Worst investing year ever...

General Discussion on the Permanent Portfolio Strategy

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bedraggled
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Re: Worst investing year ever...

Post by bedraggled » Sun Dec 30, 2018 12:30 am

Tyler,

Thanks for the link.

I have heard math people refer to elegant solutions. Is the Desert Portfolio an elegant portfolio or just terrific.

I reflect on the Desert concoction as it might be perfect for a person who truly wishes to “set and forget.” Yes, I know the Golden Butterfly has had at most 2 consecutive down years but with the Desert, why bother looking at all. Craig Rowland checks once per year with th HBPP but with the Desert, a person could misplace all paperwork and forget passwords- and, so what? Maybe find the info in 5 years. No rush or worry....

Desert Portfolio might be really good for a person with $10 million. That person has won the race.

I guess I wait for the GB and 4x25 people to point to some things I missed.
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sophie
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Re: Worst investing year ever...

Post by sophie » Sun Dec 30, 2018 8:07 am

Jeffreyalan wrote:
Sat Dec 29, 2018 10:52 pm
Any love here for The Desert Portfolio that has outperformed the PP since 2008 with less volitility?
The Desert Portfolio was designed for someone skittish about holding gold, and it does very well though doesn't allow for as high a withdrawal rate as the PP/GB. Its weakness is performance during a long 1970s style inflation, so I guess it depends if you think that could happen again. I personally don't think we are immune from repeating any financial event that has happened in the past.

I was able to pull up the Portfolio Charts page by googling it - the link may be gone but the page is still there.
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buddtholomew
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Re: Worst investing year ever...

Post by buddtholomew » Sun Dec 30, 2018 8:58 am

How far can one deviate from the 4x25 allocation and still consider themselves invested in the Permanent Portfolio?

Is it sufficient to hold all 4 assets or does percent allocated to each asset determine whether one holds the PP or some other variant thereof?

Wrestling with this obviously for a long time.
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l82start
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Re: Worst investing year ever...

Post by l82start » Sun Dec 30, 2018 9:15 am

i would propose that holding all 4 assets and sticking to rebalance bands (even with minor variations to % or allocations to ad-ons) equals a pp --- constantly changing or playing with the percentages or adding and removing assets outside the basic four breaks the permanence and is not a pp....
"The future ain't what it used to be."

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buddtholomew
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Re: Worst investing year ever...

Post by buddtholomew » Sun Dec 30, 2018 9:24 am

From my perspective (I think HB mentioned himself) the PP is invalidated when one of the assets is < 15% of portfolio.

I’m not sure Permanent applies to holding a fixed allocation and rebalancing although these are main traits of a successful investor.
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Re: Worst investing year ever...

Post by dualstow » Sun Dec 30, 2018 9:31 am

buddtholomew wrote:
Sun Dec 30, 2018 9:24 am
I’m not sure Permanent applies to holding a fixed allocation and rebalancing although these are main traits of a successful investor.
Rebalancing according to a formula/bands vs tinkering and timing in the guise of rebalancing. I think that’s the significant difference.
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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Re: Worst investing year ever...

Post by buddtholomew » Sun Dec 30, 2018 9:44 am

dualstow wrote:
Sun Dec 30, 2018 9:31 am
buddtholomew wrote:
Sun Dec 30, 2018 9:24 am
I’m not sure Permanent applies to holding a fixed allocation and rebalancing although these are main traits of a successful investor.
Rebalancing according to a formula/bands vs tinkering and timing in the guise of rebalancing. I think that’s the significant difference.
Agree DS, but the above doesn’t differentiate the PP from other portfolios. Any investor, not specifically a PP one would benefit from adhering to rebalance bands vs. market timing purchases and sales.

Let me rephrase with an example:
When you go to a party and talk about the PP, how is it presented? 4x25 or other when discussing economic climates, etc.
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Re: Worst investing year ever...

Post by sophie » Sun Dec 30, 2018 9:53 am

Speaking of repeating past financial events...

I got "Too Big to Fail" by Andrew Sorkin to read over the holidays. It starts out a bit dry but eventually reads as sort of a financial thriller. More to the point, it makes it very clear just how narrowly we escaped another Great Depression in 2008: we were lucky enough to have a Fed Chairman who happened to be a noted scholar of the Great Depression, plus some brave souls in the Treasury Dept who were humble enough to cross the partisan divide to get support for TARP.

If that event happened now with the current cast of characters I don't think we'd be so lucky. I think that because of that narrow escape, people may be thinking that nothing that bad is ever going to happen again, so there's no point in having insurance assets in your portfolio. Before you follow that line of reasoning, you might want to pick up this book, or at least see the HBO movie.
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Re: Worst investing year ever...

