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 » Mon Feb 12, 2018 12:21 pm

ochotona wrote:
buddtholomew wrote:Yikes, everyone is all over the map...
I’ll just stick to the plan and rebalance into LTT’s.
Thanks for all the input.
Trying to guess how to make you happy is all over the map
Bad choice of words, sorry.
What I meant is there are a variety of opinions and rather than deviate from the plan will follow the plan.
Not trying to make drastic changes to the portfolio.

Got to stop typing while driving.
Appreciate all the help, thank you.
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Re: Is the PP going to hold up?

Post by dualstow » Mon Feb 12, 2018 8:12 pm

Tyler wrote:FYI -- This thread inspired a longer post about the benefits of investing firewalls, and naturally there's a good PP example. For full effect, be sure to read it while drinking coffee next to a warm fire. ;)

https://portfoliocharts.com/2018/02/10/ ... e-markets/
I missed this post earlier, although I had seen the p’charts post. Good stuff. And I was drinking coffee!
ISHARES TRUST 20+ YEAR TREASURY BD ETF's price dropped 2.51 % to $136.89 at 01:17 PM EST today.
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Re: Is the PP going to hold up?

Post by KevinW » Tue Feb 13, 2018 12:29 am

bitcoininthevp wrote:
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.
How about the "Fifth Element Portfolio"?

~~~

Moments like these remind me why I like holding the PP. I hear chatter about a meltdown in the markets, and instead of feeling anxious, I have the same mindset as when I sit down to watch the latest episode of Sunny in Philadelphia. "What hilarious predicament did the clowns cook up this week?"

Just stay the course, let the portfolio whir along as designed, and enjoy life.
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Re: Is the PP going to hold up?

Post by stuper1 » Tue Feb 13, 2018 9:50 am

bitcoininthevp wrote:
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.
Sure, the backtesting of that portfolio would be amazing at this point. It would be even better if you just put 100% in bitcoin. Do you really think that the next 9 years of bitcoin price increases will be anything like the last 9 years? I guess it could be, but how much money should one bet on that? For me, the answer would be: no more than I can afford to lose.
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Re: Is the PP going to hold up?

Post by bitcoininthevp » Wed Feb 14, 2018 9:45 am

stuper1 wrote:
bitcoininthevp wrote:
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.
Sure, the backtesting of that portfolio would be amazing at this point. It would be even better if you just put 100% in bitcoin. Do you really think that the next 9 years of bitcoin price increases will be anything like the last 9 years? I guess it could be, but how much money should one bet on that? For me, the answer would be: no more than I can afford to lose.
I should have indicated sarcasm for my back testing comment :)
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Re: Is the PP going to hold up?

Post by buddtholomew » Wed Feb 14, 2018 10:14 am

For the record I haven’t purchased TLT, still mulling it over and with today’s CPI number it looks less appealing now.
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Re: Is the PP going to hold up?

Post by Cortopassi » Wed Feb 14, 2018 10:17 am

Hope you bought gold.. :D
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Re: Is the PP going to hold up?

Post by craigr » Wed Feb 14, 2018 1:59 pm

Howdy folks!

I rebalanced from stocks in January and February as they hit the way upper band for me. I had overweighted stocks in my VP after Trump's election figuring it would be a good boost and it paid off well also.

But now I'm back again at the boring 25% bands as I usually am and am not too fussed about things. The market dip last week would have been scarier if I wasn't diversified. But even with the market dip, it is still up quite a lot from when Trump got into office so it's good to keep things in perspective.

I have been running this portfolio now for over 10 years at this point and the one thing I've learned is over time it all kind of works out. And by not owning too much of any one single asset, it's hard to get as badly burned as can happen with other allocations.

Hope all of you are well.
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Re: Is the PP going to hold up?

Post by blue_ruin17 » Sat Feb 17, 2018 1:06 pm

Good to hear from you Craig, and thanks for stopping by.

I always find it fascinating to witness my own reaction to market fluctuations... with the PP, you observe the market madness from what feels almost an out-of-body experience: even though a full quarter of my core assets are invested in a particular asset that has plunged, I am totally emotionally disconnected from any feelings of panic, impending doom, or even of mild anxiety. The zen-like poise that the PP allows you to assume even in the midst of severe volatility or panic really is one of the most important features built-in to the PP.
"Like a confident pack, a confident portfolio provides both strength in fact, as well as — and this is the part I bet you’re missing right now and the focus of this note — strength in spirit."
