Nobody believes in the Permanent Portfolio

General Discussion on the Permanent Portfolio Strategy

Moderator: Global Moderator

Locked
modeljc
Executive Member
Executive Member
Posts: 168
Joined: Sat Feb 04, 2012 11:52 am

Nobody believes in the Permanent Portfolio

Post by modeljc » Tue Mar 21, 2017 10:56 am

My friend Charles (Retired) asked me why we only have about 600 registered members. For a world wide forum and a recent book he suggested we were very much on the fringe of the investment world. Charles just can't buy the idea of Cash not earning anything. Long bonds scare him to death. Also he can't own gold as there is no return, and no one knows how to value it.

ARE WE WRONG? And are we on the Fringe? And why don't we have more Believers?
stuper1
Executive Member
Executive Member
Posts: 762
Joined: Sun Mar 03, 2013 7:18 pm

Re: Nobody believes in the Permanent Portfolio

Post by stuper1 » Tue Mar 21, 2017 11:27 am

No, we are not wrong, because we believe in passive, low-expense-ratio, well-diversified investing. In fact, our investing is actually better diversified than the typical stock/bond portfolio, because we also hold a valuable commodity (gold) which is uncorrelated with stocks/bonds. You only have to look back to the period of say 2000 to 2010 to see the positive impact of gold on the portfolio.

Yes, we are on the fringe, because most people think we are crazy. Let them think whatever they want, but when the stock market hits the skids for several years in a row, they may think a little differently. And if TEOTWAWKI happens, they may think a lot differently, but those of us with physical gold will have something to preserve wealth through to the other side.

We don't have more believers, because most people just trust what the "experts" tell them, rather than digging into things themselves. But of course the experts often have hidden agendas.
User avatar
Cortopassi
Executive Member
Executive Member
Posts: 1437
Joined: Mon Feb 24, 2014 2:28 pm
Location: Illinois

Re: Nobody believes in the Permanent Portfolio

Post by Cortopassi » Tue Mar 21, 2017 11:52 am

I'd be interested in what your friend did during/after the tech bust in 2000/2001 and the RE bubble in 2008? Just hang on to whatever he had? Sold? Bought? Does he have an advisor recommending things or does it himself?

Cash not earning anything, long bonds scare him, gold has no return, yet he's comfortable with 100% (or whatever high amount) in a never ending stock market bull?
User avatar
pugchief
Executive Member
Executive Member
Posts: 2718
Joined: Tue Jun 26, 2012 2:41 pm
Location: suburbs of Chicago, IL

Re: Nobody believes in the Permanent Portfolio

Post by pugchief » Tue Mar 21, 2017 12:49 pm

Cortopassi wrote:I'd be interested in what your friend did during/after the tech bust in 2000/2001 and the RE bubble in 2008? Just hang on to whatever he had? Sold? Bought? Does he have an advisor recommending things or does it himself?

Cash not earning anything, long bonds scare him, gold has no return, yet he's comfortable with 100% (or whatever high amount) in a never ending stock market bull?
What did you do? ;D
User avatar
pugchief
Executive Member
Executive Member
Posts: 2718
Joined: Tue Jun 26, 2012 2:41 pm
Location: suburbs of Chicago, IL

Re: Nobody believes in the Permanent Portfolio

Post by pugchief » Tue Mar 21, 2017 12:52 pm

modeljc wrote:My friend Charles (Retired) asked me why we only have about 600 registered members. For a world wide forum and a recent book he suggested we were very much on the fringe of the investment world. Charles just can't buy the idea of Cash not earning anything. Long bonds scare him to death. Also he can't own gold as there is no return, and no one knows how to value it.

ARE WE WRONG? And are we on the Fringe? And why don't we have more Believers?
Just bc there are only 600 registered members doesn't mean there aren't another thousand who lurk. Some people prefer to read but not speak. And some people don't like forums. That doesn't mean they don't subscribe to the PP philosophy.
User avatar
Cortopassi
Executive Member
Executive Member
Posts: 1437
Joined: Mon Feb 24, 2014 2:28 pm
Location: Illinois

Re: Nobody believes in the Permanent Portfolio

Post by Cortopassi » Tue Mar 21, 2017 1:00 pm

pugchief wrote:
Cortopassi wrote:I'd be interested in what your friend did during/after the tech bust in 2000/2001 and the RE bubble in 2008? Just hang on to whatever he had? Sold? Bought? Does he have an advisor recommending things or does it himself?

