Is the PP going to hold up?

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buddtholomew
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Re: Is the PP going to hold up?

Post by buddtholomew » Thu Mar 01, 2018 1:22 pm

stuper1 wrote:Cmon, Budd, you have posted your overall portfolio many times. Mine is a lot closer to a PP than yours. The lesson I have learned from the PP is to keep a good percentage in LTTs and gold -- i.e., at least 10 to 15%, enough to actually make a difference -- because those things are either negatively correlated or uncorrelated with stocks and typical bonds.

One problem I have with the Bogleheads approach is that their idea of bonds is a total bond market index, which turns out to be highly correlated to stocks, just with muted peaks and valleys. By using a LTT/cash barbell approach to bonds, you get a lot smoother ride, especially with the gold added in.

You could look at my portfolio as a 60/40, but with 15% taken out of stocks and put into gold.
My taxable is 100% PP.
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Re: Is the PP going to hold up?

Post by stuper1 » Thu Mar 01, 2018 1:25 pm

Aren't you happy that it's up 5.7% in the last 12 months? Sure beats a savings account at the bank.

Keep in mind though that a PP has historically suffered drawdowns as much as 20% or more, so it's definitely not as safe as a savings account.
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buddtholomew
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Re: Is the PP going to hold up?

Post by buddtholomew » Thu Mar 01, 2018 1:29 pm

stuper1 wrote:Aren't you happy that it's up 5.7% in the last 12 months? Sure beats a savings account at the bank.

Keep in mind though that a PP has historically suffered drawdowns as much as 20% or more, so it's definitely not as safe as a savings account.
Personal CAGR for PP is around 4.25% since I started.
My 70/30 has tripled since 2008.
Can’t even compare the 2 with a straight face.
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Re: Is the PP going to hold up?

Post by stuper1 » Thu Mar 01, 2018 1:48 pm

That's the point. You shouldn't try to compare the two. They are two different things completely. Like trying to compare a giraffe with an orange.

One is higher risk/higher reward. The other is lower risk/lower reward. You get to choose. Just remember that when you pick "higher reward", you don't get to pick the timeframe when that higher reward will materialize. If it doesn't materialize until after you've already had to sell a bunch of your portfolio because you lost your job or whatever, or because you lost your nerve which is what happens to many people, then you're out of luck. Again, don't forget that 1998 to 2008 time period. It wasn't a pretty time to have a typical 70/30 portfolio.
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Cortopassi
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Re: Is the PP going to hold up?

Post by Cortopassi » Thu Mar 01, 2018 2:07 pm

buddtholomew wrote:
stuper1 wrote:Aren't you happy that it's up 5.7% in the last 12 months? Sure beats a savings account at the bank.

Keep in mind though that a PP has historically suffered drawdowns as much as 20% or more, so it's definitely not as safe as a savings account.
Personal CAGR for PP is around 4.25% since I started.
My 70/30 has tripled since 2008.
Can’t even compare the 2 with a straight face.
I was in American Century Ultra from 1989 (graduation) to about the internet bubble. I thought I could not lose. Look what happened. Would I like to go back and go PP all in from the day I had my first job? You bet. Ultra STILL hasn't recovered after 18 years.

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Re: Is the PP going to hold up?

Post by Cortopassi » Thu Mar 01, 2018 2:14 pm

And after selling Ultra after the bubble, and losing a lot of the gains, I figured I would get into more "conservative" Dodge and Cox Stock. And then this happened, and I sold at the end of 2008, nearly at the bottom. Didn't realize how tied DODGX was to financials. Duh.

This market churned me for 20 years. It WILL churn again.

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Re: Is the PP going to hold up?

Post by Cortopassi » Thu Mar 01, 2018 2:16 pm

Started buying gold after 2008. Smartest move in the world, right? At least up until 2011.

Churn, yet again.

I will never shift from holding all classes for the rest of my life, unless it is to move into cash for retirement or rentable properties.

