pershing83 wrote:
Medium Tex detects "scorn" in my post. That is silly and does not deserve a reply. OTOH MT has posted a long lecture which I can do without, too.
If I misunderstood you, try posting what you are trying to say in a different way.
We're all pretty friendly here. It's not like that on all boards, so sometimes it takes a little getting used to.
My post wasn't intended as a lecture.
Last edited by MediumTex on Fri Apr 15, 2011 12:58 pm, edited 1 time in total.
Q: “Do you have funny shaped balloons?”
A: “Not unless round is funny.”
I started easing into my 4x25 Permanent Portfolio exactly 1 year ago — right after tax day. However, I didn't completely finish easing into my 4x25 Permanent Portfolio until early July 2010.
Below is the chart of my personal performance versus if I had gone all-in with PRPFX a year ago. If I had gone all-in with the 4x25 Permanent Portfolio, the results would be slightly different.
It's important to understand that this chart will tell you nothing about future long term performance. PRPFX is a bit more volatile than a 4x25 Permanent Portfolio. When the world is falling apart, the 4x25 Permanent Portfolio does much better than PRPFX — due to the LT Bond allocation that MT referred to.
For instance, here is a chart that shows the difference between a 4x25 Permanent Portfolio vs. PRPFX during the 2008 financial crisis:
As you can see, the 4x25 Permanent Portfolio is more stable — which suits me better. Some people prefer PRPFX, and there's absolutely nothing wrong with that — my son's Coverdell IRA is only in PRPFX.
Keep in mind that PRPFX was based on Harry Browne's first attempt at building the Permanent Portfolio (with John Chandler and Terry Coxon). A few years later Browne devised the 4x25 Permanent Portfolio as a simpler (and slightly more stable) approach that investors could do on their own with very little effort.
Hope that answers your question.
Last edited by Gumby on Fri Apr 15, 2011 2:11 pm, edited 1 time in total.
Nothing I say should be construed as advice or expertise. I am only sharing opinions which may or may not be applicable in any given case.
I think if you take some time to see how people tend to interact here and contribute to discussions, you'll find that they're extremely informative and what may seem like lectures are just people trying to illustrate an entire thought, not necessarily assuming everyone's so stupid as to not already understand any of their post. This is especially true of Medium Tex, who probably has offered more solid, useful insight on discussions than most of the rest of us put together. His posts can be long and contain information you already know, but almost every one of them is a very complete thought. He's not trying to be condescending, just thorough in his illustration of why he thinks the way he does.
"Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds."
The main difference between the fund and DIY is the fund tends to overweight inflation linked assets. The last 10 years have been good for gold, silver and Swiss Francs so this has given it quite a tailwind. In the 1990s though the fund suffered due to less stock and bond exposure and poor gold and hard asset performance.
It just depends what you think works best for your situation. I'm a DIY because I want to limit costs and manage taxes for my situation. I also think it has a more balanced outlook. I think the DIY approach neither favors nor discounts any particular economic environment and will better handle a sudden sharp fall in gold prices for instance.
Well, I come from perhaps more rough and tumble message boards . Anyway, seriously, I'll consider my posts more carefully in the future. But, you guys must get 10%/year for 10 years; another
pershing83 wrote:
Well, I come from perhaps more rough and tumble message boards . Anyway, seriously, I'll consider my posts more carefully in the future. But, you guys must get 10%/year for 10 years; another
Do hang around.
You'll like it.
Lots of good stuff here.
Q: “Do you have funny shaped balloons?”
A: “Not unless round is funny.”
Pershing, you invest like you *%&^... slow and sloppy! GO!
(jk, and MT please don't kick me off this board)
"Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds."
Although PRPFX will probably have a very good day today, the HB PP may do even better. Lately, that's been unusual.
It looks like the HB PP was up .72%.
I'll be interested to see what PRPFX does. The daily valuation of PRPFX often puzzles me--it's frequently not up or down as much as the underlying assets would suggest.
Q: “Do you have funny shaped balloons?”
A: “Not unless round is funny.”
The thing about DIY is that it forces you really think about each asset class, which, for me at least, reinforced my macroeconomic understanding of what the PP is all about.
PRPFX is simple, and also a great way to invest, especially if you're not interested in learning about the bond market, or the different ways to own gold, total market vs. S&P vs. slice 'n dice strategies, etc...
