Page 5 of 7

Re: Purpose of the PP

Posted: Fri Dec 07, 2018 2:14 pm
by stuper1
Budd, I don't think you get our point. Even Harry Browne wasn't 4 x 25, and he was the inventor of the PP. He was only 4 x 25 for a certain portion of his portfolio -- the portion that he figured was too important to bet on riskier investments. Each PP investor has to figure out for themselves what that portion is.

Re: Purpose of the PP

Posted: Fri Dec 07, 2018 5:25 pm
by buddtholomew
stuper1 wrote:
Fri Dec 07, 2018 2:14 pm
Budd, I don't think you get our point. Even Harry Browne wasn't 4 x 25, and he was the inventor of the PP. He was only 4 x 25 for a certain portion of his portfolio -- the portion that he figured was too important to bet on riskier investments. Each PP investor has to figure out for themselves what that portion is.
If you change the allocation to suit your needs, then the PP no longer exists as advertised.
What is so special about stocks, bonds, gold and cash...most investors hold ALL these assets in proportions other than 4x25%.
If there's no magic to being agnostic about the future (equal parts, 25% each for economic environments) then what the hell are we doing here.
The more you move away from 4x25, the closer you are to a traditional Boglehead portfolio with a sliver of gold.
Where's the genius and ingenuity...you're telling me it doesn't exist as HB himself only held the PP for a portion of his investments.
What a farce.

After years of under-performing a traditional 60/40 SPY/BND portfolio, the PP is now -4% lower than this allocation YTD. Please...

Re: Purpose of the PP

Posted: Fri Dec 07, 2018 6:56 pm
by stuper1
They say that money can't buy happiness.

However, it can buy books ... which is almost the same thing.

You could do worse than starting with some of HB's. Or the Bible. Or both.

Re: Purpose of the PP

Posted: Fri Dec 07, 2018 8:32 pm
by buddtholomew
stuper1 wrote:
Fri Dec 07, 2018 6:56 pm
They say that money can't buy happiness.

However, it can buy books ... which is almost the same thing.

You could do worse than starting with some of HB's. Or the Bible. Or both.
You’re right, I have enough.

Re: Purpose of the PP

Posted: Fri Dec 07, 2018 10:15 pm
by Xan
buddtholomew wrote:
Fri Dec 07, 2018 10:37 am
Mr Vacuum wrote:
Fri Dec 07, 2018 10:32 am
The fool is the person who thought it had anything to do with the top of a pyramid.
Actually I think you are the fool.
I’ve run across people like you all my life, thinking they are superior than someone else in one way or another.
Again, humorous to me these are usually the losers of the bunch Mr. vacuum cleaner. Like the PP, you suck.
Budd, this has always been a very "hands-off" forum in terms of moderation. Please help us keep it that way. "Mr Vacuum Cleaner" has decided this forum is no longer worth his effort, and based on the personal attack here I don't think I blame him for that opinion.

Re: Purpose of the PP

Posted: Sat Dec 08, 2018 7:56 am
by buddtholomew
Xan wrote:
Fri Dec 07, 2018 10:15 pm
buddtholomew wrote:
Fri Dec 07, 2018 10:37 am
Mr Vacuum wrote:
Fri Dec 07, 2018 10:32 am
The fool is the person who thought it had anything to do with the top of a pyramid.
Actually I think you are the fool.
I’ve run across people like you all my life, thinking they are superior than someone else in one way or another.
Again, humorous to me these are usually the losers of the bunch Mr. vacuum cleaner. Like the PP, you suck.
Budd, this has always been a very "hands-off" forum in terms of moderation. Please help us keep it that way. "Mr Vacuum Cleaner" has decided this forum is no longer worth his effort, and based on the personal attack here I don't think I blame him for that opinion.
Don’t really care; nothing here for me either but smoke and mirrors. I’ve had my fair share of negativity as well and am tired of being everyone’s “joke”. I’ll leave as well so the groupthink can continue without my involvement.

A waste of a decade but a valuable lesson.
I’m a winner investing in a loser.
Took me a while to figure out but thanks for making it easy.

Re: Purpose of the PP

Posted: Sat Dec 08, 2018 9:44 am
by Cortopassi
buddtholomew wrote:
Sat Dec 08, 2018 7:56 am
Xan wrote:
Fri Dec 07, 2018 10:15 pm
buddtholomew wrote:
Fri Dec 07, 2018 10:37 am


Actually I think you are the fool.
I’ve run across people like you all my life, thinking they are superior than someone else in one way or another.
Again, humorous to me these are usually the losers of the bunch Mr. vacuum cleaner. Like the PP, you suck.
Budd, this has always been a very "hands-off" forum in terms of moderation. Please help us keep it that way. "Mr Vacuum Cleaner" has decided this forum is no longer worth his effort, and based on the personal attack here I don't think I blame him for that opinion.
Don’t really care; nothing here for me either but smoke and mirrors. I’ve had my fair share of negativity as well and am tired of being everyone’s “joke”. I’ll leave as well so the groupthink can continue without my involvement.

