PP Performance for 2016

General Discussion on the Permanent Portfolio Strategy

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Kbg
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Re: PP Performance for 2016

Post by Kbg » Tue Jan 31, 2017 7:00 am

There is another study at Longboard which shows investors kill their bond returns (and alts) even more than their stock returns as a percentage of total return.

We humans really aren't very well wired for this stuff as a general rule.
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mathjak107
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Re: PP Performance for 2016

Post by mathjak107 » Tue Jan 31, 2017 7:06 am

that is because as modern brain imaging equipment taught us humans hate losing money more than making it . when we look at things hypothetically as opposed to with real money on the line the same parts of the brain are not used .

we are prewired for failure as once the stress of having money potentially at a loss hits us our brain hands us very different flawed information .

it is all in jason zweigs book your money your brain .

in fact the same parts of the brain came in to play when there was the fear of losing money that reacted to watching vomiting or smelling dog poop while being scanned .

the funny thing was the rational part of the brain came back in to play once the actual loss was in place . but the fear of that loss was what caused the poor behavior .

that is why there is really little correlation between poor investor behavior being any less from more conservative models . a loss is a loss to the brain ,big or small . once it goes in to that flawed mode the allocation means little .


some of us are just better at dealing with it .
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ochotona
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Re: PP Performance for 2016

Post by ochotona » Tue Jan 31, 2017 8:28 am

Kbg wrote:There is another study at Longboard which shows investors kill their bond returns (and alts) even more than their stock returns as a percentage of total return.
Sure, because there is an expectation that bonds are "safe". Not really! They are not CDs.
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Re: PP Performance for 2016

Post by dualstow » Tue Jan 31, 2017 11:40 am

TennPaGa wrote:“All of humanity's problems stem from man's inability to sit quietly in a room alone.”
― Blaise Pascal, Pensées
Similar to my current sig, which I chose with passive investing in mind.
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dualstow
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Re: PP Performance for 2016

Post by dualstow » Tue Jan 31, 2017 12:20 pm

Awesome. 8)
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Re: PP Performance for 2016

Post by barrett » Tue Jan 31, 2017 1:33 pm

dualstow wrote:
Similar to my current sig, which I chose with passive investing in mind.
Ha! I thought it was a Chauncey Gardiner quote from the movie Being There!
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Re: PP Performance for 2016

Post by l82start » Tue Jan 31, 2017 1:38 pm

barrett wrote:
dualstow wrote:
Similar to my current sig, which I chose with passive investing in mind.
Ha! I thought it was a Chauncey Gardiner quote from the movie Being There!
so did i....
-Government 2020+ - a BANANA REPUBLIC - if you can keep it

-Belief is the death of intelligence. As soon as one believes a doctrine of any sort, or assumes certitude, one stops thinking about that aspect of existence
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Re: PP Performance for 2016

Post by dualstow » Tue Jan 31, 2017 2:47 pm

O0 You guys are cracking me up! O0
Well, Chauncey had some mastery of zen, even if he was probably unaware of the word.
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Re: PP Performance for 2016

Post by dualstow » Tue Jan 31, 2017 7:35 pm

pressure ---> touchscreen
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Re: PP Performance for 2016

Post by dragoncar » Tue Jan 31, 2017 8:11 pm

Desert wrote:
TennPaGa wrote:
Desert wrote:
That's a great quote. The entire book is worth reading, for anyone interested in science, philosophy or religion.

By the way, I'm guessing Pascal wouldn't have been thrilled with the advent of smart phones!
I dunno... Looks to me like ol' Blaise is staring into his iPad in the avatar of yours. ;)
Yeah, you're right! And here I thought his biggest contribution to technology was inventing pressure. :)

No, it was inventing triangles.
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Re: PP Performance for 2016

Post by EdwardjK » Tue Jan 31, 2017 9:38 pm

I believe the current method to measure the PP performance is not realistic.

A commonly used method is to go to the ETFReplay website and enter the four ETFs (VTI, TLT, GLD & SHY) with equal weights. This assumes that the 25% equal weighting is carried through every day of the year. Since daily rebalancing is not required nor desired by PP adherents, this approach is meaningless. No rational investor rebalances their portfolio daily.

