Are you buying, holding, or selling the PP?

[dualstow]

And I don't think words like "apostate", "panic", and "greedy" are very helpful.

I certainly didn't mean any offense by them. It's not like I'm above any of the same temptations or emotions.
Feel free to substitute gentler words in there.

[mathjak107]

yep , the insurance has to make sense and be practical .

you know here in ny aflac was not allowed to sell policy's here for many years .

the state insurance  board  felt selling insurance for single diseases or accidents  was basically taking peoples money for things that are so unlikely to occur to them while still  in the work place.  they would be better served getting better health insurance , getting  disability insurance and a host of other things that offer better deals with greater chance of the outcome happening .

you have to really question if the money you tied up in insurance like gold lost so much money giving up potential gains if invested elsewhere that even if it paid off and doubled or tripled from the levels it fell to  you would still be behind where you would have fallen to from the calamity had you invested the insurance money elsewhere .

so yep like any insurance you have to weight the costs vs potential outcome  damage vs likely hood of playing out .. .

that to bernstein is where harry's plan drops the ball  . the least likely to play out gets the same amount of money as the most likely  which is not how you would buy insurance .

[dragoncar]

I guess the strange part for me is that the PP is supposed to be a strategy you can stick to so that you don't have to have a 2008/2009 panic and abandon it.  Unfortunely, we are having a mad rush for the exit doors on a couple of down but not terrible years.  I too am calculating my end of year gold purchase.

I will begrudgingly admit that mathjak has a point here. I don't think pp apostates panic. They get greedy. They see their friends with stock-heavy portfolios bragging about success when stocks are up. Or even sans bragging, they see the S&P climb. I get that. I was stock-heavy right up until 2010. 

It can be tricky for some of us to maintain faith while stocks are rising. With the other assets, I don't think it'd be an issue. I don't think very many people are clamoring for an all-gold portfolio, even when gold is US$1800/oz.

I guess it's all about discipline.

The biggest problem I have with the PP is the same reason I don't short the S&P 500 or bet the "don't pass" line in craps -- simply I want to be an optimist.  For the PP to outperform the S&P500, bad things have to happen to the world.  I understand that may be inevitable, but I don't want to sit here hoping for another global financial crisis just to outperform my peers.

[Libertarian666]

I guess the strange part for me is that the PP is supposed to be a strategy you can stick to so that you don't have to have a 2008/2009 panic and abandon it.  Unfortunely, we are having a mad rush for the exit doors on a couple of down but not terrible years.  I too am calculating my end of year gold purchase.

I will begrudgingly admit that mathjak has a point here. I don't think pp apostates panic. They get greedy. They see their friends with stock-heavy portfolios bragging about success when stocks are up. Or even sans bragging, they see the S&P climb. I get that. I was stock-heavy right up until 2010. 

It can be tricky for some of us to maintain faith while stocks are rising. With the other assets, I don't think it'd be an issue. I don't think very many people are clamoring for an all-gold portfolio, even when gold is US$1800/oz.

I guess it's all about discipline.

The biggest problem I have with the PP is the same reason I don't short the S&P 500 or bet the "don't pass" line in craps -- simply I want to be an optimist.  For the PP to outperform the S&P500, bad things have to happen to the world.  I understand that may be inevitable, but I don't want to sit here hoping for another global financial crisis just to outperform my peers.

Actually, that's one of the reasons that I have a gold-heavy portfolio.

If the world is ticking along fairly well, my portfolio will probably underperform a more conventional one. But my life will also be ticking along fairly well, and I'll probably be able to get a job if I need one.

If the world is going to hell, my portfolio will almost certainly far outperform a more conventional one. But I'll need that extra performance to pay the higher costs of living amid relative chaos; I also probably won't be able to get a job.

So having an "anti-prosperity" portfolio reduces my overall life outcome variance.

[Kbg]

If you believe the theory but don't like the weighting or the off cycle component then implement a momentum PP while tuning the risk profile with cash set at a percentage equivalent to your risk tolerance. This isn't that hard.

