Stocks Crashing! Thank God For The PP!!

General Discussion on the Permanent Portfolio Strategy

Moderator: Global Moderator

Reub
Executive Member
Executive Member
Posts: 3158
Joined: Fri Jan 21, 2011 5:44 pm

Re: Stocks Crashing! Thank God For The PP!!

Post by Reub » Fri Jan 15, 2016 8:52 pm

MediumTex wrote:
lordmetroid wrote: I am thinking it might be a good time to go TLT and IAU now.
Why?

If anything, now seems like the time to be buying stocks, not selling them.
Are you guaranteeing that it's done going down?
var
Full Member
Full Member
Posts: 55
Joined: Thu Jan 07, 2016 11:12 pm

Re: Stocks Crashing! Thank God For The PP!!

Post by var » Fri Jan 15, 2016 9:01 pm

Libertarian666 wrote:
sk55 wrote:
MangoMan wrote: Care to share your modified PP allocation? Thanks

50/50    SPY/TLT 

i use ETFs sometimes i'll turn it into a covered call... if its down to generate income..

and i keep a decent amount cash on the side for dips...
So in other words, a 50-50 Boglehead allocation.

Not that there's anything wrong with that, but it has nothing to do with the PP.
of course it does i am using the gyroscopic essence of the PP... except gold...  i think i am happy with my 5 year return..  how much has the pure PP (perm or prpfx) returned in the last 5 year return..
var
Full Member
Full Member
Posts: 55
Joined: Thu Jan 07, 2016 11:12 pm

Re: Stocks Crashing! Thank God For The PP!!

Post by var » Fri Jan 15, 2016 9:03 pm

lordmetroid wrote: I am thinking it might be a good time to go TLT and IAU now.
you could be right with TLT... wait for it to have a down day.
var
Full Member
Full Member
Posts: 55
Joined: Thu Jan 07, 2016 11:12 pm

Re: Stocks Crashing! Thank God For The PP!!

Post by var » Fri Jan 15, 2016 9:06 pm

MediumTex wrote:
lordmetroid wrote: I am thinking it might be a good time to go TLT and IAU now.
Why?

If anything, now seems like the time to be buying stocks, not selling them.
stocks are attractive.. however i think there a good chance to that will test aug 15 low... i rather wait and see what happens before i jump in
dutchtraffic
Executive Member
Executive Member
Posts: 242
Joined: Sat Apr 11, 2015 7:28 am

Re: Stocks Crashing! Thank God For The PP!!

Post by dutchtraffic » Fri Jan 15, 2016 9:29 pm

MediumTex wrote:
lordmetroid wrote: I am thinking it might be a good time to go TLT and IAU now.
Why?

If anything, now seems like the time to be buying stocks, not selling them.
Stocks are still insanely overvalued.
User avatar
MediumTex
Administrator
Administrator
Posts: 9096
Joined: Sun Apr 25, 2010 11:47 pm
Contact:

Re: Stocks Crashing! Thank God For The PP!!

Post by MediumTex » Fri Jan 15, 2016 10:04 pm

dutchtraffic wrote:
MediumTex wrote:
lordmetroid wrote: I am thinking it might be a good time to go TLT and IAU now.
Why?

If anything, now seems like the time to be buying stocks, not selling them.
Stocks are still insanely overvalued.
But they are less overvalued than they were when everyone thought buying them was a good idea.

The best time to buy stocks is when everyone hates the stock market the most, but it's not a terrible time to buy when only most people hate the stock market a lot.
Q: “Do you have funny shaped balloons?”
A: “Not unless round is funny.”
User avatar
ochotona
Executive Member
Executive Member
Posts: 3353
Joined: Fri Jan 30, 2015 5:54 am

Re: Stocks Crashing! Thank God For The PP!!

Post by ochotona » Fri Jan 15, 2016 11:17 pm

The Shiller PE ratio today is still 23.82. That's as high as prior tops in the 1960s, and early 1900s. Bad bear markets used to get us down to about 7, last time was early 1980s, but here we are still stuck in the crotch of a tree. To go from 23.82 to 7, stocks would have to fall 75% from where they are now. Now, whether than happens in 2016, 2020, or 2030, no one can say, or will it ever happen? The early 1930s bear to early 1980s was 50 years, a long time.
var
Full Member
Full Member
Posts: 55
Joined: Thu Jan 07, 2016 11:12 pm

Re: Stocks Crashing! Thank God For The PP!!

Post by var » Sat Jan 16, 2016 6:00 am

MediumTex wrote:
dutchtraffic wrote:
MediumTex wrote: Why?

If anything, now seems like the time to be buying stocks, not selling them.
Stocks are still insanely overvalued.
But they are less overvalued than they were when everyone thought buying them was a good idea.

