Question for original forum members

General Discussion on the Permanent Portfolio Strategy

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BearBones
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Question for original forum members

Post by BearBones » Mon Mar 13, 2017 5:49 pm

I am wondering if some/many of the original high volume contributors have changed their perspective on the PP over the past few years.

So very specific question for those members (such as CraigR, MT, Gumby, Moda, Dualstow, Doodle, Stone, etc) that joined before 2013 AND have more than 1000 posts (i.e., the earliest active members):

1. About what % of your investments are still in the PP, if any?
2. Have you changed your portfolio over the past several years, given the favorable performance of the stock market and/or the recent change in interest rates?
3. If so, what do you favor?

Thanks!
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Re: Question for original forum members

Post by pugchief » Mon Mar 13, 2017 8:29 pm

Member since 2012 and almost 2000 posts, so I guess i qualify.

Over 90% is in a modified PP [35% stocks, 15% gold, 25% LTT, 25% cash] and as I sell off holdings in my VP, The proceeds go into the PP. I plan to eventually phase out most of the VP over time. I haven't really changed the portfolio much, other than the phase out of VP.
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l82start
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Re: Question for original forum members

Post by l82start » Mon Mar 13, 2017 9:26 pm

early member, still in traditional 4x25 pp, it took me a couple years to transition fully from boglehead portfolio to pp and from TLT to holding long bonds, i picked up a small dab of EDV along the way but not really enough to effect performance, took a couple hundred buck bet on junior gold miners as a VP (no wins there yet) and just recently picked some small cap in a new 401k that has lousy options and not much accumulation power.. so basically buy and hold set it and forget it PP investor.. no change of perspective
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Re: Question for original forum members

Post by Pointedstick » Mon Mar 13, 2017 9:31 pm

Joined in 2012, so I guess I count.

1. Roughly 50% pure PP.
2. Yes, if I had to start all over I would probably go with the Golden Butterfly portfolio where possible. 25% stock exposure in the standard PP is and has always been too low for my tastes. 40-50% is just right for me. Nothing wrong with the regular PP; it just doesn't suit my risk tolerance as well as the GB does.
3. Tax-deferred accounts without easy access to commission-free gold are in 100% Vanguard Wellington. The remainder is GB.

The next time the stock market collapses, I plan to convert the remaining PP into GB during the rebalance.
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Re: Question for original forum members

Post by sophie » Tue Mar 14, 2017 12:10 am

Also joined in 2012....wow, it's been that long?

1. 40% in the 25x4 PP. The other 60% is in employer retirement plans with no access to gold. These are divided between TIAA-CREF (about 40% stocks & real estate, the remainder in TIAA Guaranteed) and Vanguard, with a three-fund Boglehead portfolio set at 50% stocks.
2. No major changes, just tweaks. I stopped buying US savings bonds a few years back, and have been socking taxable cash in an online savings account getting 1% interest. I took advantage of 2013 to tax loss harvest GTU and buy physical gold. Recently I set up monthly equal contributions to all four assets.

EDIT: Like Tenn, I started out trying to make my retirement accounts part of the PP. With no access to gold, that became impossible to maintain and in 2013 I gave up. My PP is spread across multiple accounts (taxable, HSA, Roth etc) but all of them are completely under my control.
3. I favor not using the PP as an active/momentum investing vehicle. Thinking about the Golden Butterfly also, but I sort of effectively have one with the Vanguard 403b. When it comes time to move money out of that account I might switch to GB.
Last edited by sophie on Tue Mar 14, 2017 7:45 am, edited 1 time in total.
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Desert
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Re: Question for original forum members

Post by Desert » Tue Mar 14, 2017 12:52 am

I think there's a great sweet spot for low volatility at approximately 25-30 percent equity, with the remainder in a mix of fixed income and gold. But 40% equity appears to be perhaps the best choice for long-term investors that can handle some volatility (10 percent drawdowns). And if one can stomach the tracking error, tiling to SCV and/or EM has historically been a good bet.

