How do you invest the stock portion?

Discussion of the Stock portion of the Permanent Portfolio

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vnatale
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How do you invest the stock portion?

Post by vnatale » Tue Sep 10, 2019 7:58 pm

I am soon to be a Level 4 Permanent Portfolio Investor.

I plan to use Vanguard Total Stock Market and Fidelity Total Stock Market. I do not want to use anything but an indexed total stock market mutual fund.

1) Which ones are you using?
2) Do you use any that are more than U.S. securities? If so, what indexed total international stock market mutual funds do you use?

Regarding the latter, I've read much that states that since the large U.S. companies do so much business internationally one does not need any other investments for international exposure. Plus, the international stock funds have comparatively high fund expenses.

Thanks

Vinny
boglerdude
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Re: How do you invest the stock portion?

Post by boglerdude » Tue Sep 10, 2019 8:55 pm

Half vanguard US and half international. Because my income depends on the US economy I diversify.
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Smith1776
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Re: How do you invest the stock portion?

Post by Smith1776 » Tue Sep 10, 2019 11:09 pm

I personally highly recommend factor tilting the PP’s equity allocation to small and value regimes rather than using total market indices.

Just my 2 cents though. Lots will disagree with the assertion.
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boglerdude
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Re: How do you invest the stock portion?

Post by boglerdude » Wed Sep 11, 2019 1:12 am

Vanguards small value has the same PE as total market. Youre paying the same price for a basket of weaker companies.
KodoCastle
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Re: How do you invest the stock portion?

Post by KodoCastle » Wed Sep 11, 2019 1:29 am

I use Vangaurd's total US stock market index fund, VSTAX. You can also get this as an ETF, VTI.

Still in the beginning of my PP journey, so I'm happy to keep things simple and stay with the US for now. My first branch out will be to another total US stock market fund at another institution. After that, maybe I'll consider some international stocks....
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Smith1776
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Re: How do you invest the stock portion?

Post by Smith1776 » Wed Sep 11, 2019 4:08 am

boglerdude wrote:
Wed Sep 11, 2019 1:12 am
Vanguards small value has the same PE as total market. Youre paying the same price for a basket of weaker companies.
Yeah, as I mentioned: it was a contentious statement. I'm still willing to stand on it.
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pmward
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Re: How do you invest the stock portion?

Post by pmward » Wed Sep 11, 2019 7:36 am

Yes, if you're doing a "Level 4" PP, you will want to just stick to total stock market of U.S. only. The bulk of the difference between U.S. and international returns are the underlying currency fluctuations. Since you've already got a 25% hedge against the currency in gold, I don't see any reason personally to deworsify with international, especially if you're looking to stick close to the heart of HB's philosophy. I think international makes more sense for the typical Boglehead that is afraid of gold as it at least gives them some form of currency hedging. I also don't think that small cap value belongs in a PP, it's VP material a'la golden butterfly if you want to use it, imo. I'm not afraid to speculate and chase returns in my VP, but I keep my PP true to form. Also, the difference between different total stock market funds is basically nil. Choose whatever is most convenient and call it a day.
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vnatale
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Re: How do you invest the stock portion?

Post by vnatale » Mon Oct 07, 2019 9:07 pm

Thank you for this reaffirming response. I subscribe to all you have written and will stick to the one Vanguard Total Stock Market fund!

Vinny
pmward wrote:
Wed Sep 11, 2019 7:36 am
Yes, if you're doing a "Level 4" PP, you will want to just stick to total stock market of U.S. only. The bulk of the difference between U.S. and international returns are the underlying currency fluctuations. Since you've already got a 25% hedge against the currency in gold, I don't see any reason personally to deworsify with international, especially if you're looking to stick close to the heart of HB's philosophy. I think international makes more sense for the typical Boglehead that is afraid of gold as it at least gives them some form of currency hedging. I also don't think that small cap value belongs in a PP, it's VP material a'la golden butterfly if you want to use it, imo. I'm not afraid to speculate and chase returns in my VP, but I keep my PP true to form. Also, the difference between different total stock market funds is basically nil. Choose whatever is most convenient and call it a day.
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