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

[MediumTex]

i believe a local nyc club here got closed down because a dancer shot one in someones pizza .

not that i think thats a problem    lol

It's all fun and games until someone gets an eye put out.

[mathjak107]

talk about being cock eyed .

[sophie]

Wow you guys...can I ask why portfolio badness should make everyone so irritable?  It really should not be ruining your day like this.

Totally agree with goodasgold.  I think we've all seen enough of Tyler's charts that any portfolio (Desert, PP, Bogleheads, 100% stocks, etc) can produce negative real returns over multi-year periods.  If anyone can tell me what portfolio can absolutely guarantee strong returns over all three+ year periods, please do tell.

Frankly I kind of expected something like this.  2008 produced a huge boost to gold and Treasuries that resulted in several years of outsized returns for the PP.  As for many others on this forum (me included), these returns looked like a wonderful bit of magic and it attracted us to the PP.  Many of us bought into the PP just after that glorious "PP bull market".  Now, these assets are reverting to where they probably should be.  Not so good for us latecomers!

I still think the fundamentals of the PP are sound.  It is currently behaving as if there is a "tight money" condition prevailing.  At this point I'm planning to stay in and continue to plow new savings into lagging assets.  I have the feeling that something very, very interesting will happen eventually, and if you imagine yourself 5 years from now looking back at today, you may well regret having sold off those unconventional gold and bond assets.

[mathjak107]

except we are not in a tight money situation , we are in the loosest money situation in history at zero . that says to me something is wrong if we are now getting opposite results in the pp .

you can't have the tail wag the dog . you are trying to find an economic condition to apply to the pp  when that label is the exact opposite of conditions .

[Reub]

I'd like to see the same conviction from them as when they were making hundreds and hundreds of posts on the Bogleheads site and writing a book on the subject. After all, they created this website and persuaded most of us to invest in this manner. I just feel that for the two of them to disappear literally for months at a time when the PP has gone absolutely nowhere for 3 years and has returned  100+% less than stocks since 2009 borders on negligence. It just seems that they have less or no interest in the PP these days and possibly for us.

When will I be banned again for these comments?

[mathjak107]

i think we all get your  point and no need to chastise them  they only brought folks an education on it ..  after all no one should make investments or stay in investments they think are not meeting goals .

the concept of the  pp was fine for decades . it was never a growth vehicle , it was a positive real return vehicle and it did just that .

but anyone who thinks anything works forever as the world changes without seeing if it is still up to par and makes sense  is the problem not the fact they are not hand holding or running a support group .


they introduced you to someone else s strategy  and gave you an education on it . that does not mean the world will not change an make it no longer work in the manner it was designed .

in fact it is only my opinion that it no longer works well .

[drumminj]

After all, they created this website and persuaded most of us to invest in this manner. I just feel that for the two of them to disappear literally for months at a time when the PP has gone absolutely nowhere for 3 years and has returned  100+% less than stocks since 2009 borders on negligence.

Yikes.  Perhaps I'm mis-reading your tone (and a few folks seem to express this expectation), but what is it that Craig or Tex owe you?  Did they say "Reub, you should be in the PP!!!".  I'm guessing no -- you *chose* to allocate your investments in the PP, based on input you surely got from several sources - BH, here, books, etc. But it was your choice!

If anyone who expresses an opinion you choose to incorporate into your own world-view is guilty of negligence due to not continually defending that opinion (for the rest of their life?), then why would anyone ever express an opinion?

I read the massive BH thread. I've read Craig and Tex's book.  I've read HB's books.  No one owes me anything though -- I made the choice on my own to allocate my funds this way.  I bought into the thinking and arguments, and determined they made sense to me.  If they don't work out, it's my own judgement/decision to blame -- not the folks simply expressing their personal opinions.

If you want someone to make the decisions for you that you can blame after the fact, hand your funds to a money manager and pay their fees.  You can at least claim they have a fiduciary responsibility to you!!!

[sophie]

I don't know about you, but they didn't persuade me.  I gathered all the info available, examined asset performance charts, and made my own decision.  No one should choose an investment plan based on someone else's opinion.  Unfortunately I learned that the hard way in 1999, when I ended up losing about $100K in retirement funds.  And then like a completely pig-headed idiot, I got a refresher course when I bought a stock at my Wall Street uncle's urging, and lost about $20K.

In comparison to those experiences, 3 years with only small gains evokes little more than mild disappointment.  Not to mention that I'm loving being totally immune to the panicked-sounding headlines, and about as insured as I'll ever be against the big losses that can really wipe you out.

[Reub]

They owe me nothing. And vice versa.  But they did go well out of their way to start a massive thread on the BH site. They convinced many Bogleheads to change their investment strategy. They did write a book promoting this strategy. And then for the most part they went away. I just wonder if they've lost the same zeal for the PP that caused many of us to begin investing in this way. If not, then show a little interest in your baby.

