Is the PP going to hold up?
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- Cortopassi
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Re: Is the PP going to hold up?
The only temporary issue I have with this downturn is the rapidity of the paper loss. I was at 2.66% up on 1/25, here we are 15 days later and I am -2.81% down. The PP is mitigating the downturn, but it is still a painful 5.5% turn negative.
- buddtholomew
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Re: Is the PP going to hold up?
Finally, someone coming to my point of view.Cortopassi wrote:The only temporary issue I have with this downturn is the rapidity of the paper loss. I was at 2.66% up on 1/25, here we are 15 days later and I am -2.81% down. The PP is mitigating the downturn, but it is still a painful 5.5% turn negative.
PP has provided absolutely zero benefit during this downturn.
Only reason PP is losing slightly less is the lower allocation to equities. This lower allocation comes with MUCH lower gains when stocks rise.
- Cortopassi
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Re: Is the PP going to hold up?
Budd, you are making sense. For now. Not disparaging you, because at these times, if I was in a 70/30 or near 100% stocks as I was in the past, I would NOT be considering this a buying opportunity, but instead would be freaking out. EVEN with the gains I would have had since 2009, this 10+% downdraft would be killing me.buddtholomew wrote:Finally, someone coming to my point of view.Cortopassi wrote:The only temporary issue I have with this downturn is the rapidity of the paper loss. I was at 2.66% up on 1/25, here we are 15 days later and I am -2.81% down. The PP is mitigating the downturn, but it is still a painful 5.5% turn negative.
PP has provided absolutely zero benefit during this downturn.
Only reason PP is losing slightly less is the lower allocation to equities. This lower allocation comes with MUCH lower gains when stocks rise.
Four years in the PP have mellowed me. I have faith that things will come around for one asset or another, but there is no doubt that there are a lot of doomsayers out there right now saying there will be nowhere to hide, not gold, not stocks, not bonds.
- Kriegsspiel
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Re: Is the PP going to hold up?
The PP has a 'duration' of longer than 5 days.
- buddtholomew
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Re: Is the PP going to hold up?
You’re right, it’s so awesome!!
Look how beautiful the sea of red is.
Look how beautiful the sea of red is.
Re: Is the PP going to hold up?
Could you please explain what that means. I'm slow. Thanks!Kriegsspiel wrote:The PP has a 'duration' of longer than 5 days.
- Kriegsspiel
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Re: Is the PP going to hold up?
I mean the PP won't always be in the green over 5 days. So if you need the money to be there in 5 days, put it in a bank account. bud seems angry because gold and treasuries didn't immediately spike when stocks dropped.
If stocks continue deflating and treasuries and/or gold don't wind up picking up the slack then I'd be concerned, but I'm not sweating it that they haven't done so already. Hell, if stocks regained their swagger and continued their march up the hill, I'd be ok with that too. I just want the PP to return around 3-4% real a year.
If stocks continue deflating and treasuries and/or gold don't wind up picking up the slack then I'd be concerned, but I'm not sweating it that they haven't done so already. Hell, if stocks regained their swagger and continued their march up the hill, I'd be ok with that too. I just want the PP to return around 3-4% real a year.
- buddtholomew
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Re: Is the PP going to hold up?
So what’s the threshold where the other assets move? Is it
20, 30, 40%. If that’s the case why bother with Gold and LTT’s. With those declines you should be buying stocks.
Stocks come back, Gold and LTT’s down.
Stocks go down, Gold and LTT’s flat or down.
Hmm...
20, 30, 40%. If that’s the case why bother with Gold and LTT’s. With those declines you should be buying stocks.
Stocks come back, Gold and LTT’s down.
Stocks go down, Gold and LTT’s flat or down.
Hmm...
Re: Is the PP going to hold up?
Not that what's going on is nearly as severe as September 2008 when stocks fell off the cliff, but perhaps it would help to look at the day by day or month by month movement of the broad market compared to the PP from that time.
I just did so on Peak2Trough and what I see is the PP took a nosedive like everything else in September, only to recover due to gold and T Bonds kicking in. The thing is the latter didn't happen until November. That was a long month or two but rewarded those who stayed true to their chosen strategy.
The point - the whole risk parity, negative correlation phenomenon does not happen instantaneously. It takes some time (weeks, months?) for the transitions to occur. Harry Browne talks about this in his book, and this must be one of the various reasons he advocated looking at your HBPP infrequently (once per year, and only for re-balancing at that). I don't know if this gives you any comfort Budd or Cortopassi, but I hope it does.
