Purpose of the PP
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Re: Purpose of the PP
Primary is Euro PP: 60% of savings
Also dividend growth portfolio: 25%
and Merriman-type multi-asset: 15%
Having several porfolios is just a way of diversifying, as different strategies do better at different times.
Also dividend growth portfolio: 25%
and Merriman-type multi-asset: 15%
Having several porfolios is just a way of diversifying, as different strategies do better at different times.
- Cortopassi
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Re: Purpose of the PP
Purpose of the PP:
Days like today.
Days like today.
- buddtholomew
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Re: Purpose of the PP
I have to say...so far (sorry)
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Re: Purpose of the PP
Yeah, not unexpected. Quite a comeback, but at least gold is holding some gains and so are bonds.
- buddtholomew
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Re: Purpose of the PP
Yeah...Cortopassi wrote: ↑Tue Oct 23, 2018 2:52 pm Yeah, not unexpected. Quite a comeback, but at least gold is holding some gains and so are bonds.
Still at the lowest point for lifetime CAGR...
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Re: Purpose of the PP
Purpose of the PP (today's edition):
To allow not giving a crap about:
--AAPL poor outlook, which should have killed the market today but doesn't look like it
--Higher (today) or lower number of jobs than predicted by the jobs report
--Chinese trade deal in the works (today). Tomorrow? Who knows.
--Oil going down, oil going up
--Various reports and quotes from any number of officials saying how great or how bad things are
Years ago, I would have had an anxiety attack at any number of things and how they affected the current value of whatever option or stock I was holding. Now, ehhh, whatever.
To allow not giving a crap about:
--AAPL poor outlook, which should have killed the market today but doesn't look like it
--Higher (today) or lower number of jobs than predicted by the jobs report
--Chinese trade deal in the works (today). Tomorrow? Who knows.
--Oil going down, oil going up
--Various reports and quotes from any number of officials saying how great or how bad things are
Years ago, I would have had an anxiety attack at any number of things and how they affected the current value of whatever option or stock I was holding. Now, ehhh, whatever.
- buddtholomew
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Re: Purpose of the PP
To me, same old song and dance
Gold and LTT selling
Stinking it up as usual
Gold and LTT selling
Stinking it up as usual
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Re: Purpose of the PP
https://youtu.be/gzdWPwVTWsIbuddtholomew wrote: ↑Fri Nov 02, 2018 11:02 am To me, same old song and dance
Gold and LTT selling
Stinking it up as usual
9pm EST Explosions in Iran (Isfahan) and Syria and Iraq. Not yet confirmed.
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Re: Purpose of the PP
Again, days like today. Is it gridlock that have the markets giddy? Who knows. Who could possibly have called what would happen today? Or tomorrow.
Re: Purpose of the PP
I bet the financial analysts have perfect explanations. :-)Cortopassi wrote: ↑Wed Nov 07, 2018 3:19 pm Again, days like today. Is it gridlock that have the markets giddy? Who knows. Who could possibly have called what would happen today? Or tomorrow.
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Re: Purpose of the PP
To “appear” on the surface to provide safety and stability but in reality doesn’t at all. When stocks decline so does the PP in all its glory.
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Re: Purpose of the PP
Everyone having fun?
PP sucks!
I don’t care what anyone says, WORST portfolio imaginable.
Garbage.
PP sucks!
I don’t care what anyone says, WORST portfolio imaginable.
Garbage.
Re: Purpose of the PP
I'm sure you've heard of Einstein's definition of insanity.buddtholomew wrote: ↑Mon Nov 12, 2018 8:53 am Everyone having fun?
PP sucks!
I don’t care what anyone says, WORST portfolio imaginable.
Garbage.
If you really are convinced of what you are saying then why do you continue with it at all?
- buddtholomew
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Re: Purpose of the PP
It would require me to unwind my garbage Gold.jacksonM wrote: ↑Mon Nov 12, 2018 9:13 amI'm sure you've heard of Einstein's definition of insanity.buddtholomew wrote: ↑Mon Nov 12, 2018 8:53 am Everyone having fun?
PP sucks!
I don’t care what anyone says, WORST portfolio imaginable.
Garbage.