The best time to buy stocks is when everyone hates the stock market the most, but it's not a terrible time to buy when only most people hate the stock market a lot.
+1

Yup buy on nice pull backs that said. A few more down days I'll start buying. 
That's why don't even watch CNBC they'll talk PE. China down. Etc.  then at some point
You'll be. In panic.

Also correct me if I am wrong.  Boggle heads don't use TLT.  they rather use diversified bond fund. 
I think TLT is a key pp criteria.
User avatar
ochotona
Executive Member
Executive Member
Posts: 3353
Joined: Fri Jan 30, 2015 5:54 am

Re: Stocks Crashing! Thank God For The PP!!

Post by ochotona » Sat Jan 16, 2016 6:47 am

var wrote: +1

Yup buy on nice pull backs that said. A few more down days I'll start buying. 
That's why don't even watch CNBC they'll talk PE. China down. Etc.  then at some point
You'll be. In panic.

Also correct me if I am wrong.  Boggle heads don't use TLT.  they rather use diversified bond fund. 
I think TLT is a key pp criteria.
So how will you feel in October 2016 if the shares you buy next week "on the dips" based on gut feel are worth half of what you paid for them?

My guess is, you'll be selling them to me at that time.
User avatar
jafs
Executive Member
Executive Member
Posts: 817
Joined: Fri Nov 27, 2015 10:23 am

Re: Stocks Crashing! Thank God For The PP!!

Post by jafs » Sat Jan 16, 2016 6:54 am

I think combining a broad stock market index fund with a long term treasury fund uses part of the PP philosophy, just not all of it.

Those are assets that have very low correlation, and also both have long term expected positive growth.  And, one can combine their use with a band re-balancing strategy.

We just got everything out of the markets and into money market funds in our retirement accounts, because we're getting closer to retirement, but if I ever have a bit of money to play with and want to invest it, I'll probably use something like 50/50 itot/tlt and re-balance annually if they get past 60/40 either way.

One could call it a "partial PP".
User avatar
dualstow
Executive Member
Executive Member
Posts: 14231
Joined: Wed Oct 27, 2010 10:18 am
Location: synagogue of Satan
Contact:

Re: Stocks Crashing! Thank God For The PP!!

Post by dualstow » Sat Jan 16, 2016 7:13 am

lordmetroid wrote: I am thinking it might be a good time to go TLT and IAU now.
I wish you wouldn't say that, because I need to buy gold as part of a rebalancing act. Knowing that you're going to crash and burn with your market timing, I don't like that I'm doing the same thing as you, even if it's for a different reason.

Edit: adding friendly, post-softening smiley:  :D
Last edited by dualstow on Sat Jan 16, 2016 7:18 am, edited 1 time in total.
Sam Bankman-Fried sentenced to 25 years
User avatar
jafs
Executive Member
Executive Member
Posts: 817
Joined: Fri Nov 27, 2015 10:23 am

Re: Stocks Crashing! Thank God For The PP!!

Post by jafs » Sat Jan 16, 2016 9:28 am

;D
User avatar
sophie
Executive Member
Executive Member
Posts: 1959
Joined: Mon Apr 23, 2012 7:15 pm

Re: Stocks Crashing! Thank God For The PP!!

Post by sophie » Sat Jan 16, 2016 11:05 am

CraigR has something to say about TIPS - check the Gold FAQ or his website.  Among other issues, TIPS won't compensate for losses in other assets the way gold will.  At best it will tread water, and that's if you have 100% faith in the CPI.

The last several posts here should probably be moved to the Variable Portfolio section.  You guys are essentially talking about market timing with some of the PP assets.  Which could work out very well, but it's not a PP.  Nor is it passive investing, so it would also not qualify as a Boglehead allocation.

Just want to make sure a spade is being called a spade, for the benefit of those who are coming here looking for information on the Permanent Portfolio and could easily be getting confused.
"Democracy is two wolves and a lamb voting on what to have for lunch." -- Benjamin Franklin
var
Full Member
Full Member
Posts: 55
Joined: Thu Jan 07, 2016 11:12 pm

Re: Stocks Crashing! Thank God For The PP!!

Post by var » Sat Jan 16, 2016 11:37 am

sophie wrote: CraigR has something to say about TIPS - check the Gold FAQ or his website.  Among other issues, TIPS won't compensate for losses in other assets the way gold will.  At best it will tread water, and that's if you have 100% faith in the CPI.

The last several posts here should probably be moved to the Variable Portfolio section.  You guys are essentially talking about market timing with some of the PP assets.  Which could work out very well, but it's not a PP.  Nor is it passive investing, so it would also not qualify as a Boglehead allocation.

Just want to make sure a spade is being called a spade, for the benefit of those who are coming here looking for information on the Permanent Portfolio and could easily be getting confused.

