Nobody believes in the Permanent Portfolio

General Discussion on the Permanent Portfolio Strategy

Moderator: Global Moderator

User avatar
dualstow
Executive Member
Executive Member
Posts: 8656
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 » Sun Apr 30, 2017 8:20 am

True, no portfolio is always immune. I just think they''d get hit less often.
Then again, it only takes one hit.
So what do they bail into?
Wow. https://bit.ly/2TYYAtp (shortened link because the regular is obscenely long. I have not been hacked.
It's just Nautilus magazine)
User avatar
sophie
Executive Member
Executive Member
Posts: 3089
Joined: Mon Apr 23, 2012 7:15 pm

Re: Nobody believes in the Permanent Portfolio

Post by sophie » Sun Apr 30, 2017 8:26 am

mathjak107 wrote:nope , 2008 saw balanced funds get clobbered too . i was on the 401k committee at work at the time . we saw folks bailing out of everything regardless of what they held .
That's an interesting observation. Can you be more specific about what level of losses had a significant number of people bailing?

Somebody should really do a study of population responses to different levels & durations of drawdowns, but I suspect it's not been done because no one who works in the investing arena really wants to know that information.
User avatar
mathjak107
Executive Member
Executive Member
Posts: 2273
Joined: Fri Jun 19, 2015 2:54 am
Location: bayside queens ny
Contact:

Re: Nobody believes in the Permanent Portfolio

Post by mathjak107 » Sun Apr 30, 2017 8:36 am

what was interesting in jason's book was the brain imaging showed when actual money was not on the line and the people were planning their strategy their brains offered actual well balanced rational info .

but since we are prewired to hate losing money more than making it the images showed changes in other parts of the brain associated with some very repulsive controls they used .

the scans were similar to smelling dog crap or watching people vomit in a video . some showed the same brain areas come in to play that a heroin addict gets active when he does not get his fix .

but what was interesting is once the money was lost or actually down the brain shifted back to normal again and basically looked forward to the recovery .

so it is the fear of losing money more than the actual loss that cause's bad investor behavior no matter the amount . so there is not a trip point but just the fear that money will be lost that triggers our non rational brain .

i have my play money i dabble with and i was trading in and out of a few stocks for fun . actually i would buy the 5 highest yielding dogs of the dow and trading in and out .

i sold all of them at a profit 2 or 3x this year but i still have verizon this last time because the day after i bought it they missed earning and got hammered . i have so little money in verizon ,.007% of my portfolio yet my brain is pounding me to dump it .

i am down a few hundred dollars and my brain freaks out ha ha ha . it is just silly , but this is why no matter what folks do , many seem to end up exhibiting bad behavior at some point.

there is no magical portfolio .
JFP_SF
Junior Member
Junior Member
Posts: 6
Joined: Fri Mar 31, 2017 4:11 pm

Re: Nobody believes in the Permanent Portfolio

Post by JFP_SF » Sun Apr 30, 2017 9:11 am

LazyInvestor wrote:
JFP_SF wrote: I appreciate the work you are trying to do on the Bogleheads forum in that thread, but it's a waste of time. I've posted over there (in that thread even), and they are extremely close-minded. It's going to take a real sustained downturn before those guys get over their hubris.
I don't mind what they are doing. An important role of these forums is to support you with sticking to your portfolio. PP is quite different than many other Boglehead's portfolios because it's using assets that are often being used by market timers, and these assets are exactly what they had to shoot down in order to convince folks there just to stick to market weightings in bonds and stocks. At the same time, Boglehead portfolios are also solid portfolios, and they are tracking market better than PP, i.e., they are easier to stick to despite higher volatility. Even for us, who are hanging out at this forum and run PP for many years, it's hard to stick to PP in times of prosperity. As such, I'm happy they are close minded when it comes to PP as I know they'll do well with Bogleheads portfolios too. I even avoid reading PP threads at Bogleheads forum, but those of you who post there and argue for PP are doing them a service by strengthening their protection and belief in other Bogleheads portfolios. So all is good :) .
That's a very mature approach. I'll try and learn from it, especially since the latest thread there has become ridiculous.
User avatar
mathjak107
Executive Member
Executive Member
Posts: 2273
Joined: Fri Jun 19, 2015 2:54 am
Location: bayside queens ny
Contact:

Re: Nobody believes in the Permanent Portfolio

Post by mathjak107 » Mon May 01, 2017 5:30 am

dualstow wrote:True, no portfolio is always immune. I just think they''d get hit less often.
Then again, it only takes one hit.
So what do they bail into?

those who bail generally bail to cash and end up getting burned by being out when things recover . some like many of the youngin's in their 401k's never came back . in the mean time many of the funds tripled since they threw in the towel in 2008.

