Heavy in PRPFX

Discussion of funds that implement the Permanent Portfolio strategy

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portart
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Re: Heavy in PRPFX

Post by portart » Sat Mar 09, 2013 7:15 am

I started moving money around already out of PRPFX, Breaking it up into SCHB, SGOL, SCHO and TLO in even amounts. Once I have about half my portfolio in those, I will watch both this combo and compare it against PRPFX when the market moves in different ways and see how they respond going forward. If we do a have big inflation push which is going to happen eventually (who knows when), I want to see if PRPFX will have a higher return.

Once again yesterday the Dow was up .47% and PRPFX went down .01 although gold gave back some gains from the day before. The thing to notice is when the market was up  and gold was also on Thursday, PRPFX show no gain. Now the market is up again and gold is down a little less, PRPXF is still going no where.  The question then is, what combination is necessary for PRPFX to get back to 50 a share??? It feels like it's stuck in no man's land.

When the party stops, it's time to find a way to have PP respond as it was designed to do which is respond positively to one of the four sectors experiencing a major upswing, in this case stocks. If you check out he performance of PPRFX over the last few months, it has dropped from 50 to 48 and change with gold hanging around 1600 and market up strongly. All things being equal, PPRFX should have at least held 50, if not gone higher.
Last edited by portart on Sat Mar 09, 2013 7:24 am, edited 1 time in total.
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Ad Orientem
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Re: Heavy in PRPFX

Post by Ad Orientem » Sat Mar 09, 2013 8:11 am

PRPFX does not index stocks and it is limited in terms of which sectors it can hold and in what proportion. But I would caution against checking daily movements in your PP. The HBPP does not go up every day either. There have been long (multi-week and in some case multi-quarter) periods where it stagnated or even lost ground. But it tends to go up over the long term as the various components shift gears. During 2008 there was a lag between the beginning of the stock market collapse and when LTTs started to shoot up.

The PP is best approached like the proverbial pot. Just leave it alone and it will boil. Spend your time watching it and you will just give yourself an ulcer and start questioning if it really works.
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BearBones
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Re: Heavy in PRPFX

Post by BearBones » Sat Mar 09, 2013 9:13 am

And much of the rationale behind the PP is protection in severe economic/political circumstances, hence the directly held assets and out of country holdings. If this is important, you are not adding much (if any) security by moving from PRPFX to 4 ETFs, most all held by Schwab.
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sophie
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Re: Heavy in PRPFX

Post by sophie » Sat Mar 09, 2013 9:34 am

Ah, but I think the point here is that we are comparing the performance of PRPFX with that of its major components.  Portart and others have pointed out that most of its price changes are driven by gold and stocks.

So let's check this on ETFreplay.  PRPFX is 20% gold, 5% silver, 35% treasuries (avg maturity 6.6 yrs), 10% Swiss francs, 15% growth stocks, 15% natural resource and real estate stocks.  When I plug these into ETFreplay using GLD, SLV, IEI, FXF, and VTI, here's what I get:

past 24 months:  portfolio 11%, PRPFX 6.5%
past 12 months:  portfolio 3.8%, PRPFX 2.1%
past 6 months: portfolio 1.7%, PRPFX 1.9%
past 3 months:  portfolio 0.9%, PRPFX 0.7%

When I look back 36 months, the portfolio matches PRPFX very precisely up through mid 2011, after which the traces start to diverge:

Image

This means the difference isn't explained by the expense ratio, and the divergence appears to be increasing over time.  Hard to tell if this is the effect of stock picking vs recent underperformance of the natural resources sector, but either way it doesn't bode well for PRPFX.  Having so much stocks concentrated in a couple of sectors is just as bad as the active management, IMHO.  Not to say PRPFX isn't a perfectly good investment, just one that has its weak points.
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portart
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Re: Heavy in PRPFX

