2014 Predictions (just for fun)

[dualstow]

Kim Kardashian and Kanye West will split up, citing irreconcilable differences.

The pp will be ok.

Looks like they are still going "strong" hah, with a baby to boot.

And I am impressed!

[buddtholomew]

Barrett's question is a good one.  There's been some threads on it previously.  I think the conclusion was that it is reasonable to switch the LTT allocation to cash once interest rates go down enough.  It wasn't so clear how to decide when to jump back in though.

The trick is to decide what that number will be, write that down somewhere, and then sit tight.  The consensus was somewhere between 1-1.5% I think, based on Japan's experience.  A lot of the earnings in the historic Japanese PP come from rebalancing due to long bond rates bouncing up and down.  Managing the timing of getting out & back into long bonds might require a lot of portfolio watching, which may not be the best use of your time.  When bonds move, they move FAST...you'd really have to be watching closely.  And in the end you may not save yourself that much...remember than when bonds are going down, something else is going to be doing well.

Why not just manage duration?

[Thomas Hoog]

Never saw more evidence that is really impossible to predict the future than this year. P.e.:

PIMCO 25+ Year Zero Coupon U.S. Trs ETF (ZROZ) : Year to Date Return (Mkt): 40.17%
It makes me very very modest. Although the year is not yet over.

[Kbg]

Very interesting article here...maybe this PP thing isn't such a bad idea. :-)


https://www.aqr.com/cliffs-perspective/ ... e-long-run

[MachineGhost]

https://www.aqr.com/cliffs-perspective/ ... e-long-run

Isn't it funny how everyone all trips over themselves not to come to the logical frackin' conclusion? 

[Kbg]

Isn't it funny how everyone all trips over themselves not to come to the logical frackin' conclusion? 

No kidding. People forget their life has a "path dependency" as well and it may not tack with an asset class at the right time.

[Reub]

Budd, please remember that almost everyone said that long term bond yields had nowhere to go but up early on this year too. Boy were they wrong!

And MG, one could make a rather strong argument that with the world sinking into non-growth or worse that the real bubble may be in US equities and not in long bonds and that long bonds may just save the day. Just sayin.

[LC475]

I think the conclusion was that it is reasonable to switch the LTT allocation to cash once interest rates go down enough.

I don't know what the reason would be.  The reason I can think of is that you are no longer concerned about deflation/depression and no longer want to be protected against that economic scenario.

Fair enough, I suppose.  But then... you are no longer protected against deflation/depression.  And you no longer have a Harry Browne Permanent Portfolio.