The GOLD scream room

Discussion of the Gold portion of the Permanent Portfolio

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dockinGA
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Re: The GOLD scream room

Post by dockinGA » Thu Jun 17, 2021 6:55 am

Tortoise wrote:
Wed Jun 16, 2021 4:07 pm
What happened to the Budd from last December?
Yet another Mathjak type, expecting the PP to be the end-all be-all of investing portfolios, waffling back and forth on their feelings about the PP in the space of just a few months, spending their time on the forums blabbering on and on without providing one iota of anything meaningful to the discussions. All we can do is point out their past statements/inconsistencies. Maybe they'll eventually understand they don't know anything about the future of markets, just like the rest of us.
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buddtholomew
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Re: The GOLD scream room

Post by buddtholomew » Thu Jun 17, 2021 8:06 am

dockinGA wrote:
Thu Jun 17, 2021 6:55 am
Tortoise wrote:
Wed Jun 16, 2021 4:07 pm
What happened to the Budd from last December?
Yet another Mathjak type, expecting the PP to be the end-all be-all of investing portfolios, waffling back and forth on their feelings about the PP in the space of just a few months, spending their time on the forums blabbering on and on without providing one iota of anything meaningful to the discussions. All we can do is point out their past statements/inconsistencies. Maybe they'll eventually understand they don't know anything about the future of markets, just like the rest of us.
It’s down almost 3% this morning.
Take a look at my post responding to Tortoise and let me know whether you still feel the same way about me not adding anything “meaningful to discussions”. I explain my personal reasoning.
Last edited by buddtholomew on Thu Jun 17, 2021 8:40 am, edited 2 times in total.
dockinGA
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Re: The GOLD scream room

Post by dockinGA » Thu Jun 17, 2021 9:34 am

buddtholomew wrote:
Wed Jun 16, 2021 4:56 pm
Scenarios similar to March 2020 unfold with irregularity and in-between the PP investor relinquishes too much in equity gains to make 4x25 worthwhile.

The PP would still be treading water today if I hadn’t violated 15/35 bands and increased stock exposure near the March bottom. It was tactical asset allocation rather than the PP that accounted for the outsized gains.

At last glance I am up 80%+ in Gold LTD but have reduced exposure to the point where it no longer matters much to me. One day gold is worth something and the next day it’s worthless. I’d much rather invest in real estate as a store of value that also pays dividends than rely on the greater fool theory when it’s time to sell Au.
Scenarios like March 2020 occur every 5-10 years. You're correct, once the market recovers the PP lags against equities, but during the crash the PP doesn't lose nearly as much as equities. At the end of the day, perhaps equities ends up with a higher return, but that's not guaranteed (if it was guaranteed there would be no risk premium and hence no outperformance) and that doesn't mean that a PP can't be worthwhile considering it does a better job of preserving capital.

I'm still in the accumulation phase, but have no issue with being invested in a portfolio that is more of a capital preservation approach as opposed to pure returns. Crashes like 2008-9 and 2020 are prime times for people to lose their jobs. In that situation, if you're in a more heavily stock portfolio, you're suddenly having to cash out at the bottom in order to stay afloat. Perhaps your home has also lost value, and you're staring down the barrel of financial ruin because you've lost your job, investments have crashed, your crashed investments are dwindling further because you're having to tap into them to survive, your home has lost value (and maybe your mortgage is underwater) and yet you still may have to sell to make ends meet. And heaven forbid you end up with a health crisis or some other type of major emergency that piles on even further.

There are perhaps some with the intestinal fortitude to stay the course during a scenario described above, and those people will likely be rewarded at some point in the future by higher rewards. But there are many who couldn't stay the course, some who know ahead of time they won't be able to stay the course, and even for the ones who can stay the course I imagine the stress they endure during the downtimes might take years off their life and/or wreck marriages.
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Re: The GOLD scream room

Post by vincent_c » Thu Jun 17, 2021 9:55 am

buddtholomew wrote:
Wed Jun 16, 2021 4:56 pm
Scenarios similar to March 2020 unfold with irregularity and in-between the PP investor relinquishes too much in equity gains to make 4x25 worthwhile.
This is true provided that you are 100% confident in your ability to stay the course with any other allocation. I think that is a big assumption especially for those who look at it as relinquishing equity gains.