A waste of a decade but a valuable lesson.
I’m a winner investing in a loser.
Took me a while to figure out but thanks for making it easy.
Good luck to you, budd. I'm sure you'll be fine. We should revisit where things are at in mid-2019.

Re: Purpose of the PP

Posted: Sat Dec 08, 2018 10:10 am
by ochotona
Anti-hedge sentiment, one of the thousand points of light (?) ringing a bell at the top. Watch this Forum for the explosion of traffic after next major bear market, when actually it will be time to get back into the market.

Re: Purpose of the PP

Posted: Sat Dec 08, 2018 11:48 am
by flyingpylon
buddtholomew wrote:
Sat Dec 08, 2018 7:56 am
Don’t really care; nothing here for me either but smoke and mirrors. I’ve had my fair share of negativity as well and am tired of being everyone’s “joke”. I’ll leave as well so the groupthink can continue without my involvement.

A waste of a decade but a valuable lesson.
I’m a winner investing in a loser.
Took me a while to figure out but thanks for making it easy.
The only groupthink here is the idea that everyone has different goals for their investments, there can be different ways to achieve those goals, and that ultimately the individual investor has to do what feels right to them. Occasionally someone shows up that values pure financial performance above all else, which is fine, but then they blather on and on about how stupid and wrong everyone else is and how much the PP sucks.

Budd, I don’t know you at all but your behavior on the forum suggests that you lack emotional maturity. Life is not a race, you are not a “winner” and the PP is not a “loser”. Since you have plenty of money already, perhaps it would bring you more happiness to maximize the investments in other aspects of your life.

Re: Purpose of the PP

Posted: Sat Dec 08, 2018 11:56 am
by Kriegsspiel
I consider the PP a "better" version of bonds. So when budd says "yea, but you need a lot of stocks in the VP" I am down with that. 60/40 stocks/PP, go for it. 50/50 like Markowitz? How about half stocks, half PP (or... 62.5% stocks, 12.5% LTTs, STTs, gold).

Re: Purpose of the PP

Posted: Sat Dec 08, 2018 1:38 pm
by modeljc
buddtholomew wrote:
Sat Dec 08, 2018 7:56 am
Xan wrote:
Fri Dec 07, 2018 10:15 pm
buddtholomew wrote:
Fri Dec 07, 2018 10:37 am
Actually I think you are the fool.
I’ve run across people like you all my life, thinking they are superior than someone else in one way or another.
Again, humorous to me these are usually the losers of the bunch Mr. vacuum cleaner. Like the PP, you suck.
Budd, this has always been a very "hands-off" forum in terms of moderation. Please help us keep it that way. "Mr Vacuum Cleaner" has decided this forum is no longer worth his effort, and based on the personal attack here I don't think I blame him for that opinion.
Don’t really care; nothing here for me either but smoke and mirrors. I’ve had my fair share of negativity as well and am tired of being everyone’s “joke”. I’ll leave as well so the groupthink can continue without my involvement.

A waste of a decade but a valuable lesson.
I’m a winner investing in a loser.
Took me a while to figure out but thanks for making it easy.
I hope you stick around. But if you don't you will be missed by me. You are trying very hard to get an allocation that fits. If you had to tell us the perfect allocation I would love to hear it. You have given this a lot of thought and I would be appreciative of where you are at the present time. This of course is Just a Budd allocation and it would be just for now. New effort and new knowledge might change this for the future.

Re: Purpose of the PP

Posted: Sat Dec 08, 2018 2:56 pm
by Kbg
buddtholomew wrote:
Sat Dec 08, 2018 7:56 am
Xan wrote:
Fri Dec 07, 2018 10:15 pm
buddtholomew wrote:
Fri Dec 07, 2018 10:37 am


Actually I think you are the fool.
I’ve run across people like you all my life, thinking they are superior than someone else in one way or another.
Again, humorous to me these are usually the losers of the bunch Mr. vacuum cleaner. Like the PP, you suck.
Budd, this has always been a very "hands-off" forum in terms of moderation. Please help us keep it that way. "Mr Vacuum Cleaner" has decided this forum is no longer worth his effort, and based on the personal attack here I don't think I blame him for that opinion.
Don’t really care; nothing here for me either but smoke and mirrors. I’ve had my fair share of negativity as well and am tired of being everyone’s “joke”. I’ll leave as well so the groupthink can continue without my involvement.

