Fear is the mind-killer

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Pointedstick
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Fear is the mind-killer

Post by Pointedstick » Thu Nov 15, 2018 1:04 am

Hi, I'm Pointedstick, and I'm a recovering PP investor. I got help, and I'd like to help you, too.

Investing in the Permanent Portfolio in my 20s has so far been the costliest mistake I've ever made in my life. It caused me to lose out on more than $250,000 in avoided gains compared to the 100% stock portfolio I was perfectly happy with before I learned about the PP and I was convinced to adopt it by my fear of not being to replace my job and income should I lose them.

The PP is a fear-based portfolio. You fear loss, and want to avoid it. And the PP helps you avoid big losses, it's true. But I observed over the years I spent here that a good deal of people were not comfortable with even tiny unrealized losses. The fear radiating off of them was palpable. The problem is not the portfolio or the drawdowns. The problem is our own minds.

All of us here are INTJ-ish control freaks. It is so easy for us to become convinced that we can control things. Letting go of that is one of the hardest things for people like us! I now believe that loss is inevitable. Denying this is a kind of obsessive-compulsive disorder. If your kids (or grandkids!) haven't yet gotten you to see Kung Fu Panda, Let me highly recommend it--and in particular, this scene from it: https://www.youtube.com/watch?v=DLpUev1FvS0

Control is an illusion. Not because it's never possible (obviously it is), but because paradoxically, the more you strive for it, the less of it you come to find that you ultimately have, and the less flexibility you'll manifest when things don't go according to plan. The lure of control will drive you mad and turn you into an asshole. I was an asshole. It sucked. I'm sorry, everyone.

We must learn to let go. It's okay if you lose money. It's okay if you get fired from your job, or your house burns down, or your proudest achievement is destroyed and forgotten, or your greatest love is desecrated right in front of you, or your spouse and children all die tragically, or your god is dead. It's okay because you are strong enough to withstand them and come out on the other side! You're not a glass cannon or a fraud or a one-trick pony or an incapable loser. The power of creation has made you a radiant human being who can survive anything. You don't have to lock the pain away. Embrace the pain, let it wash over you, and observe your wholeness. You will survive!

Not only will you survive, but you'll thrive. Because ironically, the more at peace you become with those kinds of awful outcomes, the less likely they seem to happen, or if they do, the more likely you are to quickly recover from them! Life is funny that way.

I learned to live with loss, and I abandoned the PP. I'm back in 100% stocks now, and feel totally at peace with my portfolio. I have no idea how the stock market is doing, and I don't care. I have no clue what my net worth is. It must be okay because I can support my family and even buy nice things once in a while. I simply have no interest in closely following and worrying about and trying to control those things anymore. If the stock market tanks for 30 years and the USA collapses into warring tribes, I'll be okay. And so will you. So will we all.

Everything is going to be okay.
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Re: Fear is the mind-killer

Post by flyingpylon » Thu Nov 15, 2018 5:33 am

Seems like it will also be okay to miss out on some potential stock market gains.

Where is the line between fear and prudence?
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Re: Fear is the mind-killer

Post by buddtholomew » Thu Nov 15, 2018 7:43 am

Pointedstick wrote:
Thu Nov 15, 2018 1:04 am
Hi, I'm Pointedstick, and I'm a recovering PP investor. I got help, and I'd like to help you, too.

Investing in the Permanent Portfolio in my 20s has so far been the costliest mistake I've ever made in my life. It caused me to lose out on more than $250,000 in avoided gains compared to the 100% stock portfolio I was perfectly happy with before I learned about the PP and I was convinced to adopt it by my fear of not being to replace my job and income should I lose them.

The PP is a fear-based portfolio. You fear loss, and want to avoid it. And the PP helps you avoid big losses, it's true. But I observed over the years I spent here that a good deal of people were not comfortable with even tiny unrealized losses. The fear radiating off of them was palpable. The problem is not the portfolio or the drawdowns. The problem is our own minds.