Glenn
I just did so on Peak2Trough and what I see is the PP took a nosedive like everything else in September, only to recover due to gold and T Bonds kicking in. The thing is the latter didn't happen until November. That was a long month or two but rewarded those who stayed true to their chosen strategy.
The point - the whole risk parity, negative correlation phenomenon does not happen instantaneously. It takes some time (weeks, months?) for the transitions to occur. Harry Browne talks about this in his book, and this must be one of the various reasons he advocated looking at your HBPP infrequently (once per year, and only for re-balancing at that). I don't know if this gives you any comfort Budd or Cortopassi, but I hope it does.
Glenn
- buddtholomew
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Re: Is the PP going to hold up?
Thanks Glennd’s for the reminder.
Stocks are rebounding with Gold/LTT’s selling off.
Stocks are rebounding with Gold/LTT’s selling off.
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Re: Is the PP going to hold up?
So that means that gold is always worse than stocks.buddtholomew wrote:So what’s the threshold where the other assets move? Is it
20, 30, 40%. If that’s the case why bother with Gold and LTT’s. With those declines you should be buying stocks.
Stocks come back, Gold and LTT’s down.
Stocks go down, Gold and LTT’s flat or down.
Hmm...
Which is odd because as someone else has already pointed out, there have been 2 decades in the last 5 when gold was the best performing investment.
Have you read Bill Bernstein's article about the HBPP? Here's the URL again in case you missed it: http://www.efficientfrontier.com/ef/0adhoc/harry.htm.
But to cut to the chase (no pun intended), people who get into the HBPP because it has been outperforming for the past several years are not going to stick with it, so they won't get the benefits of its lower volatility with overall good performance.
If that sounds familiar, it should.
Re: Is the PP going to hold up?
By the way, I should say I completely get and share your pain. That's what drove me to the Peak2Trough tool to look back at the history myself.buddtholomew wrote:Thanks Glennd’s for the reminder.
Stocks are rebounding with Gold/LTT’s selling off.
I occasionally have to remind myself of the quote in the article that Libertarian666 linked - "Investment success accrues not so much to the brilliant as the disciplined".
Last edited by glennds on Fri Feb 09, 2018 3:15 pm, edited 1 time in total.
- bitcoininthevp
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Re: Is the PP going to hold up?
Dont forget. Gold went from ~$1240/oz to ~$1320/oz in the last 60 days. Thats about 6.5% up.buddtholomew wrote:Finally, someone coming to my point of view.Cortopassi wrote:The only temporary issue I have with this downturn is the rapidity of the paper loss. I was at 2.66% up on 1/25, here we are 15 days later and I am -2.81% down. The PP is mitigating the downturn, but it is still a painful 5.5% turn negative.
PP has provided absolutely zero benefit during this downturn.
Only reason PP is losing slightly less is the lower allocation to equities. This lower allocation comes with MUCH lower gains when stocks rise.
So not only shouldn't one be looking at gold "responding to" stocks within a couple days, but Id advocate looking weeks/months *before* as well.
- bitcoininthevp
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Re: Is the PP going to hold up?
Appreciate bitcoin being talked about in the discussion here. But bitcoin is all over the place for a variety of reasons, the least of which might be external-to-crypto markets.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.Kriegsspiel wrote:bud?“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/
Techno, not sure what you are talking about but you missed the point once again.
Reminds me of this tweet the other day:
https://twitter.com/arbedout/status/960675720296108033
- bitcoininthevp
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Re: Is the PP going to hold up?
I agree with this.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.
On a related topic, I would like to put in an application for a new portfolio.
I see GB, Coffeehouse, Swensen all have their own. And I'm jealous.
I propose a portfolio which is a traditional permanent portfolio mix with a bitcoin variable portfolio sidecar.
Hows:
- 24% gold
24% cash
24% stocks
24% long term bonds
4% bitcoin
Ill need your help with the name.
- dualstow
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Re: Is the PP going to hold up?
Budd, if I recall correctly, you are quite well off. (Publicly stated). You should be relaxing, and not sweating this at all.
Failing that, I just want to know if you simply feel like venting and don't actually need a response, or if you are looking for answers that you haven't gotten yet. I'm asking sincerely, not sarcastically.
Failing that, I just want to know if you simply feel like venting and don't actually need a response, or if you are looking for answers that you haven't gotten yet. I'm asking sincerely, not sarcastically.
9pm EST Explosions in Iran (Isfahan) and Syria and Iraq. Not yet confirmed.
- buddtholomew
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Re: Is the PP going to hold up?