A waste of a decade but a valuable lesson.
I’m a winner investing in a loser.
Took me a while to figure out but thanks for making it easy.
Budd...90+ percent of the comments to you have simply been pick something you are happy with and don't expect literal daily non-correlation of assets. I can't speak for everyone on the board but the multiple Budd bursts got a bit annoying when the solution space is entirely within your span of control to do something about. We are all big boys and girls here and part of why we are here is to get some hand holding to keep the faith. And, I doubt most would mind holding yours metaphorically from time to time. But when someone thinks they are trying to assist and they get repeated face shots, at a point, one just thinks "Good lord man, just rebalance to something you can live with and let's be done with this."

Perhaps at this point we should just all move on to another subject. CraigR was correct...after awhile what else is there to say about the PP?

Re: Purpose of the PP

Posted: Sat Dec 08, 2018 3:02 pm
by Xan
I also hope that both Budd and Mr Vacuum stick around. But if they don't, they're making the right choice for them.

I think Budd's is a cautionary tale. Rationally or not, I believe (and I bet many others here do too) that if I could only hit X million dollars in the brokerage account, then I wouldn't have to worry about money anymore. I could do something more productive and interesting with my life.

Budd has enough saved up for several lifetimes of comfortable living. Yet he's completely bent out of shape at the slightest loss. Not even loss: at the underperformance of his assets against some other asset he could have owned instead.

As an outsider to this situation, I can say that the right answer to Budd's money situation is to put it into, well, largely anything (apart from things that can really go to zero like a small number of individual stocks, junk bonds, etc) and then forget about it.

But would I really be able to do that if I were in that situation? Or would I be like Ebeneezer Scrooge, counting my millions every day to make sure I hadn't lost any? Or worse, counting to make sure I am growing richer as fast as I possibly can, and lamenting if otherwise?

What a pitiable life.

One thing the PP does for me is bring this "don't care" attitude into the here and now, without the millions in the bank. It's simple, it won't lose much, it will recover quickly, and its historical returns are respectable. Also because it's so smooth, I can plan on it being there in case I need to withdraw, whenever that might be. I still have to keep earning and saving, but I certainly hope that when that time is over, I will be doing other things with my life than worrying about not having maximized the gains in my savings.

Re: Purpose of the PP

Posted: Sat Dec 08, 2018 5:16 pm
by Cortopassi
Xan wrote:
Sat Dec 08, 2018 3:02 pm
if I could only hit X million dollars in the brokerage account, then I wouldn't have to worry about money anymore.

One thing the PP does for me is bring this "don't care" attitude into the here and now, without the millions in the bank. It's simple, it won't lose much, it will recover quickly, and its historical returns are respectable. Also because it's so smooth, I can plan on it being there in case I need to withdraw, whenever that might be.
There are so many lessons on this forum I only wish I had back when I graduated college...and not taken until my 40s to figure out!

Re: Purpose of the PP

Posted: Sat Dec 08, 2018 6:39 pm
by Smith1776
One of the fellows on the Bogleheads forums has posted recently about how the Permanent Portfolio is probably the best portfolio allocation for those wanting to setup a family trust -- a portfolio to last indefinitely. I've done some thinking on the issue, and I'm inclined to do the same thing for my children and theirs with the same goal.

If we're talking about the purpose of the PP, it seems to me that time horizon plays a huge role. People like Budd might lament at the PP's short term performance, but I'm beginning to see that the word permanent in the name of the portfolio isn't just for alliteration. If you want to preserve wealth for your heirs and to have the most bulletproof strategy (without crazy complexity), it seems to me that the PP is pretty much where it's at.

Re: Purpose of the PP

Posted: Sat Dec 08, 2018 9:06 pm
by dualstow
Smith1776 wrote:
Sat Dec 08, 2018 6:39 pm
One of the fellows on the Bogleheads forums has posted recently about how the Permanent Portfolio is probably the best portfolio allocation for those wanting to setup a family trust -- a portfolio to last indefinitely.
I think that’s why I don’t mind holding gold. I’m not wealthy by many (most?) people’s standards, but I’ll be ok if gold does nothing in my lifetime. It may perform for my heirs one day.

Re: Purpose of the PP

Posted: Sat Dec 08, 2018 9:23 pm
by Smith1776
Yes, me too.