All of us here are INTJ-ish control freaks. It is so easy for us to become convinced that we can control things. Letting go of that is one of the hardest things for people like us! I now believe that loss is inevitable. Denying this is a kind of obsessive-compulsive disorder. If your kids (or grandkids!) haven't yet gotten you to see Kung Fu Panda, Let me highly recommend it--and in particular, this scene from it: https://www.youtube.com/watch?v=DLpUev1FvS0

Control is an illusion. Not because it's never possible (obviously it is), but because paradoxically, the more you strive for it, the less of it you come to find that you ultimately have, and the less flexibility you'll manifest when things don't go according to plan. The lure of control will drive you mad and turn you into an asshole. I was an asshole. It sucked. I'm sorry, everyone.

We must learn to let go. It's okay if you lose money. It's okay if you get fired from your job, or your house burns down, or your proudest achievement is destroyed and forgotten, or your greatest love is desecrated right in front of you, or your spouse and children all die tragically, or your god is dead. It's okay because you are strong enough to withstand them and come out on the other side! You're not a glass cannon or a fraud or a one-trick pony or an incapable loser. The power of creation has made you a radiant human being who can survive anything. You don't have to lock the pain away. Embrace the pain, let it wash over you, and observe your wholeness. You will survive!

Not only will you survive, but you'll thrive. Because ironically, the more at peace you become with those kinds of awful outcomes, the less likely they seem to happen, or if they do, the more likely you are to quickly recover from them! Life is funny that way.

I learned to live with loss, and I abandoned the PP. I'm back in 100% stocks now, and feel totally at peace with my portfolio. I have no idea how the stock market is doing, and I don't care. I have no clue what my net worth is. It must be okay because I can support my family and even buy nice things once in a while. I simply have no interest in closely following and worrying about and trying to control those things anymore. If the stock market tanks for 30 years and the USA collapses into warring tribes, I'll be okay. And so will you. So will we all.

Everything is going to be okay.
Holy crap, this is unexpected!
PS this is a complete 180...
Good to hear from you and your newfound freedom.
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Re: Fear is the mind-killer

Post by Cortopassi » Thu Nov 15, 2018 8:26 am

PS, good to hear from you!

Trust me, the viewpoint is different in your 20s (which I am assuming you are still in or close to) vs. your 50s.

You say it made you lose out on $250k of gains. You're saying you would have realized those gains? Or just on paper, potentially to evaporate in the next downturn?

Not saying any PP gains wouldn't evaporate either, but I recall many people talking like you in the mid to late 90s as the internet was taking off and anything with a .com at the end of the name was worth billions. And then they weren't.

P.S. (pun intended) all your control points are spot on though.

And don't forget this chart. You were what, a young kid at the first peak and a teenager at the second? *Maybe* the new normal is up and to the right since 2009, but I wouldn't bet 100% on it. I freaked out on the first drop, and much more so on the second, all having to do with getting older with kids, college, retirement getting closer.

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Re: Fear is the mind-killer

Post by Pointedstick » Thu Nov 15, 2018 9:43 am

flyingpylon wrote:
Thu Nov 15, 2018 5:33 am
Where is the line between fear and prudence?
The problem is that when you're under the influence of fear, it's very hard to tell because fear makes all risk avoidance look prudent.

Cortopassi wrote:
Thu Nov 15, 2018 8:26 am
Trust me, the viewpoint is different in your 20s (which I am assuming you are still in or close to) vs. your 50s.

You say it made you lose out on $250k of gains. You're saying you would have realized those gains? Or just on paper, potentially to evaporate in the next downturn?

Not saying any PP gains wouldn't evaporate either, but I recall many people talking like you in the mid to late 90s as the internet was taking off and anything with a .com at the end of the name was worth billions. And then they weren't.
I'm 31.

