PP Performance for 2016

General Discussion on the Permanent Portfolio Strategy

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sophie
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PP Performance for 2016

Post by sophie » Mon Jan 02, 2017 11:13 am

How did you all do investing-wise this year?

Despite the recent market downturns, I was pleasantly surprised by my calculated returns for this year (1/1/16 - 1/1/17). Here's my results:

PP (standard 25x4): 5.88%
TIAA-CREF (a mix of 60% stocks and real estate, and 40% guaranteed income - no bonds): 6.02%
Vanguard (standard 3 fund portfolio with 40% US total market, 10% international, 50% total bond): 6.53%

Edit to answer Desert's question: The PP encompasses my taxable savings plus accounts over which I have full control e.g. Roth IRA and HSA. The other two are typical active employer 403b accounts (read: non PP-friendly). The PP is a little over one third of the total. Yes I would like for more of my savings to be in the PP, but tax deferral is the higher priority.

The PP is slightly underestimated as the interest on about half the cash ends up getting counted in a non-PP bucket, so the true return is closer to 6%. This is a real return of just over 4%, if you accept last month's CPI of 1.7% for the 2016 inflation rate.

And, what's your "investing todo list" for 2017? I think I'd like to pull the TIAA-CREF investments down to 50% stocks/real estate. Also my next gold purchase is going to be through an international depository. The top candidate right now is the Perth Mint certificate program via a US distributor, but I'd prefer the Perth Mint depository program if the minimum has come down from $50K.
Last edited by sophie on Mon Jan 02, 2017 12:12 pm, edited 2 times in total.
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I Shrugged
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Re: PP Performance for 2016

Post by I Shrugged » Mon Jan 02, 2017 12:55 pm

5.4%

25% cash and short bond fund
33% stocks, about 1/3rd intl
25% LT bonds, split between Treasuries, Munis, and others
17% gold

The international has dragged me down a bit over the past 2-3 years, I think. I don't know all the breakdowns.

I've had roughly the same AA, within rebalancing bands, since 2009. Prior to that I was a basic Boglehead, probably 60-40 ish.

Longer term:
3 years 3.1%
5 y 3.2%
10y 3.9%
15y 5.9%
20y 5.8%

Honestly I don't know if those are good, or not. It could be worse, that's for sure.
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Re: PP Performance for 2016

Post by Cortopassi » Mon Jan 02, 2017 1:21 pm

6.17%,

5 EM
5 SCV
25 TSM
25 LTT
25 GOLD
5 SILVER
10 CASH
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drumminj
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Re: PP Performance for 2016

Post by drumminj » Mon Jan 02, 2017 6:33 pm

Huh. Y'all are making me feel worse about my outcome this year :-\ Mine was 2.8% with a pretty much standard 4x25 PP.

I think the difference in outcomes is that I invested another 70% into the PP on top of my starting balance on 1/1/16 (been averaging into the PP over the past 2 years now), buying the lagging asset(s) to try to keep roughly at 4x25. I also record the cost basis for gold as the price paid (for coins), but track value based on spot, so this definitely accounts for some of it as well.

I guess the trick is to "lump sum" into the allocation when it's going to be a positive year or two. If only someone had told me!
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Re: PP Performance for 2016

Post by barrett » Mon Jan 02, 2017 8:15 pm

drumminj wrote:Huh. Y'all are making me feel worse about my outcome this year :-\ Mine was 2.8% with a pretty much standard 4x25 PP.

I think the difference in outcomes is that I invested another 70% into the PP on top of my starting balance on 1/1/16 (been averaging into the PP over the past 2 years now), buying the lagging asset(s) to try to keep roughly at 4x25. I also record the cost basis for gold as the price paid (for coins), but track value based on spot, so this definitely accounts for some of it as well.

I guess the trick is to "lump sum" into the allocation when it's going to be a positive year or two. If only someone had told me!
Certainly if you had money going into the PP in June or July of 2016, you were buying high. peaktotrough.com shows a return of 5.15% for the year so that is a good benchmark. My IRAs, which is the one thing in life that I seem to obsess about, were up 6.56%, but I only hold about 10% cash in there. Looks like the other percentages are roughly 36% in stocks, 27% in gold and 26% in LTTs. My PP is spread out over non-retirement assets as well but I am definitely a bit light on long duration bonds. The IRAs clearly benefited in 2016 from having more stocks and lower bond exposure (my target for the IRAs is 30/30/30/10).