Post by dualstow » Sun Dec 30, 2018 10:49 am

@sophie: Love Sorkin! He always puts out interesting articles.
buddtholomew wrote:
Sun Dec 30, 2018 9:44 am
dualstow wrote:
Sun Dec 30, 2018 9:31 am
buddtholomew wrote:
Sun Dec 30, 2018 9:24 am
I’m not sure Permanent applies to holding a fixed allocation and rebalancing although these are main traits of a successful investor.
Rebalancing according to a formula/bands vs tinkering and timing in the guise of rebalancing. I think that’s the significant difference.
Agree DS, but the above doesn’t differentiate the PP from other portfolios. Any investor, not specifically a PP one would benefit from adhering to rebalance bands vs. market timing purchases and sales.
Well, how much magic do we want to ascribe to the word “permanent?” Plenty of people permanently stick with a 60/40 stock/bond allocation.

I think of the pp as an all-weather portfolio, something you shouldn’t have to abandon in extreme inflation, deflation, etc. But, what if you’re an all-stock investor and the stock market of your country is wiped out? What if some event sends people fleeing to gold? More likely to jump ship?

The pp could be called “The Agnostic Portfolio.” It just doesn’t have that fine alliteration.
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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Re: Worst investing year ever...

Post by jhogue » Sun Dec 30, 2018 10:56 am

I was surprised at how good the HBO movie from "Too Big To Fail" was. Strong performances by William Hurt as Treasury Secretary Hank Paulson and Paul Giamatti as Fed Chair Ben Bernanke. My favorite scene was Paulson (R) literally getting down on his knees and begging Nancy Pelosi (D) to support the TARP bill in the US House.

Unfortunately, stock market crashes, bank panics, and depressions have been more common in American history than most people think. After the Civil War, the triumphant North went on a speculative and highly-leveraged railroad building binge that ended with a stock market crash in 1873. The depression that followed went on for five years and wiped out half of the railroad companies in the US.
Last edited by jhogue on Sun Dec 30, 2018 11:20 am, edited 1 time in total.
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Re: Worst investing year ever...

Post by l82start » Sun Dec 30, 2018 10:57 am

buddtholomew wrote:
Sun Dec 30, 2018 9:44 am
dualstow wrote:
Sun Dec 30, 2018 9:31 am
buddtholomew wrote:
Sun Dec 30, 2018 9:24 am
I’m not sure Permanent applies to holding a fixed allocation and rebalancing although these are main traits of a successful investor.
Rebalancing according to a formula/bands vs tinkering and timing in the guise of rebalancing. I think that’s the significant difference.
Agree DS, but the above doesn’t differentiate the PP from other portfolios. Any investor, not specifically a PP one would benefit from adhering to rebalance bands vs. market timing purchases and sales.

Let me rephrase with an example:
When you go to a party and talk about the PP, how is it presented? 4x25 or other when discussing economic climates, etc.
the permanent portfolio as established by HB would be a tight adherence to the original plan and philosophy as he wrote it, and i would present it that way.. the PP as discussed and dissected on this forum would be a little looser, it would be a portfolio that still adherers to the philosophy and is primarily made up of the 4 assets, and sticks to rebalance bands, but allows for some variation as long as it is preserving money you cant afford to loose, not timing the market, and staying true to the underling concepts/understanding of economics. (i think this is accurate but it is a bit of a semantics question, so it may not be a easy difference to split.)
"The future ain't what it used to be."

Belief is the death of intelligence. As soon as one believes a doctrine of any sort, or assumes certitude, one stops thinking about that aspect of existence
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Re: Worst investing year ever...

Post by Jeffreyalan » Sun Dec 30, 2018 12:32 pm

sophie wrote:
Sun Dec 30, 2018 8:07 am
Jeffreyalan wrote:
Sat Dec 29, 2018 10:52 pm
Any love here for The Desert Portfolio that has outperformed the PP since 2008 with less volitility?
The Desert Portfolio was designed for someone skittish about holding gold, and it does very well though doesn't allow for as high a withdrawal rate as the PP/GB. Its weakness is performance during a long 1970s style inflation, so I guess it depends if you think that could happen again. I personally don't think we are immune from repeating any financial event that has happened in the past.

I was able to pull up the Portfolio Charts page by googling it - the link may be gone but the page is still there.
So would an ETF approximation of the Desert Portfolio be:

IEF - 60%
VTI - 30%
IAU - 10%

This seems very easy and simple to replicate in any brokerage account.
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