I know the market may drop 75% tomorrow and take 40 years to recover. And I say, "so what?" I don't care. The one time I found myself living off of my investments, I hated it. I felt like a useless penny-pinching sponge. Earning money by contributing things of value to the tapestry of human existence makes me feel better in every way. I was previously afraid that if I lost my income, I wouldn't be able to regain it, because deep down I was afraid that I was an imposter who got them through an accident of fate rather than merit. What a bunch of nonsense!

Once you truly, emotionally, comprehend your own value and how much you have to contribute, you will understand that you'll never lack for the things you need or the ability to acquire them. You will see that you can never be made economically useless by automation or outsourcing or immigration or AI or whatever the fear of the day is. And once you eventually do decide to stop producing economic value, you'll just accelerate your production of social value, which will attract more and more people towards you. In the absolute worst case scenario that you find yourself destitute at 75, if you've been a producer of social value, then there should be no shortage of people who will fall all over themselves to take care of you. You only really need money in your old age if you've been a total asshole who's alienated your friends and family.

One of my grandmothers died a rich asshole. It was a miserable way to go, capping off a miserable life. It's not worth it. You don't need money to feel happy and be taken care of. But paradoxically, realizing this will probably make you financially rich anyway.

I'm not really endorsing a 100% stock portfolio. It's what I feel is right for me, but you may be different. The important thing is to choose from a position of confidence in your own ability to produce value for humanity, not fear and anxiety over losing hard-earned gains.


buddtholomew wrote:
Thu Nov 15, 2018 9:05 am
The PP won't save you and especially gold when stocks decline.
If it does then you are just lucky.
No sense in wasting 25% of your capital on luck.
Case in point today, stocks getting killed and gold up .09%, TLT up .14.
This sums up the portfolio.
What happens in the markets today is just noise.

Your problem is that you are terrified of losing your money. For what reason I do not know, but I promise you that you will be 100% happier if you can let go of this fear. Because if you lost all your money, you would find a way to get it all back. And even if you didn't, you would find a way to be happy anyway--maybe even happier, because you wouldn't be so fearful about losing your money. In other words, everything's going to be okay. :)
Last edited by Pointedstick on Thu Nov 15, 2018 10:19 am, edited 1 time in total.
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Re: Fear is the mind-killer

Post by Cortopassi » Thu Nov 15, 2018 10:16 am

PS, sounds like you had a good soul searching time off, maybe on a mountain-top.

I get closer to your ideal every day, where I realize more and more that it doesn't matter in the end.

For me, though, the PP was part of that liberation. It allowed me to not care about my investments, which up until 2014 consumed me. I am happier because of it.
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Re: Fear is the mind-killer

Post by Mountaineer » Thu Nov 15, 2018 10:57 am

Pointedstick wrote:
Thu Nov 15, 2018 9:43 am
flyingpylon wrote:
Thu Nov 15, 2018 5:33 am
Where is the line between fear and prudence?
The problem is that when you're under the influence of fear, it's very hard to tell because fear makes all risk avoidance look prudent.

Cortopassi wrote:
Thu Nov 15, 2018 8:26 am
Trust me, the viewpoint is different in your 20s (which I am assuming you are still in or close to) vs. your 50s.

You say it made you lose out on $250k of gains. You're saying you would have realized those gains? Or just on paper, potentially to evaporate in the next downturn?

Not saying any PP gains wouldn't evaporate either, but I recall many people talking like you in the mid to late 90s as the internet was taking off and anything with a .com at the end of the name was worth billions. And then they weren't.
I'm 31.

I know the market may drop 75% tomorrow and take 40 years to recover. And I say, "so what?" I don't care. The one time I found myself living off of my investments, I hated it. I felt like a useless penny-pinching sponge. Earning money by contributing things of value to the tapestry of human existence makes me feel better in every way. I was previously afraid that if I lost my income, I wouldn't be able to regain it, because deep down I was afraid that I was an imposter who got them through an accident of fate rather than merit. What a bunch of nonsense!

