Permanent Portfolio Book Question

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RothbardFan
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Permanent Portfolio Book Question

Post by RothbardFan » Mon Sep 18, 2017 7:40 pm

I have read The Permanent Portfolio: Harry Browne's Long-Term Investment Strategy and am getting ready to implement its suggestions. Is there anything new I should know about that has transpired over the five years since the book has been published that may affect my decisions?
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Tyler
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Re: Permanent Portfolio Book Question

Post by Tyler » Tue Sep 19, 2017 9:46 am

The only thing new I can think of is that Craig now posts very little after pouring so much thought into such a good book. You should be in good shape!
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ochotona
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Re: Permanent Portfolio Book Question

Post by ochotona » Tue Sep 19, 2017 12:06 pm

I will be taken to task for saying it, but stocks are up 71% in 5 years, long bonds (TLT) up 22%, and gold -26%. You might want to underweight stocks a bit, like 20% instead of 25%, and hold 30% cash instead of 25%. Just my personal opinion.
RothbardFan
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Re: Permanent Portfolio Book Question

Post by RothbardFan » Tue Sep 19, 2017 7:34 pm

Tyler wrote:The only thing new I can think of is that Craig now posts very little after pouring so much thought into such a good book. You should be in good shape!
Ok sounds good. Thank you.
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Re: Permanent Portfolio Book Question

Post by RothbardFan » Tue Sep 19, 2017 7:39 pm

ochotona wrote:I will be taken to task for saying it, but stocks are up 71% in 5 years, long bonds (TLT) up 22%, and gold -26%. You might want to underweight stocks a bit, like 20% instead of 25%, and hold 30% cash instead of 25%. Just my personal opinion.
Thank you I will take this into consideration.
DragonJoey3
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Re: Permanent Portfolio Book Question

Post by DragonJoey3 » Wed Sep 20, 2017 2:05 pm

ochotona wrote:I will be taken to task for saying it, but stocks are up 71% in 5 years, long bonds (TLT) up 22%, and gold -26%. You might want to underweight stocks a bit, like 20% instead of 25%, and hold 30% cash instead of 25%. Just my personal opinion.
I don't know about "taken to task" but I would certainly say I disagree strongly with this sentiment. The entire comment is essentially trying to time the markets, and tilt the portfolio. If you do so, you void the warranty! The PP works well for it's stability. I've run a modified PP for a while, and you can do better, but you can also do worse. I say stick with the PP, and use your Variable Portfolio to hold whatever asset you feel is undervalued.
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Xan
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Re: Permanent Portfolio Book Question

Post by Xan » Wed Sep 20, 2017 2:56 pm

I also disagree with ochotona's sentiment, but I'm not sure I disagree with what he's doing overall. I wouldn't try to time the market like that, myself. That's why I'm here in the PP.

But, if you do believe you know what's going to happen next, then what he's proposing is a good way to do it. As long as you're within your chosen bands (15%-35% by default), then you still have a PP. If you want to aim for slightly over- or under-weighting some of the PP assets, then do so, as long as you stay in the bands.

Realize you're as likely to lose money by doing it as you are to make money. But you still have a PP.
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Re: Permanent Portfolio Book Question

Post by sophie » Thu Sep 21, 2017 2:42 am

DragonJoey3 wrote:
ochotona wrote:I will be taken to task for saying it, but stocks are up 71% in 5 years, long bonds (TLT) up 22%, and gold -26%. You might want to underweight stocks a bit, like 20% instead of 25%, and hold 30% cash instead of 25%. Just my personal opinion.
I don't know about "taken to task" but I would certainly say I disagree strongly with this sentiment. The entire comment is essentially trying to time the markets, and tilt the portfolio. If you do so, you void the warranty! The PP works well for it's stability. I've run a modified PP for a while, and you can do better, but you can also do worse. I say stick with the PP, and use your Variable Portfolio to hold whatever asset you feel is undervalued.
Don't worry about ochotona. He's our resident market timer. He doesn't really have a PP, he just likes to use the assets as a base for buying and selling on various market timing signals. Perfectly valid choice, as long as people realize that it's not a passive investing strategy and thus is inconsistent with the principles of either the PP or Bogleheads.

Of course, many people on this board (myself included) have bitter experience with market timing, and well understand the demonstrated fact that passive investing consistently outperforms active investing over time. If you've managed to realize that before having that personal experience, then you are way ahead of the game.
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Re: Permanent Portfolio Book Question

Post by ochotona » Thu Sep 21, 2017 5:20 am

Ah, but I do have a PP! It's no more than 40% of my stash, but if you draw dotted lines around my gold, bonds, cash, and SP500 holdings, you will definitely find it. I just couldn't tell you exactly how big it is off the top of my head, as I don't track it as a separate entity. The momentum portfolio is the rest.
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