I Finally Purchased Some EDV

[longeyes]

I don't market-time either inside my DIY PP. 

I am considering TBT for my Variable Portfolio.

***

MT, what you say is true long-term, but in the most recent cycle rates have been declining for a long while.  I'm looking at the last 30 years, not the last 100.

[pershing83]

I posted this on the pp board but no comments were forth coming so I'll try this board. IMO, this is the sort of thing that should be discussed, not long and tedious ramblings about LTT and the like.

When asked about the classic pp performance YTD, Tex was kind enough to provide it. To change the subject somewhat and since I own a large amount of PRPFX, YTD 9%, outperforming the classic pp by a bit, it would seem to me the pp needs a more global look. HB's last book, actually the only one I have read, twice now BTW, was published in 1999. It would be interesting to know if his allocation and assets within those allocations would have changed. I think he would have made some changes. For example PPRPFX owns 5% silver and 10% Swiss franc assets. I like this.

I do not read every post but I wonder if I could steer the discussion to that issue? Would HB have made changes over the laast 12 yrs but still maintaining the basic 25% parts. I do like the 25% allocations.

Also I'm curious to what degree some of you regulars have tinkered with your pp's, and if so, how?

[AdamA]

Would HB have made changes over the last 12 yrs but still maintaining the basic 25% parts.

No.

PRPFX is the PP in its original form.  HB later figured out that the 25% x 4 was less complicated and would work just as well.

PRPFX is weighted more heavily toward precious metals and does well when they perform well.  This year it has outperformed the 25% x 4, but it was more volatile (in the downward direction) during the crash in 2008.

HB was still recommending the 25% x 4 approach on his radio show in 2005, and I don't think anything has happened since then that would cause him to change his mind.

[AdamA]

Also I'm curious to what degree some of you regulars have tinkered with your pp's, and if so, how.

As little as possible.  I hold 1/5 of my gold in GTU for rebalancing purposes, but that's pretty much it.

[pershing83]

PRPFX is not weighted more heavily in precious metals. It holds 20% gold and 5% silver. This might might vary from time to time prior to rebalancing  but as of 06/11 held 25% metal.

HB said, at least in 1999, hold 25% in the broad mkts and suggested several domestic mutual funds.

PRPFX has deviated from this somewhat, holding individual stocks, largest single stock holding is BHP (a foreign stock). PRPFX holds REIT's also.

[AdamA]

PRPFX is not weighted more heavily in precious metals. It holds 20% gold and 5% silver. This might might vary from time to time prior to rebalancing  but as of 06/11 held 25% metal.

I should have said it is more heavily weighted toward precious metals than it is toward long term treasuries, to which there is limited exposure.

HB said, at least in 1999, hold 25% in the broad mkts and suggested several domestic mutual funds.

PRPFX has deviated from this somewhat, holding individual stocks, largest single stock holding is BHP (a foreign stock). PRPFX holds REIT's also.

Again, PRPFX is more or less the original form of the PP.  HB eventually figured out that a broad market fund was probably better than trying to pick individual stocks.

[pershing83]

PRPFX has a mix of bonds and does not hold a lot of LTT.  I've often thought PRPFX would be better just to hold indexs for stocks. They have a huge portion of the gold in coins. Eagles and Maple Leafs 

[AdamA]

I've often thought PRPFX would be better just to hold indexs for stocks.

Agree.

[Reub]

Man, I wish I would have purchased some more EDV! Thanks, MT!

[dualstow]

Bill Gross, eat your heart out!

[dualstow]

I'm so pleased with the pp that I'm going to get rid of my VUSTX i.e. Vanguard's "long" treasury index fund, and buy TLT. Nothing to do with past performance, but I bought VUSTX for diversification from stocks before I knew that the holdings were not all of the longest duration. And, in fact, before I knew the pp existed. It will be a neutral transaction as VUSTX will finally break even for me today at closing.

EDV makes up only 10% of my holdings, so I think I'm going to keep it even after I unload VUSTX.
  instrument  |                % of bond holdings
---------------------------------------------------------
VUSTX Vanguard Long-Term Treasury Inv 18%
US 30-Year Treasury bonds, held directly         39%
TLT iShares Barclays 20+ Yr Treas.Bond ETF        33%
EDV Vanguard Extended Duration ETF 10%

[Reub]

I bought some more EDV this morning. It is through the roof again!

[MediumTex]

I bought some more EDV this morning. It is through the roof again!

Is this part of a mechanical PRPFX/EDV strategy or are you just speculating?

EDV has had a really nice run.

[Reub]

It is mechanical, MT. I am on my way to a 10% EDV holding to compliment my PRPFX holding. The recent EDV run-up is just helping me get there that much sooner. 

[MediumTex]

Today was a nice illustration of how the PRPFX/EDV concept is supposed to work.

The HB PP was up about 1%.

PRPFX was down .34%, while EDV was up 4.96%.

[longeyes]

So the combo would have been up about .8 pct at 9:1?

[Reub]

I'm liking the combination greatly! PRPFX up 0.53% today. EDV up another 1.10%.

[MediumTex]

I'm liking the combination greatly! PRPFX up 0.53% today. EDV up another 1.10%.

Hopefully you will like it on the bad days as well.

Those are the ones where you can get in trouble.

[Reub]

MT, I was 90% in the stock market in 2008 when it crashed and I took that long ride down and back up. Watching a properly balanced PP move is like a ballet next to that.

[Liz L.]

Hey, Reub, as Dr. Phil would say, how's that EDV purchase working out for you?

I've been on the fence about adding a touch of EDV (have restrictive 401k issues), and have been sighing a lot today about not pulling the trigger.

[Reub]

The EDV has been smoothing out some of my PRPFX losses. Just as MT predicted.

[Khisanth]

I am kicking myself for not doing 10% EDV to pair with my PRPFX purchase last week (IRA)

Do I go and sell 10% of PRPFX now so that I can pick up EDV? ;-(

[Reub]

I would do it in light of the fact that PRPFX holds a 10% holding in Swiss Francs, which are now pegged to the Euro. This in my opinion is a game changer for PRPFX. They need to change their allocation so that they have some deflation protection, as a larger holding of TLT or EDV would accomplish. As a large holder of PRPFX, I sold some yesterday and purchased some TLT to go along with my previous EDV holding. I am still waiting for the Permanent Portfolio Fund to answer my recent emails on this subject.

[longeyes]

Don't hold your breath; I wrote them a while ago about the same thing.  No answer.

[AdamA]

Don't hold your breath; I wrote them a while ago about the same thing.  No answer.

The Swiss Frac will ultimately be a wild card.  The Japanese do the same nonsense with the Yen, and it's continuted to strengthen against the dollar in spite of everything.  I wouldn't worry too much about it, but I would definitely get some long term bond exposure if you position in PRPFX is sizable.