PP Performance for 2016

General Discussion on the Permanent Portfolio Strategy

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rickb
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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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I Shrugged
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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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I Shrugged
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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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dualstow
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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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sophie
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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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