Is the PP going to hold up?

General Discussion on the Permanent Portfolio Strategy

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buddtholomew
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Re: Is the PP going to hold up?

Post by buddtholomew » Thu Feb 08, 2018 6:41 pm

Kriegsspiel wrote:
“Why keep something in gold? It’s stable. But why keep it in gold when it stays in a $100 range, when I could buy Bitcoin when it is increasing everyday?” Salamida said.

http://fortune.com/2018/02/08/bitcoin-p ... price-buy/
bud?
Let me be clear, I am not advocating buying BTC but merely pointing out on a day where the DOW fell 1000+ points BTC rose 10% while Gold only 0.24% That doesn't seem unusual to anyone on this forum? Think about that for a moment.

Techno, not sure what you are talking about but you missed the point once again.
Mr Vacuum
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Re: Is the PP going to hold up?

Post by Mr Vacuum » Thu Feb 08, 2018 6:53 pm

buddtholomew wrote: Let me be clear, I am not advocating buying BTC but merely pointing out on a day where the DOW fell 1000+ points BTC rose 10% while Gold only 0.24% That doesn't seem unusual to anyone on this forum? Think about that for a moment.
I thought about it again and it still seems congruous with zero correlation.
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Re: Is the PP going to hold up?

Post by iwealth » Thu Feb 08, 2018 6:54 pm

buddtholomew wrote:
Let me be clear, I am not advocating buying BTC but merely pointing out on a day where the DOW fell 1000+ points BTC rose 10% while Gold only 0.24% That doesn't seem unusual to anyone on this forum? Think about that for a moment.

Techno, not sure what you are talking about but you missed the point once again.
Bitcoin doesn’t have any correlations to anything. A 10% rise on a day gold falls 3% or rises 3% or stocks are up or down or whatever has absolutely no deep meaning.
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Kriegsspiel
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Re: Is the PP going to hold up?

Post by Kriegsspiel » Thu Feb 08, 2018 7:08 pm

BTC is wildly volatile, a 10% day is kinda a limp-wrist-wave ordeal.

As far as safe havens going up at the same time as stocks are taking it in the * ... As long as they're compensating for each other over time, I'm cool with it.
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buddtholomew
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Re: Is the PP going to hold up?

Post by buddtholomew » Thu Feb 08, 2018 7:47 pm

I see; so when there’s fear the masses run to BTC. That makes sense now.
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Tyler
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Re: Is the PP going to hold up?

Post by Tyler » Thu Feb 08, 2018 8:16 pm

It's exactly times like this when I most appreciate the PP firewalls. Bonds, gold, and cash don't even need to make money for the PP to be a success when stocks are falling like a rock. Diversification FTW.
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iwealth
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Re: Is the PP going to hold up?

Post by iwealth » Thu Feb 08, 2018 8:36 pm

buddtholomew wrote:I see; so when there’s fear the masses run to BTC. That makes sense now.
Can’t tell if you are being serious because nobody said anything close to that.

Bitcoin dropped 25% between 2/5 and 2/6 during the most volatile market day in a decade. The masses ran out of bitcoin far faster than any other asset that day.
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ochotona
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Re: Is the PP going to hold up?

Post by ochotona » Thu Feb 08, 2018 9:14 pm

How is BTC an asset? You pay money, you get a token!
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eufo
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Re: Is the PP going to hold up?

Post by eufo » Thu Feb 08, 2018 9:39 pm

Tyler wrote:It's exactly times like this when I most appreciate the PP firewalls. Bonds, gold, and cash don't even need to make money for the PP to be a success when stocks are falling like a rock. Diversification FTW.
You said it, brother! It's easy to discount the role bonds and gold are playing right now since they have been declining. The fact is, they are declining at a MUCH slower rate than stocks, so are acting as relative protection while pure equity portfolios are getting slaughtered.

RE: Bitcoin... If anyone is selling equities to run to Bitcoin as a safe haven, I think they are making a gross error that will prove disastrous.
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Re: Is the PP going to hold up?

Post by dualstow » Fri Feb 09, 2018 4:21 am

eufo wrote: RE: Bitcoin... If anyone is selling equities to run to Bitcoin as a safe haven, I think they are making a gross error that will prove disastrous.
I agree, very strongly. O0
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sophie
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Re: Is the PP going to hold up?

Post by sophie » Fri Feb 09, 2018 7:41 am

All I can say is, going into this with 30% cash in the PP is AWESOME. The Bogleheads portfolio in my retirement accounts, not so much :-)

All these posthoc, know-it-all explanations of "why" the market is dropping are entertaining, but useless. They can't really know, not without conducting a large survey. This event could have started simply as a localized dip in an early-opening Asian market, then people already a bit rattled by something (tax reform, interest rates, government shutdown, people just afraid the stock market went up too fast and my buddy is going to sell so I'd better do it first, whatever) see it and start following suit, then more people take notice and make "me-too" sales, and then automatic sell signals kick in, and there you have it.

One of the things I study is biological networks, and it occurs to me that it's a good explanation of stock market behavior. People tend to think of networks as organized from the top down, like an orchestra: there's a conductor, the violins are listening to the cellos, etc. A better analogy is how geese come to fly in a V formation. They don't decide as a group to form the V. Instead, each of them has its own localized rules for where it wants to fly in relation to the goose next to it. I call it a self-organizing network, and it's incredible how much complexity can arise from a few very simple rules. You can try to make up rules for why the large-scale structure forms as it does, but you'll fail because there aren't any. There are very, very few people who have recognized and truly understood this, AND were willing to admit it.

Given this, sticking to a formula that is "good enough" and works under most conditions is about the best you can do. I think the PP is working just fine in this situation by limiting losses, and putting you in a great position to take advantage of the stock sale. People who are 80% stocks can't do this, because they don't have the necessary reserves. All they can do is wait for the market to go back up. Could be next week, next year, or next decade, no way to know.

Thought for the day!
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Re: Is the PP going to hold up?

Post by stuper1 » Fri Feb 09, 2018 8:01 am

Thanks for that great, enlightening, comforting post, Sophie!
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