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

[Tyler]

@Mathjak -- The 1% number I quoted is the difference between the PP and a 60-40 portfolio over the same timeframe.  Stocks lost money on a compound basis for 13 straight years starting in 2000.  The actively managed model you used may or may not have beaten that.  It may or may not continue to do so.  Actively managed funds, investment newsletters, and market predictions are not my personal cup of tea. 

In any case, I posted way back on page 4 why comparing two portfolios over a single arbitrary timeframe looking backward is misleading and a waste of energy.  Recency bias is extremely deceptive.  One should select a portfolio because they believe in the fundamentals of its construction, not simply because of returns differences over X years or because someone on a message board was a good cheerleader. 

[mathjak107]

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.

i think it isn't the fact it is down the users are upset about . i think it is more the fact that while it is down where is the pull supposed to come from to give it traction when even the biggest stock rally's turn in to more loses .

i think that is what they are freaking out about .

[mathjak107]

@Mathjak -- The 1% number I quoted is the difference between the PP and a 60-40 portfolio over the same timeframe.  Stocks lost money on a compound basis for 13 straight years starting in 2000.  The actively managed model you used may or may not have beaten that.  It may or may not continue to do so.  Actively managed funds, investment newsletters, and market predictions are not my personal cup of tea. 

In any case, I posted way back on page 4 why comparing two portfolios over a single arbitrary timeframe looking backward is misleading and a waste of energy.  Recency bias is extremely deceptive.  One should select a portfolio because they believe in the fundamentals of its construction, not simply because of returns differences over X years or because someone on a message board was a good cheerleader.

well over the 15 years the model i used went from 206k in 2000 to 533k as of last night .  using the same 206k to start where would the pp be as of last night ?

for comparison the insight growth model which is a 10-20% bond model  was at  816,056 in 2000 and  as of last night 2,100,000.00

these are the absolute worst time frames ever for the models  so the performance over the years has been way better than the last 15 which i don't think were that bad . not sure what hey averaged but those are the results .

[Pointedstick]

i think it isn't the fact it is down the users are upset about . i think it is more the fact that while it is down where is the pull supposed to come from to give it traction when even the biggest stock rally's turn in to more loses .

i think that is what they are freaking out about .

Exactly. When the stock market is down, some people expect the PP to be up, and for the relationship to be true on a day-to-day basis. The stock market is down 3%, then that day the PP should be up 0.2%. The stock market is down 6%, and the PP should be up 1%. Etc. It's a ridiculous assumption. There is absolutely no collection of assets that will offset each other on a day-to-day basis and always have their average be positive. None. Never will be. Someone who demands nominal loss avoidance on a day-to-day basis should be in 100% cash, case closed. That is the only portfolio that will satisfy that criteria.

[iwealth]

i think it isn't the fact it is down the users are upset about . i think it is more the fact that while it is down where is the pull supposed to come from to give it traction when even the biggest stock rally's turn in to more loses .

i think that is what they are freaking out about .

It's down less than 2.5% in 2015 after being up over 8% in 2014.  Is a 2.5% down year some sort of evidence that it has lost traction?

[Tyler]

well over the 15 years the model i used went from 206k in 2000 to 533k as of last night .  using the same 206k to start where would the pp be as of last night ?

According to PeaktoTrough, $542k.

[MediumTex]

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?

If you think it's entertaining now, wait until I expose mathjak's lack of capitalization capabilities by saturating the discussion with acronyms.

He will be running back to the Blue Hair-guana begging for his old job.  "It's ugly out there, especially for the lower-cased", he will say.

[MediumTex]

well over the 15 years the model i used went from 206k in 2000 to 533k as of last night .  using the same 206k to start where would the pp be as of last night ?

According to PeaktoTrough, $542k.

MJ KIA...RIP



JK...JK...LMAO

[sixdollars]

well over the 15 years the model i used went from 206k in 2000 to 533k as of last night .  using the same 206k to start where would the pp be as of last night ?

According to PeaktoTrough, $542k.

MJ KIA...RIP



JK...JK...LMAO

[Pointedstick]

well over the 15 years the model i used went from 206k in 2000 to 533k as of last night .  using the same 206k to start where would the pp be as of last night ?

for comparison the insight growth model which is a 110-20% bond model  was at  816,056 in 2000 and  as of last night 2,100,000.00

Be careful what you wish for.

[img width=500]http://i.imgur.com/WFh6o0z.png[/img]


If we include the 2.5% loss in 2015 so far, the total is $558k. Your 816k in the PP during that time period would become $2.12m.

Check for yourself at https://www.portfoliovisualizer.com/bac ... sisResults

[mathjak107]

but the 2-1/2% loss would be assuming it is 100% equity's correct ?  both are not 100% equity's .

even so 7.62% in the worst 15 year time frame we  have had is not to bad .    the sap 500 i think was less than 4%

[MediumTex]

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?

That's like trying to thank the host for putting on a fun party by leaving an upper decker.

