Is the PP going to hold up?

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bitcoininthevp
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Re: Is the PP going to hold up?

Post by bitcoininthevp » Wed Feb 14, 2018 9:45 am

stuper1 wrote:
bitcoininthevp wrote:
I propose a portfolio which is a traditional permanent portfolio mix with a bitcoin variable portfolio sidecar.

Hows:
  • 24% gold
    24% cash
    24% stocks
    24% long term bonds
    4% bitcoin
Turns out the back testing is amazing.
Sure, the backtesting of that portfolio would be amazing at this point. It would be even better if you just put 100% in bitcoin. Do you really think that the next 9 years of bitcoin price increases will be anything like the last 9 years? I guess it could be, but how much money should one bet on that? For me, the answer would be: no more than I can afford to lose.
I should have indicated sarcasm for my back testing comment :)
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Re: Is the PP going to hold up?

Post by buddtholomew » Wed Feb 14, 2018 10:14 am

For the record I haven’t purchased TLT, still mulling it over and with today’s CPI number it looks less appealing now.
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Re: Is the PP going to hold up?

Post by Cortopassi » Wed Feb 14, 2018 10:17 am

Hope you bought gold.. :D
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Re: Is the PP going to hold up?

Post by craigr » Wed Feb 14, 2018 1:59 pm

Howdy folks!

I rebalanced from stocks in January and February as they hit the way upper band for me. I had overweighted stocks in my VP after Trump's election figuring it would be a good boost and it paid off well also.

But now I'm back again at the boring 25% bands as I usually am and am not too fussed about things. The market dip last week would have been scarier if I wasn't diversified. But even with the market dip, it is still up quite a lot from when Trump got into office so it's good to keep things in perspective.

I have been running this portfolio now for over 10 years at this point and the one thing I've learned is over time it all kind of works out. And by not owning too much of any one single asset, it's hard to get as badly burned as can happen with other allocations.

Hope all of you are well.
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Re: Is the PP going to hold up?

Post by blue_ruin17 » Sat Feb 17, 2018 1:06 pm

Good to hear from you Craig, and thanks for stopping by.

I always find it fascinating to witness my own reaction to market fluctuations... with the PP, you observe the market madness from what feels almost an out-of-body experience: even though a full quarter of my core assets are invested in a particular asset that has plunged, I am totally emotionally disconnected from any feelings of panic, impending doom, or even of mild anxiety. The zen-like poise that the PP allows you to assume even in the midst of severe volatility or panic really is one of the most important features built-in to the PP.
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Re: Is the PP going to hold up?

Post by dualstow » Tue Feb 20, 2018 12:19 am

aha, so that’s you in the avatar. O0
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Re: Is the PP going to hold up?

Post by blue_ruin17 » Tue Feb 20, 2018 2:21 pm

;)
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Re: Is the PP going to hold up?

Post by dualstow » Wed Feb 21, 2018 3:44 pm

Your kindred spirit, Budd?

https://www.bogleheads.org/forum/viewto ... 3#p3795060
(BOGLEHEAD fantasytensai)
What do I do with my bond funds that have been dropping like a rock? I'm already at 80/20 but I still feel absolutely screwed by my bond fund allocations. I have the risk tolerance for 90/10 but it just sickens me to sell VBTLX at such a huge loss.
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Re: Is the PP going to hold up?

Post by buddtholomew » Thu Mar 01, 2018 9:00 am

I'll answer the OP's question - No.
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Re: Is the PP going to hold up?

Post by Cortopassi » Thu Mar 01, 2018 10:09 am

Gold blows... ;)
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Re: Is the PP going to hold up?

Post by Tyler » Thu Mar 01, 2018 10:10 am

dualstow wrote:
(BOGLEHEAD fantasytensai)
What do I do with my bond funds that have been dropping like a rock? I'm already at 80/20 but I still feel absolutely screwed by my bond fund allocations. I have the risk tolerance for 90/10 but it just sickens me to sell VBTLX at such a huge loss.
??? I'm always fascinated when people's perception of their own risk tolerance is in such obvious opposition to their actual behavior.
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Re: Is the PP going to hold up?

Post by buddtholomew » Thu Mar 01, 2018 10:14 am

Cortopassi wrote:Gold blows... ;)
You got it.
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Re: Is the PP going to hold up?

Post by Roy » Thu Mar 01, 2018 11:05 am

Greetings,

I go back to the epic discussions on the other board, from 2008. I’m a nostalgic slob, even over things like this. Those talks remain my best memories regarding anything to do with investing, with Craig and Tex, and the usual suspects who joined in, and even the relative authorities who were big critics, but an important part of that discussion, or the why Gold is terrible threads, which always referred back powerfully to this concept.

There was always a reason (or a bunch) why the basic HBPP could not or should not work, or some part of it not work, and surely altogether would not work—going forward in the new normal of whatever month happened to be in focus.

