PSA: I now have a 3-year period with no gains

[mathjak107]

yep and long treasury bonds did great!  they were the growth engine for the pp. in fact the pp did well when equity's plunged because of them .  they continued to do okay hitting a speed bump every now and then but still continuing their drop until February when they bottomed and reversed direction .

odds are at these levels that is over . yeah you will get short term pops when trouble hits but once it simmers down bond rates are trying to rise as they have been doing since feb until the last couple of weeks made them a safe haven . but that is short lived as we saw them get hit when stocks took off  again . basically i think you will see the interest and that is about it going forward ..

i think the pp has kind of ended up after 40 years at a point where it reached a point where it has no guns.

the guns that do the heavy lifting when gold is on vacation  are pee shooters .

25% equity's is okay with a total bond fund  , the equity's at these valuations stand a chance of adding lift . but battling against falling long term  treasury's and gold is more than can get traction .  with little end in sight short of a long term meltdown and extended flight to safety  the pp can't get out of the hole it is stuck in .


the yield on the 10-year Treasury was every bit as volatile as the equity market. But as investors lost their fear of stocks, Treasury yields worked their way higher, . Having at one point fallen below 2%, the 10-year finished the week up 13 basis points to 2.18% - roughly where it started the year.



of course these are my own opinions and not intended to say my way is the way it will play out .

it is only my reason why i stopped doing it almost immediately once i saw what the market action was doing to it ..

[Gosso]

Math,

But what about stocks being overvalued as well:


http://www.multpl.com/shiller-pe/

"It's not that easy being green B&H"


Maybe we should all sit in cash and wait for the Great Resettm

[mathjak107]

they are and that is why i feel gains will be tepid going forward and being they are still the best house in the worst neighborhood anything that impedes those below average gains is going to be a killer to performance .


also the shiller cape was revised and you can't compare to past years , it isn't apples to apples but i still agree by any measure we were to high .  but you have the fed back stopping them . if things pick up and the fed raises rates after the first round it means the economy is doing better and that is good for stocks .

if the economy isn't doing well  qe4 is on deck .

i think we reached a point in time that without taking on more volatility an overly conservative portfolio will be at best a struggle to keep pace . it is basically depending on calamity to give it lift and not the new normal times .  that is really kind of betting against the house  . we are still the most desirable place in the world to invest .  .

i think the new normal requires a portfolio that complements each other and plays nice  and unlike the past does not fight each other's efforts  so strongly .

[frommi]

Thanks Gosso for your posts!
I stopped using the PP in late 2013 but started a 3xPP two months ago with 25% of my networth. If history is any guide (and especially when i read the latest comments here) its the perfect time for that. Won`t take long until either inflation picks up or the FED has to ease again, both should be net positive for the PP.

[mathjak107]

inflation  picking up is bad for bonds and so far gold has not shown a good response to inflation . maybe if inflation was running out of control but so far it has lagged inflation for most of it's more modern life .

so i don't see that being a good thing for it .

[4x4]

Are you confusing the role of the PP w that of the VP?

Why not keep money you can't lose in the PP and allocate that which is more discretionary to a VP?

[helpme]

I started investing in the PP in mid-2011.  My gains are now equal to those I saw in August, 2012.  In other words, I haven't made any money in the PP in three years.

The caveat is that I've been regularly and aggressively contributing to the PP.  So my early gains in 2011/2012 were small as a percent of my current total portfolio value.  Losses in 2015 are applied to a much higher portfolio value.  Hopefully that makes sense.

Overall, not super happy with this portfolio.  I might try to move out of it by continually rebalancing into stocks but never rebalancing out of stocks until my allocation is more boglehead like.

Did the gain calculation include stock dividends and bond income?

[frommi]

Are you confusing the role of the PP w that of the VP?

Why not keep money you can't lose in the PP and allocate that which is more discretionary to a VP?

Because i am not a sheep of HB.

[4x4]

Are you confusing the role of the PP w that of the VP?

Why not keep money you can't lose in the PP and allocate that which is more discretionary to a VP?

Because i am not a sheep of HB.

Well whether you are a sheep, goat, or donkey, I have no idea... However, you seem to be a bit confused about something....

[frommi]

Well whether you are a sheep, goat, or donkey, I have no idea... However, you seem to be a bit confused about something....

No i am not, and the beauty of the PP idea is that i don`t have to be right on anything and still can make a profit. The best time to start an investment is when nobody likes it, in case of the PP its the same. Personally i think gold will play a major role in the next years returns for the PP, but who cares?