[ochotona]

If you believe the theory but don't like the weighting or the off cycle component then implement a momentum PP while tuning the risk profile with cash set at a percentage equivalent to your risk tolerance. This isn't that hard.

This is a great idea.

[sophie]

I am blown away at the doom and gloom on this site.  I am so glad that I became a PP investor at a much more positive time.  As a Chapter 11 Bankruptcy Attorney, I remember very well what stock heavy investors went through in 2008/2009. 

fi50, welcome to the forum!  It's not always doom & gloom...mainly it happens when gold takes a nosedive.

Mathjak and Budd definitely speak for a sizeable number of investors - PP or otherwise - in their complaints about how tracking error of the PP compared to some other portfolio hurts, when that tracking error is on the downside.  The problem is though, that such complaints will apply to ANY portfolio.  There is always going to be an investment that does better than the one you're currently holding (or contemplating).

The comments remind me of a newsletter that Harry Browne described, where an investment advisor claimed some enormous and not-believable number as a possible investment return for his clients.  It turns out that the number came from a group of 50 (or similar #) funds, tracked over 10 years, and an imaginary investment that involved buying the fund that turned out to be the winner each year.  Sort of like Decision Moose with a crystal ball.

Like fi50, I'm pretty happy with a stable investing plan with which I won't ever again have to see 90% of my retirement investments evaporate (no not exaggerating - I've told that story in other posts).  After that experience I have a hard time getting excited about a 1-2% loss.

Drumminj & dualstow, have fun drinking wine over the holidays, contemplating your finances and planning your gold purchases!

[Professor Disorientation]

Hi sophie,

I guess I can be described as a newbie. On December 16, 2014, I personally implemented my HBPP. Long-term bonds were high at the time. But whenever you begin your PP, some asset class will be overvalued and another will be undervalued.

Yes. I have noticed some animosity between forum members. This is to be expected. This doesn't stop me from perusing the forum. I have decided to implement two of Tyler's portfolios he mentioned on his website: The Ivy Portfolio and Swedroe's Minimizing Fat Tail's Portfolio. Actually I am a passive investor. The majority of my money is in HBPP, but I do have a portfolio comprised of penny stocks that I enjoy.

There has been an aura of gloom-and-doom regarding the HBPP. This is extremely bullish for me. When the sentiment is so pessimistic, the performance of the PP will turn around. All the naysayers will jump back on board and swear they will never leave again. This will happen. The market gyrates between greed-and-fear. It always has and it always will.

There is something that I have noticed about being in the HBPP. I'm more calm; and I know that whatever happens, I am covered.
Therefore, I can concentrate on other areas of my life.

What I find interesting is the HBPP is a capital preservation portfolio. The purpose is to preserve your capital with limited risk and grow it at a reasonable rate over time. This is boring and not very glamorous. The PP is going to lag behind in a bull market but it will help you sleep at night when all hell is breaking loose in the market.

Also the PP is an agnostic portfolio. No one knows what is going to happen tomorrow, next week, next month, next year or ten years from now. I'll place my bet on the PP for the next 10 or 20 years to grow my capital with less risk.

By the way, as of Friday, my HBPP is down -3.28% since inception. But I have been building cash slowly, and I am almost 35% in cash in the PP. I'll rebalance soon. This is the natural rhythm of the PP. I'm #1 on the choices you gave.

Michael 

[I Shrugged]

I'm letting mine drift with the intent of getting around to reducing the cash allocation.  I see the wisdom of having a baseline amount of cash.  Maybe a year's gross income or something like that.  With ZIRP, I can't see holding more than that.  If interest rates go up, I can see letting cash accumulate again. 

I know this is against HB's advice in more than one way.  But he never lived through ZIRP and probably would have thought it very unlikely to occur. 

I'm a bit stock heavy and gold light.  I'll put the excess cash into gold and short term bonds.  I think many of us are beginning to substitute short bonds for cash.