[dualstow]

After all, they created this website and persuaded most of us to invest in this manner.

I think the conditions were ripe. That was the real persuasion for me although certainly the thread at bhagavad gita was the gateway. I listened to Harry Browne's radio archives posted at crawlingroad, read two of Harry's books and it all made sense to me.

If anything gave me pause, it was that the permanent portfolio wasn't more popular. Hundreds of bogleh blue-hairs had heard about it, but they didn't seem to be switching over in droves. Highly intelligent and well respected posters were explaining why they didn't like the pp. Others were reluctant to buy or hold gold.

I didn't care. And I still don't.

Sure, the allure is stronger when the pp is crushing riskier portfolios. But it can't always be that way.
All will be well, Reub.

[Reub]

I haven't complained about the poor performance of the portfolio. I'm a big boy. I just wonder why people could be so involved with and dedicated to the PP and then just go away for months at a time. It just seems a little odd.

[Pointedstick]

I haven't complained about the poor performance of the portfolio. I'm a big boy. I just wonder why people could be so involved with and dedicated to the PP and then just go away for months at a time. It just seems a little odd.

My guess: they're human and got bored, because an investment portfolio is an inherently boring thing, and after a while there isn't much to talk about anymore because all the obvious questions and even a lot of the subtle ones have already been answered. The biggest reason why I stick around is for the Other Discussions subform at this point. We've all pretty much beaten the PP to death from as many angles as we can already. What more is there to say? It's an investment portfolio. It isn't very complicated. Once you start to use it, the biggest challenge is likely to be your own emotions, same as any portfolio, but potentially even worse since almost nobody loves all four PP assets.

[MediumTex]

I haven't complained about the poor performance of the portfolio. I'm a big boy. I just wonder why people could be so involved with and dedicated to the PP and then just go away for months at a time. It just seems a little odd.

Well, it happened.

I don't know what else there is to say about that.

Sometimes other interests in your life pull your attention in other directions.  I'm no different than any other member in that regard.  Lots of people here come and go.  That's a good thing.  I think that not thinking about the PP or any investment topic for a while is good for people.

[jfreib]

I just wonder why people could be so involved with and dedicated to the PP and then just go away for months at a time. It just seems a little odd.

And what about that Harry Browne character, he sure hasn't responded in a while either...

People are acting like they have been sold a scam by a couple of financial advisors who are profiting off of their misfortune. The people involved in this forum have spent lots of their time creating a place on the internet where people can get a wealth of knowledge about a particular investment strategy. It does not benefit any of them when someone switches to the permanent portfolio. It makes no sense to me why someone could have resentment or anger towards them.

Perhaps because I have been in this long enough to experience the good times of the PP, or perhaps because I have a lot less money than many people here, I am actually relieved to look at my portfolio and see nothing happening. It very nice to not have to listen to the panic surrounding daily swings in the markets in order to try and guess which way the wind is blowing. Of course the downside is the reduced stress means that I might live longer and therefore need more money for retirement!

[MediumTex]

I just wonder why people could be so involved with and dedicated to the PP and then just go away for months at a time. It just seems a little odd.

And what about that Harry Browne character, he sure hasn't responded in a while either...

People are acting like they have been sold a scam by a couple of financial advisors who are profiting off of their misfortune. The people involved in this forum have spent lots of their time creating a place on the internet where people can get a wealth of knowledge about a particular investment strategy. It does not benefit any of them when someone switches to the permanent portfolio. It makes no sense to me why someone could have resentment or anger towards them.

Perhaps because I have been in this long enough to experience the good times of the PP, or perhaps because I have a lot less money than many people here, I am actually relieved to look at my portfolio and see nothing happening. It very nice to not have to listen to the panic surrounding daily swings in the markets in order to try and guess which way the wind is blowing. Of course the downside is the reduced stress means that I might live longer and therefore need more money for retirement!

The thing I'm having trouble with is understanding what the misfortune is.

Nothing out of character has happened with the PP.

It's rolling along like a clock in a thunderstorm.

From reading all of this stuff, you would never guess that YTD the PP is beating a 100% stock allocation as well as a 60/40 allocation.

Which allocation do the grumblers wish they had gone to and when?  Seriously.

If everything else is down a lot and the PP is down a little, the PP is doing its job.

[Reub]

I'm not complaining about performance, but come on! Since 2009 aren't equities up 150-200%? Is the PP up anywhere close to that? Please let's not pretend that it's kicked any ass recently.

[Pointedstick]

I'm not complaining about performance, but come on! Since 2009 aren't equities up 150-200%? Is the PP up anywhere close to that? Please let's not pretend that it's kicked any ass recently.

But you wouldn't expect it to, right? The PP is not a 100% equity portfolio so obviously it will lag one. I've said it before and I'll say it again: it's not the portfolio that's killing people but the wild expectations. A lot of people seem to want equity returns with cash volatility.

