Setting up an ETF PP

[portart]

I sold 800k of PRPFX today and need to allocate it Friday morning. I am keeping some in case we get back into inflation which would make the fund rock, assuming gold doesn't continue to tank. The expenses are too high in PRPFX for the lack of movement in the fund for the last three years. If I am not going to make money, I might as well consider a gain in savings of costs like a gain by using ETFs. Any thoughts how your would break down an $800,000 PP in today's ETF world going forward? Which ones and how much in each? Thanks so much!

[Ad Orientem]

$800k in a traditional (level I) 4x25% HBPP...

$200k in TLT
$200k in SHV or SCHO (depending on risk tolerances for cash)
$200k in IAU
$200k in VTI (VT is an acceptable alternative if you want a little international exposure)

Reinvest dividends unless the account is taxable, in which case I would put them in the cash fund.

[portart]

Thank you… If you want to hedge your gold with some Bitcoins, is there a way to do that? This is in case gold tanks as an alternate currency for bit coins.

[Ad Orientem]

Thank you… If you want to hedge your gold with some Bitcoins, is there a way to do that? This is in case gold tanks as an alternate currency for bit coins.

Bitcoins are strictly a Variable Portfolio play. I would not in any way put them on the same level as gold. Remember gold is there to hedge against severe inflation or an SHTF type disaster where you may need hard assets. Gold has been a universally accepted store of value for around 6,000 years. I don't think Bitcoins have that pedigree. Further... can you carry Bitcoins around on your person?

[Ad Orientem]

P.S. to my last... while I am fine with ETF's for most of the PP assets I really do encourage people to hold at least some of their gold in physical form. That said IAU is probably your best choice if you want to go with an ETF.

[KevinW]

That ETF list looks pretty good, although it's worrisome that 75% of the assets are all at iShares, and I'd definitely use VTI and not VT. So my recommendation is: VTI, TLT, IAU, BIL . Also consider holding some physical gold.

[Ad Orientem]

That ETF list looks pretty good, although it's worrisome that 75% of the assets are all at iShares, and I'd definitely use VTI and not VT. So my recommendation is: VTI, TLT, IAU, BIL . Also consider holding some physical gold.

I concur with your concerns about too much with I Shares. SCHO is with Schwab though. Also I actually prefer VGLT to TLT even though TLT is closer to pure Treasury. Mostly just because I trust Vanguard a lot more than Black Rock.

[Tyler]

I personally use VTI/TLT/IAU/SCHO.

I like SCHO because 1) it lets me diversify fund holders away from Blackrock, and 2) its expense ratio is half that of SHY/SHV.

[dualstow]

I sold 800k of PRPFX today
... The expenses are too high in PRPFX for the lack of movement in the fund for the last three years. If I am not going to make money, I might as well consider a gain in savings of costs like a gain by using ETFs.

A savings of some $6K per year (minus the low ER of the pp ETFs). Not bad.

[portart]

Yes, I sold all my PRPFX except some in a taxable account. Its broken up in equal parts IAU, TLT, SHV and VTI. I have my VP in GDX, GDXJ and SLV (about 7% total here). Any venture to guess what I am saving a year now in fees from when I was in PPRFX? Schwab says I am up 3.88 YTD doing this w/out PRPFX.

[frugal]

Yes, I sold all my PRPFX except some in a taxable account. Its broken up in equal parts IAU, TLT, SHV and VTI. I have my VP in GDX, GDXJ and SLV (about 7% total here). Any venture to guess what I am saving a year now in fees from when I was in PPRFX? Schwab says I am up 3.88 YTD doing this w/out PRPFX.

For such a big amount, why don't you diversify with EUROPEAN PP too?

Regards!

[portart]

How would you comprise an EU pp?

[LC475]

I'd definitely use VTI and not VT.

Agreed.  VTI (total US stock market) is Permanent Portfolio.  VT (total world stock market) isn't.  The world stock market is not linked to any of the four exhaustive economic states.  Well, rather, only 50% linked, since the US market is 50% of the world market.  The US economy can be in any one of four states at any given time.  The genius of the PP is to have an asset that will be doing well at all four times, except for recession.  VT is an asset that messes that up.

You could say, "No, world stock market is up when the world economy is in prosperity."  OK.... then we need a whole new portfolio built for a whole new thing in order to have 100% temporal coverage.

World prosperity: all stocks in the world.  Check.
World deflation: ????
World inflation: ????
World recession: ????

I am not even sure what the terms "world deflation" and "world inflation" would mean.  How would they be measured?  Not with the greatest of ease, that's for sure.

So, if we can come up with three new assets that will do well, or as well as possible, in these three other time periods, then we will have a new thing called a World Permanent Portfolio.  Until then, there is only one actual Permanent Portfolio, in my opinion: the US Permanent Portfolio.  All others are confused mis-extensions which are not ideal and will not provide the same protection.