Freakonomics: The Folly of Prediction

General Discussion on the Permanent Portfolio Strategy

Moderator: Global Moderator

Post Reply
cowboyhat
Senior Member
Senior Member
Posts: 122
Joined: Sun Nov 14, 2010 7:12 pm

Freakonomics: The Folly of Prediction

Post by cowboyhat »

Harry Browne would have enjoyed this radio show:
http://freakonomicsradio.com/hour-long- ... ction.html

I found the link to the show on Barry Ritholtz blog: The Big Picture.

It's funny and pertinent for PP investors, and it made me ask myself a question I'll ask you:


What would it take to convince you that you are wrong about the Permanent Portfolio?
1) Some empirical evidence?
2) Something theoretical?
3) You're right, so there is no need to worry about being wrong.
User avatar
MediumTex
Administrator
Administrator
Posts: 9096
Joined: Sun Apr 25, 2010 11:47 pm
Contact:

Re: Freakonomics: The Folly of Prediction

Post by MediumTex »

cowboyhat wrote: It's funny and pertinent for PP investors, and it made me ask myself a question I'll ask you:

What would it take to convince you that you are wrong about the Permanent Portfolio?
1) Some empirical evidence?
2) Something theoretical?
3) You're right, so there is no need to worry about being wrong.
1. Yes.  A rolling three year period of negative returns would make me re-evaluate the PP strategy.

2. Yes.  If a fifth ecoomic condition was identified I would want to re-think the four scenario PP paradigm.

3. I test my theories against reality every day.  "Right" is what works.  I just like the PP because it has worked so well to date.

Note that the only prediction that the PP makes is that the world will remain unpredictable.
Q: “Do you have funny shaped balloons?”
A: “Not unless round is funny.”
User avatar
moda0306
Executive Member
Executive Member
Posts: 7680
Joined: Mon Oct 25, 2010 9:05 pm
Location: Minnesota

Re: Freakonomics: The Folly of Prediction

Post by moda0306 »

I'd say that if somehow the "greater fools" game we play with gold eventually lost hold... but the thing is, it usually loses hold during times of disinflationary prosperity and solid balance sheets.... the game kicks right back in again when things don't look so rosey.

So do I think gold will act wildly outside its normal behavior given the other assets?  No.  But that's my biggest doubt with the PP.
"Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds."

- Thomas Paine
Post Reply