Most Appealing Aspect of PP Strategy

[Stunt]

I've been lurking the forums for a while after reading the Permanent Portfolio book from Craig Rowland [mod CraigR: and J.M. Lawson!]. I enjoy the discussions, debate and analysis completed by members of the forum. I am interested in knowing what appeals to each member the most about the PP strategy understanding all items are appealing.

(Apologies for not recognizing both authors)
Interested to hear what Rowland and Lawson's MOST appealing aspect is...

[frugal]

I would like to know also the sizes in USD of PPs of this forum users

Just to understand more the profile.

This study (POLL) already done here?

[buddtholomew]

I would like to know also the sizes in USD of PPs of this forum users

Just to understand more the profile.

This study (POLL) already done here?

The size of the portfolio is irrelevant. Speaking in terms of percentage gain or loss ensures a common perspective for all investors.

[LifestyleFreedom]

I like the HBPP because its construction is based on strongly-noncorrelated-but-volatile asset classes that can be easily managed by individual investors to make a low-volatility portfolio.  I find it easier to plan a withdrawal strategy for retirement when a portfolio exhibits a low volatility (at least historically the HBPP does).

HB developed the PP for a fiat currency world where individuals can also own gold.  Also required to make the PP work are investments that represent the entire stock market (index funds) and the availability of long-term sovereign bonds.  If any of there underlying requirements change, the HBPP is in danger of not working as originally conceived by HB.

Fiat currencies are also confidence currencies.  Governments can declare that their currencies are legal tender by fiat, but the general population also must accept the currencies as legal tender for this currency decree to work.  If the general population ever loses confidence in a fiat currency, they will not use it.  Sometimes, hyperinflation results when people try to convert their worthless fiat currency into other assets.

Read When Money Dies for a good description of what happens when people lose confidence in their fiat currency.

When Money Dies: The Nightmare of the Weimar Collapse
http://thirdparadigm.org/doc/45060880-W ... y-Dies.pdf

Will fiat currencies ever go away because the world has lost confidence in them?  I don't know.  Will countries ever nationalize gold again (as the United States did during the 1930s)?  I don't know.  These possibilities are what keep me from putting all of my money in the HBPP strategy of investing.

[frugal]

I would like to know also the sizes in USD of PPs of this forum users

Just to understand more the profile.

This study (POLL) already done here?

The size of the portfolio is irrelevant. Speaking in terms of percentage gain or loss ensures a common perspective for all investors.

I don't think it is irrelevant.

IMHO it is not

[buddtholomew]

I would like to know also the sizes in USD of PPs of this forum users

Just to understand more the profile.

This study (POLL) already done here?

The size of the portfolio is irrelevant. Speaking in terms of percentage gain or loss ensures a common perspective for all investors.

I don't think it is irrelevant.

IMHO it is not

I have 20 million invested in the PP. How do you intend to use this information? A better question is what % of your personal net worth is invested in the PP - If I am worth 400 million, then I only have committed 5% of my available capital to the strategy.

[Stunt]

I am 75-80% PP... (Greater than $100k)
I was doing the couch potato method (passive stock and bond indexing, rebalancing annually) but am also a hard money advocate so the portfolio was perfect for me. 

[Gosso]

I went with the monetary cycle diversification.  It seems silly to expect that we will continue to grow at the rate between 1980 to 2000.

The steady real returns are also a big bonus, especially once the portfolio is needed to fund retirement.

[Bean]

Voted: Monetary Cycles

You can't predict if you will retire in a bull market of asset class <insert anything here>.  So you have to hedge for all potential economic cycles.

Also, I like measuring the value of stuff with other stuff. This portfolio helps me see undervalued assets classes.

[LifestyleFreedom]

I put 2% of my money in PRPFX two years ago as a test (in a taxable account).  I will increase this amount to 5% eventually.  I put 5% of my money in four ETFs a couple of months ago as a further test (in a retirement account).  I will increase this amount to 35% eventually.

I do not want to put more than 40% of my money in this investing strategy.  This limit is not based on any hard analysis; rather, it is based on gut instinct and how much I might be willing to lose if the PP does not work as originally envisioned by HB for whatever reason.

[globalcash]

The size of the portfolio is irrelevant. Speaking in terms of percentage gain or loss ensures a common perspective for all investors.

I don't think it is irrelevant.

IMHO it is not

I have 20 million invested in the PP. How do you intend to use this information? A better question is what % of your personal net worth is invested in the PP - If I am worth 400 million, then I only have committed 5% of my available capital to the strategy.

So, like where do you keep $5M worth of gold?  Do you have a sizable safe in the house?

I'm new to PP, and am trying to create a passable portfolio to simulate PP here in Asia.  My only problem is gold, since purchase of gold is not allowed in our country.

I'd need to make a trip to either Singapore or Hong Kong to purchase gold.

[frugal]

The size of the portfolio is irrelevant. Speaking in terms of percentage gain or loss ensures a common perspective for all investors.

I don't think it is irrelevant.

IMHO it is not

I have 20 million invested in the PP. How do you intend to use this information? A better question is what % of your personal net worth is invested in the PP - If I am worth 400 million, then I only have committed 5% of my available capital to the strategy.