So, to Sophie's question about the 2017 to-do list, I guess I'll rebalance a bit. I also have my IRA "cash" in short-term treasuries and have been thinking that I will use Craig's tweak of moving that to 1-3 year treasuries. That should take care of my urge to tinker.

drumminj, FWIW, I think my wife's PP probably returned close to your numbers. It's mostly made up of IRAs and by the time we get her yearly contributions in, the portfolio seems to have amassed most of it's yearly gains (2014-2016 were all great in the early going). Fortunately she doesn't seem to give a rat's ass how it's doing as long as she is working and making money!
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Re: PP Performance for 2016

Post by drumminj » Mon Jan 02, 2017 8:27 pm

barrett wrote: drumminj, FWIW, I think my wife's PP probably returned close to your numbers. It's mostly made up of IRAs and by the time we get her yearly contributions in, the portfolio seems to have amassed most of it's yearly gains (2014-2016 were all great in the early going). Fortunately she doesn't seem to give a rat's ass how it's doing as long as she is working and making money!
Thanks for the comments. Yeah, I don't feel bad about it overall -- without the PP I likely wouldn't have much exposure to stocks, so I definitely did better this year than I would have "on my own". Plus, the money I'm moving into the PP is largely from a one-time stock windfall (company IPO), so I'm doing all right O0

I think the toughest part has been watching the big gains we had earlier this year evaporate...

No big 2017 TODOs on my plate. Staying the course, though perhaps also moving to slightly longer-term treasuries for my 'cash' (I already have cash in a mix of STT's, CDs, and a high-yield savings account).
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Re: PP Performance for 2016

Post by Kbg » Mon Jan 02, 2017 10:07 pm

If anyone is interested, the performance of more aggressive versions of the PP (read leveraged) can be found in the VP section in the 20% returns for 40 years thread. I also did a good, bad, ugly 2016 EOY write-up and have posted my personal results after 3 years of live.
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Re: PP Performance for 2016

Post by mathjak107 » Tue Jan 03, 2017 3:18 am

the golden butterfly ,which at least makes more sense to me than the pp clocked in for 2016 with a 10.67% gain despite the drop in gold and LT'S .

that is very good results ,because small cap value was insane .

there is no hiding from volatility anymore in any models . someone who decided to try the pp after brexit saw insane volatility as the portfolio whacked them with relatively heavy losses for the pp for 2016.
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Re: PP Performance for 2016

Post by I Shrugged » Tue Jan 03, 2017 8:14 am

drumminj wrote:Huh. Y'all are making me feel worse about my outcome this year :-\ Mine was 2.8% with a pretty much standard 4x25 PP.

I think the difference in outcomes is that I invested another 70% into the PP on top of my starting balance on 1/1/16 (been averaging into the PP over the past 2 years now), buying the lagging asset(s) to try to keep roughly at 4x25. I also record the cost basis for gold as the price paid (for coins), but track value based on spot, so this definitely accounts for some of it as well.

I guess the trick is to "lump sum" into the allocation when it's going to be a positive year or two. If only someone had told me!
Yeah I was up 10% or more in mid-year, then fell back to 5%, so your averaging worked against you. But I like averaging in.
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Re: PP Performance for 2016

Post by sophie » Tue Jan 03, 2017 8:50 am

drumminj wrote:Huh. Y'all are making me feel worse about my outcome this year :-\ Mine was 2.8% with a pretty much standard 4x25 PP.

I think the difference in outcomes is that I invested another 70% into the PP on top of my starting balance on 1/1/16 (been averaging into the PP over the past 2 years now), buying the lagging asset(s) to try to keep roughly at 4x25. I also record the cost basis for gold as the price paid (for coins), but track value based on spot, so this definitely accounts for some of it as well.

I guess the trick is to "lump sum" into the allocation when it's going to be a positive year or two. If only someone had told me!
It might be that you bought in at the high points, but still that doesn't sound feasible if you played an agnostic lagging asset strategy. Check your math? Also, I use bid prices for the gold coins I hold from the company I bought from (Colorado Gold) to determine their value, not spot gold. That's a few percent difference right there.

