder? When I think of laddering, I always think of having CDs or treasuries with different maturities. A
...

...
As these mature I'll buy new issue 2-year Treasuries.
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[barrett]

Sorry about the bad timing barrett.

Shall we call this Sequence Of Contributions Risk?

[dualstow]

That sucks, Barrett, but take a look at those yahoo finance threads where people invested their 401(k)'s in the company that was going to make sapphire screens for Apple. Apple stuck with gorilla glass, and the stock was toast. Your wealth is preserved, and it *will* grow.

[mathjak107]

anytime you bet on one company and the whims of that one company whether you work there or not i consider that speculating , not investing . i don't care if the company was general motors .

accepting the returns the collective markets give you without the whims of anyone company is in my opinon "investing "

until you own enough individual stocks to make individual company risk go away i call that speculating .

[Kbg]

The PPs performance profile is easily detectable with just a bit of historical data review and the last 5 years have been particularly poor. The performance gap will close during the next bear market and will lag during a bull market.

The PP is not a good grow your assets over the long term portfolio. There is no risk premia in 50% of the portfolio. I categorically do not recommend it for younger people (unless you leverage it and know how to do that properly).

[mathjak107]

Personally i much prefer the golden butterfly . I think it models more typically what happens over time which is markets are up 2/3's of the time and down only 1/3 over long periods of time.

I never saw the logic in betting the same amount of money on anything but equal chances of outcomes.

I think the gb can give good growth where the mix of alternative portfolios are not 100% equity