Hi Budd,
as I told you, its important to know if it is a strategy used by "rich" or "poor" people...to see where we are...

I am 75-80% PP... (Greater than $100k)
I was doing the couch potato method (passive stock and bond indexing, rebalancing annually) but am also a hard money advocate so the portfolio was perfect for me. 

Hi Stunt,
the other 20-25% are applied in which assets? Can you share your VP, please.

I went with the monetary cycle diversification.  It seems silly to expect that we will continue to grow at the rate between 1980 to 2000.

The steady real returns are also a big bonus, especially once the portfolio is needed to fund retirement.

Voted: Monetary Cycles

You can't predict if you will retire in a bull market of asset class <insert anything here>.  So you have to hedge for all potential economic cycles.

Also, I like measuring the value of stuff with other stuff. This portfolio helps me see undervalued assets classes.

Hi Gosso

Hi Bean

can you please explain what you did : "Monetary Cycles" ?

I put 2% of my money in PRPFX two years ago as a test (in a taxable account).  I will increase this amount to 5% eventually.  I put 5% of my money in four ETFs a couple of months ago as a further test (in a retirement account).  I will increase this amount to 35% eventually.

I do not want to put more than 40% of my money in this investing strategy.  This limit is not based on any hard analysis; rather, it is based on gut instinct and how much I might be willing to lose if the PP does not work as originally envisioned by HB for whatever reason.

Hi LifestyleFreedom ,

you started with 2% and you will go up to 40% in HBPP?

What about the other 60-98% of your savings what are you doing ?





REGARDS TO ALL!

[Stunt]

Frugal,

Other 20-25% is in a few individual stocks (high dividend earning utility co, some oil exploration co's) and silver bullion.

[sophie]

HB developed the PP for a fiat currency world where individuals can also own gold.  Also required to make the PP work are investments that represent the entire stock market (index funds) and the availability of long-term sovereign bonds.  If any of there underlying requirements change, the HBPP is in danger of not working as originally conceived by HB.

The PP is actually a very robust strategy.  HB's original books talked about picking volatile stocks instead of indexing, because those funds weren't readily available at the time.  At least one member of this forum (normgcpa I believe) chose to buy individual stocks.  Also, there was a period (2002 - 2006) where 30 year US treasuries were not sold, and PPs at that time just went with the longest bonds available.

I put 2% of my money in PRPFX two years ago as a test (in a taxable account).  I will increase this amount to 5% eventually.  I put 5% of my money in four ETFs a couple of months ago as a further test (in a retirement account).  I will increase this amount to 35% eventually.

I do not want to put more than 40% of my money in this investing strategy.  This limit is not based on any hard analysis; rather, it is based on gut instinct and how much I might be willing to lose if the PP does not work as originally envisioned by HB for whatever reason.

Easing into the PP slowly is a good strategy for maintaining peace of mind.  As you get used to how stable this odd mix of volatile components and cash is, you may change your mind about how much you want to put into it, but there is no reason to rush in.

[christina]

as an imperfect person who becomes very discouraged when she loses money, I like the low volatility of the portfolio the best.

But I love the stock market, and it was very hard for me to choose the PP over dividend-paying stocks.

[Bean]

Voted: Monetary Cycles

You can't predict if you will retire in a bull market of asset class <insert anything here>.  So you have to hedge for all potential economic cycles.

Also, I like measuring the value of stuff with other stuff. This portfolio helps me see undervalued assets classes.

Hi Bean

can you please explain what you did : "Monetary Cycles" ?

I mean the second options to vote on.  This to me stands for a portfolio that is designed for the monetary cycles of Prosperity, Inflation, Depression, and Tight Money Recession.

[Spectre]

I went with the monetary cycle diversification.  It seems silly to expect that we will continue to grow at the rate between 1980 to 2000.

The steady real returns are also a big bonus, especially once the portfolio is needed to fund retirement.

The steady real returns in the drawdown phase of retirement is what led me on a search that eventually took me here.  I started reading a lot about how much damage "order of returns" can do to a retirement portfolio in the drawdown phase, and how hard it was to defend against it.  I started researching what the best solution was and that search eventually led me here, where I have been 100% PP for the last 2 years and very pleased with the very visible reduction in volatility while still providing a decent real-return...

[Gosso]

I went with the monetary cycle diversification.  It seems silly to expect that we will continue to grow at the rate between 1980 to 2000.

The steady real returns are also a big bonus, especially once the portfolio is needed to fund retirement.

The steady real returns in the drawdown phase of retirement is what led me on a search that eventually took me here.  I started reading a lot about how much damage "order of returns" can do to a retirement portfolio in the drawdown phase, and how hard it was to defend against it.  I started researching what the best solution was and that search eventually led me here, where I have been 100% PP for the last 2 years and very pleased with the very visible reduction in volatility while still providing a decent real-return...

Spot on.  I try to imagine what would have happened during the 70's to someone withdrawing 4% a year.  -2% real annual return for a 60/40 (increasing bonds wouldn't have helped), so that means their portfolio lost about 46% of it's purchasing power over the decade (I'm measuring from 1972-1982). 