For the sake of diversity, it's probably not a bad idea to use both (PRPFX and DIY) for some portion of one's holdings, as MT does.
I hope you opt to stick around the board...there's a lot of really great info here, and it's also nice to have posters who prompt lively discussion.
"All men's miseries derive from not being able to sit in a quiet room alone."
PRPFX up 0.61% today. That settles it. DIY wins!
Let's just remember that PRPFX and DIY are fraternal twins from the same parents (actually HB would be our father).
I do a bit of both for my portion of investable money that is allocated to the PP. I do see that PRPFX is slightly more risky. I agree that the past decade has been great for PRPFX due to having higher allocations to hard assets and less LT bonds, which of course is great timing. That of course doesn't mean squat starting on Monday however, because it could all reverse and the DIY will outperform.
As for the daily valuation of PRPFX I would guess there are some issues with calculating each asset and producing a number in a couple of hours. Maybe not...
Harry Brown lived near me and had run for POTUS on the Libertarian ticket, so I got interested in his investing ideas. By possibly 2005 I started looking at PRPFX as unique, at least IMO. I was selling a lot of stock/funds (advancing age) and had plenty of cash. The rest is history as they say. Looking at PRPFX by '06 and '07, started buying, and now have a lot. My argument for PRPFX is simple. It's done 10%/yr for 10 yrs and I woud think twice about improving that record. To beat Cuggino is a steep hill to climb. When I bought my first shares as I recall the fund had about $700-800 Mil, now it is 12 bil!
pershing83 wrote:
Harry Browne lived near me and had run for POTUS on the Libertarian ticket, so I got interested in his investing ideas. By possibly 2005 I started looking at PRPFX as unique, at least IMO. I was selling a lot of stock/funds (advancing age) and had plenty of cash. The rest is history as they say.
Did you ever meet him?
He strikes me as having been a genuinely warm and generous person.
Q: “Do you have funny shaped balloons?”
A: “Not unless round is funny.”
There is one thing that I find attractive in the mutual fund, but it's not about performance. It's that you can buy all four assets at once, no matter how small, and no matter how much space you have in your IRA/401(k). I've been going gangbusters filling up my tax-deferred accounts with 30-year treasuries, but I have to be careful to make sure I can still afford to buy enough gold to balance things out.
I suppose I could buy about $1500 worth of TLT on the same day as a 1 oz gold coin, but I won't bother. I guess this is the "screwing around" that pershing was referring to, not the mere monitoring of one's portfolio.
While all is well, I'm sometimes torn between buying gold and bonds and then redesignating a chunk of vp stock that I already own as part of my growing pp versus buying all four assets fresh so that they are all the same age. That is, I worry if it's fair to match new gold and bonds with "seasoned" stock that has already had time to appreciate (or fall).
Conversely, I could dump my unwanted VUSTX not by selling it but by redesignating it as as vp holdings instead of buying more gold and stock to match it.
Harry Browne lived in Franklin which adjoins Nashville. I did meet him but never really talked to him or spent anytime with him. He was popular, well liked, my age, but few seemed to know of his investing ideas. Some years ago I had an fee for service investment advisor at Schwab, and asked him about PRPFX; said he had never heard of it or Harry Browne. That was my last (and only advisor). I believe his wife lives in Franklin. Wikipedia has a good biography. In investing luck is everything, beats being smart. PP ideas made me leave the ordinary mkt's and I was busily selling everthing back in 06-07, age related, wanted to leave my boys something, not because I knew what was coming, and was buying Vanguard Wellesley (VWINX) and PRPFX and CD's. Also, I thought a good way to own gold and the Swiss francs.
Despite being a total "newbie" on this board, and this is basically now a dead thread, I will nevertheless make a comment because I can, have, and do READ and thus may have something worthwhile to say.
Upon seeing what the allocations are of the commercial "PRPXF" fund, I realize that it is NOT Harry Browne's Permanent Portfolio, but a hold-over from an earlier concept worked out with (or by?) Terry Coxon that I am PRESUMING Harry Browne, himself, later decided to scrap (or, at least, simplify).