Btw. the reason why most PP years end in green is because the PP erases most drawdowns in the last months of the year.

[BP]

About 2.5 years for me with only a 15% gold allocation.  Right now  the PP is negative both nominal and real.  Would have been even worse with a 25% gold allocation.  BH is positive both nominal and real with the same 25% stock.

[buddtholomew]

Negative 6 months in a row.
Gold and LTT's doing absolutely nothing
DOW down 500

PP = Pathetic Portfolio.

[ochotona]

Negative 6 months in a row.
Gold and LTT's doing absolutely nothing
DOW down 500

PP = Pathetic Portfolio.

So why don't you change?

1. Sell most or all of the gold on a short-term bump, hopefully it's not in an IRA, so you can take the tax loss for 2015, and buy "regular" bonds, like ETF BND
2. The 25% LTTs + 25% STTs/cash are OK to hold as a pair. If you own the actual bonds themselves, not in a fund, I'd just stay put
3. With all of those LTTs and STTs/cash, your fixed income side will still be high quality overall. BND has Treasuries, too, along with things the PPers don't care for
4. 25% stocks is perfectly good to hold now that we aren't sure if we're headed into to an equities bear market or not; this is not the time to buy a buyer of stocks, not yet.

Then you'll be in a conventional defensive mode. You'll suffer along with the rest of us who are configured that way right now. It's not good times for most investors. You need to ditch the yellow metallic sea anchor. Then you will feel better, after you take the loss and get over that.

The way I am thinking these days, metals and any other commodities are the "VP", not core. You can buy them again if you want, and maybe at a lower price in a few years. Maybe a lot lower. We still have not seen capitulation in gold. We've been seeing it in oil the last few days. That's what a capitulation looks like.

When people start saying, "I'm never gonna sell my gold!"... it means they're thinking about selling their gold, or half of their brain is, but the dissonance is intolerable, so they have to officially banish the thought. But they will fold, under the right conditions. No one walks up to you and says, out of the blue, "I'd never kill my wife!". Uh... what would that tell you?

[dualstow]

Some people put new money into the pp every month. I like to wait until Budd is running in the streets.

[buddtholomew]

Some people put new money into the pp every month. I like to wait until Budd is running in the streets.

Good for you.

[Kbg]

Why your PP sucks this year and for the past year. 

http://www.scottsinvestments.com/wp-con ... 8/Ivy1.png

Pretty much no major asset class is profitable.

[LC475]

PP = Pathetic Portfolio.

Just wait for it.  

You'll see!

[mathjak107]

it isn't the fact everything is down , it is the fact everything is down and all assets are horrible horses to hitch the wagon  to be pulled out .

but as i said my feeling is that equity's have the most potential to recover and move ahead if only single digits .

the pp will likely be stuck in the muck as internal fighting between assets will squash equity's attempt to pull it out and positive .  this is one of those time frames i think conventional investing will respond to life support a whole lot better without being torn apart by gold and long term treasury's .

but this has been my objection all along about the pp .

[iwealth]

This forum's morale more than most desperately needs a big equities correction. I'm sure most concerns will abate if equities drop another 15%. That of course assumes the PP doesn't drop with them.

[mathjak107]

perhaps a support group section may help . bud can be president .

[Tyler]

Stocks down 3%.  PP down 0.45%.  And people take that as a reason to complain about the PP because it didn't go up.  That's a classic signal to take a break from thinking about investments for a little while.

For comparison, other stock-centric forums are even more unhappy.  Focus on money all day every day and you'll drive yourself crazy and rationalize that just about everything you've done is either wrong or could be much better.  Go outside and enjoy the nice weather! 

[mathjak107]

I think they Are complaining  more about when stocks are up 3% and the pp is down. We saw that too

[MediumTex]

The fall should be interesting.

The last two 7 year intervals have given us very ugly falls (i.e., 2001 and 2008).

[dualstow]

This forum's morale more than most desperately needs a big equities correction. I'm sure most concerns will abate if equities drop another 15%. That of course assumes the PP doesn't drop with them.

+1 on the -15%

[MediumTex]

This forum's morale more than most desperately needs a big equities correction. I'm sure most concerns will abate if equities drop another 15%. That of course assumes the PP doesn't drop with them.

+1 on the -15%

Every person who builds a storm shelter secretly hopes for a storm, even if they don't like it at all when it actually happens.