[mathjak107]

Hi sophie,

I guess I can be described as a newbie. On December 16, 2014, I personally implemented my HBPP. Long-term bonds were high at the time. But whenever you begin your PP, some asset class will be overvalued and another will be undervalued.

Yes. I have noticed some animosity between forum members. This is to be expected. This doesn't stop me from perusing the forum. I have decided to implement two of Tyler's portfolios he mentioned on his website: The Ivy Portfolio and Swedroe's Minimizing Fat Tail's Portfolio. Actually I am a passive investor. The majority of my money is in HBPP, but I do have a portfolio comprised of penny stocks that I enjoy.

There has been an aura of gloom-and-doom regarding the HBPP. This is extremely bullish for me. When the sentiment is so pessimistic, the performance of the PP will turn around. All the naysayers will jump back on board and swear they will never leave again. This will happen. The market gyrates between greed-and-fear. It always has and it always will.

There is something that I have noticed about being in the HBPP. I'm more calm; and I know that whatever happens, I am covered.
Therefore, I can concentrate on other areas of my life.

What I find interesting is the HBPP is a capital preservation portfolio. The purpose is to preserve your capital with limited risk and grow it at a reasonable rate over time. This is boring and not very glamorous. The PP is going to lag behind in a bull market but it will help you sleep at night when all hell is breaking loose in the market.

Also the PP is an agnostic portfolio. No one knows what is going to happen tomorrow, next week, next month, next year or ten years from now. I'll place my bet on the PP for the next 10 or 20 years to grow my capital with less risk.

By the way, as of Friday, my HBPP is down -3.28% since inception. But I have been building cash slowly, and I am almost 35% in cash in the PP. I'll rebalance soon. This is the natural rhythm of the PP. I'm #1 on the choices you gave.

Michael

the question though is what is grow at a reasonable rate mean and will it ?

we used to tease a friend of mine  and tell him he had the easiest job  in the world .  he married a virgin so she never knew if he was good or bad  lol.

you need a benchmark to know how you are doing . it does not have to be indexes you are comparing too either .

i have a few that i use to judge things .  i used to compare to index's but now in retirement the goal posts moved .

my first benchmark is am i generating enough in retirement to meet my goals for income and some legacy money  ?

next is if i did nothing at all but bought a cd that year is what i am doing worth doing ?

also , lately my benchmark is the pp since i do not use it . i was going to but felt it was not for me  so now i need to see if my decision was right or wrong . in the past my decision not to do it grew a whole lot more money then i would have . so now that i retired and toned my investing down i am curious to compare the two  portfolio's and do that here weekly . as of friday my own model was 110k ahead this year  but that can change .

my model trades a bit of volatility for hopefully a lot more dollars .

so without some form of expectation you do not know whether  whatever you are doing is costing you to much  in growth  given up as a trade off ..    charts of the past do not matter much , it is only going to be about your balance and your time frame  so if you need the money the trade off may be hurting you long term  unless you have a benchmark to compare to . .

i would love to use nothing more than cd's ,tips and short term bonds if i could but my budget precludes doing that and the safest investments would become the most riskiest to  income failure if i did .  so we can't always make that trade off for what we perceive as the safer route because in the end that safer route may turn in to the riskiest choice once you need to live on your own crops but fall short .

not that i am advocating it but 100% stock in retirement actually proved to be over 90%  less risky than just bonds and cash over 110 rolling 30 year time frames going back to 1926 and including the great depression , the world wars  and every other horrible time frame .

so here we have the safest choices  turning in to the riskiest at the end of the day because to  to much growth was given up ..

but if you have a lot of money saved up and need little of it to live on , or you have a pension , you may not need that growth so those tips an short term bonds may work very well for you .

so the other question is who are you investing for  ?  yourself to live on  ?  legacy money for heirs ?  those are two very different paths you may want to take with different strategy's .

so one needs to evaluate their total situation or goal  to know  how much volatility they need to take on .  in the end what you need to do is going to be determined by your financial needs and that does not always coincide with the lower volatility you would like .

not growing your own money enough and counting on  the remote flyers to bring everything else down  so you can do well may not be the best plan either . counting on your own working ability may not work out either if your health does not  allow it . 

i always felt i worked hard for my money so i want my money working hard for me  especially if i may not be able to work hard for my money .