Once you truly, emotionally, comprehend your own value and how much you have to contribute, you will understand that you'll never lack for the things you need or the ability to acquire them. You will see that you can never be made economically useless by automation or outsourcing or immigration or AI or whatever the fear of the day is. And once you eventually do decide to stop producing economic value, you'll just accelerate your production of social value, which will attract more and more people towards you. In the absolute worst case scenario that you find yourself destitute at 75, if you've been a producer of social value, then there should be no shortage of people who will fall all over themselves to take care of you. You only really need money in your old age if you've been a total asshole who's alienated your friends and family.

One of my grandmothers died a rich asshole. It was a miserable way to go, capping off a miserable life. It's not worth it. You don't need money to feel happy and be taken care of. But paradoxically, realizing this will probably make you financially rich anyway.

I'm not really endorsing a 100% stock portfolio. It's what I feel is right for me, but you may be different. The important thing is to choose from a position of confidence in your own ability to produce value for humanity, not fear and anxiety over losing hard-earned gains.


buddtholomew wrote:
Thu Nov 15, 2018 9:05 am
The PP won't save you and especially gold when stocks decline.
If it does then you are just lucky.
No sense in wasting 25% of your capital on luck.
Case in point today, stocks getting killed and gold up .09%, TLT up .14.
This sums up the portfolio.
What happens in the markets today is just noise.

Your problem is that you are terrified of losing your money. For what reason I do not know, but I promise you that you will be 100% happier if you can let go of this fear. Because if you lost all your money, you would find a way to get it all back. And even if you didn't, you would find a way to be happy anyway--maybe even happier, because you wouldn't be so fearful about losing your money. In other words, everything's going to be okay. :)
PS - great to hear from you. I started to put this in the religion thread but was afraid it would lose the context. I'll keep it brief. Your post struck as quite harmonious with the LCMS confessional Christian view: God is in charge of everything and everything we have is a gift from Him. "It's all good" as my Pastor frequently says. I agree with you 100% that once you accept this, or the version you discussed in your post, life is much simpler, and the freedom and peace it brings is awesome. Best wishes. ... Mountaineer
Rev 22:6-21
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Re: Fear is the mind-killer

Post by flyingpylon » Thu Nov 15, 2018 11:33 am

Pointedstick wrote:
Thu Nov 15, 2018 9:43 am
Once you truly, emotionally, comprehend your own value and how much you have to contribute, you will understand that you'll never lack for the things you need or the ability to acquire them. You will see that you can never be made economically useless by automation or outsourcing or immigration or AI or whatever the fear of the day is. And once you eventually do decide to stop producing economic value, you'll just accelerate your production of social value, which will attract more and more people towards you. In the absolute worst case scenario that you find yourself destitute at 75, if you've been a producer of social value, then there should be no shortage of people who will fall all over themselves to take care of you. You only really need money in your old age if you've been a total asshole who's alienated your friends and family.
The problem is that there's a whole lot of in-between. You could be an average person of average means that produced an average amount of economic and social value. Enough to be a net positive perhaps, but not enough to rely on when the chips are down. And then, shit happens. The economy goes in the tank around the same time you develop a chronic medical condition or suffer an injury, and then because of the economy you get laid off and can't afford insurance, or even if you can then you get addicted to opioids and end up dying of a fentanyl overdose while living in a van down by the river.

I'm being overly dramatic, but stories like that are all over the place. The truth is that it doesn't always work out. There can be lots of reasons for that.

I agree with Cortopassi's point that your viewpoint changes as you age, mine certainly has. A certain amount of positivity and invincibility is important early in life to help you achieve your potential. But at some point you realize that your trajectory is flattening and your priorities and expectations start to change. It can be an uncomfortable transition at times.