Sure, but let's not forget LTT's are down almost 8% YTD.bitcoininthevp wrote:Dont forget. Gold went from ~$1240/oz to ~$1320/oz in the last 60 days. Thats about 6.5% up.buddtholomew wrote:Finally, someone coming to my point of view.Cortopassi wrote:The only temporary issue I have with this downturn is the rapidity of the paper loss. I was at 2.66% up on 1/25, here we are 15 days later and I am -2.81% down. The PP is mitigating the downturn, but it is still a painful 5.5% turn negative.
PP has provided absolutely zero benefit during this downturn.
Only reason PP is losing slightly less is the lower allocation to equities. This lower allocation comes with MUCH lower gains when stocks rise.
So not only shouldn't one be looking at gold "responding to" stocks within a couple days, but Id advocate looking weeks/months *before* as well.
- buddtholomew
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Re: Is the PP going to hold up?
DS, I'm not sweating the losses at all since they are minor in comparison to the gains we have seen in the PP.dualstow wrote:Budd, if I recall correctly, you are quite well off. (Publicly stated). You should be relaxing, and not sweating this at all.
Failing that, I just want to know if you simply feel like venting and don't actually need a response, or if you are looking for answers that you haven't gotten yet. I'm asking sincerely, not sarcastically.
If the threshold is > 20% decline before Gold and LTT's respond then I need to rethink whether the PP is for me.
With a 20% decline I am exchanging into stocks and may never benefit from Gold or LTT's if Stocks continue to fall (I will be re-balancing into stocks).
Maybe its just Stocks and Cash.
- dualstow
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Re: Is the PP going to hold up?
Makes sense.
9pm EST Explosions in Iran (Isfahan) and Syria and Iraq. Not yet confirmed.
Re: Is the PP going to hold up?
"Bittersweet"?bitcoininthevp wrote:I agree with this.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.
On a related topic, I would like to put in an application for a new portfolio.
I see GB, Coffeehouse, Swensen all have their own. And I'm jealous.
I propose a portfolio which is a traditional permanent portfolio mix with a bitcoin variable portfolio sidecar.
Hows:
Turns out the back testing is amazing.
- 24% gold
24% cash
24% stocks
24% long term bonds
4% bitcoin
Ill need your help with the name.
I like the concept, btw.
Don't agree with me too strongly or I'm going to change my mind
Re: Is the PP going to hold up?
The Little Bit portfolio
Re: Is the PP going to hold up?
dualstow, I forget your plan. Is that nibble a long term increase plan or micro rebalancing or what?dualstow wrote:
I'll be nibbling at stocks on a regular (weekly) schedule, but I think the dumbest thing I can do is make that equity-heavy fantasy a reality, even if stocks continue to drop. My thought for the day is stay the course.
I so badly want to buy some whenever it drops a few percent, but that has never once worked out for me—even in late 2008, already way farther down than a few percent, it just kept going down. So that is my stay the course self admonition.
- dualstow
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Re: Is the PP going to hold up?
Mr Vacuum wrote:dualstow, I forget your plan. Is that nibble a long term increase plan or micro rebalancing or what?dualstow wrote:
I'll be nibbling at stocks on a regular (weekly) schedule,
Choice #1. It’s not so much rebalancing as a long term plan to continue to accumulate stocks, pp or not, while I’m still relatively young. It’s probably best to just lump sum early, but my lump sum is already invested.
Most importantly, this is the only way I can overcome paralysis. I can buy any of the four assets as long as it’s in small amounts.
9pm EST Explosions in Iran (Isfahan) and Syria and Iraq. Not yet confirmed.
Re: Is the PP going to hold up?
Smaller moves are much easier to make for me as well. If I received a large lump sum of money, I would have great difficulty putting it all to work immediately. I would slowly and methodically add to my positions over a course of time that felt adequate for the amount involved. It's likely too conservative, but it helps me sleep at night.
Don't agree with me too strongly or I'm going to change my mind
Re: Is the PP going to hold up?
My personal opinion is that gold is going to explode up soon. Of course timing is never easy and I'm talking over the next 5-7 years, I see gold out-performing stocks significantly.
In my business, I see costs skyrocketing.
-Construction costs on commercial projects are 20-25% higher than they were 4 years ago. There is a lot of building going on so contractors can bid high.
-Wages have been rising rapidly recently.
-Other input costs are rising, almost across the board.
To me that signals inflationary pressure. Inflation has been virtually non-existent for over a decade now. It's been relatively tame for 3 decades.
In my business, I see costs skyrocketing.
-Construction costs on commercial projects are 20-25% higher than they were 4 years ago. There is a lot of building going on so contractors can bid high.
-Wages have been rising rapidly recently.
-Other input costs are rising, almost across the board.
To me that signals inflationary pressure. Inflation has been virtually non-existent for over a decade now. It's been relatively tame for 3 decades.