How’d that turn out?


Yeah, this time is different (and here follows the well-argued reasons why…). Sure. So was pick-your-month of the last 10 years different, followed by the sometimes well-argued reasons whys.

“Is it different this time?,” someone asked here five years ago. I thought then and feel the same:

" I wonder how many times those five words have been used—and will be used— to justify the abandonment of a good plan. "


It is useful revisiting those threads—way back to the olden days—and what it felt like living through those times.

If one did not fret over the dailies, the experience was and remains, dust in the wind…


Volatile parts, sure. Valuations too rich, I suppose. Too funky, yep. But portfolio-as-a-whole rarely looked this good. Especially when not looking at it. I suspect much the same might be said 10 years from now.

Peace
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Re: Is the PP going to hold up?

Post by stuper1 » Thu Mar 01, 2018 11:24 am

I just went to etefreplay.com. Over the last 12 months, the PP is up 5.7%. Year to date, the PP is down 0.8%, which is exactly the same as a 60/40 stock/bond fund. I'm baffled by the angst in this thread.
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Re: Is the PP going to hold up?

Post by buddtholomew » Thu Mar 01, 2018 12:11 pm

stuper1 wrote:I just went to etefreplay.com. Over the last 12 months, the PP is up 5.7%. Year to date, the PP is down 0.8%, which is exactly the same as a 60/40 stock/bond fund. I'm baffled by the angst in this thread.
What is the 60/40 12-month return.
The PP goes down with stocks and when stocks go up the portfolio goes up 1/5 the amount.
That doesn’t disturb you?
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Re: Is the PP going to hold up?

Post by stuper1 » Thu Mar 01, 2018 12:24 pm

60/40 12-month return is 9.9%

Stocks have been on a 10 year tear, so of course the PP has been lagging. A 60/40 or 70/30 isn't going to look very good if we hit another 10-year stretch like 1998 to 2008. I know for me personally that having so many down years over that time frame would make it very hard for me not to capitulate and sell low. Having two assets (LTT and gold) that are uncorrelated to stocks/bonds helps smooth returns out a lot, without causing a huge reduction in long term returns.

I'm still a long ways from retirement, so I think 25% gold is too much. My personal allocation is about 45/20/20/15 in stocks/LTT/STT/gold.
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Re: Is the PP going to hold up?

Post by buddtholomew » Thu Mar 01, 2018 12:30 pm

stuper1 wrote:60/40 12-month return is 9.9%

Stocks have been on a 10 year tear, so of course the PP has been lagging. A 60/40 or 70/30 isn't going to look very good if we hit another 10-year stretch like 1998 to 2008. I know for me personally that having so many down years over that time frame would make it very hard for me not to capitulate and sell low. Having two assets (LTT and gold) that are uncorrelated to stocks/bonds helps smooth returns out a lot, without causing a huge reduction in long term returns.

I'm still a long ways from retirement, so I think 25% gold is too much. My personal allocation is about 45/20/20/15 in stocks/LTT/STT/gold.
Another poster not 4x25...
You have 45% in stocks and 15% in Gold.
Your experience is more like a BH portfolio than traditional PP which explains why you have a hard time understanding where I’m coming from.
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Re: Is the PP going to hold up?

Post by Cortopassi » Thu Mar 01, 2018 12:41 pm

buddtholomew wrote:
stuper1 wrote:60/40 12-month return is 9.9%

Stocks have been on a 10 year tear, so of course the PP has been lagging. A 60/40 or 70/30 isn't going to look very good if we hit another 10-year stretch like 1998 to 2008. I know for me personally that having so many down years over that time frame would make it very hard for me not to capitulate and sell low. Having two assets (LTT and gold) that are uncorrelated to stocks/bonds helps smooth returns out a lot, without causing a huge reduction in long term returns.

I'm still a long ways from retirement, so I think 25% gold is too much. My personal allocation is about 45/20/20/15 in stocks/LTT/STT/gold.
Another poster not 4x25...
You have 45% in stocks and 15% in Gold.
Your experience is more like a BH portfolio than traditional PP which explains why you have a hard time understanding where I’m coming from.
Budd,

So if you haven't already, tweak it to where you are ok with it. I am 35% stocks (mix), 10% cash, 25% gold, 5% silver, 25% LTT. Obviously not a 25/25/25/25 PP, but something I am happy with.
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Re: Is the PP going to hold up?

Post by stuper1 » Thu Mar 01, 2018 1:19 pm

Cmon, Budd, you have posted your overall portfolio many times. Mine is a lot closer to a PP than yours. The lesson I have learned from the PP is to keep a good percentage in LTTs and gold -- i.e., at least 10 to 15%, enough to actually make a difference -- because those things are either negatively correlated or uncorrelated with stocks and typical bonds.