I imagine PointedStick is pretty happy with the small cap value tear as well. That's quite a boost for the Golden Butterfly.
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Re: PP Performance for 2016

Post by dualstow » Tue Jan 03, 2017 10:12 am

I don't know how to calculate the real performance of my holdings because of little purchases, sales and reinvestments. Micropurchases?
I can tell that I did well in stocks, lost a ton of value in long bonds (unrealized profit), and a bit in gold. But, my spreadsheet shows an overall profit and I'm not too worried about the specifics.
And, what's your "investing todo list" for 2017?
It has been easy for me to adhere to rebalancing bands, but I struggle with the dilemma of whether or not to make the pp a larger share of my total. If I do that, I have to buy a lot more gold. Expanding might be an excuse in the back of my mind to load up on gold, a way of tinkering and telling myself that I'm not.

Then come the voices that say gold might stay down for my lifetime.

I do like the idea of putting more in the pp while it's unpopular and stocks are beloved.

Finally, I have flirted with the idea of using Citadel storage, a subsidiary of APMEX, my most recent dealer. I think I feel better just holding my own gold, though, and keeping all but a single coin in a bank safe deposit box.

I suppose I only have a To Don't list, and that has but one item: don't do anything drastic.
RIP Marcello Gandini
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Re: PP Performance for 2016

Post by rickb » Tue Jan 03, 2017 10:33 am

I track a theoretical PP consisting of 25% each SHY/TLT/GLD/VTI rebalanced monthly (for benchmarking purposes). I get 5.71% for the year for this.

My actual PP (90% of total assets) returned about 5.92%.

My "to do" list is (actually was since I've done this) to pay slightly more attention to the cash portion. I had set up a ladder of 2-year treasuries with most of the cash portion but lazily let these mature into a brokerage MM paying about 0%. As a result, my cash return has lagged SHY by about half (0.35% as opposed to SHY's 0.82%). I've recreated my 2-year ladder.
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Re: PP Performance for 2016

Post by I Shrugged » Tue Jan 03, 2017 12:34 pm

dualstow,

You can do what Vanguard does. They assume the net in and out flows happened on June 30. I figured that out through reverse engineering.

So using a spreadsheet's IRR function:

1. 01 Jan 2016 balance 01/01/2016 $10000
2. negative of same 01/01/2016 -10000
3. Out (-In) 06/30/2016 -500 (In in this case)
4. 01 Jan 2017 balance 01/01/2017 11000 IRR = 4.86%

IRR formula uses the dates in 2nd column and the values in lines 2-4.
You can just copy those 3 lines over and over as years go by, to the next line, then advance the dates, and input the last two lines' values.
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Re: PP Performance for 2016

Post by I Shrugged » Tue Jan 03, 2017 12:37 pm

My to do list is to buy more stocks after they crash. :)
In the mean time, to buy more gold.
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Re: PP Performance for 2016

Post by dualstow » Tue Jan 03, 2017 12:40 pm

Thanks, Shrugged.

I have developed an even simpler method. I merely monitor threads like this. O0
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Re: PP Performance for 2016

Post by Cortopassi » Tue Jan 03, 2017 2:12 pm

Just finished rebalancing. Lowered cash to very near my 10% target, and otherwise generally sold stock and bought TLT/GLD/SLV with the proceeds to get everything aligned.

Been a good first day of trading for sure, up half a percent! Better than down!
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Re: PP Performance for 2016

Post by dragoncar » Tue Jan 03, 2017 6:19 pm

I mostly use a PP (last year included some 2xPP), but this is IRR of my entire net worth and savings, so it includes some other returns over my entire assets (real estate, cash on hand, etc.).

1 YR - 9.3%
3 YR - 4.8%
5 YR - 5.6%
"lifetime" 4.6%

(CAGR) - it was up to something like 8% lifetime earlier this year. Recent losses really affect my lifetime CAGR I guess.

