Why the PP is better in accumulation than you think

[MachineGhost]

BTW, the Browne PP survives as well, generating .43% real CAGR until 2014, assuming you held junk silver coins from 1965 to 1967 then switched to gold in 1968.  0% is at a 4.45% SWR.

[mathjak107]

i would never accept that as fact or the way things would actually have played out with gold .

the answer is we just do not know what the pp would have done . anything else is a speculative guess at finding an answer to something that has no answer .

[MachineGhost]

i would never accept that as fact or the way things would actually have played out with gold .

the answer is we just do not know what the pp would have done . anything else is a speculative guess at finding an nswer to something that has no answer .

I could extend holding the junk silver coins until 1975 when gold was domestically legal again, but the results are virtually still the same at .41% CAGR.

No one stopped Americans from buying and storing their gold overseas in London or Switzerland.  Most of the pre-1933 gold coins were being held overseas, in fact.  It wasn't Big Brotherish like it was today with FATCA and the surveillance state.

I don't think its any more speculative than saying that the future will not surpass history in terms of magnitude and basing a portfolio around it.  If anything, what we having coming is going to surpass all historical precedent.

[mathjak107]

you can bend , twist and mold any situation to try to get a point to work , but considering the pp concept didn't go public  until years later it still was not a concept used  until the 1980's ..

the pp wasn't just an investment it was a total radical concept unlike just  buying stocks and bonds .  without the book there was no pp .

so  we can't use the same benchmarks as to those worst of times that are what a safe withdrawal rate is founded on .

sure , you can compute a cagr  for the pp  at any point in time or even a withdrawal rate that worked but  that is all we can really know in comparison . we can't do an apple to apple comparison .

it is lik me trying to simulate reits at a time hey didn't exist so i use my co-op as a proxy .

[dutchtraffic]

you can bend , twist and mold any situation to try to get a point to work , but considering the pp concept didn't go public  until years later it still was not a concept used  until the 1980's ..

the pp wasn't just an investment it was a total radical concept unlike just  buying stocks and bonds .  without the book there was no pp .

so  we can't use the same benchmarks as to those worst of times that are what a safe withdrawal rate is founded on .

sure , you can compute a cagr  for the pp  at any point in time or even a withdrawal rate that worked but  that is all we can really know in comparison . we can't do an apple to apple comparison .

What on earth are you talking about, a radical concept? It's just buying stocks, bonds, and some gold.

What's so radical about that?

[MachineGhost]

you can bend , twist and mold any situation to try to get a point to work , but considering the pp concept didn't go public  until years later it still was not a concept used .

the pp wasn't just an investment it was a total radical concept unlike buying stocks and bonds .

except we can't use the same benchmarks as to those worst of times that are what a safe withdrawal rate is founded on .

Says who?  Assets move together as a broad group.  You don't think silver being taken out of the currency post-1965 is equivalent to gold post-1968 or post 1975 and worthy as a stopgap substitute?  Whats the big deal about needed perfect likeness for 3-10 years?  History isn't going to repeat in the future exactly either that will justify any of these SWR portfolios.  The past does not repeat.

[mathjak107]

the pp  has a concept behind it.  do you really think without the pp being published and promoted  folks were just hap hazardly buying stocks , gold and bonds in all the exact same allocations ?  not on your life and not without someone laying out why .  really , you think that is what would have happened ?  well folks then would have publicized they were doing it  wouldn't they or you would have already seen it in practice on a wide scale . .


sorry there mister ghost . gold is not a proxy for silver .

[MachineGhost]

it is lik me trying to simulate reits at a time hey didn't exist so i use my co-op as a proxy .

That's different because your co-op is an entirely different asset class than what a REIT index measures.  Gold and silver are monetary twins.

[mathjak107]

it is lik me trying to simulate reits at a time hey didn't exist so i use my co-op as a proxy .

That's different because your co-op is an entirely different asset class than what a REIT index measures.  Gold and silver are monetary twins.

no , by the same token they are both real estate just as gold and silver are precious metals .

and oil and coffee are both commodity's .

we do not know if  if gold and silver would have been treated the same back then ,look at 2008 when silver plunged and gold was up .

to be fair you can't do a comparison based on what you think would have happened .