[ochotona]

Hebrews 2:7 - "You made him a little lower than the angels, yet you crowned him with glory and honor"

I think of the PP as a little better than the bonds

[mathjak107]

Hebrews 2:7 - "You made him a little lower than the angels, yet you crowned him with glory and honor"

I think of the PP as a little better than the bonds

my planning number is about 3-4%  near term for a 50/50 mix .  anything better will be a welcome  upside surprise .

i figure at best intermediate and short term  bonds will return zero to the coupon rate and equity's about 6% unless earnings pick up a lot .. my guess is at least 5 years of sub average returns .

i wouldn't attempt to guess with long term bonds and gold .  i have no idea if better or worse but my gut feeling is once rates rise  farther then they have , less of a return for the pp  unless some calamity strikes .

[MWKXJ]

[The biggest problem I have with the PP is the same reason I don't short the S&P 500 or bet the "don't pass" line in craps -- simply I want to be an optimist.  For the PP to outperform the S&P500, bad things have to happen to the world.  I understand that may be inevitable, but I don't want to sit here hoping for another global financial crisis just to outperform my peers.

In my opinion, there's no need to sit here hoping; the crisis is demographic and the die is cast.  I hold a over-insured standard PP allocation because I believe that a nation is an organic expression of its people.  The end of Euro-America will be the beginning of something different ...quite possibly dysfunctional, like the heavily minority schools and neighbourhoods I experienced growing up, yet many times larger and far more fragile.

[buddtholomew]

Hey look gold's up...not. Take a guess whether the PP is up or down.

[dutchtraffic]

Hey look gold's up...not. Take a guess whether the PP is up or down.

You are seriously going to look at it daily? Do you understand it can easily go down for another 6 years before turning to a bullmarket again...?

[dualstow]

Hey look gold's up...not. Take a guess whether the PP is up or down.

I take it you are selling the pp.

[sophie]

A small observation....

Approximately half of those who voted hold a vanilla PP.  Another ~20% are holding or aspiring to hold a modified version of the PP.

Meanwhile, 12 of 40 posts (30%) are negative - and that doesn't count the responses to them.

For those of you who have been perhaps influenced by the negative/doom and gloom opinions on the forum, realize that they reflect only a minority of the opinions of active forum members.  Also, of course, there's not really a lot to say about the PP as there's been so much discussion already, so it's natural that opinions are going to be dominated by PP current events - which are not nearly as favorable to the PP as they are to traditional stock/bond portfolios.

May I request that people about to jump in with strongly negative posts be just a bit more respectful of the other opinions on the forum?  Particularly when you're just repeating stuff you've said a gzillion times already.  We get it.  Nobody is forcing you to buy into the PP, but it looks like you're actively trying to convince everyone else here to avoid it.  Why is that?

[buddtholomew]

A small observation....

Approximately half of those who voted hold a vanilla PP.  Another ~20% are holding or aspiring to hold a modified version of the PP.

Meanwhile, 12 of 40 posts (30%) are negative - and that doesn't count the responses to them.

For those of you who have been perhaps influenced by the negative/doom and gloom opinions on the forum, realize that they reflect only a minority of the opinions of active forum members.  Also, of course, there's not really a lot to say about the PP as there's been so much discussion already, so it's natural that opinions are going to be dominated by PP current events - which are not nearly as favorable to the PP as they are to traditional stock/bond portfolios.

May I request that people about to jump in with strongly negative posts be just a bit more respectful of the other opinions on the forum?  Particularly when you're just repeating stuff you've said a gzillion times already.  We get it.  Nobody is forcing you to buy into the PP, but it looks like you're actively trying to convince everyone else here to avoid it.  Why is that?