One problem I have with the Bogleheads approach is that their idea of bonds is a total bond market index, which turns out to be highly correlated to stocks, just with muted peaks and valleys. By using a LTT/cash barbell approach to bonds, you get a lot smoother ride, especially with the gold added in.

You could look at my portfolio as a 60/40, but with 15% taken out of stocks and put into gold.
Last edited by stuper1 on Thu Mar 01, 2018 1:20 pm, edited 1 time in total.
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Re: Is the PP going to hold up?

Post by dualstow » Thu Mar 01, 2018 1:20 pm

Roy wrote:Greetings,

I go back to the epic discussions on the other board, from 2008. I’m a nostalgic slob, even over things like this. Those talks remain my best memories regarding anything to do with investing, with Craig and Tex, and the usual suspects who joined in, and even the relative authorities who were big critics, but an important part of that discussion, or the why Gold is terrible threads, which always referred back powerfully to this concept.

There was always a reason (or a bunch) why the basic HBPP could not or should not work, or some part of it not work, and surely altogether would not work—going forward in the new normal of whatever month happened to be in focus.

How’d that turn out?


Yeah, this time is different (and here follows the well-argued reasons why…). Sure. So was pick-your-month of the last 10 years different, followed by the sometimes well-argued reasons whys.

“Is it different this time?,” someone asked here five years ago. I thought then and feel the same:

" I wonder how many times those five words have been used—and will be used— to justify the abandonment of a good plan. "


It is useful revisiting those threads—way back to the olden days—and what it felt like living through those times.

If one did not fret over the dailies, the experience was and remains, dust in the wind…


Volatile parts, sure. Valuations too rich, I suppose. Too funky, yep. But portfolio-as-a-whole rarely looked this good. Especially when not looking at it. I suspect much the same might be said 10 years from now.

Peace
Nice! I like revisiting old threads, too. Should do that more often.
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Re: Is the PP going to hold up?

Post by buddtholomew » Thu Mar 01, 2018 1:22 pm

stuper1 wrote:Cmon, Budd, you have posted your overall portfolio many times. Mine is a lot closer to a PP than yours. The lesson I have learned from the PP is to keep a good percentage in LTTs and gold -- i.e., at least 10 to 15%, enough to actually make a difference -- because those things are either negatively correlated or uncorrelated with stocks and typical bonds.

One problem I have with the Bogleheads approach is that their idea of bonds is a total bond market index, which turns out to be highly correlated to stocks, just with muted peaks and valleys. By using a LTT/cash barbell approach to bonds, you get a lot smoother ride, especially with the gold added in.

You could look at my portfolio as a 60/40, but with 15% taken out of stocks and put into gold.
My taxable is 100% PP.
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Re: Is the PP going to hold up?

Post by stuper1 » Thu Mar 01, 2018 1:25 pm

Aren't you happy that it's up 5.7% in the last 12 months? Sure beats a savings account at the bank.

Keep in mind though that a PP has historically suffered drawdowns as much as 20% or more, so it's definitely not as safe as a savings account.
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Re: Is the PP going to hold up?

Post by buddtholomew » Thu Mar 01, 2018 1:29 pm

stuper1 wrote:Aren't you happy that it's up 5.7% in the last 12 months? Sure beats a savings account at the bank.

Keep in mind though that a PP has historically suffered drawdowns as much as 20% or more, so it's definitely not as safe as a savings account.
Personal CAGR for PP is around 4.25% since I started.
My 70/30 has tripled since 2008.
Can’t even compare the 2 with a straight face.
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Re: Is the PP going to hold up?

Post by stuper1 » Thu Mar 01, 2018 1:48 pm

That's the point. You shouldn't try to compare the two. They are two different things completely. Like trying to compare a giraffe with an orange.

One is higher risk/higher reward. The other is lower risk/lower reward. You get to choose. Just remember that when you pick "higher reward", you don't get to pick the timeframe when that higher reward will materialize. If it doesn't materialize until after you've already had to sell a bunch of your portfolio because you lost your job or whatever, or because you lost your nerve which is what happens to many people, then you're out of luck. Again, don't forget that 1998 to 2008 time period. It wasn't a pretty time to have a typical 70/30 portfolio.
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Re: Is the PP going to hold up?

Post by Cortopassi » Thu Mar 01, 2018 2:07 pm

buddtholomew wrote:
stuper1 wrote:Aren't you happy that it's up 5.7% in the last 12 months? Sure beats a savings account at the bank.

Keep in mind though that a PP has historically suffered drawdowns as much as 20% or more, so it's definitely not as safe as a savings account.
Personal CAGR for PP is around 4.25% since I started.
My 70/30 has tripled since 2008.
Can’t even compare the 2 with a straight face.
I was in American Century Ultra from 1989 (graduation) to about the internet bubble. I thought I could not lose. Look what happened. Would I like to go back and go PP all in from the day I had my first job? You bet. Ultra STILL hasn't recovered after 18 years.

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