Interest rate insurance

Discussion of the Bond portion of the Permanent Portfolio

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ppnewbie
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Interest rate insurance

Post by ppnewbie » Mon May 17, 2021 2:08 am

I wonder what the smart people of this forum think about PFIX and SVOL from Simplifyetfs.com

1000 shares ($50k) per $1,000,000 in insurance against assets that have significant rate risk.

https://www.simplify.us/etfs/pfix-simpl ... -hedge-etf

Here is a link to the podcast interview with Harley Bassman but you can also find it in your podcast app.

https://macrovoices.podbean.com/e/macro ... st-future/

Harley Bassman comes on at minute 12:39 and ends at minute 45.
whatchamacallit
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Re: Interest rate insurance

Post by whatchamacallit » Mon May 17, 2021 7:32 pm

Doesn't look like the smart people responded yet so I will at least continue the conversation.

I also first heard about the pfix etf on that podcast.

First thing I noticed was the .5% expense ratio and the 3% premium. That was definitely deterring in itself.

After that, the way I figure. The underlying options you would be buying are leveraged bets. Which means double edged sword to loses.

I also don't like the assumed extra counterparty risk. Who knows what happens to the institution that is selling these options if we do get a big interest rate spike


I also can't say I understand the product enough to put much into it.

I am interested to hear people's thoughts on what would a more organic option to make money in rising rates.

I assume it would be holding cash while rates are rising and then rebalance into assets that were then cheaper.
ppnewbie
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Re: Interest rate insurance

Post by ppnewbie » Mon May 17, 2021 10:30 pm

I have a long stock portfolio (in addition to an HBPP) that I want to somehow secure against a big shock. I guess I can start layering in HBPP elements intermediate bonds, IAU.
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buddtholomew
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Re: Interest rate insurance

Post by buddtholomew » Tue May 18, 2021 8:25 am

ppnewbie wrote:
Mon May 17, 2021 10:30 pm
I have a long stock portfolio (in addition to an HBPP) that I want to somehow secure against a big shock. I guess I can start layering in HBPP elements intermediate bonds, IAU.
Talk to MJ first.
whatchamacallit
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Re: Interest rate insurance

Post by whatchamacallit » Tue May 18, 2021 4:40 pm

ppnewbie wrote:
Mon May 17, 2021 10:30 pm
I have a long stock portfolio (in addition to an HBPP) that I want to somehow secure against a big shock. I guess I can start layering in HBPP elements intermediate bonds, IAU.
Is it because you like having all stock portfolio or because it is in account that only has access to stock?

Or is it because you don't want to sell and be taxed?

If you called that all stock portfolio a part of your permanent portfolio. Could you rebalance out stock in your permanent portfolio?

Some people love and can stomach all stock portfolios.
I am probably too risk adverse being that my favorite thing to buy is ee bonds.
ppnewbie
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Re: Interest rate insurance

Post by ppnewbie » Wed May 19, 2021 2:24 am

This portfolio has been built over many years and is “deep value” based on what I paid for the stocks. My investment horizon for this portfolio is very long. I should probably look for the simplest hedges - cash, gold, maybe LTT’s.

Also the hedges would be side positions for this portfolio not something to rebalance into and out off. I want to avoid taxes.
boglerdude
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Re: Interest rate insurance

Post by boglerdude » Sat May 22, 2021 11:12 pm

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