I'm currently at about 33% equity, 10% gold, with the remainder largely in 5-year CD's and a slice of LTT. My equity is split between TSM, SCV, EM and a bit of mid cap blend. From a distance, my portfolio closely resembles a "Larry portfolio," except for the gold slice. I don't really like the gold, but it's the one physical asset I hold, and it hasn't historically harmed the performance much.

I believe strongly in looking at one's total asset allocation, across all accounts. One's net worth will grow and fluctuate in response to that total allocation. This is a pretty obvious point, but one that brings some disagreement on this forum. Also, I think assets can be managed optimally with that view: holding high yield investments in tax-deferred accounts, gold in taxable, etc.

I think the PP, GB and other gold-heavy past return calculations need to be examined with a critical eye. The gold/dollar peg was removed in '72, and private gold ownership was legalized in '75. The resulting dollar/gold valuation reset in the 70's was dramatic, finally ending in a speculative gold bubble. The gold highs seen in 1980 weren't seen again (in real terms) for two decades. The likelihood of any real human holding onto a large allocation in gold during that period is small. Especially during the 90's, when stocks were soaring and gold was doing nothing.

When I talk to new or uneducated investors with a low risk tolerance, I start by talking about a 30/70 portfolio. It's conservative, but has provided decent returns. It represents the "efficient frontier" over the past 4+ decades. Some investors will be willing to add the gold insurance and diversification with a 10 percent allocation to gold. More adventurous types with an understanding of minimizing fat tails in the expected distribution of returns might tilt to higher ER assets in the 30% equity portion, while maintaining the large allocation to FI/gold. Finally, if one can handle some larger draw-downs and is investing over a muti-decade period, the 40% equity allocation, tilted to higher ER assets, has provided wonderful returns with still reasonable draw-downs (GB is a great example).

One last point: Don't let politics affect your risk tolerance. Some Obama haters missed out on one of the greatest bull markets in equities. On a smaller scale, Trump haters could have missed out on the recent equity rally. Swedroe just posted a good article on this topic:
http://www.etf.com/sections/index-inves ... -investing
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Re: Question for original forum members

Post by TennPaGa » Tue Mar 14, 2017 7:20 am

I started investing in the PP (and found this forum) back in mid-2011. At that time, I went 100% in the PP. However, my savings was roughly split 40/60 between a rollover IRA (where I could invest in ETFs, and thus gold) and my employer's 401k (where I could not invest in ETFs, so no gold). For about 2 years, I tried to maintain 100% PP across both vehicles. Rebalancing eventually became too complicated.

At that point, I decided to make my rollover IRA a PP, and do something different with my 401k.

Also, since that time, I've been able to build up significant (well, for me at least) savings in my after tax accounts. This money is with Vanguard, and thus I could make this a PP. However, I have consciously chosen not to do so. Most of this savings has been built up by automatic monthly contributions. With Vanguard, I can assign my contributions to automatically go into mutual funds, but not into ETF's. Psychologically, I like the automatic investment. I would not like having to build up cash and then periodically (and manually) invest in the PP ETF's.

Overall (i.e. considering both tax advantaged and non-advantaged accounts), I have about 15% of my savings in a PP. The remaining 85% is split 55/45 between equity mutual funds (S&P500 heavy) and Wellesley.
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Re: Question for original forum members

Post by dualstow » Tue Mar 14, 2017 10:01 am

Hi Bear. You should reinstall your avatar when you get a chance. I miss it.

I do wonder about some of the early members like Wonk, gizmo-rat, 6 iron, WildAboutHarry, et al who seldom post now, or not at all. I want to know if they moved to a different strategy or just got tired of the forum, as the portfolio mostly runs itself.

1. Still 35% pp.
2 & 3: Since vp+pp is still 50% in stocks, I have been able not to do anything too crazy.
Gold remains the one creature I grapple with. Even if I don't tinker too much, I have changed my outlook many times about whether or not I should go 100% pp. I can keep telling myself that the gold will be a fine thing to pass on to relatives if it doesn't surge in value in my lifetime (I'm in my forties). But, if that's the way I feel about this asset, am I ready to put 25% into it? Maybe not.

