Why the PP is better in accumulation than you think

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dutchtraffic
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Re: Why the PP is better in accumulation than you think

Post by dutchtraffic » Mon Oct 19, 2015 7:38 pm

mathjak107 wrote: 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 .
Your keyboard is broken i think.
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Re: Why the PP is better in accumulation than you think

Post by mathjak107 » Mon Oct 19, 2015 7:39 pm

it works fine when i want it to .
Last edited by mathjak107 on Mon Oct 19, 2015 7:42 pm, edited 1 time in total.
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Re: Why the PP is better in accumulation than you think

Post by MachineGhost » Mon Oct 19, 2015 7:42 pm

mathjak107 wrote: 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 .
Oh, Bullshit!  We've been talking about retiring in 1965 and SWRs which are retirement concepts, so 50/50 is the appropriate portfolio since that is what you have now.  Don't change the terms of the debate.  What would you have chosen in 1965 for a retirement portfolio if not 50/50?  You get no benefit of hindsight in choosing.
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Re: Why the PP is better in accumulation than you think

Post by MachineGhost » Mon Oct 19, 2015 7:44 pm

Tyler wrote: 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!
I rest my case.
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Re: Why the PP is better in accumulation than you think

Post by mathjak107 » Mon Oct 19, 2015 7:46 pm

yes if we are taking retirement then yes 50/50 would have still been my choice but if you were talking getting better performance with other assets  then i assume you are talking going for more growth .

.last sentance below in your post . in which case if i was looking to accumulate more i would have had  a very heavy equity mix instead  .
MachineGhost wrote:
mathjak107 wrote: 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 .
  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. 
Last edited by mathjak107 on Mon Oct 19, 2015 7:49 pm, edited 1 time in total.
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Re: Why the PP is better in accumulation than you think

Post by mathjak107 » Mon Oct 19, 2015 7:52 pm

MachineGhost wrote:
Tyler wrote: 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!
I rest my case.

i have no problem with a 5 or 10% position in gold , i agree with bill.

but i do have an issue personally with the same amount in gold as i do bonds and stocks .

that is my only objection to the gold part .
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Re: Why the PP is better in accumulation than you think

Post by MachineGhost » Mon Oct 19, 2015 7:52 pm

mathjak107 wrote: yes if we are taking retirement then yes 50/50 would have still been my choice but if you were talking getting better performance with other assets  then i assume you are talking going for more growth .
As a rule of thumb, each 10% allocation to gold adds roughly .43% real CAGR after the 4% SWR when taken from 10yr bonds.  I suppose now we could craft a retirement portfolio to get the exact net real return we want to get.  Is there a comfortable margin of safety to shoot for in terms of real CAGR buffer?
Last edited by MachineGhost on Mon Oct 19, 2015 8:01 pm, edited 1 time in total.
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Re: Why the PP is better in accumulation than you think

Post by mathjak107 » Mon Oct 19, 2015 7:54 pm

can't say , i don't follow what it  is you are trying to simulate and why you think it would even hold true going forward . . that would only be true if gold was going up  more than bonds ..  but then again i could likely do even better just increasing the equity allocation  or if that was true why not  50% stocks and 50% gold and no bonds  ?
Last edited by mathjak107 on Mon Oct 19, 2015 8:00 pm, edited 1 time in total.
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Re: Why the PP is better in accumulation than you think

Post by ochotona » Mon Oct 19, 2015 7:56 pm

Very nice charts, Tyler, as usual. I'm bookmarked your site.  :D
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Re: Why the PP is better in accumulation than you think

Post by mathjak107 » Mon Oct 19, 2015 8:05 pm

another one with visions  ha ha ha ..

it isn't worth trying to simulate something because we just really do no know the answer .
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Re: Why the PP is better in accumulation than you think

Post by MachineGhost » Mon Oct 19, 2015 8:06 pm

mathjak107 wrote: another one with visions  ha ha ha ..

it isn't worth trying to simulate something because we just really do no know the answer .
You're weird.  How is expecting the future to be exactly like the past any different than simulating?