[Libertarian666]

it is lik me trying to simulate reits at a time hey didn't exist so i use my co-op as a proxy .

That's different because your co-op is an entirely different asset class than what a REIT index measures.  Gold and silver are monetary twins.

No, they aren't; HB destroyed that myth years ago. In terms of amounts used, silver is mostly an industrial metal, and gold is almost entirely a monetary metal. They have about a 50% correlation, as I recall, or even less than that.

On a slightly different note, here's a great example of why you shouldn't listen to market prognosticators. Every single prediction from 2010 was way off:

http://news.silverseek.com/SilverSeek/1278958658.php

[MachineGhost]

the pp  has a concept behind it.  do you really think without the pp folks were just hap hazardly buying stocks , gold and bonds in all the exact same allocations ?  not on your life and not without someone laying out why .

Not as 25%x4 of course, but if you think people didn't own any silver or gold back then...  Maybe you didn't see this book released in 1970...  How You Can Profit From The Coming Devaluation.  Or the hoarding of pre-1965 junk silver once it was taken out coins in 1965.  Inflation was already an issue in the early 60's.  It didn't take until the late 70's for people to get a clue, just the dumbest.

I'm comfortable with using silver as a proxy for gold for just 3 years.  In fact, it returned nothing for 2 of those years, so all the more conservative.  I could also halve the third year return to make it even more conservative.  Point stands that the Browne PP would have theoretically survived the worst case 1965+ era just as the 50/50 did.

[MachineGhost]

we do not know if  if gold and silver would have been treated the same back then ,look at 2008 when silver plunged and gold was up .

to be fair you can't do a comparison based on what you think would have happened .

Well that's a fair point.  However, given the environment was inflationary vs 2008's deflation, its a risk I'm willing to take along with the conservatism.

[mathjak107]

people always bought gold and silver  but haphazardly , there was no portfolio concept in place like the pp .

but debating what didn't exist is silly .

[MachineGhost]

No, they aren't; HB destroyed that myth years ago. In terms of amounts used, silver is mostly an industrial metal, and gold is almost entirely a monetary metal. They have about a 50% correlation, as I recall, or even less than that.

Oh sure, silver hasn't been money since 1899, but we're talking about an inflationary environment of the 60's here shortly after silver was taken out of all coinage.  All commodities went up.  What is true now is irrelevant.

[mathjak107]

i think we beat trying to fill in the blanks enough , it really cannot be compared  guessing at missing info ..

[MachineGhost]

people always bought gold and silver  but haphazardly , there was no portfolio concept in place like the pp .

but debating what didn't exist is silly .

You're resting your whole argument on the PP not existing back then.  That's not the point.  The point is you could have used some real assets to improve whatever portfolio you did have at the time and it would have been superior to the 50/50 by nature.  The PP is just a convenient portfolio to measure against since it includes all asset classes.

[mathjak107]

people always bought gold and silver  but haphazardly , there was no portfolio concept in place like the pp .

but debating what didn't exist is silly .

You're resting your whole argument on the PP not existing back then.  That's not the point.  The point is you could have used some real assets to improve whatever portfolio you did have at the time and it would have been superior to the 50/50 by nature.  The PP is just a convenient portfolio to measure against since it includes all asset classes.

except the 50/50 is not a model i would have used nor most folks  back then for growth . a diversified mix of almost all equity's would have been .

the 50/50 is a retirement mix or a mix for the feint of heart , not someone who wants to maximize growth .

so like the pp it is more for  some one more concerned with trying to not grow poorer then grow richer .


big difference over my accumulation years between he growth model and a 50/50 model .

every one has their own pucker factor and the  fear and worry  of loss will always be the same when that level is breached whether 100% equity or in the pp . . the only difference is your belief  in the fact that like always ,  things will recover in a fair amount of time .

[Tyler]

You're resting your whole argument on the PP not existing back then.  That's not the point.  The point is you could have used some real assets to improve whatever portfolio you did have at the time and it would have been superior to the 50/50 by nature.  The PP is just a convenient portfolio to measure against since it includes all asset classes.

Exacly. 