I hope they treated their kids well.

[k9]

Interesting poll, while I was reading the possible answers, I thought "hmm, this one is good, but the next one is too" then I read about gold-bugs. Hah. Definitely gold-bug for me, even if the other aspects are fine too.

I think I discovered about the PP when I was looking for a way to include something besides gold in my portfolio. 100% gold is foolish, of course, I had a few cash beside it but didn't know when to buy & sell gold on a rational basis. Then I met the PP

[frugal]

Interesting poll, while I was reading the possible answers, I thought "hmm, this one is good, but the next one is too" then I read about gold-bugs. Hah. Definitely gold-bug for me, even if the other aspects are fine too.

I think I discovered about the PP when I was looking for a way to include something besides gold in my portfolio. 100% gold is foolish, of course, I had a few cash beside it but didn't know when to buy & sell gold on a rational basis. Then I met the PP

k9!

Why you love Gold?

Do you also like silver? For transactions if one day some disaster appears, silver coins makes more sense, no?


Regards 

[k9]

Silver is interesting for its volatility but it's hard to see what really drives its price (beside pure speculation, of course) as it is both a former monetary metal (although not as much as gold) and, more importantly, an industrial commodity. So it is hard to know if it could protect you in a hyperinflation (well, I guess it would, but I think gold will be better) or a government default. In the same time, it could do much better than gold during prosperity. In other words, it is interesting in a VP, probably not in a PP (unless you are not allowed to buy gold at all).

As for bartering, I don't really know. There are not many places where silver is used more than gold when SHTF. In Argentina, you sell your gold to a local dealer against dollars (or even pesos) when you need cash and use that cash. You don't pay directly with gold or silver. In Zimbabwe, they used dollars, once again, or even directly gold powder to buy bread (and not silver coins) ; the reason is, you can "easily" find gold in the rivers over there. If SHTF really bad and you have to barter, useful items will probably hold more value than precious metals, anyway (eggs, grains, alcohol, tobacco, drugs, ...). Gold is useful to protect your belongings when the money crashes and until another sound money appears, not to be used on a day to day basis.

The other appeal of gold is that you can take it with you over the borders if a dictatorship starts ruling your country. Silver uses much more space than gold.Taking 10 oz of gold is easier than taking a 400 oz bar of silver (or the equivalent in coins).

[frugal]

Silver is interesting for its volatility but it's hard to see what really drives its price (beside pure speculation, of course) as it is both a former monetary metal (although not as much as gold) and, more importantly, an industrial commodity. So it is hard to know if it could protect you in a hyperinflation (well, I guess it would, but I think gold will be better) or a government default. In the same time, it could do much better than gold during prosperity. In other words, it is interesting in a VP, probably not in a PP (unless you are not allowed to buy gold at all).

As for bartering, I don't really know. There are not many places where silver is used more than gold when SHTF. In Argentina, you sell your gold to a local dealer against dollars (or even pesos) when you need cash and use that cash. You don't pay directly with gold or silver. In Zimbabwe, they used dollars, once again, or even directly gold powder to buy bread (and not silver coins) ; the reason is, you can "easily" find gold in the rivers over there. If SHTF really bad and you have to barter, useful items will probably hold more value than precious metals, anyway (eggs, grains, alcohol, tobacco, drugs, ...). Gold is useful to protect your belongings when the money crashes and until another sound money appears, not to be used on a day to day basis.

The other appeal of gold is that you can take it with you over the borders if a dictatorship starts ruling your country. Silver uses much more space than gold.Taking 10 oz of gold is easier than taking a 400 oz bar of silver (or the equivalent in coins).

So, for commerce if the SHTF, to buy food and primary items, gold will work better?

For physical coins which racio you would recommend me ? 2:1 on value of silver to gold

Hug!

[k9]

I THINK gold would be better based on recent examples, or precisely silver would do no better. If bartering small items becomes widespread, there won't be enough people having silver coins, anyway. Barter would probably be based on everyday's items, say, an egg for a lemon, something like that. You probably won't go to your neighbor's every day and give him a silver coin for him to give back a loaf of bread and a cabbage. Gold & silver would be used for big (or rather big) purchases, IMO.

But in SHTF-world you won't get your change back, so you better have what US citizens call "fractional" gold coins (a sovereign or a 20F is such a beast as it is much less than an ounce) and even a few silver coins, but I think the equivalent (in value) of 2-5 of your coins is enough. It's used as small change, you don't need much. When you have cash in your wallet, you don't have half of your euros in banknotes and half in 1 cent coins, right ? Well, that's the same idea.

This is my personal opinion on this subject, however, I know many would disagree.

[frugal]

K9,

I'll open new thread, its better.

[doug6zj9]

...I do not want to put more than 40% of my money in this investing strategy.  This limit is not based on any hard analysis; rather, it is based on gut instinct and how much I might be willing to lose if the PP does not work as originally envisioned by HB for whatever reason.

Well,  then please share with us what strategy is employed for the other 60% that apparently IS guaranteed to work as envisioned?