In fact if you really believe that, then the PP is perfect for you because its all about not simulating or checking history.  Which I certainly don't agree with.
Last edited by MachineGhost on Mon Oct 19, 2015 8:08 pm, edited 1 time in total.
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Re: Why the PP is better in accumulation than you think

Post by Matthew19 » Mon Oct 19, 2015 9:50 pm

I enjoyed this forum much more before you came along mathjak107.
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Re: Why the PP is better in accumulation than you think

Post by mathjak107 » Tue Oct 20, 2015 3:11 am

thank you .

i guess it is as they say , ignorance is bliss .    .  there have been many issues here that were just  not accurate before i came along .  sorry if i had to bring along some facts and figures that showed the error in a lot of thinking here and ruined the fact many of you  were blindly  believing the bull-sh%t you handed each other  like some kind of support group .

hey if you guys don't want me spoiling the party  i will just leave the forum .    you can just close your eyes to educating yourselves and keep on believing what you want .

there is nothing wrong with the pp as it is if that is the plan you think will work for you .

but what is wrong is the attempts to make the pp in to things it was never designed for by cherry picking certain time frames or comparing to other portfolios during time frames  that were not the best time frames for that mix of investments    , or even trying to show it was as good a growth vehicle as anything else and then selecting perfect time frames or bending them .  we have folks trying to create data that does not exist based on what  they think would have happened with other assets like silver , like this discussion here on safe withdrawal rates .

of course if you do this with conventional portfolio's you are data mining  or get the how do you know it will do that in the future .  but when select data is pulled out or created out of the air  for the pp suddenly it is ok .

perhaps those who drink the kool-aid don't see this being done but this forum is filled with these attempts .

just accept the pp for what it is without all this mental masturbation patting each other on the back  and trying to constantly make comparisons turning it in to a support group rather then something educational with an exchange of information from both sides . .


like i said , you guys don't want to hear the negatives or inaccuracy's , fine i will go . just close yourself off and keep congratulating each other .
Last edited by mathjak107 on Tue Oct 20, 2015 7:49 am, edited 1 time in total.
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Re: Why the PP is better in accumulation than you think

Post by mathjak107 » Tue Oct 20, 2015 3:14 am

MachineGhost wrote:
mathjak107 wrote: another one with visions  ha ha ha ..

it isn't worth trying to simulate something because we just really do no know the answer .
You're weird.  How is expecting the future to be exactly like the past any different than simulating?

In fact if you really believe that, then the PP is perfect for you because its all about not simulating or checking history.  Which I certainly don't agree with.
planning around remote fliers with the same weight as the most likely is just not a good idea  , that is my point .

thinking this time is different has been the most costliest thinking  in the financial world , john templton was so right about that .
Last edited by mathjak107 on Tue Oct 20, 2015 3:16 am, edited 1 time in total.
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Re: Why the PP is better in accumulation than you think

Post by dragoncar » Tue Oct 20, 2015 4:23 am

Really cool tyler.

So does anyone here want some pizza rolls?

Leave a message on this webzone and I'll send you pizza roll.
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Re: Why the PP is better in accumulation than you think

Post by Libertarian666 » Tue Oct 20, 2015 9:42 am

Matthew19 wrote: I enjoyed this forum much more before you came along mathjak107.
In that case, I recommend setting your profile to ignore him. That's what I have done.
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Re: Why the PP is better in accumulation than you think

Post by Reub » Tue Oct 20, 2015 10:12 am

Why is true diversity of opinion such an anathema in here? Although I don't always agree with Mr. mathjak he adds a lot to these threads and makes one question himself, which is a good thing.

I just feel that Mr. mathjak should understand that he isn't an expert as his one week entrance and exit from the PP proves.
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Re: Why the PP is better in accumulation than you think

Post by Xan » Tue Oct 20, 2015 10:40 am

Reub wrote: Why is true diversity of opinion such an anathema in here? Although I don't always agree with Mr. mathjak he adds a lot to these threads and makes one question himself, which is a good thing.

I just feel that Mr. mathjak should understand that he isn't an expert as his one week entrance and exit from the PP proves.
If by "adds a lot to these threads" you mean "adds the same thing over and over and over to every single thread", then agreed.
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Re: Why the PP is better in accumulation than you think

Post by dualstow » Tue Oct 20, 2015 11:42 am

This is a great thread. Carry on, guys.
https://www.city-journal.org/journalism-advocacy-over-reporting
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Re: Why the PP is better in accumulation than you think

Post by Tyler » Tue Oct 20, 2015 12:41 pm

mathjak107 wrote: i guess it is as they say , ignorance is bliss .    .  there have been many issues here that were just  not accurate before i came along .  sorry if i had to bring along some facts and figures that showed the error in a lot of thinking here and ruined the fact many of you  were blindly  believing the bull-sh%t you handed each other  like some kind of support group .