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Re: Is the PP going to hold up?

Post by dualstow » Tue Feb 20, 2018 12:19 am

aha, so that’s you in the avatar. O0
ISHARES TRUST 20+ YEAR TREASURY BD ETF's price dropped 2.51 % to $136.89 at 01:17 PM EST today.
-- vanguard email to me
https://www.city-journal.org/journalism-advocacy-over-reporting
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Re: Is the PP going to hold up?

Post by blue_ruin17 » Tue Feb 20, 2018 2:21 pm

;)
"Like a confident pack, a confident portfolio provides both strength in fact, as well as — and this is the part I bet you’re missing right now and the focus of this note — strength in spirit."
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Re: Is the PP going to hold up?

Post by dualstow » Wed Feb 21, 2018 3:44 pm

Your kindred spirit, Budd?

https://www.bogleheads.org/forum/viewto ... 3#p3795060
(BOGLEHEAD fantasytensai)
What do I do with my bond funds that have been dropping like a rock? I'm already at 80/20 but I still feel absolutely screwed by my bond fund allocations. I have the risk tolerance for 90/10 but it just sickens me to sell VBTLX at such a huge loss.
ISHARES TRUST 20+ YEAR TREASURY BD ETF's price dropped 2.51 % to $136.89 at 01:17 PM EST today.
-- vanguard email to me
https://www.city-journal.org/journalism-advocacy-over-reporting
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Re: Is the PP going to hold up?

Post by buddtholomew » Thu Mar 01, 2018 9:00 am

I'll answer the OP's question - No.
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Re: Is the PP going to hold up?

Post by Cortopassi » Thu Mar 01, 2018 10:09 am

Gold blows... ;)
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Re: Is the PP going to hold up?

Post by Tyler » Thu Mar 01, 2018 10:10 am

dualstow wrote:
(BOGLEHEAD fantasytensai)
What do I do with my bond funds that have been dropping like a rock? I'm already at 80/20 but I still feel absolutely screwed by my bond fund allocations. I have the risk tolerance for 90/10 but it just sickens me to sell VBTLX at such a huge loss.
??? I'm always fascinated when people's perception of their own risk tolerance is in such obvious opposition to their actual behavior.
Mechanical engineer, history buff, treasure manager... totally not Ben Gates
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Re: Is the PP going to hold up?

Post by buddtholomew » Thu Mar 01, 2018 10:14 am

Cortopassi wrote:Gold blows... ;)
You got it.
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Re: Is the PP going to hold up?

Post by Roy » Thu Mar 01, 2018 11:05 am

Greetings,

I go back to the epic discussions on the other board, from 2008. I’m a nostalgic slob, even over things like this. Those talks remain my best memories regarding anything to do with investing, with Craig and Tex, and the usual suspects who joined in, and even the relative authorities who were big critics, but an important part of that discussion, or the why Gold is terrible threads, which always referred back powerfully to this concept.

There was always a reason (or a bunch) why the basic HBPP could not or should not work, or some part of it not work, and surely altogether would not work—going forward in the new normal of whatever month happened to be in focus.

How’d that turn out?


Yeah, this time is different (and here follows the well-argued reasons why…). Sure. So was pick-your-month of the last 10 years different, followed by the sometimes well-argued reasons whys.

“Is it different this time?,” someone asked here five years ago. I thought then and feel the same:

" I wonder how many times those five words have been used—and will be used— to justify the abandonment of a good plan. "


It is useful revisiting those threads—way back to the olden days—and what it felt like living through those times.

If one did not fret over the dailies, the experience was and remains, dust in the wind…


Volatile parts, sure. Valuations too rich, I suppose. Too funky, yep. But portfolio-as-a-whole rarely looked this good. Especially when not looking at it. I suspect much the same might be said 10 years from now.

Peace
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Re: Is the PP going to hold up?

Post by stuper1 » Thu Mar 01, 2018 11:24 am

I just went to etefreplay.com. Over the last 12 months, the PP is up 5.7%. Year to date, the PP is down 0.8%, which is exactly the same as a 60/40 stock/bond fund. I'm baffled by the angst in this thread.
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Re: Is the PP going to hold up?

Post by buddtholomew » Thu Mar 01, 2018 12:11 pm

stuper1 wrote:I just went to etefreplay.com. Over the last 12 months, the PP is up 5.7%. Year to date, the PP is down 0.8%, which is exactly the same as a 60/40 stock/bond fund. I'm baffled by the angst in this thread.
What is the 60/40 12-month return.
The PP goes down with stocks and when stocks go up the portfolio goes up 1/5 the amount.
That doesn’t disturb you?
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Re: Is the PP going to hold up?

Post by stuper1 » Thu Mar 01, 2018 12:24 pm