FYI, I do these posts mainly for my benefit, to remind me I cannot be counted on the make the right calls, or get in or out at the right time.

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Re: Is the PP going to hold up?

Post by stuper1 » Thu Mar 01, 2018 3:01 pm

Cortopassi, your experience is about the same as mine.

I am determined to pass on more investing guidance to my children than what I received from my parents, which was zero. When I read Craig and Tex's PP book, it was like a light bulb went on in my head. It just makes so much sense, but nobody ever explained it to me before. We can argue about what percentages belong in stocks/LTT/STT/gold, but the basic idea remains the same. Pick an allocation that you are comfortable with and re-balance semi-consistently, and you are essentially guaranteed to buy low and sell high, which is always the goal but seems so hard to do when you are just going by the seat of your pants.
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Re: Is the PP going to hold up?

Post by Cortopassi » Thu Mar 01, 2018 3:56 pm

stuper1 wrote:Cortopassi, your experience is about the same as mine.

I am determined to pass on more investing guidance to my children than what I received from my parents, which was zero. When I read Craig and Tex's PP book, it was like a light bulb went on in my head. It just makes so much sense, but nobody ever explained it to me before. We can argue about what percentages belong in stocks/LTT/STT/gold, but the basic idea remains the same. Pick an allocation that you are comfortable with and re-balance semi-consistently, and you are essentially guaranteed to buy low and sell high, which is always the goal but seems so hard to do when you are just going by the seat of your pants.
As opposed to my prior method which was buy high, sell low. Seriously. And I am the same way, Stuper. My kids will have all of my hard knocks knowledge which will hopefully help them avoid similar situations.
Last edited by Cortopassi on Thu Mar 01, 2018 4:00 pm, edited 1 time in total.
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Re: Is the PP going to hold up?

Post by bitcoininthevp » Thu Mar 01, 2018 4:00 pm

In order to make outsized ('speculative' in the PP sense) gains you need to bet against what most people are saying. And then be right.

The contrarian in me: All these people hating on gold (and tangentially the PP)... gold is due for a rise.
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Re: Is the PP going to hold up?

Post by Cortopassi » Thu Mar 01, 2018 4:01 pm

bitcoininthevp wrote:In order to make outsized ('speculative' in the PP sense) gains you need to bet against what most people are saying. And then be right.

The contrarian in me: All these people hating on gold (and tangentially the PP)... gold is due for a rise.
Same with bonds. Due for a reversal.
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Re: Is the PP going to hold up?

Post by Mr Vacuum » Thu Mar 01, 2018 6:43 pm

Cortopassi wrote:
stuper1 wrote:Cortopassi, your experience is about the same as mine.

I am determined to pass on more investing guidance to my children than what I received from my parents, which was zero. When I read Craig and Tex's PP book, it was like a light bulb went on in my head. It just makes so much sense, but nobody ever explained it to me before. We can argue about what percentages belong in stocks/LTT/STT/gold, but the basic idea remains the same. Pick an allocation that you are comfortable with and re-balance semi-consistently, and you are essentially guaranteed to buy low and sell high, which is always the goal but seems so hard to do when you are just going by the seat of your pants.
As opposed to my prior method which was buy high, sell low. Seriously. And I am the same way, Stuper. My kids will have all of my hard knocks knowledge which will hopefully help them avoid similar situations.
Thanks for the hard-won lessons and reminders. It’s always good to zoom out and connect the dots on how this stuff works with real money on the line. I hope you were able to contribute more or less throughout the churn and benefit somewhat from the unfortunate buying opportunities along the way.

Your kids are lucky, both for your prep for your retirement now and for the frank education they will receive. It amazes me how we have total control of these accounts and, for many of us, no training. I had luckily absorbed just enough of Bogle’s Little Red Book to avoid selling in 2009, but I made some costly mistakes in allocation and buy timing. It must work out great for the people on the other side of these terrible trades. I enjoy the control, but pensions weren’t all bad, I guess.
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