Post by portart » Sat Mar 09, 2013 5:50 pm

Yes, these charts tell you mathematically what I have noticed through price action.  I have been watching it everyday for ten years, not just lately. I think something else is happening. I remember reading that the Swiss Frank could be the culprit tying itself to the Euro. Most likely it is the stocks owned in the fund that are underperforming and are just rotated out of favor. I am just an average investor so I am no expert for sure but I know for a fact that something has changed over time. When your paying .71 management fees, an additional divergence away from what you expect the fund to do, it gets your attention. The other thing is that PPRFX was the number one conservative fund out of all of them. Now they are near the bottom as the numbers even out by sheer odds. I think it is unrealistic for this fund to keep outperforming other conservative funds every year. I feel luck was on my side picking it at just the right time. I believe moving some money around using the same philosophy makes good sense.
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BearBones
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Re: Heavy in PRPFX

Post by BearBones » Sat Mar 09, 2013 7:17 pm

portart wrote: I am just an average investor so I am no expert for sure...
Ah, the difference between expertise and wisdom... Of the two, I'd certainly favor the latter, and it sounds like you have it in spades. Congratulations on your success so far, and best wishes going forward. Thanks for sharing your story.
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Re: Heavy in PRPFX

Post by Reub » Sat Mar 09, 2013 7:52 pm

Reub wrote: Yes, please publish the paper that Harry Browne wrote for you. I would love to see it!
Have you located that letter from HB? I'd love to read it.
portart
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Re: Heavy in PRPFX

Post by portart » Sun Mar 10, 2013 9:33 pm

I have his papers somewhere as I saw them not too long ago.. I looked the other day but didn't locate them yet. When I find them, I will do a full report. At the time I got them, I didn't realize he would become famous posthumously as this.
portart
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Re: Heavy in PRPFX

Post by portart » Mon Mar 18, 2013 8:13 am

PRPFX down from 99 percent to 68 percent of my portfolio as I continue to redistribute using other funds for the same breakdown. I own more gold through since PRPFX has 5% silver as part of it's 25% PM. Picked up some GDX which is so sold off that the risk reward here may be the best buy in the last twenty years, when gold goes over $2,000 which could be breathtakingly fast. GDX is priced for $800 gold so which do you believe?
portart
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Re: Heavy in PRPFX

Post by portart » Sat Nov 16, 2013 1:56 pm

Hi people, I haven't written to this post in awhile. For whatever reason, I am back to 100 percent in PRPFX. It has gone nowhere for a long time. I am getting a little nervous about if and when the stimulus stops, this portfolio might find it's way back to $45.00 a share. I don't know what other diversity I would go to now with stocks so high, increasing exposure there could be expensive in a set back which could come at any time. Anyone have ideas on this?
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Ad Orientem
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Re: Heavy in PRPFX

Post by Ad Orientem » Sat Nov 16, 2013 2:14 pm

portart wrote: Hi people, I haven't written to this post in awhile. For whatever reason, I am back to 100 percent in PRPFX. It has gone nowhere for a long time. I am getting a little nervous about if and when the stimulus stops, this portfolio might find it's way back to $45.00 a share. I don't know what other diversity I would go to now with stocks so high, increasing exposure there could be expensive in a set back which could come at any time. Anyone have ideas on this?
If you are looking for radical diversification in 1 stop shopping you would be hard pressed to find a better choice than PRPFX. My only complaint is its E/R which will detract from your long term returns. The future is unpredictable but the fund has withstood all of the economic storms of the last 30+ years. I would try to avoid worrying about future events. That's kind of the point in owning such a fund.
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Re: Heavy in PRPFX

Post by Kshartle » Sat Nov 16, 2013 4:10 pm

portart wrote: Hi people, I haven't written to this post in awhile. For whatever reason, I am back to 100 percent in PRPFX. It has gone nowhere for a long time. I am getting a little nervous about if and when the stimulus stops, this portfolio might find it's way back to $45.00 a share. I don't know what other diversity I would go to now with stocks so high, increasing exposure there could be expensive in a set back which could come at any time. Anyone have ideas on this?
What makes you think stimulus is going to stop?

The FED is trying to have their cake and eat it too. The stimulus is neccessary to keep the banks and government afloat but if they let the cat out of the bag that they have no intention of withdrawing (I think they're more likely to up it) then they will plunge the dollar.

If they actually do stop printing by some miracle, PRPFX will probably get hurt but I imagine the dollar will really firm up so you might not lose too much purchasing power.

I wouldn't bet on a strong dollar as long as this regime is in power though. They have made a lot of promises to people that can only be kept if they print the money to pay for it.
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