I wish there were more negative opinions of the PP when I was researching portfolios. All I remember was a book and posts about how awesome the portfolio was. It's called a reality check Sophie.

[Tyler]

as always investors who do the wrong thing at the wrong time paid the price for their own bad behavior not the markets results  . .

+1.  I don't personally agree with your particular portfolio prescription, but the diagnosis is spot-on. 

I've always believed that the worst time to make a big change in life is when you're angry, depressed, or otherwise emotional.  You inevitably regret that decision.  That applies to pretty much anything -- relationships, career, money, etc. 

The time to sell a portfolio is not when you're upset.  That pattern is extremely likely to repeat no matter what temporary fix you choose.  In fact, if investing is such an emotionally charged issue for you that you're cursing daily gyrations of individual assets or railing against various portfolios (yours or others) on message boards all day, then you really need to step away for a while.  That kind of mindset is toxic both emotionally and financially.

FWIW, I feel no need to change my investments.  My personal financial system is much larger and more sustainable than simply waiting for the fickle markets to provide, and I do not need my portfolio to always do great every singe day, week, month, or even year for my ultimate financial goals to be met.  As a result, my happiness is completely independent of the markets.

[mathjak107]

the time to ask or think about selling is when markets are going up . when they are sliding the only question should be what do we buy or re balance .

[koekebakker]

I'm holding a eurozone PP in taxable and a traditional stock/bond portfolio in my retirement accounts.

I've stopped trying to bring those two portfolios together as I have very little choice in the retirement accounts.

No idea why there's so much negativity on this board. The PP is doing what it's supposed to do. Fortunately the poll shows that support for the PP is still strong on this forum.

[mathjak107]

it better be strong here , this is the pp forum . if not here where else ?

[dutchtraffic]

I don't think the low returns for the last few years are a reason to worry, i think it's the low returns PLUS the fact that it looks absolutely horrible right now.
With both bonds and stocks being overvalued @ twilightzone levels, something's got to give, stocks should easily be -50% to be at fair value, and let's not even talk bonds.

And with rates staying at 0 or close to 0 (come on let's get real they can't and won't raise, at least not meaningful), this is unlikely to change anytime soon.
Yes, the PP has looked horrible before, but this, has simple never happened before, nobody knows the outcome, not Yellen either.

Can gold save them both, that's the question.

/edit

And yes I am still holding a EU PP, which is even crazier, with longterm bonds yielding around 1%, and having to PAY to hold shortterm bonds, it just doesn't look great.

[dragoncar]

A small observation....

Approximately half of those who voted hold a vanilla PP.  Another ~20% are holding or aspiring to hold a modified version of the PP.

Meanwhile, 12 of 40 posts (30%) are negative - and that doesn't count the responses to them.

For those of you who have been perhaps influenced by the negative/doom and gloom opinions on the forum, realize that they reflect only a minority of the opinions of active forum members.  Also, of course, there's not really a lot to say about the PP as there's been so much discussion already, so it's natural that opinions are going to be dominated by PP current events - which are not nearly as favorable to the PP as they are to traditional stock/bond portfolios.

May I request that people about to jump in with strongly negative posts be just a bit more respectful of the other opinions on the forum?  Particularly when you're just repeating stuff you've said a gzillion times already.  We get it.  Nobody is forcing you to buy into the PP, but it looks like you're actively trying to convince everyone else here to avoid it.  Why is that?

I wish there were more negative opinions of the PP when I was researching portfolios. All I remember was a book and posts about how awesome the portfolio was. It's called a reality check Sophie.

Me too, that said I noticed the same thing as Sophie and I'm kinda surprised how few people voted that they switched to 60/40.  I think without the negative posts and helpful responses here, I might have jumped ship long ago.  So thanks to all posters

[koekebakker]

it better be strong here , this is the pp forum . if not here where else ?

Anywhere but here I'd say, it's your private forum.

@Dutchtraffic. Wether bonds and stocks are overvalued is pure speculation. And if they are that would mean that most investment strategies are in the same boat and that the PP might actually be one of the better options right now.