Cash not earning anything, long bonds scare him, gold has no return, yet he's comfortable with 100% (or whatever high amount) in a never ending stock market bull?
What did you do? ;D
You know what I did! I wasn't in the PP. Panicked. Both times. Then sluggishly got back in, missing out on the recoveries. Never again.
User avatar
Tyler
Executive Member
Executive Member
Posts: 1729
Joined: Sat Nov 12, 2011 3:23 pm
Contact:

Re: Nobody believes in the Permanent Portfolio

Post by Tyler » Tue Mar 21, 2017 1:17 pm

This topic is an interesting juxtaposition to the retirement crisis thread. The most popular retirement strategy is to not save at all, and you might even call planning to self-fund a retirement to be fringe.

Popularity does not automatically make a strategy superior to other options.
PortfolioCharts.com : Find a portfolio to love
User avatar
Xan
Administrator
Administrator
Posts: 2227
Joined: Tue Mar 13, 2012 1:51 pm

Re: Nobody believes in the Permanent Portfolio

Post by Xan » Tue Mar 21, 2017 1:51 pm

The horrifying conclusion of that other thread might be that the popular strategy (not saving at all) is also the best one.
Jack Jones
Executive Member
Executive Member
Posts: 262
Joined: Mon Aug 24, 2015 3:12 pm

Re: Nobody believes in the Permanent Portfolio

Post by Jack Jones » Tue Mar 21, 2017 1:56 pm

Xan wrote:The horrifying conclusion of that other thread might be that the popular strategy (not saving at all) is also the best one.
My thoughts as well. :-\
technovelist
Executive Member
Executive Member
Posts: 4809
Joined: Wed Sep 15, 2010 11:20 pm

Re: Nobody believes in the Permanent Portfolio

Post by technovelist » Tue Mar 21, 2017 2:05 pm

Jack Jones wrote:
Xan wrote:The horrifying conclusion of that other thread might be that the popular strategy (not saving at all) is also the best one.
My thoughts as well. :-\
It is also very low-cost and simple! :P
User avatar
Tyler
Executive Member
Executive Member
Posts: 1729
Joined: Sat Nov 12, 2011 3:23 pm
Contact:

Re: Nobody believes in the Permanent Portfolio

Post by Tyler » Tue Mar 21, 2017 2:19 pm

Xan wrote:The horrifying conclusion of that other thread might be that the popular strategy (not saving at all) is also the best one.
Nah -- I'll take my chances with saving. ;)
PortfolioCharts.com : Find a portfolio to love
User avatar
dualstow
Executive Member
Executive Member
Posts: 8260
Joined: Wed Oct 27, 2010 10:18 am
Location: next to emotional support peacock
Contact:

Re: Nobody believes in the Permanent Portfolio

Post by dualstow » Tue Mar 21, 2017 2:59 pm

modeljc wrote:ARE WE WRONG? And are we on the Fringe? And why don't we have more Believers?
- Feels like limited upside. A lot of people look at the returns of stocks, shrug off the risk part, and it's stocks all the way. 25%? Not enough.

- It's rational to want to take apart the individual components of something and see how it works. Unfortunately, more people just hear a list of the components and fewer people actually take the time to read the full context, let alone the full text of pp books.

What if a scientist discovered that a diet of oreos, vodka and anchovies was actually healthful, but only if all consumed on the same day?
He'd have a hard time selling it to the public. It may be easier for some to just buy PRPFX and not deal with the sausage making. I'm sure plenty of those fundholders don't bother with forums.

Whether they bother with a forum or not, I do think the number of those who hold a PP waxes and wanes right along with the markets.
Dow down 600+ points. Gold- well, see AdamSmith’s post in the gold scream rm
one of the cnbc guys I dislike just said you can track silver to the President’s tweets
Locked