Worst investing year ever...

General Discussion on the Permanent Portfolio Strategy

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flyingpylon
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Re: Worst investing year ever...

Post by flyingpylon » Sun Dec 30, 2018 1:14 pm

I think of the Permanent Portfolio more as a state of mind than strict adherence to 4x25. So while I might initially explain it to someone using the orthodox 4x25 allocation, I would explain that there's also room for flexibility depending on each individual's needs.
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dualstow
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Re: Worst investing year ever...

Post by dualstow » Sun Dec 30, 2018 3:04 pm

How much flexibility, though, fp?

You don’t have to have the 25%, but you need to have the 4.
Remember all those threads like “pp with no cash”?
I don’t know what that is, but it’s clear from the radio archives that it’s not a pp.

A little more solid than state of mind.
Good news everyone: AOC and Maxine Waters are going to oversee Wall Street.
All should be well from here on in. O0 #stockscreamroom
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Smith1776
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Re: Worst investing year ever...

Post by Smith1776 » Sun Dec 30, 2018 3:36 pm

For what it's worth, Harry Browne in Best Laid Plans said that he hoped the reader would put no less than 20% and no more than 35% in each of the given asset classes.

Maybe that changed in the intervening time between that book and his radio show.
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Re: Worst investing year ever...

Post by drumminj » Sun Dec 30, 2018 4:20 pm

Smith1776 wrote:
Sun Dec 30, 2018 3:36 pm
For what it's worth, Harry Browne in Best Laid Plans said that he hoped the reader would put no less than 20% and no more than 35% in each of the given asset classes.

Maybe that changed in the intervening time between that book and his radio show.
If I could just figure out how to put 35% in each of the asset classes, I'd be set! ;)
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buddtholomew
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Re: Worst investing year ever...

Post by buddtholomew » Sun Dec 30, 2018 5:11 pm

drumminj wrote:
Sun Dec 30, 2018 4:20 pm
Smith1776 wrote:
Sun Dec 30, 2018 3:36 pm
For what it's worth, Harry Browne in Best Laid Plans said that he hoped the reader would put no less than 20% and no more than 35% in each of the given asset classes.

Maybe that changed in the intervening time between that book and his radio show.
If I could just figure out how to put 35% in each of the asset classes, I'd be set! ;)
In Mr. Smith’s defense, I believe he meant don’t let any asset drift lower than 20% or higher than 35% - Ive heard something similar but with 10% re-balance bands the lower end of the range is 15%, higher end 35%
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Re: Worst investing year ever...

Post by drumminj » Sun Dec 30, 2018 5:12 pm

buddtholomew wrote:
Sun Dec 30, 2018 5:11 pm
In Mr. Smith’s defense, I believe he meant don’t let any asset drift lower than 20% or higher than 35% - Ive heard something similar but with 10% re-balance bands the lower end of the range is 15%, higher end 35%
Yes, I was not meaning to give Smith a hard time, was just making a bad joke
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buddtholomew
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Re: Worst investing year ever...

Post by buddtholomew » Sun Dec 30, 2018 5:17 pm

drumminj wrote:
Sun Dec 30, 2018 5:12 pm
buddtholomew wrote:
Sun Dec 30, 2018 5:11 pm
In Mr. Smith’s defense, I believe he meant don’t let any asset drift lower than 20% or higher than 35% - Ive heard something similar but with 10% re-balance bands the lower end of the range is 15%, higher end 35%
Yes, I was not meaning to give Smith a hard time, was just making a bad joke
It was funny though haha
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Re: Worst investing year ever...

Post by flyingpylon » Mon Dec 31, 2018 10:08 am

dualstow wrote:
Sun Dec 30, 2018 3:04 pm
How much flexibility, though, fp?

You don’t have to have the 25%, but you need to have the 4.
Remember all those threads like “pp with no cash”?
I don’t know what that is, but it’s clear from the radio archives that it’s not a pp.

A little more solid than state of mind.
Well, as long as one self-identifies as a Permanent Portfolio investor it's probably okay. :)

I agree that having the 4 assets is key, as is the hands-off approach. I just don't get that hung up on the individual percentages if they remain within the rebalancing bands. If you're someone that checks your portfolio infrequently and only rebalances when a band is hit then the percentages can be pretty far off from 4x25 at any given time.

I'm probably just grouping a lot of "lazy portfolios" together in contrast to some of the other approaches out there. It's a big tent that can accommodate some variation. It works for me but I realize others like to stick with strict definitions.
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Re: Worst investing year ever...

Post by buddtholomew » Mon Dec 31, 2018 11:29 am

70/10/10/10 holds all 4 asset classes but many would not consider this a permanent portfolio.

35/15/15/35 or 15/35/35/15 for that matter I would consider a permanent portfolio-like AA. For me, it’s an allocation between 15 and 35 to all 4 assets that distinguishes the PP from other portfolios.
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Re: Worst investing year ever...

Post by jacksonM » Mon Dec 31, 2018 4:14 pm

Got up the nerve to do my yearly portfolio review. This is the second year since my switch to the Golden Butterfly so I was worried about what would be the effect of the increased stock allocation given current events in the stock market.

Was pleased to learn the overall portfolio was only down about 3.4%. Given that I was up about 11.5% last year I'm pretty happy with the two year result.

Reminds me of the year that gold crashed a few years ago and I was pleasantly surprised to see I was only down about 2% overall.

This is basically why I use the PP strategy. So far it has succeeded very well in protecting me in volatile situations.
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Re: Worst investing year ever...

Post by Hal French » Mon Dec 31, 2018 7:54 pm

Well whaddya know? The 4x25 HBPP works.

Without touching a thing(*) my personal portfolio was down only 1.97% for 2018, and it actually rebalanced itself. I only check my portfolio twice a year-- when I do my yearly rebalance and my year end check-in.

Stocks: IWV(*)
Bonds: TLT(*)
Cash: Capital One 360, SCHO(*), SHY(*), ETrade cash reserves(*)
Precious Metals: Physical gold, tiny amount of silver

(*) The lone X-factor was when Capital One Sharebuilder was taken over by ETrade earlier this year, any fractional shares of stock were converted to cash at the time, so that got lumped in with my year-end cash numbers-- has these fractional shares remained, the numbers would have been different.

Also, I did not add to my portfolio/rebalance in 2018, though I plan to do my 2018 contribution within the next 2 months.

I was a little heavy on precious metals and TLT going in to the year; the tumult of the market took care of that. As of this evening, my 4 asset classes are a statistical dead heat-- no more than 26.1%; no less than 24.2% in any one category... and stocks are exactly at 25%. Crazy.

When I started with the PP way back when, I felt more comfortable buying PRPFX. I still have a sizable chunk over there-- and even with automatic dividend reinvesting factored in, I lost over 6% on that fund for the year. 4x25 is the way to go.
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Re: Worst investing year ever...

Post by drumminj » Mon Dec 31, 2018 8:06 pm

Hal French wrote:
Mon Dec 31, 2018 7:54 pm
Well whaddya know? The 4x25 HBPP works.
I didn't end up quite as balanced as you (I did contribute some to lagging assets this year), but look to have ended up down ~1.91% on the year, heaviest in cash at 28.33%. Note that I haven't annualized/pro-rated my contributions, just assume they were all purchased on 1/1 at whatever I actually paid for them, so the math is a bit fuzzy there..

Net worth ended up positive on the year given additions to cash savings outside of the PP (PP is about 75% of my overall portfolio at this point). Not gonna complain one bit.
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