I have three "Browne and company" books that I have read several times, and the one written in 1981, Inflation-Proofing Your Investments by Harry Browne and Terry Coxon suggests various balancing portfolios BASED ON WHAT YOUR ECONOMIC EXPECTATIONS ARE. Those are: Level Inflation, Rising Inflation, Runaway Inflation, Soft Landing, Deflation, and Uncertain (that final one kind of makes me laugh, because, gee, who is certain?). The menu of investments used are various percentages of Gold coins & bullion, Silver bullion, Silver coins, Swiss franks, Stock market investments, Real estate, Cash, Short-term dollars, and Long-term dollars (sound familiar to you PRPFXers?). In addition, some of the allocations (in the two inflation scenarios) called for SHORTING long term dollars (Jim Rogers would have liked that one).
These menus of investment possibilities seemed quite cumbersome to fool with, particularly in today's economic climate in which we seem to be bouncing back and forth between deflation and inflation, all depending upon "how low" the FED allows the recession to go before it is afraid the nation will erupt into civil unrest (or the big boys need another bail-out, which is probably the bigger draw) and therefore will perpetrate another "Quantitative Easing" and thus move the indicator over toward inflation.
Well, none of the "menus" were there to handle an eenie meenie miney moe between deflation and inflation, so I wondered if maybe I should make an average between the allocations of those two scenarios, or perhaps WEIGHT the percentages toward hyperinflation as that is what I expect will ultimately have to happen (but WHEN is anybody's guess)?
But I just couldn't push myself into maneuvering all my various investments around to fit into all those different categories and all the associated questions that each can raise (SHORTING an investment, I'd really rather not thank you; SWISS FRANCS, but then somebody or other was really touting the JAPANESE YEN; do I REALLY want to keep around bagfuls of silver coins, blah blah blah) and, honestly, I never really even considered simply investing in the commercial PRPFX fund because I am just a "do it myself" kind of a guy; I like to keep it all in my control, if I can.
Finally, I threw up my hands and read Harry Browne's Fail-Safe Investing for the third time, every word, and realized that two-thirds of that book, maybe more, was about NOT thinking that YOU knew what kind of investments were going to do well and not thinking that ANYbody else knew, either, that was something that for most of us was "been there, done that, and what a mess". So if one was convinced by Harry Browne, as I was...I even voted for him when he ran for President (and was one of the few Presidential votes in my career that I was really pleased about casting)...then attempting to decide that we were going to be moving into inflation or a soft landing or whatever and investing accordingly completely VIOLATED the entire Permanent Portfolio principle. Didn't Harry Browne as the capper of his career write this book, two-thirds of which said to NOT do that?
So I scrapped attempting to figure out the percentages of Swiss francs or bags of junk silver, scrapped real estate (which Harry also specifically said was not an investment, but was, maybe, a career) or shorting anything, and eliminated ALL attempts at speculating, and worked, instead, on actually doing what Harry Browne said to do. Not Terry Coxon. Harry Browne.
With Harry Browne's final method (and a pox on the Wall Street Journal...I forget which evil insider now owns it...for saying that senility must have set in), you don't have to guess, determine, or decide much of anything at all. A broad US stock fund: 25%, thirty-year US treasury bonds: 25%, US treasury t-bills: 25%, and Gold bullion: 25%. Get all those (you takes your pick as to S&P 500, Russell 3000, or whatever; buy your T-bonds from Treasury Direct or through a broker; you can get whatever gold bullion coins you think are pretty or are from a country you like or have a low premium, etc.), forget them all, and then once a year balance anything that goes outside the 15-35% range (which is selling at the highs and buying at the lows--gee, what a concept!). End of story.
pitbullshark wrote:
this is basically now a dead thread...
No thread seems to ever really die on this board.
pitbullshark wrote:
So I scrapped attempting to figure out the percentages of Swiss francs or bags of junk silver, scrapped real estate (which Harry also specifically said was not an investment, but was, maybe, a career) or shorting anything, and eliminated ALL attempts at speculating, and worked, instead, on actually doing what Harry Browne said to do. Not Terry Coxon. Harry Browne.
Here's what MT had to say about Terry Coxon a few months ago...
"I want to get something from Terry Coxon's thinking but I just don't. It consistently strikes me as either obvious or half-baked.
In my view, Terry Coxon is entirely swallowed by Harry Browne's shadow."
Rings true to me, based on the stuff I've read or listened too.
"All men's miseries derive from not being able to sit in a quiet room alone."
. Anyway, seriously, I'll consider my posts more carefully in the future. But, you guys must get 10%/year for 10 years; another 