Interestingly, William Bengen (the author of the original SWR study) was quoted in Forbes saying that gold is  “A vital component of an investor’s portfolio today” even though it was never part of his study! 

[mathjak107]

lots of things weren't like reits and commodity funds .

their research was only based on what the average investor was buying  in those days which meant stocks and bonds .  the endless mixes of all the possible assets and combinations out there made data running prohibitive  on anything else .
no investor can match the study's exactly  but allocation is the majority of your return , not the individual holdings .

[dutchtraffic]

every one has their own pucker factor and the  fear and worry  of loss will always be the same when that level is breached whether 100% equity or in the pp . . the only difference is your belief  in the fact that like always ,  things will recover in a fair amount of time .

Wait, you actually believe stocks always recover?
How about if they don't recover during your lifetime? You know the chance of that is extremely realistic right?

Or do you see the US going through another golden age? 

[mathjak107]

  if i believed that was the case i wouldn't be in any investment .

i don't invest based on what if , i invest based on what what was , what is and what has a pretty good chance of playing out .


how about if gold goes to near nothing  because the dollar collapses  along with stocks and no one has money to bid up gold,  as well as bonds get defaulted on  and now cash is worthless .

as long as we are playing what if , lets make it good .

[dutchtraffic]

how about if gold goes to near nothing because the dollar collapses  along with stocks and no one has money to bid up gold, 

Now i'm 100% sure you're just a troll.
Nobody can be this stupid, a dollar collapse and gold would go to zero....? Because nobody can "bid it up", what are you talking about man :D:D

[mathjak107]

REALLY .  WHAT ARE FOLKS GOING TO BID UP PRICES WITH IF THEY LOST EVERYTHING , THEIR GOOD LOOKS ?

WHY ARE YOU SO IN TO PERSONAL ATTACKS .  NO ONE ATTACKS YOU WITH NAME CALLING OR ANYTHING ELSE DEROGATORY AND YOUR STATEMENTS ARE USUALLY FAR FROM CORRECT .

they reflect no  data , no facts just these visions in your head yet i remain quite civil with you . if you can't do the same then refrain from replying to my posts . then you don't have to deal with my stupidity as you called it ..

DO YOU SEE ANY OF US HERE INSULTING EACH OTHER IN THIS DISCUSSION  ?

[dutchtraffic]

REALLY .  WHAT ARE FOLKS GOING TO BID PRICES WITH IF THEY LOST EVERYTHING THEIR GOOD LOOKS ?

WHY ARE YOU SO IN TO PERSONAL ATTACKS .  NO ONE ATTACKS YOU WITH NAME CALLING OR ANYTHING ELSE DEROGATORY AND YOUR STATEMENTS ARE USUALLY FAR FROM CORRECT . .

Because you act like someone who has a gold-phobia and are now going absolutely batshit crazy 24/7 nonstop 1 post/5 seconds posting about how everybody is a moron for holding gold, or in fact, anything else than your portfolio.

You are doing this probably because you are incredibly insecure about your own portfolio, which i can understand, as someone must be close to insane being very heavy on stocks right now, but that's ok, some people like to gamble.

But stop posting absolute nonsense and plain lies, it's not helping anyone, it's more likely to be harmful.

And insulting? Really? If someone says something stupid, I call them stupid, if people can't even handle that anymore, we're doomed either way, with whatever portfolio.

[mathjak107]

WE ARE HAVING A VERY EDUCATIONAL DISCUSSION HERE . THERE ARE POINTS OF INFORMATION HERE THAT WERE WRONG AND  DATA THAT WAS INACCURATE .  IT HAS NOTHING TO DO WITH MY LOVE OR HATE FOR GOLD .

YOU RARELY ADD ANYTHING TO ANY POST I HAVE HAD WITHOUT IT BEING SOME CATASTROPHIC SCENARIO WHERE ONLY GOLD SURVIVES .

IT IS THE SAME CHICKEN LITTLE SCENARIO'S OVER AND OVER AS YOU VISION THEM .

MAYBE THY WILL PLAY OUT , MAYBE THEY WON'T BUT THE POINT IS WHAT YOU THINK IS WORTH NO MORE OR LESS THEN WHAT I THINK THE FUTURE HOLDS .

not all of us live our lives based on remote  what if's