pp and inflation. How is calculated on performance charts

[Arturo]

Hi everybody,

i am starting to research about PP, and i have 3 small doubts i am sure are not complex, but i couldn't find anywhere.

1. The first one. On internet, there are some charts that offers information about PP performance, like this ones:

https://web.archive.org/web/20160324133 ... l-returns/

http://harrybrowne.org/PermanentPortfolioResults.htm

http://europeanpermanentportfolio.blogs ... folio.html

when we read this charts, is it supposed that inflation is already substract? if we go to crawling road pp table, we obtain a result CAGR of 9.7%. Is this number after inflation? if we go to the USA European Portfolio 1972-2011 table, is the 9.8% average pp performance after inflation, i mean, with 4.5% average inflation substracted? The same with Harry Browne charts?

I am sure i am asking a very basic question, but to me its not that obvious since this charts never clarify this detail.

2. My second question about inflation is about how you calculate it. Lets say i invest 1000$ in PP, and after 1 year, i obtain 1100$. In a first approach, we could say i obtain a return of 10%, but, is this 10% the real return? or i should substract the inflation of this year? lets say it was 3%,  so the real pp return was 7% (lets say for building a chart), but the return i had was 100$ (10%). Could someone give me a clue about where i am having the theorical issue here? :-)

i would like to give my thanks to everybody for giving me the opportunity of writting here and being able to solve my doubts.

Regards,

Arturo.

[Gumby]

Here's one attempt at adjusting for inflation that I did awhile back... http://gyroscopicinvesting.com/forum/ht ... ic.php?t=9

[craigr]

Best way to adjust for inflation is to get the average return and CPI figure for that year and calculate the return. The chart I have listed on the website does not have inflation removed as is standard. In the book we published we actually do present numbers inflation adjusted because that gives readers the best view into performance. I may update the performance chart with these figures in the future when I get the time.

For now, you can use Simba's spreadsheet as he does include two values of pre and post inflation return numbers to get the information you are after.

[MachineGhost]

1928 -1.16%
1929 0.58%
1930 -6.40%
1931 -9.32%
1932 -10.27%
1933 0.76%
1934 1.52%
1935 2.99%
1936 1.45%
1937 2.86%
1938 -2.78%
1939 0.00%
1940 0.71%
1941 9.93%
1942 9.03%
1943 2.96%
1944 2.30%
1945 2.25%
1946 18.13%
1947 8.84%
1948 2.99%
1949 -2.07%
1950 5.93%
1951 6.00%
1952 0.75%
1953 0.75%
1954 -0.74%
1955 0.37%
1956 2.99%
1957 2.90%
1958 1.76%
1959 1.73%
1960 1.36%
1961 0.67%
1962 1.33%
1963 1.64%
1964 0.97%
1965 1.92%
1966 3.46%
1967 3.04%
1968 4.72%
1969 6.20%
1970 5.57%
1971 3.27%
1972 3.41%
1973 8.71%
1974 12.34%
1975 6.94%
1976 4.86%
1977 6.70%
1978 9.02%
1979 13.29%
1980 12.52%
1981 8.92%
1982 3.83%
1983 3.79%
1984 3.95%
1985 3.80%
1986 1.10%
1987 4.43%
1988 4.42%
1989 4.65%
1990 6.11%
1991 3.06%
1992 2.90%
1993 2.75%
1994 2.67%
1995 2.54%
1996 3.32%
1997 1.70%
1998 1.61%
1999 2.68%
2000 3.39%
2001 1.55%
2002 2.38%
2003 1.88%
2004 3.26%
2005 3.42%
2006 2.54%
2007 4.08%
2008 0.09%
2009 2.72%
2010 1.50%
2011 2.96%