A recent Vanguard blog entry says
Our asset class forecasts, anchored on a future of 2% growth, assign the highest probabilities to:

Global bond market returns of 2.5%–3% over the next decade.
Global equity returns of 6%–8% over the next decade.
The U.S. stock market is giddier, suggesting a different economic future.
- I have no regrets about moving toward a pp so far, even though my stock-heavy portfolio would have made me richer at this point. Who knows if I would have stuck with it? Well, I didn't stick with it. O0 I'm comfortable where I am.
- A surge in gold is still a possibility, and maintaining this % in the pp is good enough. I won't look back and question why I didn't go all in. More than one road to doublin'.
- It's natural to be attracted to whatever asset is doing great right now. When the market crashes, and it will, the pp will attract and re-attract new adherents. I was sad when iwealth, a very intelligent member, departed, saying that he didn't understand gold and that he "just get(s) stocks." I have a sneaking suspicion that when gold is up and stocks are down people will "get" gold just fine. ;)
- This would be a fine time for all-equities investors to diversify into the permanent portfolio!
- So, I'm still torn between the idea that all these bogleheads are growing rich and doing fine pretending that gold doesn't even exist (hence my vp) and the idea that a certain set of conditions could make most-to-all bogleheads very sorry, while pp'ers will be doing just fine.
- VP has indy stocks, muni bonds, corporate bonds (VCIT), & midterm treasuries.

How'bout you?
BearBones wrote: 1. About what % of your investments are still in the PP, if any?
2. Have you changed your portfolio over the past several years, given the favorable performance of the stock market and/or the recent change in interest rates?
3. If so, what do you favor?
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Re: Question for original forum members

Post by Tyler » Tue Mar 14, 2017 11:09 am

I still count discovering the HBPP and learning about how it works as being the single most important step in my personal investing education. It has served me extremely well, and while I've started tinkering around the edges I really don't see myself ever replacing the foundation barring a major change in how the financial system works.

FWIW, my portfolio modeling exploits were largely inspired by this forum and my desire to accurately model the PP and compare it to more traditional options. The thing I didn't really expect is just how well the PP holds up not just to a typical stock/bond blend but also against other fancy alternatives. Especially in the retirement portfolio space, the PP is extremely difficult to beat.

I did eventually give in last year and start my own VP, putting 20% of my money in small caps to create my own Golden Butterfly. But it's not because of recent stock performance, interest rate fear, or anything like that. It's simply because I found that it increased the historical returns a bit while preserving the other features that make the PP so appealing. It's cool to see that several people have also found the idea helpful, but Harry still deserves 80% of the credit. ;D
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Re: Question for original forum members

Post by I Shrugged » Tue Mar 14, 2017 1:12 pm

I don't have 1000 posts, but,

I started my PP in the depths of the 08-09 crash. I needed to capture some big capital losses at the time, so it was a great time to make the move.
I am still there, within 15/35 bands. Stocks are low-30-something percent now. I would not mind if stocks climbed to 40%, but I am not going to sell anything that results in realized capital gains to get there. Well, if stocks were to crash to 15%, I would find a way to rebalance into them.

So for me, there really is not much to discuss. Not until the next big move in the stock market, or bond crash, or gold spike, or some combo of those.

I think the Other folder is a double edged sword here. On the one hand it keeps some members active. On the other hand, it has driven some away either by their or the moderators' choice.
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Re: Question for original forum members

Post by Pointedstick » Tue Mar 14, 2017 1:25 pm

I Shrugged wrote: I think the Other folder is a double edged sword here. On the one hand it keeps some members active. On the other hand, it has driven some away either by their or the moderators' choice.
Let's face it, the PP is a boring-ass portfolio. After a while there just isn't a lot to say about it--or its cousins.
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Re: Question for original forum members

Post by dualstow » Tue Mar 14, 2017 2:11 pm

I Shrugged wrote:I think the Other folder is a double edged sword here. On the one hand it keeps some members active. On the other hand, it has driven some away either by their or the moderators' choice.
This has got to be one of the most laid back forums ever. It's always the member's own choice, even if they happen to choose suicide by moderator.
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