The Permanent Portfolio is dead

[Reub]

Mathjak did you invest in the PP  few weeks ago as I thought that you stated earlier?

[mathjak107]

if it was just me beating them up it wouldn't be bad but the market is hammering them too and with little let up in sight.

I just would hate for you all to get hurt  expecting safety and getting hurt trying to stick to an ideal that may have changed with the times.

[mathjak107]

Mathjak did you invest in the PP  few weeks ago as I thought that you stated earlier?

I did  as I always had a liking of it and harry. but a few days in to it as I thought about it more and more I came to the conclusion that it might not be the best vehicle to enter retirement with . especially because of the way the market place has been dealing with most of it's holdings  as well as never really able to be stress tested over the real  worst case scenario's as far as safe withdrawal rates . so once I had real money on the line and not hypothetical I wasn't really comfortable  .

so I quickly switched to a model of my own before sustaining real damage.


as of today the pp as I bought it and still track it is down 13k  back up from down 23k.  my own 55/45 mix recovered and  is up 9k. the gold position was the real killer being down 15k  in 3 weeks.

[iwealth]

Mathjak did you invest in the PP  few weeks ago as I thought that you stated earlier?

I did  as I always had a liking of it and harry. but a few days in to it as I thought about it more and more I came to the conclusion that it might not be the best vehicle to enter retirement with . especially because of the way the market place has been dealing with most of it's holdings so I quickly switched to a model of my own before sustaining real damage.

You invested successfully for years. You followed Harry for years. Obviously you thought long and hard before moving your money into the PP. Then a few days in not only do you sell out of the PP, but you joined the PP forum and have campaigned against the portfolio ever since.

Just doesn't add up..

[mathjak107]

actually I joined first  before I sold.  I sold within a day or two if I remember.

one of the problems of only hanging with those who support your views and what you think is you lose touch with the other side.

so I just present the facts as I see them good or bad and hopefully it gets those folks thinking who may not be happy with the pp to do their own homework as to what may be right for them.

[koekebakker]

Lots of negativity regarding the 4x25 on this forum, but after the last couple of meager years the classic 4x25 looks more attractive to me now than it did a few years ago when stocks, gold and LT's all went up and up and up.

[Pointedstick]

Lots of negativity regarding the 4x25 on this forum, but after the last couple of meager years the classic 4x25 looks more attractive to me now than it did a few years ago when stocks, gold and LT's all went up and up and up.

I agree. Our own instincts work against us so much when investing.

[Cortopassi]

Mathjak did you invest in the PP  few weeks ago as I thought that you stated earlier?

as of today the pp as I bought it and still track it is down 13k  back up from down 23k.  my own 55/45 mix recovered and  is up 9k. the gold position was the real killer being down 15k  in 3 weeks.

I am not trying to be confrontational, but since 6/26/2015, 3 weeks ago, the PP is up 0.32%, and a 55/45 mix is up 1.81%. 

Since the day you first joined, 6/19/2015, PP is down 1.81%, 55/45 is down 0.15%.

You are either using different timeframes for your comparisons or I am missing something.

We are talking days and weeks here.  It is insane!  It's like I am in a twilight zone day trading forum!

I am in the PP for the long term, and here we are all talking about how gold has sucked royally, but you only have to go back about 6.5 months and see it beating the pants off all other components except bonds, which were kicking it too.

Somehow we've transitioned to an "All is well, nothing to see here" mentality.

[mathjak107]

Looking at the history I bought the pp  starting with a  little piece 6/17 and  added a bit as things fell up until 6/26.  had my full position 6/26

I sold it on 6/29 after reconsidering .

bought what I am using now  from 6/30 thru 7/6  adding more with each  drop  .

here are my average costs

shv 110.31

gld 114.00

tlt 117.30

vti  109.74

average costs for what I bought
vxf 91.63
vtip  48.71
bsv 79.80
vig 79.20
vti  109.35.  added to the pp position  so costs dropped.

as I type I show pp down 1.04%  minus 13,392.00//  etf mix up 6513.00    up  .52%

biggest hit to the pp as it shows now is my gold position which if I still had it would have been down more than 18,000 as of today.





 

[Cortopassi]

I totally understand.  I suggest we revisit this in 3/6/12/24 months and see if the gold concern is replaced with bonds or stocks, and if gold rises and stocks fall I guarantee you have counterparts out there that will passionately argue for less stocks and more gold.