One thing I want to touch on. A lot of people say that gold probably won't do as well if a 70s inflationary environment comes back. They cite that the discoupling from the gold standard and the subsequent price explosion was a one-time event.

I'd submit that if the 70s happens again, gold's price doesn't have to skyrocket to show that its inclusion was worthy. All it has to do is even just maintain purchasing power, which I suspect it would in such a scenario.

Here the key point: it's not just that the 70s was great for gold, it's that it was astonishingly bad for just about everything else. Even if the 70s price spike doesn't happen again, it can still make for an effective diversifier.

Image

The above, as i'm sure we're all familiar with, is the PP (blue) vs a 50/50 (red) portfolio of stocks and bonds in real returns. The 50/50 is underwater for about 12 years. Yes, the PP went up because of the price explosion in gold. However, again, the next time such a scenario happens all gold has to do is just maintain purchasing power and you'll be ahead of the typical boglehead portfolio.

As for TIPS? I still don't like them for the same reasons Craig articulated.

Re: Purpose of the PP

Posted: Sun Dec 09, 2018 9:27 am
by I Shrugged
For me, the hope is that the PP avoids big losses and beats inflation by a decent amount. I have a big nest egg too, and the PP gives me a lot of peace of mind. Let's say a person has 10 million hard-earned dollars. Then imagine losing 4 or 5 million of them in a stock market downturn. You could say it's only temporary, ride it out and they will return. Yeah, that's pretty easy to say in abstract. But in real life, hoo boy. I'm down about 800K from the peak early this year. It's a little uncomfortable but I'm not panicking. My 10 year IRR is 6.5% as of today. And for that whole time I've split stocks between US and foreign, and that has cost me.

I will admit to dissonance when a normal stock portfolio beats the PP. It's only natural. The one thing I don't like to see is a negative year. As Budd I think pointed out, there have been more of them lately than advertised. But I think it's because cash has been worthless for several years. To me that is the biggest bug that I have uncovered.

Re: Purpose of the PP

Posted: Sun Dec 09, 2018 11:51 am
by Tortoise
2018 YTD performance:

4x25 PP: 1.9% loss, 5.0% volatility
60/40 All-world benchmark: 3.8% loss, 8.0% volatility

What’s not to like about the PP in the comparison above? Lower loss and lower volatility. I’ll take it!

As others have pointed out, it’ll be fun to watch the influx of new and old members flood into this forum the next time the stock market has a really bad year and the PP surprises the BH community by holding steady or even rising.

Re: Purpose of the PP

Posted: Sun Dec 09, 2018 11:51 am
by Tortoise
Oops, accidentally replied to my post when I meant to edit it. Looks like you can’t delete posts on this forum...

Re: Purpose of the PP

Posted: Sun Dec 09, 2018 11:59 am
by Kriegsspiel
Nonsense, I delete like half my posts. There's a little 'x' in the top right corner of the post, beside the edit pencil.

Re: Purpose of the PP

Posted: Mon Dec 10, 2018 12:19 am
by Smith1776
I must say, after an absence from the forums for a while, I've quite enjoyed reading Budd's posts since coming back.

Budd's negativity towards the PP always forces me to reconsider my thinking and my position. I believe in one of the posts he mentioned groupthink. Budd has forced me to be introspective and really consider whether the PP is the best choice for me. And for me, I still believe it is.

Re: Purpose of the PP

Posted: Mon Dec 10, 2018 2:31 am
by Tortoise
Kriegsspiel wrote:
Sun Dec 09, 2018 11:59 am
Nonsense, I delete like half my posts. There's a little 'x' in the top right corner of the post, beside the edit pencil.
Weird, on my new posts like this one I do see the ‘x’ delete-post button, but on my previous two posts I don’t. (I’m using the mobile version of the site, for what it’s worth.)

Re: Purpose of the PP

Posted: Mon Dec 10, 2018 7:59 am
by dualstow
Probably expires.
Tortoise wrote:
Mon Dec 10, 2018 2:31 am
Kriegsspiel wrote:
Sun Dec 09, 2018 11:59 am
Nonsense, I delete like half my posts. There's a little 'x' in the top right corner of the post, beside the edit pencil.
Weird, on my new posts like this one I do see the ‘x’ delete-post button, but on my previous two posts I don’t. (I’m using the mobile version of the site, for what it’s worth.)

Re: Purpose of the PP

Posted: Mon Dec 10, 2018 9:46 am
by Xan
My guess is it has to do with activity in the meantime. For example, you can always edit your posts, but if you do it after somebody else has seen it, then the system adds an "Edited on" message.

I bet you can delete posts up until somebody replies.