The way I think about it is that if you take additional equity exposure, you have increased your risk. If I don't take on that risk I am not entitled to any compensation so it's not giving up anything. I don't relinquish lottery gains by not purchasing a ticket.
buddtholomew wrote:
Wed Jun 16, 2021 4:56 pm
The PP would still be treading water today if I hadn’t violated 15/35 bands and increased stock exposure near the March bottom. It was tactical asset allocation rather than the PP that accounted for the outsized gains.
I don't see how these kinds of comments add value. Even if you can convince yourself that your tactics have added alpha, you will have a hard time convincing others and you are not offering your services to anyone else so I don't see how it's actionable for anyone.
buddtholomew wrote:
Wed Jun 16, 2021 4:56 pm
At last glance I am up 80%+ in Gold LTD but have reduced exposure to the point where it no longer matters much to me. One day gold is worth something and the next day it’s worthless.
I actually have no problem with this because it's clear that you're not actually saying gold is worthless and that it's just a personal comment/opinion. I've always taken this thread to be a support group for PP investors who naturally have difficulty holding onto all of the assets. Personally I have a hard time holding cash but there isn't a support thread for that.
buddtholomew wrote:
Wed Jun 16, 2021 4:56 pm
I’d much rather invest in real estate as a store of value that also pays dividends than rely on the greater fool theory when it’s time to sell Au.
Have you tried to really break down where all the real estate returns come from and have you considered that land itself has a pretty big carrying cost and that you are forced to be active in building something productive on it in order to get the "dividends" that you're referring to? If you're willing to engage in a discussion between real estate and gold then that would truly be adding value to the forum.
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Re: The GOLD scream room

Post by jswinner » Thu Jun 17, 2021 10:17 am

A PP of VTI, IAU, TLT and SHY returned over 9% between Feb 2020 and May 2021. Max drawdown was -4.55%. What is so bad about that?
Yes 100% VTI was up over 24%. But max drawdown was over 21%. Seems to be classic PP use case. And IAU is up 14.30%, with a max daily drawdown of -13.8%
The obsessive daily performance focus and postings on an individual asset class is what I consider non-productive commentary. Constructive criticism is fine, even the occasional I hate gold or TLT or whatever. To be constructive, the critiques should also include whatever the proposed "better" solution is, with the analysis as to why.
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Re: The GOLD scream room

Post by vincent_c » Thu Jun 17, 2021 10:31 am

What I find is non-productive is that there are some on here, Budd and MJ (who hasn't been around for a bit), come to mind that pass of their opinion as fact because it is mixed in with some facts. Yes it is a fact that gold is down almost 3% today, but it is not a fact that you're giving up gains by holding the PP.

The fact is that you give up gains whenever you deviate from the asset allocation that you have decided you can stay the course in and that deviation caused you to lose money. Perhaps they have decided that 100% equities is their default allocation and they "add" protection when they feel it is necessary. From that perspective holding the PP assets can be a drag on portfolio returns.

It may be useful to discuss whether using 100% equities is the proper long term benchmark. I've heard arguments for defaulting to 100% equities during the accumulation phase or if your nest egg is large enough that equity volatility doesn't affect your day to day. I'm not convinced but I'd love to hear thoughts on this.

I'll start.

The reason I don't think 100% equities should be a good benchmark is because I can show that the PP has better risk adjusted return. So if I leverage the PP to match the volatility of 100% equities I can get higher return than just holding 100% equities. I therefore adjust my cash/leverage according to my risk tolerance.

Given this reasoning, more exposure to a better risk adjusted return portfolio (the PP) is the relevant benchmark so whether I have relinquished any gains depends on whether I am underexposed to the PP assets.
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Re: The GOLD scream room

Post by flyingpylon » Thu Jun 17, 2021 11:17 am

So much of investing is psychological and emotional. After hanging out here for a decade or so, I've seen various posters come and go. It's apparent that some folks always need to feel like they're "winning". Like every single day. That's fine, but that mindset is not a good fit for PP-style portfolios because some "worthless" asset will always be holding them back and provoking outbursts on internet forums.
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Re: The GOLD scream room

Post by vincent_c » Thu Jun 17, 2021 11:56 am

dockinGA wrote:
Thu Jun 17, 2021 9:34 am
At the end of the day, perhaps equities ends up with a higher return, but that's not guaranteed (if it was guaranteed there would be no risk premium and hence no outperformance) and that doesn't mean that a PP can't be worthwhile considering it does a better job of preserving capital.
I do think that one of the key assumptions in the PP is that businesses will continue to be productive so that given an indeterminant timeframe that there will be a real return on capital.