[mathjak107]

not sure what you want them to say . charts of what was  mean nothing when you are losing money . there is nothing they can say about the future , only the past and since conditions beyond their control may be prevailing  they really can't add much except wait and see or find something you think is better .

i know you want to hear some comforting thoughts about your choice but i don't think that solves a thing .

[sixdollars]

After all, they created this website and persuaded most of us to invest in this manner. I just feel that for the two of them to disappear literally for months at a time when the PP has gone absolutely nowhere for 3 years and has returned  100+% less than stocks since 2009 borders on negligence.

I read the massive BH thread. I've read Craig and Tex's book.  I've read HB's books.  No one owes me anything though -- I made the choice on my own to allocate my funds this way.  I bought into the thinking and arguments, and determined they made sense to me.  If they don't work out, it's my own judgement/decision to blame -- not the folks simply expressing their personal opinions.

+1

I truly do value the insights of both MT and Craig, but I do not see them as owing me anything at all.  Each person is responsible for their own choices, don't expect others to do your thinking for you

I've never been on a PP forum during the height of a stock bull market - this has been very educational for me.  In commemoration of this long and strange thread, I have changed my signature quote.  Thank you to all for the interesting reads

[AdamA]

But they did go well out of their way to start a massive thread on the BH site. They convinced many Bogleheads to change their investment strategy. They did write a book promoting this strategy. And then for the most part they went away.

I think that's because there's just not that much to say about it. 

You can read the FAQs on Craig's blog and understand most of what you need to know.  The rest of the discussion is mostly for fun. 

I would, of course, be interested to hear if either of them saw a change in the financial universe at some point that would make them leave the PP, but I've seen nothing over the past 5 years to indicate anything like that has happened. 

[Reub]

What irks me is why they put so much effort in promoting the PP and then just stopped.Would you have business or a relationship and run it this way?

I'm going to guess Sophie that although you're sleeping better at night with these paltry gains that you'd be sleeping on a much more comfortable and expensive mattress if you had gone the Boglehead route.

[mathjak107]

wow , another pagan besides me  ha ha ha   

nio but getting back positive again may be .

[AdamA]

wow , another pagan besides me  ha ha ha 

Lol...I guess I just don't get you pagans. 

The PP's down like 3-4%...is that a big deal? 

[buddtholomew]

What irks me is why they put so much effort in promoting the PP and then just stopped.Would you have business or a relationship and run it this way?

I'm going to guess Sophie that although you're sleeping better at night with these paltry gains that you'd be sleeping on a much more comfortable and expensive mattress if you had gone the Boglehead route.

I too find myself directing my disappointment towards MT and Craig as both of them advocated the PP so passionately and eloquently. We were drawn to the PP (lower volatility, comparable returns) at the most vulnerable time when 2008/9 was fresh in our minds. Unfortunately, investing in the PP around 2011 was closing the gate after the horses ran free. I feel somewhat duped.

In reality, the PP is less volatile than a more equity-centric portfolio, but there is no guarantee that you will sidestep the inevitable stock decline invested in gold or treasuries. I don't count cash as many also use this as their emergency fund.

[mathjak107]

wow , another pagan besides me  ha ha ha 

Lol...I guess I just don't get you pagans. 

The PP's down like 3-4%...is that a big deal?

no being down 3-4% for the pp is not a big deal.

but getting back positive again with some decent gains  may be  for it ..

[sixdollars]

Just curious, but for those of you who are pretty sure that the PP will not work as designed in the future, why are you staying with it?  Do you think that complaining will somehow magically raise your portfolio value?  Bitching is not a good asset to have in any portfolio as far as I know. 

Maybe it's time for the true skeptics who can't sleep well with the PP to head back to the welcoming arms of the Bogleheads to complete the final step in the prophecy observed by Bernstein long ago

[Tyler]

I'm going to guess Sophie that although you're sleeping better at night with these paltry gains that you'd be sleeping on a much more comfortable and expensive mattress if you had gone the Boglehead route.

I can only speak for myself and not for Sophie.  I graduated in 2000.  I'd have made a full 1% more a year in compound real returns if I had invested in the PP then than if I went the Bogleheads route.  But like most people, I changed strategies too often and lost soundly to both portfolios.

Both strategies are good ones, and they alternate over long timeframes regarding which one looks "best" in the long run.  Fretting about short-term returns comparisons is exactly the mentality that will cause you to switch at the wrong time and lose money.

As an aside, I'm very thankful for MT's and Craig's contributions to the topic.  They can post as often or infrequently as they like.  The longer I invest in the PP, the more I appreciate the hands-off attitude.  Once you internalize it, there's really no need to debate portfolios daily.  The entire point is to invest in a way that allows you to have a life outside of the markets!  IMHO, fretting about daily movements, bailing after only a few weeks, and wasting valuable life energy trying to predict the markets all miss out on the life benefits of the larger philosophy. 

[MediumTex]

From my perspective, this is a sort of surreal discussion.

