3 years of PP returns

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Kbg
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Re: 3 years of PP returns

Post by Kbg » Tue Jun 11, 2019 11:10 pm

modeljc wrote:
Tue Jun 11, 2019 4:11 pm
In 47 years the PP has made plus 3% REAL 77% of the time using a 3 year rolling average. 11 years or 23% they have made less. Here are the 11 years:

1977 2.8%
1990 1.1%
1994 2.1%
2000 2.6%
2001 .2%
2002 2.3%
2008 2.8%
2014 2.9%
2015 1.5%
2017 2.6%
2018 2.8%

These numbers are from a friend and not from the book. Still seems a little low since 2014. If you use 2.6% real the PP has done that 89% of the time.
I get an average 3 yr real return of 2.83%.

By year real return
2014 8.80%
2015 -3.30%
2016 3.40%
2017 8.90%
2018 -3.50%

5yr Avg 2.76%
3yr Avg 2.83%

These returns are computed using SPY, SHY, GLD, TLT with costs included (e.g. management fees, trading commissions, buy at the opening price) Add .1% back if you don't include commissions.

If 3% is what is advertised, then I'd say we are pretty much "by the book" net of costs.
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Re: 3 years of PP returns

Post by modeljc » Wed Jun 12, 2019 5:16 pm

No one is picking up on we may be OK with recent PP returns if DEFLATION has started.

https://www.thinkadvisor.com/2019/02/16 ... 0512161205
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Kbg
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Re: 3 years of PP returns

Post by Kbg » Thu Jun 13, 2019 1:19 pm

Real is real, that’s why we use it and not nominal.
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Re: 3 years of PP returns

Post by modeljc » Thu Jun 13, 2019 5:21 pm

Kbg wrote:
Thu Jun 13, 2019 1:19 pm
Real is real, that’s why we use it and not nominal.
"Shilling notes that U.S. inflation numbers don’t register the full impact of falling prices because the Bureau of Labor Statistics has not kept up with the explosion of new technology products."

The goverment can't measure inflation but deflation is real! Wages are flat. China is real and so is Amazon. Prices have a lid in my view.
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Re: 3 years of PP returns

Post by Kbg » Fri Jun 14, 2019 12:34 am

modeljc wrote:
Thu Jun 13, 2019 5:21 pm
Kbg wrote:
Thu Jun 13, 2019 1:19 pm
Real is real, that’s why we use it and not nominal.
"Shilling notes that U.S. inflation numbers don’t register the full impact of falling prices because the Bureau of Labor Statistics has not kept up with the explosion of new technology products."

The goverment can't measure inflation but deflation is real! Wages are flat. China is real and so is Amazon. Prices have a lid in my view.
On the wage front, the data says else wise overall. (there is a reason why the Walmarts and McDonalds of the world are no longer fighting the $15 minimum wage...the average retail wage paid in the US is now $18.73 according to the BLS)

I'm more of a data guy now for things I care about because the news just plain sucks in the United States. I watch a short list of economic indicators/measures and I find I have relatively good clarity on the here and now, though I would claim no insight into the future. Saturday I'll pull the latest data and refresh my assessment...however, the economy has been really, really good for a very very long time which has shown up in wages. Recently the news has been blathering about the economy turning over finally. That may very well be accurate, or it could be pure BS (and often is).

If you like facts vs. opinion...here's a pretty good source. https://www.yardeni.com/

Most of it is public data pulled from various locations, but most of the good stuff can be found here in a pre-generated form. Peruse his wages section.
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Re: 3 years of PP returns

Post by sophie » Fri Jun 14, 2019 7:02 am

The low 2018 return is a bit artificial. If the year had ended a few weeks later or earlier, it would be a whole different story. The YTD 2019 returns reflect the deep transient market dive at year's end: the PP stands at 7.8% and GB at 9% - and this is just for the first half of the year!

Even though the PP is still doing its thing, it generates enough angst that it should be considered a significant disadvantage of the portfolio. If you'd have less angst with a traditional stock/bond portfolio with the cash on the side (and thus not counted in total returns), then maybe that would be better despite the occasional steep drawdowns. That's because when those happen, you have a massive support group e.g. the entire Bogleheads platform and its prolific collection of authors. With the PP's "tracking error", in which it lags traditional portfolios when stocks are doing well and includes your cash savings in the mix, there's not much beyond this forum and a couple of books for consolation.