[buddtholomew]

I don't recall seeing a positive day in several months that was greater than .25%

Down

Down

Down into the abyss...

[Cortopassi]

Granted, it has been quite a while...!

[rickb]

I don't recall seeing a positive day in several months that was greater than .25%

Down

Down

Down into the abyss...

I track rolling 12 month returns of an idealized PP (GLD, TLT, SHY, VTI), rebalanced monthly.  Here's the previous 12 months:

7/15  1.90%
6/15  0.98%
5/15  4.46%
4/15  5.37%
3/15  7.05%
2/15  7.08%
1/15  12.05%
12/14 10.89%
11/14 7.52%
10/14 4.75%
9/14  5.41%
8/14  8.14%

[mathjak107]

Markets have no memory. Each day starts something new. Rolling backwards reflects what was in the past. If trends changed and are now going down on things trying to make youself feel better by looking at the past does not mean much going forward.

Regardless of what was, if the money stops growing or heads down now that is all that matters.

[rickb]

Markets have no memory. Each day starts something new. Rolling backwards reflects what was in the past. If trends changed and are now going down on things trying to make youself feel better by looking at the past does not mean much going forward.

Regardless of what was, if the money stops growing or heads down now that is all that matters.

Wait a minute.  On the one hand you keep insisting that anyone with half a brain MUST invest in a stock heavy portfolio because over 15+ year time frames any short term losses that you might see (like 30% or 40% down) will inevitably be recovered by subsequent gains - and, looking at the past, we see that this approach beats all others (over 15+ year time frames).

Yet, here, you seem to be saying that the short term (daily perhaps) return is "all that matters". 

I agree markets have no memory and that each day starts something new.  However, Budd's notion that the PP is failing because of extremely short term variations is absurd.

You're advising folks to ignore 30% sized fluctuations (at least those in the downward direction) and instead focus on returns over 15+ years.

I'm suggesting Budd ignore daily fluctuations of 1% or less and focus on slightly longer time frames, like a year.  Actually I believe about 5 years is the "safe" horizon for the PP (you're very likely to see a return very close to the PP's average return over this kind of time frame).  For a stock heavy portfolio this horizon is closer to 15 years, if not 20+.  This is what Tyler's "funnel" graph is showing, see http://gyroscopicinvesting.com/forum/pe ... #msg123482

[sixdollars]

Seems to me that a big reason that might explain why many of the forum members and mathjak are not on the same page is likely due to methods used to process information.  Mathjak seems to rely heavily on existing facts and data (i.e. backtesting results).  This seems weird to folks like me because we're all very well aware that the future might not look like the past.

Many of us here, as evidenced by a recent MBTI survey, favor intuition over Mathjak's likely preference for sensing.  Basically, we're talking past each other because we have different worldviews and require different data to feel comfortable.  Here we likely place a strong favoring of the PP due to the reasoning placed by Harry Browne, linking each asset to different economic conditions - really favoring the underlying theory behind its construction.  This makes intuitive sense to us and looks to be working well so far..  We realize that the future won't look like the past, and so we see this agnostic approach to make the most sense since we can't prove with backtesting what a portfolio can handle, only what it cannot handle.  There is not as much historical data available for the PP, which is what Mathjak seems to need to feel comfortable as I pointed out above..

All makes sense in the right light... in the end, just stick with what you're most comfortable with and hope for the best I guess...

[mathjak107]

The answer is i prefer to plan around what was ,what is and what stands a reasonible  chance of continuing. That is why i do like equity's as a growth engine.

But i also stated over and over no portfolio should be buy and die.

It needs nudging as the big picture changes to stay on course. That means staying dynamic and flexible.

Today i see little use for putting much money in gold as an example.

I don't see any reason right now to prepare for a worse calamity then we have ever had to date.

But that isn't to say as the big picture shifts i won't . Trends usually take time to ramp up and the bit i may miss in the beginning has likely already been made up since i don't have to recover losses in it and i already made a nice cushion on that money that would have been sitting in gold.

My gold position had i kept my pp would have been down 36,000 bucks as of yesterday.

So as we say part of winning isn't losing.  So when and if i buy gold because conditions change i have time since i do not need to recover.