If you really are convinced of what you are saying then why do you continue with it at all?
Keep on waiting for this portfolio to actually do something different than a 70/30 equity/bond allocation.
I want to be proven wrong but this portfolio is truly crap.
It may have worked in the past (now + 10 years ago) probably out of shear luck but now it is at the whims of the stock market and the dollar.
We gave up 300+% in stocks over last decade so that the portfolio can go down when stocks finally decline!
- Kriegsspiel
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Re: Purpose of the PP
Getting out of the PP over the course of a few years would save you some taxes I'm guessing?buddtholomew wrote: ↑Mon Nov 12, 2018 9:17 amIt would require me to unwind my garbage Gold.jacksonM wrote: ↑Mon Nov 12, 2018 9:13 amI'm sure you've heard of Einstein's definition of insanity.buddtholomew wrote: ↑Mon Nov 12, 2018 8:53 am Everyone having fun?
PP sucks!
I don’t care what anyone says, WORST portfolio imaginable.
Garbage.
If you really are convinced of what you are saying then why do you continue with it at all?
Keep on waiting for this portfolio to actually do something different than a 70/30 equity/bond allocation.
I want to be proven wrong but this portfolio is truly crap.
It may have worked in the past (now + 10 years ago) probably out of shear luck but now it is at the whims of the stock market and the dollar.
We gave up 300+% in stocks over last decade so that the portfolio can go down when stocks finally decline!
Re: Purpose of the PP
YTD performance:
PP: -2.9% return with 4.9% volatility
All-world 60/40 benchmark: -3.1% return with 7.7% volatility
So YTD, compared to a 60/40 portfolio, the PP has provided about the same return (slightly higher, actually) with 36% less volatility.
PP: -2.9% return with 4.9% volatility
All-world 60/40 benchmark: -3.1% return with 7.7% volatility
So YTD, compared to a 60/40 portfolio, the PP has provided about the same return (slightly higher, actually) with 36% less volatility.
- buddtholomew
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Re: Purpose of the PP
Tortoise, thank you for that.
Problem is the PP under-performed a 60/40 allocation over last 10 years (at least for me)...
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Re: Purpose of the PP
Budd,buddtholomew wrote: ↑Mon Nov 12, 2018 6:57 pmTortoise, thank you for that.
Problem is the PP under-performed a 60/40 allocation over last 10 years (at least for me)...
If you are so concerned with what the 60/40 portfolio is doing then I don't understand why you don't use the 60/40 portfolio? If you aren't using a 60/40 allocation then my question is why did you change? Was it 2002? 2008? The volatility?
There is a really great podcast episode that came out last week by J. David Stein on his podcast "Money for the rest of us" in which he points out that investing really shouldn't be about getting the maximum return, it's about having the minimum regret. (I forget how exactly he worded it, but I recommend that epsiode which you can find here.)
Obviously if there were a portfolio that returned as much as 100% stocks with the risk of 100% bonds any of us would take it, but we have to decide where we want to be on the risk spectrum. If you have 50x your annual expenses in your account you can afford to just put the money into US Treasuries and live out your life in comfort. But will you suffer more regret not having put the money at risk than if you risked it and lost?
If you can only console yourself with a portfolio that beats or meets the 60/40 consistently then invest in the 60/40. If you want to beat it consistently then just go 100% stocks which would have CRUSHED the 60/40 over the last 10 years (it's been longer than 10 years since the crash now).
Just using Tylers site the 60/40 would have got you 9.02% annualized from 2009 to 2017, vs the total stock market getting you over 13% in the same time-frame. If you have the stomach for just throwing it all in VTSAX then do it, but if not then you shouldn't really complain if someone willing to take more risk than you got more reward, that was the risk they chose to take.
One of the things I've come to realize is that in the wake of 2008 there was a resurgence in "safe" portfolios. People learned quickly that they didn't have the risk-tolerance they thought they did, but I wonder where all those people were invested in 2007? Just look at this year for example. I was lamenting a few weeks ago how stocks were up nearly 10% this year while the PP was basically flat. Then in 1 week my YTD return was better than stocks, and I was reminded that I just don't have the stomach to tolerate that.
