"The PP Up/Down Today" is Misleading

[TripleB]

I frequently read people posting the status of the PP on any given day. I'm guilty of this myself. It's misleading because a 4x25 PP is not what people who use the PP have in the real world. Using the 15/35 recommended bands, it's very likely someone could have:

16% Stocks
34% Bonds
18% Cash
32% Gold

which could have a wildly different 1 day return from a 4x25. Just something to think about that when you enter the PP will determine your return as someone who enters into a perfect 4x25 today will have a different return than someone who rebalanced into 4x25 several months ago.

Perhaps someone will better Excel skills than myself could calculate the historical variation of the PP depending on when the initial entry event occurred (which will skew future rebalancing events as well). This too might also be meaningless because people will constantly be contributing new money to the PP in theory, and thus skewing the results as well depending on which assets they contributed to. It would be interesteing to see how much of a standard deviation from the baseline 4x25 PP could occur based on entry date. I would guess it's between 2% and 5% difference from the return of a composite model 4x25 that is rebalanced daily

[moda0306]

One could do a reasonable guesstimate as to this effect, at least on draw downs, by looking at whether the preceding year before a PP asset shock-drop was good vs bad for that asset.  It's likely that if the prior year was quite good, but didn't result in a rebalance at year end, it would be quite a bit rougher a ride in the next year if that asset fell considerably than if you tracked a 4x25 portfolio rebalanced annually.