60/40 12-month return is 9.9%

Stocks have been on a 10 year tear, so of course the PP has been lagging. A 60/40 or 70/30 isn't going to look very good if we hit another 10-year stretch like 1998 to 2008. I know for me personally that having so many down years over that time frame would make it very hard for me not to capitulate and sell low. Having two assets (LTT and gold) that are uncorrelated to stocks/bonds helps smooth returns out a lot, without causing a huge reduction in long term returns.

I'm still a long ways from retirement, so I think 25% gold is too much. My personal allocation is about 45/20/20/15 in stocks/LTT/STT/gold.
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Re: Is the PP going to hold up?

Post by buddtholomew » Thu Mar 01, 2018 12:30 pm

stuper1 wrote:60/40 12-month return is 9.9%

Stocks have been on a 10 year tear, so of course the PP has been lagging. A 60/40 or 70/30 isn't going to look very good if we hit another 10-year stretch like 1998 to 2008. I know for me personally that having so many down years over that time frame would make it very hard for me not to capitulate and sell low. Having two assets (LTT and gold) that are uncorrelated to stocks/bonds helps smooth returns out a lot, without causing a huge reduction in long term returns.

I'm still a long ways from retirement, so I think 25% gold is too much. My personal allocation is about 45/20/20/15 in stocks/LTT/STT/gold.
Another poster not 4x25...
You have 45% in stocks and 15% in Gold.
Your experience is more like a BH portfolio than traditional PP which explains why you have a hard time understanding where I’m coming from.
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Re: Is the PP going to hold up?

Post by Cortopassi » Thu Mar 01, 2018 12:41 pm

buddtholomew wrote:
stuper1 wrote:60/40 12-month return is 9.9%

Stocks have been on a 10 year tear, so of course the PP has been lagging. A 60/40 or 70/30 isn't going to look very good if we hit another 10-year stretch like 1998 to 2008. I know for me personally that having so many down years over that time frame would make it very hard for me not to capitulate and sell low. Having two assets (LTT and gold) that are uncorrelated to stocks/bonds helps smooth returns out a lot, without causing a huge reduction in long term returns.

I'm still a long ways from retirement, so I think 25% gold is too much. My personal allocation is about 45/20/20/15 in stocks/LTT/STT/gold.
Another poster not 4x25...
You have 45% in stocks and 15% in Gold.
Your experience is more like a BH portfolio than traditional PP which explains why you have a hard time understanding where I’m coming from.
Budd,

So if you haven't already, tweak it to where you are ok with it. I am 35% stocks (mix), 10% cash, 25% gold, 5% silver, 25% LTT. Obviously not a 25/25/25/25 PP, but something I am happy with.
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Re: Is the PP going to hold up?

Post by stuper1 » Thu Mar 01, 2018 1:19 pm

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.
Last edited by stuper1 on Thu Mar 01, 2018 1:20 pm, edited 1 time in total.
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Re: Is the PP going to hold up?

Post by dualstow » Thu Mar 01, 2018 1:20 pm

Roy wrote:Greetings,

I go back to the epic discussions on the other board, from 2008. I’m a nostalgic slob, even over things like this. Those talks remain my best memories regarding anything to do with investing, with Craig and Tex, and the usual suspects who joined in, and even the relative authorities who were big critics, but an important part of that discussion, or the why Gold is terrible threads, which always referred back powerfully to this concept.

There was always a reason (or a bunch) why the basic HBPP could not or should not work, or some part of it not work, and surely altogether would not work—going forward in the new normal of whatever month happened to be in focus.

How’d that turn out?


Yeah, this time is different (and here follows the well-argued reasons why…). Sure. So was pick-your-month of the last 10 years different, followed by the sometimes well-argued reasons whys.

“Is it different this time?,” someone asked here five years ago. I thought then and feel the same:

" I wonder how many times those five words have been used—and will be used— to justify the abandonment of a good plan. "


It is useful revisiting those threads—way back to the olden days—and what it felt like living through those times.

If one did not fret over the dailies, the experience was and remains, dust in the wind…


Volatile parts, sure. Valuations too rich, I suppose. Too funky, yep. But portfolio-as-a-whole rarely looked this good. Especially when not looking at it. I suspect much the same might be said 10 years from now.

Peace
Nice! I like revisiting old threads, too. Should do that more often.
ISHARES TRUST 20+ YEAR TREASURY BD ETF's price dropped 2.51 % to $136.89 at 01:17 PM EST today.
-- vanguard email to me
https://www.city-journal.org/journalism-advocacy-over-reporting
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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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