PRPFX Performance and Profit Taking

[buddtholomew]

PRPFX YTD returns exceeded 13% today and I decided to sell a portion of the fund (10%) and book the profits. In conjuction with this transaction, I also decided to shave a little off of my VGPMX holdings (20%) as this fund had reached 20% over cost basis. I am now evaluating whether it made sense to capture the gains, add to cash holdings and restore PRPFX and VGPMX to 10% of AA (even though they had not reached rebalancing bands).

My main reservations are centered around selling PRPFX, as I should remain committed to the setup of the fund without paying attention to YTD returns. I assume 4 x 25 PP investors dont feel the need to sell to cash when the PP is up over a specific threshold. Maybe I am not convinced that PRPFX can whether the storm if things become economically difficult and I want the cash reserves to benefit from lower NAVs.

Anyone else feeling the same way?

Budd

[MediumTex]

Your entire thought process is one that the HB PP seeks to avoid.

This is one of the problems with PRPFX--its added volatility invites this sort of thing.

When you are trying to figure out on an ad hoc basis whether it is time to buy or sell based upon market conditions and not pre-established rebalancing bands, much of the benefit of the PP strategy has been lost.

I understand where you are coming from, though.  It is always tempting to take profits when an asset has gone up in value rapidly.

[BobS]

I've got some of my savings in the PRPFX.  But I wouldn't touch that - at least not until well into retirement when it might make sense.

I would (and did) cash out everything in my 401k back in the run up to 2009.  As my company changed on me, I closed out the 401k and moved
it into an IRA where I have the PRPFX and way too much precious metals.

My 401k is now all equities, which I would cash out if I felt like 2008 did.  However, equities seem like they are going to catch a big wave up for
awhile, along with gold.  Bonds and cash might be getting hit hard from the news I've been following - the QE2 is going to hurt cash in a big way.

PRPFX is nice in that the cash component is in Swiss Francs which are rising against the dollar.  From what I can see the only portion of PRPFX that's
going to be hurt over the next six months will be bonds.  But gold and silver should do well until April, equities and Swiss Francs should work through
spring and summer. 

[buddtholomew]

I've got some of my savings in the PRPFX.  But I wouldn't touch that - at least not until well into retirement when it might make sense.

I would (and did) cash out everything in my 401k back in the run up to 2009.  As my company changed on me, I closed out the 401k and moved
it into an IRA where I have the PRPFX and way too much precious metals.

My 401k is now all equities, which I would cash out if I felt like 2008 did.  However, equities seem like they are going to catch a big wave up for
awhile, along with gold.  Bonds and cash might be getting hit hard from the news I've been following - the QE2 is going to hurt cash in a big way.

PRPFX is nice in that the cash component is in Swiss Francs which are rising against the dollar.  From what I can see the only portion of PRPFX that's
going to be hurt over the next six months will be bonds.  But gold and silver should do well until April, equities and Swiss Francs should work through
spring and summer. 

Too much prognostication for my taste. The only commonality between my and your post is that we both hold PRPFX for our savings.

[MediumTex]

BobS,

That's a pretty detailed picture of the future.

How did you arrive at such specific predictions?

[BobS]

Uh, some of it is pretty easy -

Gold is seasonal.  70% of the time it goes up in September and down in April.  I think I first saw that in the book - Gold for Dummies.
The last post on it's seasonality is here - http://dailyreckoning.com/ready-set-gol ... ust-ahead/  Looking at the
the url, I see it's mainly March not April.  I was wrong about that...

On QE2 and the effects, the head of the St. Louis Fed - James Bullard, was on CNBC's Squawk Box Friday morning as a guest host.  You can see
and listen to his remarks at - http://www.cnbc.com/id/15838368

On currency, I follow Chuck Butler during the week - http://dailyreckoning.com/author/cbutler-2/  and I have my "emergency" fund in
a 3 month multi-currency CD at Everbank (where Chuck works).  One of the components of that CD is the Swiss Franc.  Every 3 months I'm
forced into deciding whether to roll it over or switch to something else.  The interest rates haven't gone down yet.  And the last return was pretty
nice.