I think the better approach is to assume an equal 25% investment on day one of every year and then track daily performance throughout the year. Here you would only rebalance when any asset falls outside the 15%-35% rebalancing bands, as stated by Harry Browne. The yearend balance is then measured against the starting balance to determine overall return.

I think this is a more meaningful and realistic approach to reporting the annual PP performance.
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Re: PP Performance for 2016

Post by Xan » Tue Jan 31, 2017 10:23 pm

TennPaGa wrote:So he cloned himself 99,999 times and invented... wait for it...

The Bar.
boooooo
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Re: PP Performance for 2016

Post by EdwardjK » Wed Feb 01, 2017 6:26 pm

TennPaGa wrote:FWIW, I think ETF Replay does the calculations as you describe in the second paragraph (i.e. the portfolio composition is set on Day 1, and there is no rebalancing), and *not* as you describe in your first paragraph.

One way to verify is to simply check that the portfolio return is a weighted average of the individual fund returns.
You are correct. Here is a reply to my question to ETFReplay:

"You enter the STARTING weight and then yes, the weights will drift as performance differs between the securities vs the starting amount.

There is a rebalancing option as well for subscribers in a drop-menu on the right."

I stand corrected.
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Re: PP Performance for 2016

Post by geaux saints » Fri Feb 10, 2017 12:53 pm

TennPaGa wrote:
EdwardjK wrote:A commonly used method is to go to the ETFReplay website and enter the four ETFs (VTI, TLT, GLD & SHY) with equal weights. This assumes that the 25% equal weighting is carried through every day of the year. Since daily rebalancing is not required nor desired by PP adherents, this approach is meaningless. No rational investor rebalances their portfolio daily.

I think the better approach is to assume an equal 25% investment on day one of every year and then track daily performance throughout the year. Here you would only rebalance when any asset falls outside the 15%-35% rebalancing bands, as stated by Harry Browne. The yearend balance is then measured against the starting balance to determine overall return.
FWIW, I think ETF Replay does the calculations as you describe in the second paragraph (i.e. the portfolio composition is set on Day 1, and there is no rebalancing), and *not* as you describe in your first paragraph.

One way to verify is to simply check that the portfolio return is a weighted average of the individual fund returns.
Interesting, thanks for the info.
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Re: PP Performance for 2016

Post by LC475 » Mon Feb 13, 2017 9:27 am

Kbg wrote:The PP is not a good grow your assets over the long term portfolio.
Seems pretty good to me!

Very good!

Stupendously good!!

It's been a smashing success during its entire existence, since it was invented. I don't know what else you could ask from a portfolio. Seriously.

Now if you're going to be comparing actually-existing portfolios to imaginary-backtested portfolios.... indeed: ALAS! You shall always be pining for the gains what might have been. :D
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Re: PP Performance for 2016

Post by Libertarian666 » Mon Feb 13, 2017 9:42 am

mathjak107 wrote:I would say if you are in your 20-30's that is young,even 40's today could go 100% equity and have enough growth and recovery time. The real determining factor is your own pucker factor. I ran 100% until about 55 . Retired at 62 and even ran in to 2008 on the way
Only 100% equity? Why limit yourself so?
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Re: PP Performance for 2016

Post by Libertarian666 » Mon Feb 13, 2017 9:44 am

Kbg wrote:My apologies if this has been posted in this thread or else where. Fidelity did a study a few years back on their best performing accounts and they found that the best performing accounts had a couple of characteristics. One, The account holder was found to be deceased. Two, the account holder forgot they had the account.
So we do know how to improve investor psychology!
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Re: PP Performance for 2016

Post by LC475 » Fri Feb 17, 2017 5:26 pm

Libertarian666 wrote:
mathjak107 wrote:I would say if you are in your 20-30's that is young,even 40's today could go 100% equity and have enough growth and recovery time. The real determining factor is your own pucker factor. I ran 100% until about 55 . Retired at 62 and even ran in to 2008 on the way
Only 100% equity? Why limit yourself so?
Indeed! Lame sauce. Get the 3X fund. Obviously.

Stupid conservative investors being stupidly conservative.

Are there any 10X funds around yet? (If not, why not? >:( )
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