Investing is NOT ALL ABOUT THE NUMBERS it is ALWAYS ABOUT BEHAVIOR! The vast majority of investors under-perform their own asset allocations because they can't help but tinker, or change, or think "this time is different." Asset allocation is a way to help get the investors behavior in line with the numbers they want to see.
So I invest to minimize the risk of regret. The regret of being under-invested and missing out (I have my VP heavily invested in stocks), and the risk of being over-invested and feeling like I took too much risk (I have the bulk of my assets in the PP). Ultimately my Portfolio this year is down 4.5% which is pretty lousy, but ultimately I can console myself in knowing that I have more years to accumulate, and that performance is in line with what I would expect from my portfolio. In context:
(lost my tracking data from pre-2016)
2016: +12.205%
2017: +11.065%
2018: (- 4.053%) YTD (annulized)
Overall: +5.081%
So although 2018 hasn't been the best, I'm still well on track and +5.081% is good enough for me. I can hit all my long-term goals, and I don't feel like I have taken too much risk or left too much money on the table.
You need to decide where the minimal amount of regret is for you.
~DragonJoey3
Re: Purpose of the PP
That's a great post DragonJoey. You have to understand that Budd only has $13M in his portfolio, so he needs to swing for the fences in order to meet his FI goals. Budd's bitter that he's not getting 15% returns every year, and I'm bitter that I don't have $13M to put into T-bills. I guess the grass really is always greener somewhere else.
- buddtholomew
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Re: Purpose of the PP
Couldn’t be further off base.stuper1 wrote: ↑Tue Nov 13, 2018 11:51 am That's a great post DragonJoey. You have to understand that Budd only has $13M in his portfolio, so he needs to swing for the fences in order to meet his FI goals. Budd's bitter that he's not getting 15% returns every year, and I'm bitter that I don't have $13M to put into T-bills. I guess the grass really is always greener somewhere else.
Net worth is irrelevant.
There’s nothing special about the PP.
Many hold all 4 assets but no one is naive enough to hold 25% in gold.
I was a novice when I entered the PP so it appeared on the surface to be what I was looking for. In reality it is the coward of all coward portfolios and loses better than it gains.
Re: Purpose of the PP
Budd,
Have you read any of HB's books or listened to his podcasts to understand why he recommended 25% gold? it's not just about annual returns.
BTW, I always enjoy your Buddbursts, both the happy and sad. Glad you are here. As they say, if you weren't here, we would have to invent somebody like you. You must be doing something right to have $13M.
Have you read any of HB's books or listened to his podcasts to understand why he recommended 25% gold? it's not just about annual returns.
BTW, I always enjoy your Buddbursts, both the happy and sad. Glad you are here. As they say, if you weren't here, we would have to invent somebody like you. You must be doing something right to have $13M.
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Re: Purpose of the PP
I have read a couple of books and listened to all the podcasts as nauseum. Like I said, I bought into the philosophy hook, line and sinker. Problem is I have 3.23 CAGR to show for it during one of the biggest bull markets of our time. That sucks no matter what anyone says.stuper1 wrote: ↑Tue Nov 13, 2018 1:12 pm Budd,
Have you read any of HB's books or listened to his podcasts to understand why he recommended 25% gold? it's not just about annual returns.
BTW, I always enjoy your Buddbursts, both the happy and sad. Glad you are here. As they say, if you weren't here, we would have to invent somebody like you. You must be doing something right to have $13M.
It’s pretty difficult to miss that stocks are positive again this year with the assets that differentiate the portfolio (Gold and LTT’s) down around 10% each. The more the market falls the lower these assets go. Garbage. There’s always something going on to clobber the portfolio...rising rates, strong dollar. Doesn’t matter, PP will go down. CPI strongest reading in 6 years, gold declines. Same story, year after year after year.
Last edited by buddtholomew on Tue Nov 13, 2018 1:21 pm, edited 2 times in total.
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Re: Purpose of the PP
Stuper1,stuper1 wrote: ↑Tue Nov 13, 2018 11:51 am That's a great post DragonJoey. You have to understand that Budd only has $13M in his portfolio, so he needs to swing for the fences in order to meet his FI goals. Budd's bitter that he's not getting 15% returns every year, and I'm bitter that I don't have $13M to put into T-bills. I guess the grass really is always greener somewhere else.