I also watch Jyske Bank's web-tv segments - http://en.jyskebank.tv/

And I watch Jim Cramer - not so much for the stocks, but for what he's saying about the markets.  He provides some decent
insight.  I'm also reading his books, for a novice like me, there's some real insight to how the market sometimes works.

Cramer was pretty negative on Obama's policies, but is now liking what's coming out of the White House.  Along with some of the House
Seats are going to Republicians this November which makes the market happy.

I read some newsletters I subscribe to and watch the news scroll by when I have time during the day.

I do have concerns - when is silver going to crash?  How long will it be at $25, should it get there?
Is earning season going to meet expectations - if not the market is going to crash for a bit?

[Pkg Man]

Uh, some of it is pretty easy -

Gold is seasonal.  70% of the time it goes up in September and down in April.  I think I first saw that in the book - Gold for Dummies.
The last post on it's seasonality is here - http://dailyreckoning.com/ready-set-gol ... ust-ahead/  Looking at the
the url, I see it's mainly March not April.  I was wrong about that...

On QE2 and the effects, the head of the St. Louis Fed - James Bullard, was on CNBC's Squawk Box Friday morning as a guest host.  You can see
and listen to his remarks at - http://www.cnbc.com/id/15838368

On currency, I follow Chuck Butler during the week - http://dailyreckoning.com/author/cbutler-2/  and I have my "emergency" fund in
a 3 month multi-currency CD at Everbank (where Chuck works).  One of the components of that CD is the Swiss Franc.  Every 3 months I'm
forced into deciding whether to roll it over or switch to something else.  The interest rates haven't gone down yet.  And the last return was pretty
nice.

I also watch Jyske Bank's web-tv segments - http://en.jyskebank.tv/

And I watch Jim Cramer - not so much for the stocks, but for what he's saying about the markets.  He provides some decent
insight.  I'm also reading his books, for a novice like me, there's some real insight to how the market sometimes works.

Cramer was pretty negative on Obama's policies, but is now liking what's coming out of the White House.  Along with some of the House
Seats are going to Republicians this November which makes the market happy.

I read some newsletters I subscribe to and watch the news scroll by when I have time during the day.

I do have concerns - when is silver going to crash?  How long will it be at $25, should it get there?
Is earning season going to meet expectations - if not the market is going to crash for a bit?

Wow.  I'm glad I'm in the PP.

BobS I would encourage you to pick up a copy of "Fail Safe Investing" by Harry Browne.

[BobS]

I have "Fail Safe Investing" by Harry Browne and have read it, along with "Why The Best-Laid Investment Plans Usually Go Wrong".  Both are
great books!

I'm giving "Fail Safe Investing" to friends and relatives for Christmas.  But I'd be surprised if any of them implemented a PP.

I'm building up my retirement account and have a small variable portfolio that I'm learning how to manage.  But I also believe one needs
to do homework on mutual funds and etfs, as well as stocks.  I'm not willing to lose a massive amount of money like those who are in an S&P 500
index fund have and still haven't recovered.  I would have lost a lot in the 2008/2009 crash had I not heeded the warnings and moved to cash while the market was going up.

Given that 25% of the PP is in some type etf or mutual fund or combination of equities, there's nothing wrong with moving that to all cash when
something bad is coming and there are people who are normally bullish on the market telling you to get out.  Even Bill Gross moved a lot of his of Total
Bond fund - PTTRX, into cash last year.  Looks like he's moved it back into bonds now - cash is at -34.15%.

[Storm]

Selling 25% of your PP just because you think something bad is going to happen seems like the opposite approach of the PP.  Also, I would just like to point out that if Bill Gross is going into cash and bonds, that would seem to indicate that he thinks deflation is in the picture, not currency devaluation.

Another thing about QE2... the analogy of pushing on a string really applies here.  If all the fed is doing is buying their own bonds and increasing their balance sheet, that money will never make it into circulation.  It seems the fed is more concerned about lending money to the banks at 0%, then allowing them to buy more treasuries with that money, then paying dividends on those treasuries in an effort to recapitalize banks and make their balance sheets look better.  This is the japanese strategy and indicates long, slow deflation is coming, not rapid inflation.

You really shouldn't listen to Jim Cramer at all.  The phrase "even a stopped clock is right twice a day" is the best way I can describe him.