Is the PP going to hold up?

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dualstow
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Re: Is the PP going to hold up?

Post by dualstow » Fri Feb 09, 2018 8:48 am

Awesome, Sophie, especially about the self-organizing networks. Reminds me of the beginning of one of those Dawkins books that explains how the tide makes a beach look so orderly and how the largest vitamins rise to the top of a pill bottle, only better!

Watching stocks go up since 2012(?) I had a bit of pp buyer's remorse, yearning for my old stock-heavy portfolio, glee for the extra equities in my Vp, and some woulda/coulda/shoulda dreams of a future equity-heavy portfolio. I think it's normal and natural to have those feelings; I'm not an ice man.
Now that my pp+vp has shrunk by a bit over 5% from the peak (including some normal spending from cash), I feel glee for cash and short-term bonds.

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.
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Re: Is the PP going to hold up?

Post by Cortopassi » Fri Feb 09, 2018 10:02 am

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.
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Re: Is the PP going to hold up?

Post by buddtholomew » Fri Feb 09, 2018 11:33 am

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.
Finally, someone coming to my point of view.
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.
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Re: Is the PP going to hold up?

Post by Cortopassi » Fri Feb 09, 2018 11:44 am

buddtholomew wrote:
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.
Finally, someone coming to my point of view.
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.
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.

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.
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Re: Is the PP going to hold up?

Post by Kriegsspiel » Fri Feb 09, 2018 11:56 am

The PP has a 'duration' of longer than 5 days.
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Re: Is the PP going to hold up?

Post by buddtholomew » Fri Feb 09, 2018 12:14 pm

You’re right, it’s so awesome!!
Look how beautiful the sea of red is.
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Re: Is the PP going to hold up?

Post by stuper1 » Fri Feb 09, 2018 12:19 pm

Kriegsspiel wrote:The PP has a 'duration' of longer than 5 days.
Could you please explain what that means. I'm slow. Thanks!
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Re: Is the PP going to hold up?

Post by Kriegsspiel » Fri Feb 09, 2018 12:32 pm

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.
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Re: Is the PP going to hold up?

Post by buddtholomew » Fri Feb 09, 2018 12:42 pm

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...
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Re: Is the PP going to hold up?

Post by glennds » Fri Feb 09, 2018 12:59 pm

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.

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Re: Is the PP going to hold up?

Post by buddtholomew » Fri Feb 09, 2018 1:27 pm

Thanks Glennd’s for the reminder.
Stocks are rebounding with Gold/LTT’s selling off.
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Re: Is the PP going to hold up?

Post by Libertarian666 » Fri Feb 09, 2018 1:46 pm

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...
So that means that gold is always worse than stocks.

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.
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Re: Is the PP going to hold up?

Post by glennds » Fri Feb 09, 2018 2:19 pm

buddtholomew wrote:Thanks Glennd’s for the reminder.
Stocks are rebounding with Gold/LTT’s selling off.
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.

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.
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Re: Is the PP going to hold up?

Post by bitcoininthevp » Fri Feb 09, 2018 2:40 pm

buddtholomew wrote:
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.
Finally, someone coming to my point of view.
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.
Dont forget. Gold went from ~$1240/oz to ~$1320/oz in the last 60 days. Thats about 6.5% up.

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.
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Re: Is the PP going to hold up?

Post by bitcoininthevp » Fri Feb 09, 2018 2:47 pm

buddtholomew wrote:
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.
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.

Reminds me of this tweet the other day:
https://twitter.com/arbedout/status/960675720296108033
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Re: Is the PP going to hold up?

Post by bitcoininthevp » Fri Feb 09, 2018 2:57 pm

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 with this.

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
Turns out the back testing is amazing.

Ill need your help with the name.
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Re: Is the PP going to hold up?

Post by dualstow » Fri Feb 09, 2018 3:06 pm

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.
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Re: Is the PP going to hold up?

Post by buddtholomew » Fri Feb 09, 2018 3:09 pm

bitcoininthevp wrote:
buddtholomew wrote:
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.
Finally, someone coming to my point of view.
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.
Dont forget. Gold went from ~$1240/oz to ~$1320/oz in the last 60 days. Thats about 6.5% up.

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.
Sure, but let's not forget LTT's are down almost 8% YTD.
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Re: Is the PP going to hold up?

Post by buddtholomew » Fri Feb 09, 2018 3:14 pm

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.
DS, I'm not sweating the losses at all since they are minor in comparison to the gains we have seen in the PP.
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.
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Re: Is the PP going to hold up?

Post by dualstow » Fri Feb 09, 2018 3:16 pm

Makes sense.
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Re: Is the PP going to hold up?

Post by eufo » Fri Feb 09, 2018 3:27 pm

bitcoininthevp wrote:
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 with this.

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
Turns out the back testing is amazing.

Ill need your help with the name.
"Bittersweet"?

I like the concept, btw.
Don't agree with me too strongly or I'm going to change my mind
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Re: Is the PP going to hold up?

Post by ochotona » Fri Feb 09, 2018 4:04 pm

The Little Bit portfolio
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Re: Is the PP going to hold up?

Post by Mr Vacuum » Fri Feb 09, 2018 8:02 pm

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.
dualstow, I forget your plan. Is that nibble a long term increase plan or micro rebalancing or what?

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.
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Re: Is the PP going to hold up?

Post by dualstow » Sat Feb 10, 2018 7:33 am

Mr Vacuum wrote:
dualstow wrote:
I'll be nibbling at stocks on a regular (weekly) schedule,
dualstow, I forget your plan. Is that nibble a long term increase plan or micro rebalancing or what?


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.
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Re: Is the PP going to hold up?

Post by eufo » Sat Feb 10, 2018 7:40 am

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.
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