The whole point of the PP is to reduce investing stress by increasing portfolio safety, but not everyone values that. It defeats the purpose if you end up increasing your stress by holding the PP. FWIW, the angst passes after a few years for most people, judging by the experience on this forum. I've even gotten to the point where what stresses me the most is the traditional three fund portfolio that I hold in my 403b accounts. That doesn't happen for everyone though, and for some people the PP is just not a good idea.
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Re: 3 years of PP returns

Post by modeljc » Fri Jun 14, 2019 10:25 am

Kbg wrote:
Fri Jun 14, 2019 12:34 am
modeljc wrote:
Thu Jun 13, 2019 5:21 pm
Kbg wrote:
Thu Jun 13, 2019 1:19 pm
Real is real, that’s why we use it and not nominal.
"Shilling notes that U.S. inflation numbers don’t register the full impact of falling prices because the Bureau of Labor Statistics has not kept up with the explosion of new technology products."

The goverment can't measure inflation but deflation is real! Wages are flat. China is real and so is Amazon. Prices have a lid in my view.
On the wage front, the data says else wise overall. (there is a reason why the Walmarts and McDonalds of the world are no longer fighting the $15 minimum wage...the average retail wage paid in the US is now $18.73 according to the BLS)

I'm more of a data guy now for things I care about because the news just plain sucks in the United States. I watch a short list of economic indicators/measures and I find I have relatively good clarity on the here and now, though I would claim no insight into the future. Saturday I'll pull the latest data and refresh my assessment...however, the economy has been really, really good for a very very long time which has shown up in wages. Recently the news has been blathering about the economy turning over finally. That may very well be accurate, or it could be pure BS (and often is).

If you like facts vs. opinion...here's a pretty good source. https://www.yardeni.com/

Most of it is public data pulled from various locations, but most of the good stuff can be found here in a pre-generated form. Peruse his wages section.
If wages are moving it probably just catch with inflation.

https://www.pewresearch.org/fact-tank/2 ... r-decades/
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Re: 3 years of PP returns

Post by jacksonM » Sat Jun 15, 2019 4:15 pm

I am now more than a decade into using the PP and am satisfied with the results (although I did switch to the Golden Butterfly a few years ago).

It actually saw me through to my retirement and helped me meet my goals during that time so it's kind of like my old Dodge Caravan which I bought right around the same time I started the PP. It's been a dependable car that gets the job done and I don't have to do much but routine maintenance to keep it going.
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Re: 3 years of PP returns

Post by drumminj » Sat Jun 15, 2019 9:07 pm

jacksonM wrote:
Sat Jun 15, 2019 4:15 pm
it's kind of like my old Dodge Caravan
Let's make sure you don't get put in charge of marketing :)
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Re: 3 years of PP returns

Post by modeljc » Sun Jun 16, 2019 9:28 am

For May 2016-May 2019 Bureau of Labor Statistics report the U.S. Consumer price index as up 6.6%. So inflation has averaged +2.2% over three years. A little more than I thought!

I am happy with the PP

I think since 2014 the returns are lower than history

I think some deflation is in the system but can't be measured
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Re: 3 years of PP returns

Post by pmward » Sun Jun 16, 2019 9:51 am

I have started to separate the terms "deflation" and "disinflation" just for clarity. When you mention the term "deflation" people think of 2008 or 1929. We definitely do not have that going on right now. But we definitely do have some disinflationary pressures in the economy right now. It's not just a U.S. phenomenon either, it's a global disinflationary trend, but we are at the moment still the cleanest dirty shirt. Whether that disinflation turns into true deflation ???
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Re: 3 years of PP returns

Post by dualstow » Sun Jun 16, 2019 5:00 pm

drumminj wrote:
Sat Jun 15, 2019 9:07 pm
jacksonM wrote:
Sat Jun 15, 2019 4:15 pm
it's kind of like my old Dodge Caravan
Let's make sure you don't get put in charge of marketing :)
O0
Vanguard treasury money market still paying 2.17%
TODFTHR
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