VP Success?

[AdamA]

I'm curious...

Is there anyone who has had consistent success within their VP?

I'm constantly trying to come up with ideas, but every time I think one through for long enough I ultimately conclude that it's unlikely to outperform my PP.

Any success stories?

[HB Reader]

Adam1226 --

FWIW -- that performance question can be harder to answer than it appears.

Nonetheless, I can make some reasonable estimates.  In some individual years, especially in the 1990's, my VP had a higher return.  But overall, especially in recent years, the PP approach has clearly been superior -- not to mention much less work and excitement. 

For many years (~1984 to 2003), I used PRPFX as a major "core" holding (along with some gold coins and LT Treasuries), but held it in some of the same regular and retirement accounts in which I actively traded my VP picks.  It has only been in recent years that I have kept the portfolios in separate accounts with automated records that permit truly reliable measurements.

As best I can determine, in the nineteen year period prior to early 2003 my VP investments returned about 6.7% -- almost exactly the same as PRPFX (with the gold coins and LT Treasuries) -- but with considerable swings -- especially down in 1987, 1990, 1994 and 2002 and up in 1988, 1991-92 and 1996 and 1999.

In the years since 2003, my VP investments have returned about 8.0% -- but with considerable swings down in 2008 (-23%) and up in 2003 (+30.7%) and 2010 (+25%).  My strict 4X25 HBPP over the same time period has returned about 11.6% -- but with considerably less volatility (a low return of about 1.5% in 2008 and a high of about 18% in 2009).  In my HBPP I have had the advantage of using the Federal TSP GFund and some high-yielding I Bonds as part of the cash portion.

I'll probably still keep plugging away with a VP (about 1/3 of the assets I manage for myself and a few others) for a few years since I enjoy the challenge and research involved, but my results have been humbling.  Hope springs eternal, I guess.

The 4x25 PP really is very hard to beat, especially if you consider the safety, stability and work factors involved.  So I don't consider my "VP experience" to be successful versus my "PP experience," although I must admit that during the late 1990's I did occasionally consider abandoning the PP strategy.       

[AdamA]

I'll probably still keep plugging away with a VP (about 1/3 of the assets I manage for myself and a few others) for a few years since I enjoy the challenge and research involved, but my results have been humbling.  Hope springs eternal, I guess.

HB Reader--

Your posts are fantastic.

Thanks for the info.

[Odysseusa]

The way I look at it is our hand has 4 fingers (Permanent Portfolio) and 1 thumb (Variable Portfolio). For VP, I invest mostly in dividend stocks. Once in a while, I like to invest in individual companies. Therefore, the VP is suitable to my liking. Please see below for my PP and VP.

[AdamA]

Please see below for my PP and VP.

Which is winning?

The reason I started the post was that it often seems pointless to me to employ a VP because I don't see one doing any better than my PP.

Was just curious if others had had any long term success with their VP's.

[Odysseusa]

Source: from the table of stocks above.

Bond +1,041
Gold -248
Cash -15
Stock -304
____________

PP = +474

VP: -34

Total: +474-34=440
____________


So far PP is winning on the basis of stock price appreciation.
However, I have not included dividends of PP and VP in this analysis.

[Storm]

My VP did really well from mid 2009 to mid 2011...   I actually sold much of my VP which consisted of APPL and ARMH mid summer so I can honestly say that for a 2 year period of time my VP outperformed the PP.

Just dumb luck, really.  Investing in tech stocks is great but you still get hurt in market downtrends.  I would say that long-term, AAPL is still a good play.  They own 97% (based on browser stats) of the tablet market, a market that is currently only 2% of global web traffic.

Certainly, if the tablet share of the market increases to even 20 or 30% and they maintain at least 50-75% of the tablet market share, there are some great earnings seasons ahead.  Mobile is the future.  Jobs knew what the computing environment would look like 10 or 20 years from now.

http://www.splatf.com/2011/10/ipad-usage-comscore/