[craigr]

I'm not complaining about performance, but come on! Since 2009 aren't equities up 150-200%? Is the PP up anywhere close to that? Please let's not pretend that it's kicked any ass recently.

etfreplay.com shows 7.9% in 2009 vs. 26.5% for 100% S&P 500.

In 2010 it was 14.5% vs. 15.1% for S&P500.

In 2011 it was 11.5% vs. 1.9% for S&P500

Etc.

Nothing out of the ordinary is going on and volatility in the portfolio is about 50% of 100% stocks. It is all period dependent on the returns and what an investor happened to get.

A stock heavy portfolio is going to outperform a non-stock heavy portfolio after the worst market crash in 40 years followed by a sharp Fed induced recovery. There is no surprise here, but who was willing to bet the family farm in January 2009 on all of that happening?

So unless investors are going to jump into their time machine back to 2009, and put 100% of their money at the bottom of the market crash, the entire debate is meaningless.

[dragoncar]

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.

That's kinda what spurred my post to begin with.  From when mediumtex said "A rolling three year period of negative returns would make me open up the hood and take a look."  We are nearing that point.

See: https://www.bogleheads.org/forum/viewto ... &start=100

But apparently clocks in thunderstorms have always had three years of negative returns

[mathjak107]

but the 2-1/2% loss would be assuming it is 100% equity's correct ?  both are not 100% equity's .

even so 7.62% in the worst 15 year time frame we  have had is not to bad .    the sap 500 i think was less than 4%

as of last night the losses are not 2.50%

the growth and income model is down 1.44% ytd  and  the growth model is down only 1%  ytd not 2-1/2 . one good market day and both portfolio's  could be positive again .  so while yes they got hit harder they had a bigger cushion of gains to fall back with  as well as were pushed back up by the larger market gains acting on them .  that is an important  thing to consider when looking at the drops .  they may be from much higher levels of gains .

[mathjak107]

I haven't complained about the poor performance of the portfolio. I'm a big boy. I just wonder why people could be so involved with and dedicated to the PP and then just go away for months at a time. It just seems a little odd.

Well, it happened.

I don't know what else there is to say about that.

Sometimes other interests in your life pull your attention in other directions.  I'm no different than any other member in that regard.  Lots of people here come and go.  That's a good thing.  I think that not thinking about the PP or any investment topic for a while is good for people.

we should all just be happy there is a forum and kind of a support group here for those who need it .  even  though i am not a follower i find the forum a great benefit for discussions  . i always believe in understanding the other side  of things so regardless of who is contributing from above  the forums are a benefit to all and i think rather than complaining the brass isn't posting we should be happy for those who have a place to post .


misery loves company and having others who reinforce your view and make you feel better about your choice  is a powerful tool as it helps you stay the course .

right or wrong even a broken watch is right twice a day so sticking to your plan is important no matter what your strategy .

[mathjak107]

I'm not complaining about performance, but come on! Since 2009 aren't equities up 150-200%? Is the PP up anywhere close to that? Please let's not pretend that it's kicked any ass recently.

etfreplay.com shows 7.9% in 2009 vs. 26.5% for 100% S&P 500.

In 2010 it was 14.5% vs. 15.1% for S&P500.

In 2011 it was 11.5% vs. 1.9% for S&P500

Etc.

Nothing out of the ordinary is going on and volatility in the portfolio is about 50% of 100% stocks. It is all period dependent on the returns and what an investor happened to get.

A stock heavy portfolio is going to outperform a non-stock heavy portfolio after the worst market crash in 40 years followed by a sharp Fed induced recovery. There is no surprise here, but who was willing to bet the family farm in January 2009 on all of that happening?

So unless investors are going to jump into their time machine back to 2009, and put 100% of their money at the bottom of the market crash, the entire debate is meaningless.

if the times going forward really are different ,  then comparing all these charts of the past is useless and nothing more than driving and looking in the rear view mirror .

each time frame is just different enough that one day every trading system or strategy eventually  reaches a point  where what worked well in the past does not anymore . some just take a longer time than others to reach that point .

for the pp it may have taken a point where zero interest rates , high stock valuations and bonds that have little oomph left  on their own and depend more on a calamity and flight to safety rather  than the normal direction of rates in a long term  fall.  the fact gold responds to little at this point  and falls more than it goes up has created the perfect storm . the 4-wheel drive system of the pp may be so bogged down it can't move itself .


we really will not know for a while whether the pp reached a point where by its own design it buried itself and can't get out  because its own asset's are killing off the weaker pulls of the  growth engine's that  attempt to tow it  but right now that appears to be the case to me .  but to early to really tell for sure .

i just wouldn't use that rear view mirror to much and concentrate more on the road a head of me while i stayed the course with the pp at this stage as i would with any portfolio today . .


for those uncomfortable with what they see  there are other conservative options out there to run with , no reason to second guess yourself or need reassurance from some others  and then pick on them for not being there .