Sophie your right but.
This forum doesn't have too many posts.  I think it's probably better to concentrate in one post to spark more discussion.  Thus you have more user participation. 

Otherwise the forum will get stale people will start to leave. Etc.

PP so well covered in 2 books now.  It's simple to implement.  I can't see to many people asking questions about it.  Other the. Complaining about recent return.
User avatar
sophie
Executive Member
Executive Member
Posts: 1959
Joined: Mon Apr 23, 2012 7:15 pm

Re: Stocks Crashing! Thank God For The PP!!

Post by sophie » Sat Jan 16, 2016 2:31 pm

New threads are always welcome.  Why don't you start one?
"Democracy is two wolves and a lamb voting on what to have for lunch." -- Benjamin Franklin
User avatar
buddtholomew
Executive Member
Executive Member
Posts: 2464
Joined: Fri May 21, 2010 4:16 pm

Re: Stocks Crashing! Thank God For The PP!!

Post by buddtholomew » Sat Jan 16, 2016 3:45 pm

I agree, let's try and keep threads on topic as much as possible. The HBPP has performed admirably during the recent equity decline. It has also reminded purists why they are invested in the 4x25 allocation. There are as many ice cream flavors as variants of the permanent portfolio, but one item that we can all agree on - to qualify as a HBPP, the investor includes stocks, long-term treasuries, gold and short-term treasuries in their portfolio.
Last edited by buddtholomew on Sat Jan 16, 2016 3:50 pm, edited 1 time in total.
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.
User avatar
l82start
Global Moderator
Global Moderator
Posts: 1291
Joined: Sun Apr 25, 2010 9:51 pm

Re: Stocks Crashing! Thank God For The PP!!

Post by l82start » Sun Jan 17, 2016 1:28 am

the moderation staff likes to stay with a traditional post content allocation, and allow the topic to drift within the 15% bands before resorting to re-balancing or ....God forbid... slice and dice thread splitting  ;D ;D
Last edited by l82start on Sun Jan 17, 2016 1:30 am, edited 1 time in total.
-Government 2020+ - a BANANA REPUBLIC - if you can keep it

-Belief is the death of intelligence. As soon as one believes a doctrine of any sort, or assumes certitude, one stops thinking about that aspect of existence
User avatar
MediumTex
Administrator
Administrator
Posts: 9096
Joined: Sun Apr 25, 2010 11:47 pm
Contact:

Re: Stocks Crashing! Thank God For The PP!!

Post by MediumTex » Sun Jan 17, 2016 2:41 am

Desert wrote: I agree with Sophie on TIPS, and I'll also add that when inflation is accompanied by rising rates, the value of TIPS can fall even if the CPI is rising.  This is only for medium to longer term durations, of course.
For anyone who hasn't seen it before, "TIPSymandias":
I met a traveller from an antique land
Who said: I have seen a curious bond
This bond made a promise rare among men and kings,
Backed by full faith and credit

The bond made it clear to all who bought, purchasing power is safe
Those who look upon the bond are counseled to take comfort
That which is will always be, a promise made is a promise kept,
And other assorted platitudes and assurances.

On the back of the bond these words appear:
"Inflation is tamed for all time!
Gold is a barbarous relic,
Inflation look upon this mighty bond and despair!"

No record of the issuer of the bond remains.
Round the decay
Of this curious promise,
Boundless and bare,
The lone and level sands of change stretch far away.
Last edited by MediumTex on Sun Jan 17, 2016 2:52 pm, edited 1 time in total.
Q: “Do you have funny shaped balloons?”
A: “Not unless round is funny.”
User avatar
dualstow
Executive Member
Executive Member
Posts: 14231
Joined: Wed Oct 27, 2010 10:18 am
Location: synagogue of Satan
Contact:

Re: Stocks Crashing! Thank God For The PP!!

Post by dualstow » Sun Jan 17, 2016 8:59 am

TIPSymandias
Still brilliant.  :)

Breaking Bad (and poets) has influenced this board so much.
Image
Sam Bankman-Fried sentenced to 25 years
Professor Disorientation
Associate Member
Associate Member
Posts: 31
Joined: Thu Dec 18, 2014 9:29 am

Re: Stocks Crashing! Thank God For The PP!!

Post by Professor Disorientation » Sun Jan 17, 2016 9:16 am

Markets go down as well as up and this is why I invested in the PP. When all the news is negative and the market is tanking, I can live my life because the PP is going to perform nicely in a market like this. I rebalanced my PP and bought more gold the last week in December.
I personally love the agnostic quality of the PP. Timing the market is a fool's game. Sure you may get lucky once or twice, but I would not want to market time my way to success. The market brings out emotions in all of us. If stocks are doing well, we lament that only 25% of the PP is in stocks. Harry must be wrong or misguided. Gold is a loser. Long-term bonds can't possibly go up in an environment like this. Cash is paying nothing. It goes on and on. The market is emotions. If you can't control your emotions, you will do the wrong thing at the wrong time. The PP is for the humble and for those who don't know what tomorrow may bring. I am sticking with the PP and I make no apologies to anyone for doing this. In Aesop's fable of the Tortoise and the Hare, the tortoise wins the race. Sure the hare is confident, faster and flashy. But the Tortoise is disciplined, focused and unfazed by the hare. I liken the PP to the Tortoise.