So overall, not great, but not terrible. I can live with the 5-YR in low inflation, but not if inflation picks up.

lifetime returns are probably about on par with average investors
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Re: PP Performance for 2016

Post by drumminj » Tue Jan 03, 2017 9:15 pm

sophie wrote: It might be that you bought in at the high points, but still that doesn't sound feasible if you played an agnostic lagging asset strategy. Check your math? Also, I use bid prices for the gold coins I hold from the company I bought from (Colorado Gold) to determine their value, not spot gold. That's a few percent difference right there.
It's very possible there's an error in my accounting somewhere. My first pass at sanity-checking hasn't found anything, but I need to look at it over time, rather than just the year-end numbers for further validation. That said, if I look at money moving into the PP in from 7/1 on, it's pretty much (~95%) 30-year bonds and gold, both of which are down ~15% in that time frame. So I would definitely expect that to drag on the yearly returns.

As far as the markup on coins, it looks like APMEX's buy price on Kruggerands is $10 above spot. I think I'll start valuing based on that this year, though I don't expect that will make a huge difference.
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Re: PP Performance for 2016

Post by sophie » Wed Jan 04, 2017 8:04 am

dualstow wrote: I suppose I only have a To Don't list, and that has but one item: don't do anything drastic.
Dualstow's Rule #1? I like it!
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Re: PP Performance for 2016

Post by barrett » Wed Jan 04, 2017 8:32 am

rickb wrote:My "to do" list is (actually was since I've done this) to pay slightly more attention to the cash portion. I had set up a ladder of 2-year treasuries with most of the cash portion but lazily let these mature into a brokerage MM paying about 0%. As a result, my cash return has lagged SHY by about half (0.35% as opposed to SHY's 0.82%). I've recreated my 2-year ladder.
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. Are you working with a range of, say, one to three years? Also, is this with Fidelity? I am just wondering about any expenses incurred. Looks like SHY has an expense ratio of .15 which I'd like to avoid on cash. Thanks!
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Re: PP Performance for 2016

Post by dualstow » Wed Jan 04, 2017 8:40 am

barrett wrote:Are you working with a range of, say, one to three years?
If he's using 2-year treasuries, range must be 0 or 1 to 2 years, right Rick?
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Re: PP Performance for 2016

Post by rickb » Wed Jan 04, 2017 11:23 am

barrett wrote: 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. Are you working with a range of, say, one to three years? Also, is this with Fidelity? I am just wondering about any expenses incurred. Looks like SHY has an expense ratio of .15 which I'd like to avoid on cash. Thanks!
It's with Fidelity. I have 1/8 of the total amount in the ladder in bonds/bills that mature every 3 months. To set it up I just bought this amount of after market Treasuries with maturities at +3 months, +6 months, +9 months, etc. As these mature I'll buy new issue 2-year Treasuries. This means I'll have to issue a buy order every 3 months (this is the step I lazily skipped before - which means the ladder then ends up your brokerage settlement account).

I think Fidelity will actually do this for you if you want. They have an automatic rollover feature where they'll reinvest maturing bonds in something "similar". If anyone's used this (specifically for short term Treasuries), please speak up.
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Re: PP Performance for 2016

Post by barrett » Wed Jan 04, 2017 7:57 pm

rickb wrote:I think Fidelity will actually do this for you if you want. They have an automatic rollover feature where they'll reinvest maturing bonds in something "similar". If anyone's used this (specifically for short term Treasuries), please speak up.
I was told today by a fixed income guy at Fido that it can be set up in a taxable account but not in an IRA. Also, you apparently have to manage a two-year ladder yourself until you get to the point where you are actually holding all two-year bills. Once you have a ladder that contains all two year bills, it can be set to automatically rollover.
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Re: PP Performance for 2016

Post by Ugly_Bird » Wed Jan 04, 2017 9:02 pm

sophie wrote:How did you all do investing-wise this year?
PP (standard 25x4): 5.88%
I guess SigFig is rounding the hundredth and shows 5.9% for my PP (25x4)
Part of the stocks and bonds form PP are in Vanguard IRA.
It is somewhat Bogleheadish: 31%Stocks and 69% LTTs. In 2016 it performed to 4.7%

Andrei.
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Re: PP Performance for 2016

Post by Tyler » Wed Jan 04, 2017 11:41 pm

Although the inflation numbers are only through November so it isn't quite final, I finally have official returns numbers through 2016. For reporting purposes on the site, it looks like the PP made 3.96% real.
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