I post about everything here, constantly.

With that said, if I don't have anything to add to a particular PP discussion, I don't.

I don't have to be in the middle of every PP thread that anyone posts here.  I actually think that would be kind of annoying.

The value that I think Craig and I have brought to the PP is to create a new and updated resource in the form of the book for people who want to learn more about the strategy, plus we have created a platform here for the discussion of all things PP (and a lot of things not-PP).  Between the two of us, Craig deserves more credit for these things than me.  I have used the platform to share my own thoughts about the PP, but the value of the platform is that it exists, not that I happen to contribute to a particular discussion.

The PP works whether I post about it or not.  If people are unhappy with the PP right now, it's because their expectations were not well-aligned with what the portfolio can deliver, but from my perspective there is nothing unusual going on with the strategy right now.  It's drifting sideways rather than up, and it does that from time to time.

mathjak says he doesn't see how the PP can possibly deliver future returns that match its past performance, but I find his analysis sort of thin and fuzzy.  I'm not saying he is wrong, I'm just saying that I've spent my entire PP career listening to the same criticisms, and I've never found them persuasive, though I have sometimes found them to be good contrary indicators.

But it needs to be emphasized if it wasn't already clear: No one should ever make investment decisions because of something they hear from me or Craig or anyone else.  If they choose to use the PP, it should be because it makes sense to them and it aligns with their goals, expectations and risk tolerance.

[iwealth]

What is it that I'm missing? When I run a 35/15 rebalance band backtest on peaktotrough from 1/1/09, I get the following yearly returns from the PP:

CAGR: 6.52%
2009: +8.67%
2010: +14.51%
2011: +10.53%
2012: +6.43%
2013: -1.88%
2014: +8.51%
2015: -2.23%
Max DD: -7.57%

60/40 same time frame:

CAGR: 9.19%
2009: +13.7%
2010: +10.78%
2011: +4.69%
2012: +9.75%
2013: +16.17%
2014: +9.97%
2015: -2.77%
Max DD: -17.42%

ONE single year (2013) makes up the entirety of the 2.6% CAGR difference. All of this angst over one year's worth of underperformance in a historic bull market. You read these threads and you'd think the PP was in the midst of a massive drawdown or something. Seriously, sixdollars quote is on the money. It's crazy in here.

[mathjak107]

tyler -since 2000 these are  the results  on the model i used from insight ..

i used the growth and income model  , i don't have the  patience to compare results .  so i would be curious  to see how the pp compared .    start with  the 206,089.00 balance in 2000 . as of sept 1 2015 (last night )  balance is 533,254 .00 .  that is the worst time frame i can remember having ever .



http://www.fidelityinsight.com/about/pe ... f2012.html

[MediumTex]

What is it that I'm missing? When I run a 35/15 rebalance band backtest on peaktotrough from 1/1/09, I get the following yearly returns from the PP:

CAGR: 6.52%
2009: +8.67%
2010: +14.51%
2011: +10.53%
2012: +6.43%
2013: -1.88%
2014: +8.51%
2015: -2.23%
Max DD: -7.57%

60/40 same time frame:

CAGR: 9.19%
2009: +13.7%
2010: +10.78%
2011: +4.69%
2012: +9.75%
2013: +16.17%
2014: +9.97%
2015: -2.77%
Max DD: -17.42%

ONE single year (2013) makes up the entirety of the 2.6% CAGR difference. All of this angst over one year's worth of underperformance in a historic bull market. You read these threads and you'd think the PP was in the midst of a massive drawdown or something. Seriously, sixdollars quote is on the money. It's crazy in here.

I know.

Maybe some people are just frustrated and want to blow off some steam by throwing stones.

I don't mind dodging a few, but I would say to check your footing.

[Pointedstick]

ONE single year (2013) makes up the entirety of the 2.6% CAGR difference. All of this angst over one year's worth of underperformance in a historic bull market. You read these threads and you'd think the PP was in the midst of a massive drawdown or something. Seriously, sixdollars quote is on the money. It's crazy in here.

I agree, but I think it's a case of expectations not matching up with reality. Right now, everything is treading water, and I think some people assumed that this should be the ideal condition for the PP, and, specifically, that the PP would zig when other things zagged, and on a daily basis, to boot! It's the same old case of wishing for a portfolio that only ever went up, never down. Now that it's going down, there's panic because this wasn't supposed to happen! It's just not realistic.

[sixdollars]

You read these threads and you'd think the PP was in the midst of a massive drawdown or something. Seriously, sixdollars quote is on the money. It's crazy in here.

Honestly, I find the craziness to be somewhat entertaining.  I'm not a natural sadist, but some of the claims and justifications that have been spouted in this thread are borderline ridiculous, as you said.  The mountains out of molehills fears are running so high that everyone is looking for consolation from Papa Tex and Papa Rowland now for comfort... seriously, you can't make this stuff up... what is going on?