A guaranteed return does not imply that there is no risk premium because you are not guaranteed that return on any finite timeframe. A 15+ year timeframe has historically been considered to be a guarantee of returns both real and nominal for US equities.

One might ask whether the S&P500 or the few companies that drive the short term returns are making business decisions and investments that mean that they are being productive in the long term. I think this is why you have to diversify your exposure to productivity by having some real estate investment (primary residence, rentals, various commercial) as well as utilitzing your own time/energy.

In my opinion the focus doesn’t have to be PP as capital preservation and human capital to make money but the PP philosophy is just to diversify exposure to the economic conditions. I mean, the economy could be thriving at a time where your personal productivity is underperforming or vice versa.
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Cortopassi
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Re: The GOLD scream room

Post by Cortopassi » Thu Jun 17, 2021 3:42 pm

Oh, the horror, gold fell. Like that doesn't always happen... ;)

You may call me crazy, but my cash balance hit a rebalance point (still contributing to 401k). Which means, for my PP, I bought a crapload of TLT.

But it certainly follows the buying of the lagging asset theory. And the theory of buying stuff that your soul and the media is telling you to run away from.

Hope everyone is well.
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Kriegsspiel
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Re: The GOLD scream room

Post by Kriegsspiel » Thu Jun 17, 2021 6:26 pm

Cortopassi wrote:
Thu Jun 17, 2021 3:42 pm
Oh, the horror, gold fell. Like that doesn't always happen... ;)
Holy fuck, we're back at Revolutionary War levels, after hanging around... uh, More Recent War levels for a while!
You may call me crazy, but my cash balance hit a rebalance point (still contributing to 401k). Which means, for my PP, I bought a crapload of TLT.

But it certainly follows the buying of the lagging asset theory. And the theory of buying stuff that your soul and the media is telling you to run away from.

I've been trying out the "accumulate in cash" method, with some nibbles at the other assets if I feel like it. It's been pretty pleasant.
Hope everyone is well.
I'm amazing, thanks for asking.
"You haven't, I suppose, ever mixed with politicians at close quarters. They're awful. I think some of these must have been the dregs anyhow, but I've discovered, what previously I didn't believe possible, that politicians behave in private life and say exactly the same things as they do in public. Their stupidity is inhuman.
- John Maynard Keynes
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vnatale
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Re: The GOLD scream room

Post by vnatale » Thu Jun 17, 2021 8:03 pm

Cortopassi wrote:
Thu Jun 17, 2021 3:42 pm

Oh, the horror, gold fell. Like that doesn't always happen... ;)

You may call me crazy, but my cash balance hit a rebalance point (still contributing to 401k). Which means, for my PP, I bought a crapload of TLT.

But it certainly follows the buying of the lagging asset theory. And the theory of buying stuff that your soul and the media is telling you to run away from.

Hope everyone is well.


You are back from your self-imposed exile!

Good to see you here again!
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats."
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Cortopassi
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Re: The GOLD scream room

Post by Cortopassi » Thu Jun 17, 2021 10:39 pm

vnatale wrote:
Thu Jun 17, 2021 8:03 pm

Good to see you here again!
Thanks, man. Not saying I am back on a daily basis, but I do occasionally lurk. I see things have "sort" of quieted down. In any event, I have spent more time reading (sci-fi usually, rereading Ringworld right now for like the fourth time) and consuming almost no news, and feel out of it, in a good way. With the weather good, I am outside as much as I can be either riding my bike or tending the landscape.

And we are starting the college visit process this summer for my younger daughter.

I did pull the trigger on working 4 days a week, been doing it for 3 weeks now. Taking a bit of effort not to look at email on my day off (Wed), but I'm getting better. All our products are currently mature and in production and we should generally be sitting back dealing with small fires, but with semiconductor lead times gone to crazy 52 weeks+ in a lot of cases, my days are filled with trying to find alternate suppliers or ways to get parts of circuits to work with different ICs, otherwise we can't build. It has not been fun!

Finally, I know this is the gold room, but I don't really want to go to the other sections -- just an IL update -- I do not have to carry a mask anywhere anymore. All stores I usually go to, and the library are mask optional. A lot of people out there are still wearing them (their right) but it literally was like flipping a switch. From masks and limited to capacity, to wide open back to normal overnight. I even have had sales people in the office three times this week, hasn't happened in over a year.
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Re: The GOLD scream room

Post by vnatale » Fri Jun 18, 2021 7:23 pm

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Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats."
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