Perhaps the fear of losing everything grows as one ages, but for me and others that I know, what shrinks is the fear of missing out.
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Re: Fear is the mind-killer

Post by Cortopassi » Thu Nov 15, 2018 11:59 am

flyingpylon wrote:
Thu Nov 15, 2018 11:33 am
what shrinks is the fear of missing out.
Absolutely. In the market, in my career path, in what my net worth will be, etc. Started volunteering this year for my younger daughter's high school marching band. More fulfilling than I imagined.
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Re: Fear is the mind-killer

Post by jacksonM » Thu Nov 15, 2018 1:03 pm

Pointedstick wrote:
Thu Nov 15, 2018 1:04 am
All of us here are INTJ-ish control freaks. It is so easy for us to become convinced that we can control things. Letting go of that is one of the hardest things for people like us! I now believe that loss is inevitable. Denying this is a kind of obsessive-compulsive disorder. If your kids (or grandkids!) haven't yet gotten you to see Kung Fu Panda, Let me highly recommend it--and in particular, this scene from it: https://www.youtube.com/watch?v=DLpUev1FvS0
Well, I'm an INTJ but have never considered myself a control freak and didn't know that was in the description. I always thought I was just a reasonable person but maybe I lack self-awareness.

The impression I got of the PP from the writings of HB and Craig Rowland was that it was a passive investment strategy that probably wouldn't be suitable for obsessive-compulsive portfolio watchers, even though we seem to have a few of those here. I thought the whole reason for an all-weather portfolio like the PP was exactly because we know we can't control things.

As for being fear-based, I guess what one man sees as fear, another might call prudence.

Age is definitely a factor. In my 20's my "portfolio" consisted mostly of a checking account so I have nothing to compare with your experience. I'm impressed that you actually had a portfolio that could lose $250k. In my 30's I doubt that I would have had interest in the PP and probably not in my 40's either if I had even heard of it. It was only in my late 50's that I started looking for a safer strategy.

I also think another important factor is your experience growing up. My parents went through WWII and the great depression and I would definitely call their investment strategy "fear-based". It was all cash, all the time.

As for me, I was 12 years old at the time of the Cuban Missile Crisis and 19 years old in 1968 when we learned we didn't need the Russians to destroy us because we could do it ourselves. I think coming of age during those years left me less likely to discount SHTF scenarios. Sometimes I find myself amazed at how peaceful and prosperous things have been since those days and wonder how long it can last.
Last edited by jacksonM on Thu Nov 15, 2018 1:13 pm, edited 1 time in total.
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Re: Fear is the mind-killer

Post by stuper1 » Thu Nov 15, 2018 1:07 pm

I don't invest some of my money in the PP because of fear. I invest some of my money in the PP because it's smart. It gives reliable real returns under many economic conditions with much lower volatility than most portfolios. It systematizes the process of buying low and selling high, which is the only way to actually make money investing.

I didn't read all the responses, so maybe this has already been mentioned, but when you get into your 50s+, and in some careers maybe earlier, the possibility of being let go from your job position and not being able to get re-hired into a similarly well-paying position becomes much more likely in many fields.
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Re: Fear is the mind-killer

Post by Tyler » Thu Nov 15, 2018 1:13 pm

Great to hear from you, PS. I'm really happy to hear that you've reached a comfort point in life far beyond investing. We should all strive for such a place.

My one quibble is your comment that the PP is a fear-based portfolio. I agree with you that it does seem to attract certain types of people very worried about losses, and I similarly hope they they follow your lead and find a healthier investing mindset no matter what portfolio they ultimately choose. However, Harry Browne was not a fearful person nor is every PP investor motivated by fear. Personally, I like the underlying philosophy because I find it very thoughtful and neither overly fearful nor irrationally exuberant. It just makes sense to me.

That said, you raise a very good point about not making investing decisions purely from an emotional perspective and I admire you for identifying something that works for you. Life is too short to deal with fear and anxiety on a daily basis. I also know you've had quite the adventure finding yourself when it comes to work and overall purpose, and it's great to see you come through that happy and confident. Congrats!
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