...perhaps those who drink the kool-aid don't see this being done but this forum is filled with these attempts .
Open discussion of diverse perspectives is great.  Repeating the same complaints even after others have thoughtfully replied, falsely accusing people of fabricating and cherry picking data, calling people ignorant, claiming intellectual superiority, HITTING THE CAPS LOCK, saying the entire discussion is a waste of time, and generally filibustering all topics you do not personally agree with is anything but an open discussion.  And all of that is in this thread alone.  It's not a matter of drinking the kool aid.  It's an issue of mutual respect. 

I admit I'm kinda disappointed that a topic I spent a lot of time on has been overrun by chest beating.  That's generally not how this board has historically operated, and hopefully it's only temporary.  If anyone offers a rebuttal, that's fine.  I've said my peace and refuse to contribute to further arguments.

In the meantime -- I'll take one of those pizza rolls, Dragoncar.  http://totinos.tumblr.com/
Last edited by Tyler on Tue Oct 20, 2015 12:50 pm, edited 1 time in total.
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Re: Why the PP is better in accumulation than you think

Post by MachineGhost » Tue Oct 20, 2015 3:22 pm

mathjak107 wrote: planning around remote fliers with the same weight as the most likely is just not a good idea  , that is my point .
I don't understand what you said here.
mathjak107 wrote: thinking this time is different has been the most costliest thinking  in the financial world , john templton was so right about that .
That's true, but it goes both ways.... both for extremes in the current moment as well as historical extremes that "can't possibly be exceeded" in the future.  All we have to base our portfolio design on is history, simulation, probabilities and deep thinking.  A portfolio design is not going to break just because you substitute the point-in-time actual reality that silver was practical legal gold if it is a truly robust one.
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Re: Why the PP is better in accumulation than you think

Post by MachineGhost » Tue Oct 20, 2015 3:24 pm

Reub wrote: Why is true diversity of opinion such an anathema in here? Although I don't always agree with Mr. mathjak he adds a lot to these threads and makes one question himself, which is a good thing.
Ditto.  I've learned a lot from mathjak about retirement concepts that I never really paid attention too before as well as the proven power of discipline.  Talk is cheap, but mathjak has walked the talk.  So he deserves some respect at the very least.
Last edited by MachineGhost on Tue Oct 20, 2015 3:39 pm, edited 1 time in total.
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Re: Why the PP is better in accumulation than you think

Post by MachineGhost » Tue Oct 20, 2015 3:27 pm

So here is the bottom line for 1965+ as far as inflation and 4% SWR adjusted returns are for several portfolios (with all the usual caveats about gold we don't need to rehash again):
Portfolio Real MaxDD
Browne PP -49.35%
Risk Parity PP -58.70%
50/50 10yr -59.46%
Wellesley + 15% Gold -58.38%
100% Stocks -54.34% (it hit -60.69% in 1932, -59.42% in 2008)
Without the gold, Wellesley hits a -74.26% real MaxDD.

I don't know what a safe cushion is in real terms, but -74.26% MaxDD requires nearly an 800% gain just to get back to breakeven.  I suggest -50% is more than enough for anybody with a pulse.

As I've suspected, the 35% to T-Bonds in the Risk Parity PP is a very bad idea in a high inflation period.  But mean variance optimization is not designed to handle portfolio risk in terms of maximum drawdown, only volatility.
Last edited by MachineGhost on Tue Oct 20, 2015 4:55 pm, edited 1 time in total.
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Re: Why the PP is better in accumulation than you think

Post by Dmilligan » Tue Oct 20, 2015 3:46 pm

MachineGhost wrote: 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.
MG, did you happen to also calculate the maximum percentage withdrawal that would have sustained the initial principal when adjusted for inflation? If so, I'd be curious to learn that number as a comparable to the 40 year number on Tyler's site.
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Re: Why the PP is better in accumulation than you think

Post by MachineGhost » Tue Oct 20, 2015 4:00 pm

Dmilligan wrote:
MachineGhost wrote: 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.
MG, did you happen to also calculate the maximum percentage withdrawal that would have sustained the initial principal when adjusted for inflation? If so, I'd be curious to learn that number as a comparable to the 40 year number on Tyler's site.
Do you mean the inflation-adjusted value each year of the initial starting balance as the lower threshold for each year's total portfolio value?  If so, then there is no minimum SWR as the PP doesn't keep up in this 15 year time frame, except for 3 years but 2 of those were using silver and 1 was the very first year of gold floating (i.e. not reliable).  At the end of 1981, the real initial balance is $1653.87 whereas the PP is down to $911.69.
Last edited by MachineGhost on Tue Oct 20, 2015 4:06 pm, edited 1 time in total.
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes

Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet.  I should not be considered as legally permitted to render such advice!
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