Stock scream room

Discussion of the Stock portion of the Permanent Portfolio

Moderator: Global Moderator

User avatar
mathjak107
Executive Member
Executive Member
Posts: 2934
Joined: Fri Jun 19, 2015 2:54 am
Location: bayside queens ny
Contact:

Re: Stock scream room

Post by mathjak107 » Fri May 01, 2020 3:51 pm

Equal dollars does not mean equal chance of playing out ....there is a big difference in that fact ...if I remember that was one of Bernstein’s gripes about the pp...in practice equal dollars does not correspond to equal odds
pp4me
Executive Member
Executive Member
Posts: 424
Joined: Wed Apr 29, 2020 4:12 pm

Re: Stock scream room

Post by pp4me » Fri May 01, 2020 3:59 pm

Tyler wrote:
Fri May 01, 2020 12:07 pm
pp4me wrote:
Fri May 01, 2020 8:43 am
Maybe we should start calling the Permanent Portfolio the Pessimist's portfolio.
Definitely not! It's true that the PP attracts a certain subset of people with doubts about the stock market, but the portfolio itself isn't inherently optimistic or pessimistic. The whole point is that it maintains a neutral outlook.
Fair enough and maybe "Pessimism" isn't the right word. It's just that if you live long enough you eventually realize that the shit really can and does hit the fan and you need to be prepared.
User avatar
Tortoise
Executive Member
Executive Member
Posts: 1959
Joined: Sat Nov 06, 2010 2:35 am

Re: Stock scream room

Post by Tortoise » Fri May 01, 2020 5:14 pm

mathjak107 wrote:
Fri May 01, 2020 3:51 pm
Equal dollars does not mean equal chance of playing out ....there is a big difference in that fact ...if I remember that was one of Bernstein’s gripes about the pp...in practice equal dollars does not correspond to equal odds
Correct. But who claimed that the PP's equal weighting was based on an assumption of equal odds? Nobody did, and it's not.

The PP's equal weighting is based on an agnostic ("neutral") outlook, not a prediction that all economic conditions are equally likely (which we know they typically aren't).
User avatar
vnatale
Executive Member
Executive Member
Posts: 3982
Joined: Fri Apr 12, 2019 8:56 pm
Location: Massachusetts
Contact:

Re: Stock scream room

Post by vnatale » Fri May 01, 2020 5:42 pm

Tortoise wrote:
Fri May 01, 2020 5:14 pm
mathjak107 wrote:
Fri May 01, 2020 3:51 pm
Equal dollars does not mean equal chance of playing out ....there is a big difference in that fact ...if I remember that was one of Bernstein’s gripes about the pp...in practice equal dollars does not correspond to equal odds
Correct. But who claimed that the PP's equal weighting was based on an assumption of equal odds? Nobody did, and it's not.

The PP's equal weighting is based on an agnostic ("neutral") outlook, not a prediction that all economic conditions are equally likely (which we know they typically aren't).
There is no contradiction there? Or, are you saying that that it is neutral because it is impossible to predict which are more or less likely?

Vinny
"I only regret that I have but one lap to give to my cats."
User avatar
Tortoise
Executive Member
Executive Member
Posts: 1959
Joined: Sat Nov 06, 2010 2:35 am

Re: Stock scream room

Post by Tortoise » Fri May 01, 2020 8:02 pm

vnatale wrote:
Fri May 01, 2020 5:42 pm
There is no contradiction there? Or, are you saying that that it is neutral because it is impossible to predict which are more or less likely?
Some people say it's impossible. Personally, I wouldn't say it's necessarily impossible to predict which economic conditions are more or less likely. I'm just saying the PP is based on the idea that it's either impossible or at least very difficult to do accurately and consistently.

If you operate under the assumption that it's very hard or impossible, then anything other than equal weighting doesn't make a lot of sense since unequal weighting is basically an implied prediction.

Most people, even most PP investors, disagree with Harry Browne's assumption that we can't predict the prevalence of economic conditions, so they either tweak the PP allocations directly (e.g., GB) or have a VP to satisfy their predictive urges. I'm one of the few PP purists.
User avatar
vnatale
Executive Member
Executive Member
Posts: 3982
Joined: Fri Apr 12, 2019 8:56 pm
Location: Massachusetts
Contact:

Re: Stock scream room

Post by vnatale » Fri May 01, 2020 8:09 pm

Tortoise wrote:
Fri May 01, 2020 8:02 pm
vnatale wrote:
Fri May 01, 2020 5:42 pm
There is no contradiction there? Or, are you saying that that it is neutral because it is impossible to predict which are more or less likely?
Some people say it's impossible. Personally, I wouldn't say it's necessarily impossible to predict which economic conditions are more or less likely. I'm just saying the PP is based on the idea that it's either impossible or at least very difficult to do accurately and consistently.