nothing is immune to bad investor behavior . as long as the portfolio can lose money in down years or does not gain as much in the up years there are always those that will bail and run or bail and try something else until that has a down year . .

while there are times i allocate more or less money to the portfolio's i run i may have more less in one model vs another but i have used the same models as a core for 30 years now . i may dabble with something like the gb at times (call it my variable portfolio ) but the core has always been the core ever since 1987.

i kind of used a rising glide path entering retirement , so i phased out my growth model at the start and used my income model and growth and income model but now that the election is over and i have some gains to cushion things i re-introduced the growth model back in to the mix for money i won't be using to eat with for 12 to 30 plus years out .

so the point is adjusting things along the way as a strategy is one thing but bailing out and running is quite another .
User avatar
dualstow
Executive Member
Executive Member
Posts: 8656
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 » Mon May 01, 2017 6:03 am

Ok, so operator error. Can't fault the brussel sprouts for lack of nutrition if the child won't eat them.

As you said, nothing is immune to bad investor behavior.
Wow. https://bit.ly/2TYYAtp (shortened link because the regular is obscenely long. I have not been hacked.
It's just Nautilus magazine)
User avatar
mathjak107
Executive Member
Executive Member
Posts: 2273
Joined: Fri Jun 19, 2015 2:54 am
Location: bayside queens ny
Contact:

Re: Nobody believes in the Permanent Portfolio

Post by mathjak107 » Mon May 01, 2017 6:09 am

always operator error .

do you know even if you screwed up and bought gold decades ago when it hit almost 900 an ounce that if you bought the s&p 500 on the same day and had a 50/50 mix you would have seen the following results just rebalancing the gold over years ..

back in the 2000's when gold almost hit 2k your gold which you bought at the worst possible time would actually have beaten the s&p 500 bought on the same day .. of course that is no longer true as gold fell .

but it shows you any plan you stick to can turn out at some point as a decent plan . so operator error is generally going to be the cause . plans may give you better or worse performance but usually they will turn out positive left to themselves .
User avatar
dualstow
Executive Member
Executive Member
Posts: 8656
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 » Mon May 01, 2017 6:12 am

Yup. This usually comes up in pro-lump-sum arguments vs dollar cost avg'ing.
Wow. https://bit.ly/2TYYAtp (shortened link because the regular is obscenely long. I have not been hacked.
It's just Nautilus magazine)
User avatar
mathjak107
Executive Member
Executive Member
Posts: 2273
Joined: Fri Jun 19, 2015 2:54 am
Location: bayside queens ny
Contact:

Re: Nobody believes in the Permanent Portfolio

Post by mathjak107 » Mon May 01, 2017 7:54 am

there is no argument . dca will with few exceptions yield less gains but a better risk profile .

if dca actually worked better overall , we would all reach our desired allocation ,sell everything off and start from zero all over again ..

for dca to work better kitces found you have to be a really good market timer .

https://www.kitces.com/blog/dollar-cost ... s-returns/
User avatar
dualstow
Executive Member
Executive Member
Posts: 8656
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 » Mon May 01, 2017 8:00 am

Yeah, DCA mostly just feels better.
But with new money coming in at regular intervals to invest, it's the only choice after the initial investment.
Wow. https://bit.ly/2TYYAtp (shortened link because the regular is obscenely long. I have not been hacked.
It's just Nautilus magazine)
User avatar
mathjak107
Executive Member
Executive Member
Posts: 2273
Joined: Fri Jun 19, 2015 2:54 am
Location: bayside queens ny
Contact:

Re: Nobody believes in the Permanent Portfolio

Post by mathjak107 » Mon May 01, 2017 8:20 am

dca is the only choice if you don't have the money . having no choice is having no choice .

whether it is a discussion about taking social security early or later , buying or renting , etc , not everything can apply to everyone since many have no choice .

one thing i always say about money is money may not buy happiness but it certainly buys choices in life .
User avatar
Smith1776
Executive Member
Executive Member
Posts: 448
Joined: Fri Apr 21, 2017 6:01 pm

Re: Nobody believes in the Permanent Portfolio

Post by Smith1776 » Mon May 01, 2017 10:55 am

Yeah, I think the dollar cost averaging discussion is largely academic. (Not that it's not a useful discussion of course.) 99% of people will naturally dollar cost average as they make steady income week after week, month after month, and just make contributions to their mutual funds or other investments. I suppose, even people who have a lump sum in the market end up dollar cost averaging to a certain degree as they reinvest their periodic interest and dividend payments.
e + 1 = 0
Check out the Smith Variation of the PP: https://www.gyroscopicinvesting.com/forum/viewtopic.php?f=1&t=9613
Remember to watch National Treasure at least once per year to maintain your forum membership.
The value factor looks, smells, and tastes like a risk factor.
The free market punishes irresponsibility. Government rewards it.
Locked