I'm aware that Budd has 8 digits in his portfolio he's mentioned it here before. Hence why I mentioned the possibility of just doing T-bills for everything.
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Re: Purpose of the PP
Budd,buddtholomew wrote: ↑Tue Nov 13, 2018 1:17 pmI have read a couple of books and listened to all the podcasts as nauseum. Like I said, I bought into the philosophy hook, line and sinker. Problem is I have 3.23 CAGR to show for it during one of the biggest bull markets of our time. That sucks no matter what anyone says.stuper1 wrote: ↑Tue Nov 13, 2018 1:12 pm Budd,
Have you read any of HB's books or listened to his podcasts to understand why he recommended 25% gold? it's not just about annual returns.
BTW, I always enjoy your Buddbursts, both the happy and sad. Glad you are here. As they say, if you weren't here, we would have to invent somebody like you. You must be doing something right to have $13M.
The portfolio is designed to provide a positive CAGR that is after-inflation. It's primary focus is preservation, and to reach that positive cagr with low-volatility and do so quickly.
Using Tyler's site I would point out:
https://portfoliocharts.com/portfolio/p ... portfolio/
Note the things that the portfolio does well.
- The range of possible CAGR's converges to the mean quickly. (Long term returns chart)
- The mean CAGR is positive by several percent. (Long term returns chart)
- The sequence of returns risk is very low (Start date sensitivity chart)
- Drawdowns are small and unlikely to result in much angst (drawdowns chart [very low ulcer index])
My overall portfolio is actually more along the lines of the Golden Butterfly portfolio that Tyler also has on that site. I consider that portfolio as looking something like this:
80% HBPP (money that I want to have very minimal risk on and would like a consistent real return on)
20% Small Cap Stocks (Money that I'm placing at higher risk because in the long run the returns will be higher)
By limiting my high-risk money to 1/5th of my portfolio I'm unlikely to suffer a shock that would cause me to sell-low or send me into panic mode. Also the cash portion of my PP (20% of my portfolio) is my Emergency Fund, so I need to ensure that capital doesn't experience significant draw-downs to the point where I wouldn't have it if I need it.
Harry Browne never said you have to be 100% PP. He advocated for the PP for "Money you can't afford to lose." He also advocated for a VP for "Money you are willing to accept more risk on."
The PP is the coward of all cowards because it is designed to be a bastion that can return a rate above inflation (over nearly every 3 year rolling window) without accepting hardly any risk.
The behavior you are exemplifying is one of the things that drives the market cycles we see. When the market it hot FOMO (fear of missing out) drives people to get in. When it crashes people feel burned and sit on the sidelines while it recovers. It is up to each investor to come up with a means of harnessing that inner drive, and saying "No I will stay the course." Find a portfolio that is acceptable to you in terms of not suffering from massive FOMO, and also not putting yourself at risk of getting hit with a draw-down you can't stomach.
I think the best advice I have heard on this is "take small steps." If you want to change to a more equities position, do enough to feel like you did something, but not so much to feel like you did everything. Take 5 or 10% of your portfolio and put it in the S&P 500 index fund. Be a 90% HBPP, and 10% VP in something that keeps the FOMO at bay.
It's better for you to lose a little of your money chasing yield and feel like you did enough, than to eventually say "To hell with it," and put all your money at risk all at once.
~DragonJoey3
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Re: Purpose of the PP
Thanks for the thoughtful responses.
For the record I am invested 70/30 in retirement accounts so don’t feel I have missed the rise in equities by any means.
I have just lost faith in the portfolio to provide stability during market fluctuations (10% or greater) and it has failed to do so during the recent pullback in stocks.
When stocks enter a correction or bear market I want to buy stocks and not sit in Gold and LTT’s.
Hope that makes sense.
For the record I am invested 70/30 in retirement accounts so don’t feel I have missed the rise in equities by any means.
I have just lost faith in the portfolio to provide stability during market fluctuations (10% or greater) and it has failed to do so during the recent pullback in stocks.
When stocks enter a correction or bear market I want to buy stocks and not sit in Gold and LTT’s.
Hope that makes sense.