If you operate under the assumption that it's very hard or impossible, then anything other than equal weighting doesn't make a lot of sense since unequal weighting is basically an implied prediction.

Most people, even most PP investors, disagree with Harry Browne's assumption that we can't predict the prevalence of economic conditions, so they either tweak the PP allocations directly (e.g., GB) or have a VP to satisfy their predictive urges. I'm one of the few PP purists.
Thank for the explanation and reaffirming that I was correctly interpreting you. Plus, when I FINALLY go Permanent Portfolio I will join you as a PURIST! That is one of my prime attractions. A somewhat mechanical, formulaic system which does not require you to constantly monitor and make decisions.

Vinny
"I only regret that I have but one lap to give to my cats."
User avatar
ochotona
Executive Member
Executive Member
Posts: 3177
Joined: Fri Jan 30, 2015 5:54 am

Re: Stock scream room

Post by ochotona » Sat May 02, 2020 3:16 pm

Masanari Takada, a macro and quantitative strategist at Nomura, thinks a "sell in May" stock-market unwind is on the horizon

"When Takada and McElligot talk --- people listen"
User avatar
buddtholomew
Executive Member
Executive Member
Posts: 2105
Joined: Fri May 21, 2010 4:16 pm

Re: Stock scream room

Post by buddtholomew » Sat May 02, 2020 5:41 pm

25/25/25/25 or 40/15/15/30 both qualify as Permanent Portfolios although the latter is not rebalanced.

4x25 is simple and elegant for some while others prefer allocations that meet their individual risk profile and temperament. HB himself (if I recall) considered the portfolio “permanent” if the investor held all 4 assets within 15 and 35% bands.
User avatar
dualstow
Executive Member
Executive Member
Posts: 10825
Joined: Wed Oct 27, 2010 10:18 am
Contact:

Re: Stock scream room

Post by dualstow » Sat May 02, 2020 6:00 pm

buddtholomew wrote:
Sat May 02, 2020 5:41 pm
25/25/25/25 or 40/15/15/30 both qualify as Permanent Portfolios although the latter is not rebalanced.

4x25 is simple and elegant for some while others prefer allocations that meet their individual risk profile and temperament. HB himself (if I recall) considered the portfolio “permanent” if the investor held all 4 assets within 15 and 35% bands.
I think you’re right, B. I definitely remember him saying & writing that one doesn’t have to stick to 25% exactly. To say within the bands is sufficient.
The new Freakonomics: Why Are Cities (Still) So Expensive? (Ep. 435)
thisisallen
Senior Member
Senior Member
Posts: 117
Joined: Sat Sep 24, 2016 5:39 pm
Location: NJ and India

Re: Stock scream room

Post by thisisallen » Sat May 02, 2020 6:16 pm

Explanation of what’s going on with the stock market from Pragmatic Capitalism
https://www.pragcap.com/what-the-hell-i ... ket-doing/
pmward
Executive Member
Executive Member
Posts: 1194
Joined: Thu Jan 24, 2019 4:39 pm

Re: Stock scream room

Post by pmward » Sat May 02, 2020 6:56 pm

buddtholomew wrote:
Sat May 02, 2020 5:41 pm
25/25/25/25 or 40/15/15/30 both qualify as Permanent Portfolios although the latter is not rebalanced.

4x25 is simple and elegant for some while others prefer allocations that meet their individual risk profile and temperament. HB himself (if I recall) considered the portfolio “permanent” if the investor held all 4 assets within 15 and 35% bands.
Another way you could also frame that is having a PP that is 15/15/15/15 and a VP that is 25/0/0/15. There is nothing wrong with that at all. My PP is 40% of my total portfolio. I am keeping that 40% a pure vanilla PP implementation. In my VP half of it is in a quant trend-following strategy and half of it I actively speculate and trade. This works well for me. My portfolio on the whole is much different than most people here... but that's what the VP is for. The VP is personal.
User avatar
dualstow
Executive Member
Executive Member
Posts: 10825
Joined: Wed Oct 27, 2010 10:18 am
Contact:

Re: Stock scream room

Post by dualstow » Sat May 02, 2020 8:33 pm

pmward wrote:
Sat May 02, 2020 6:56 pm

Another way you could also frame that is having a PP that is 15/15/15/15 and a VP that is 25/0/0/15. There is nothing wrong with that at all. My PP is 40% of my total portfolio. I am keeping that 40% a pure vanilla PP implementation.
...
It looks like it’s your PP that adds up to 60% and your VP that adds up to only 40%, not the other way around.
Is that a mistake, or just a coincidence and I’m reading it wrong?
The new Freakonomics: Why Are Cities (Still) So Expensive? (Ep. 435)
Post Reply