Michael
User avatar
Pointedstick
Executive Member
Executive Member
Posts: 8864
Joined: Tue Apr 17, 2012 9:21 pm
Contact:

Re: Stocks Crashing! Thank God For The PP!!

Post by Pointedstick » Sun Jan 17, 2016 9:21 am

Hehe, where is that from?
Human behavior is economic behavior. The particulars may vary, but competition for limited resources remains a constant.
- CEO Nwabudike Morgan
User avatar
rocketdog
Executive Member
Executive Member
Posts: 688
Joined: Fri Dec 07, 2012 3:35 pm

Re: Stocks Crashing! Thank God For The PP!!

Post by rocketdog » Sun Jan 17, 2016 11:12 am

MediumTex wrote:
dutchtraffic wrote:
MediumTex wrote: Why?

If anything, now seems like the time to be buying stocks, not selling them.
Stocks are still insanely overvalued.
But they are less overvalued than they were when everyone thought buying them was a good idea.

The best time to buy stocks is when everyone hates the stock market the most, but it's not a terrible time to buy when only most people hate the stock market a lot.
I advise any investor to adopt a contrarian attitude, at least to some extent.  Nobody likes to see the value of their portfolio go down, but unless you need the cash flow you have to look at it as "Everything is on sale!"  As long as you're still dollar-cost averaging into your investments, don't sweat the short-term gyrations. 

After all, do you waste time tracking the daily changes in the value of your house and then fret whenever it dips? (assuming you're not about to sell it, of course.)
The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.
- H. L. Mencken
User avatar
rocketdog
Executive Member
Executive Member
Posts: 688
Joined: Fri Dec 07, 2012 3:35 pm

Re: Stocks Crashing! Thank God For The PP!!

Post by rocketdog » Sun Jan 17, 2016 11:24 am

ochotona wrote:
var wrote: +1

Yup buy on nice pull backs that said. A few more down days I'll start buying. 
That's why don't even watch CNBC they'll talk PE. China down. Etc.  then at some point
You'll be. In panic.

Also correct me if I am wrong.  Boggle heads don't use TLT.  they rather use diversified bond fund. 
I think TLT is a key pp criteria.
So how will you feel in October 2016 if the shares you buy next week "on the dips" based on gut feel are worth half of what you paid for them?

My guess is, you'll be selling them to me at that time.
See, I'm a contrarian, so whenever that happens I think "Sweet!  It's even more attractively priced now!  Time for me to stock up!"  I never sell an investment at a loss.  I have the patience of a saint and can wait years for my bets to pay off.  That's the beauty of the market cycle: it's a cycle.

That happened when I bought some VDE about a year ago, partly as an inflation hedge.  Oil of course has tanked since then, so as soon as it seems to bottom out I'll scoop up some more VDE at firesale prices to lower my cost basis.  Might be a while before it bounces back, but I've got a 10+ year time horizon, and the world's energy needs are not about to diminish.

Who says you can't catch a falling knife?  ;D
The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.
- H. L. Mencken
Libertarian666
Executive Member
Executive Member
Posts: 5994
Joined: Wed Dec 31, 1969 6:00 pm

Re: Stocks Crashing! Thank God For The PP!!

Post by Libertarian666 » Sun Jan 17, 2016 1:27 pm

rocketdog wrote:
Who says you can't catch a falling knife?  ;D
I don't think anyone says you can't, just that you shouldn't.

Not that I'm against being a contrarian, of course.
var
Full Member
Full Member
Posts: 55
Joined: Thu Jan 07, 2016 11:12 pm

Re: Stocks Crashing! Thank God For The PP!!

Post by var » Sun Jan 17, 2016 1:34 pm

ochotona wrote:
var wrote: +1

Yup buy on nice pull backs that said. A few more down days I'll start buying. 
That's why don't even watch CNBC they'll talk PE. China down. Etc.  then at some point
You'll be. In panic.

Also correct me if I am wrong.  Boggle heads don't use TLT.  they rather use diversified bond fund. 
I think TLT is a key pp criteria.
So how will you feel in October 2016 if the shares you buy next week "on the dips" based on gut feel are worth half of what you paid for them?

My guess is, you'll be selling them to me at that time.
I will be fine that's what asset allocations about.  If spy goes down and Tlt will go up.
Post Reply