Equity's have thrived over every 15 year or longer time frame regardless of events so if i have to hitch my wagon to a horse as of now that is my choice.
But there is always enough slack in my plan for what if they are not this time.

[Xan]

So which is it?  Is anything less than your 15 year horizon meaningless, or is it significant that your hypothetical PP would have been down a fraction of a percent over the last few weeks?

[mathjak107]

i only have long term money in equity's which at 62 is money i will not eat with for  15-30 years . so yes my time frame i only worry's about the 15-30 year block of time with the bulk in the 20-30 year range .  while i rather not be down at any point in time or more than i have to be by bad investment decisions  the reality is shorter term movers are not a concern .  under 15 years in time really is a moot point .

if it was i would not have that money in equity's . i would match the money needs better to an investment suited for that time frame .

i don't believe in trying to invest in the short term in long term investments . odds are you will get burned no matter how you try to rig that .

[dutchtraffic]

i only have long term money in equity's which at 62 is money i will not eat with for  15-30 years . so yes my time frame i only worry's about the 15-30 year block of time with the bulk in the 20-30 year range .  while i rather not be down at any point in time or more than i have to be by bad investment decisions  the reality is shorter term movers are not a concern .  under 15 years in time really is a moot point .

if it was i would not have that money in equity's . i would match the money needs better to an investment suited for that time frame .

i don't believe in trying to invest in the short term in long term investments . odds are you will get burned no matter how you try to rig that .

planning 15 to 30+ years ahead at 62, let's just say that's 'rather optimistic', do you realise an enormous amount of people do not even live to see 65?

[Cortopassi]

Per SS tables, if you've made it to 62, you can expect 19.9 more years, so 15-30 is not unreasonable.

http://www.ssa.gov/oact/STATS/table4c6.html

[mathjak107]

a married couple who makes it to age 65 has a 73% chance of one of you  seeing 85 and just a tad under 50% of seeing 90 . .

that is pretty damn good  chances for a couple.

but who cares what statistics show . i hate to be the bearer of bad news  but as humans we only have two outcomes . we are dead or alive .  that is it  . so which team are you on for sure ?

[mathjak107]

i only have long term money in equity's which at 62 is money i will not eat with for  15-30 years . so yes my time frame i only worry's about the 15-30 year block of time with the bulk in the 20-30 year range .  while i rather not be down at any point in time or more than i have to be by bad investment decisions  the reality is shorter term movers are not a concern .  under 15 years in time really is a moot point .

if it was i would not have that money in equity's . i would match the money needs better to an investment suited for that time frame .

i don't believe in trying to invest in the short term in long term investments . odds are you will get burned no matter how you try to rig that .

planning 15 to 30+ years ahead at 62, let's just say that's 'rather optimistic', do you realise an enormous amount of people do not even live to see 65?

and do you realive the odds of one person in a couple living to 90 today is just under a coin toss ?  but as i said , we only have two outcomes , we are dead or we are alive .  i prefer to plan as if i will be alive .  the ramifications of being wrong  about you or your spouses early death and  living  and having no money i think are  clearly worse in my book ,

hey ,you want to plan for an early death ,go ahead . just make ure you own a shopping cart .

[Libertarian666]

Per SS tables, if you've made it to 62, you can expect 19.9 more years, so 15-30 is not unreasonable.

http://www.ssa.gov/oact/STATS/table4c6.html

People should apply for term life insurance if they want to know their life expectancy pretty accurately. The insurance companies are betting a lot of money that you will either let the policy lapse (about 2/3 of them) or outlive the term.

Here's an interesting factoid about insurance ratings: The probability of death for someone in the highest rating class is about 1/2 the probability of death of a standard risk of the same age!

[AnotherSwede]

Per SS tables, if you've made it to 62, you can expect 19.9 more years, so 15-30 is not unreasonable.

In Sweden insurance companies assume 19-25 years, most companies 22-23, remaining years at 65 years of age. Still Sweden only has 3 years longer life expectancy than US (wikipedia).
EDIT: I saw your figure was males only.

Not differentiated by sex, because thats illegal, but by area of work.

Once you're at 65, expected remaining years increases by almost a year every year until 80 where probabilities becomes much worse. After 90 it's 50/50 you'll make it until next year.

Collective retirement products are created so you live mostly on your capital and the return of it in the beginning of the retirement. After 85-90 you will almost exclusively live of capital of others that have died.