Permanent Portfolio Blinders

[moda0306]

If you buy land, remember that you are relying on the society's respect of private property rights.  You can't put land in your pocket... it's easy for the government to take it off your hands for you when things get difficult.  I believe the US is still one of the safest places to assume that if you buy land the private property rights associated with it will at least in-part be respected.

Another thing to note:  I don't know how historically accurate it is, but in the show Mad Men, during the Cuban Missile Crisis, people are down right terrified about the future of the country.  1962, and people are fretting about the end of the world.  Also, in 1999, people were probably sick with optimism about the world and economy.  It's always hard to get outside the bubble of recency bias.

[moda0306]

doodle,

When governments get desperate, they grasp for straws.  One of those straws might be confiscation of "your" land.

You are taking huge risks by purchasing land (often priced based on leverage) in a country that has a short and rocky history of respecting property rights... especially of "rich" foreigners.

My uncle bought a chunk of land in Mexico and is in constant wonder as to whether it will be his 5 years from now.

[MediumTex]

MT,

To achieve that mental state of well being I feel I must make some adjustments to PP.

Do what makes sense to you.  

As far as land I have been looking at a number of places, in no particular order of importance.

Rural Appalachia WV, TN, mostly as well as parts of Texas....how is the Hill Country?

The Texas Hill Country is very nice.  Austin is expensive and congested, but if you lived a ways out that is a nice city to be close to.

Internationally, Southern Chile, Panama, potentially Southern Mexico.

If I feared political and economic instability I don't know if I would be thinking of moving to Mexico.  There are a lot of Mexicans in Texas who would agree with me.

Read up on Mexico's oil export situation if you want something else to worry about.

[Lone Wolf]

Also, in 1999, people were probably sick with optimism about the world and economy.

LOL.  Talking about how people "probably" felt in 1999 just made me feel about a thousand years old.

Pretty much an accurate characterization, at least as far as I'm concerned.  But I'm a Reagan-era kid and I've got a pretty big natural optimistic tilt anyway.

One day I will tell stories of what happened "back in 1999" and people will look at me like I just came stumbling out of a crypt.  Crazy to think about.  That was, like, yesterday.

[Gumby]

MT,

To achieve that mental state of well being I feel I must make some adjustments to PP.

As far as land I have been looking at a number of places, in no particular order of importance.

Rural Appalachia WV, TN, mostly as well as parts of Texas....how is the Hill Country?

Internationally, Southern Chile, Panama, potentially Southern Mexico

I prefer to stay in temperate climates. Cold weather doesn't suit me.

Oh....and Fiji.

I'm going to have to officially give up on this conversation at this point. Claiming the PP isn't conservative enough and moving off to the wilderness is where I draw the line in terms of rational investment dialog.

To have the same conversation with us, week after week after week — and your unwillingness to see any other points of view — I fail to see why you would want to start these conversations in the first place. You can't be reasoned with.

And if you can't be convinced otherwise, why are even having these conversations?

It strikes me as either trolling or larger cerebral issues. I just can't seem to figure out what your motive is.

...but either way, I'm done.

Only Doodle can help Doodle at this point.

[MediumTex]

Also, in 1999, people were probably sick with optimism about the world and economy.

LOL.  Talking about how people "probably" felt in 1999 just made me feel about a thousand years old.

Pretty much an accurate characterization, at least as far as I'm concerned.  But I'm a Reagan-era kid and I've got a pretty big natural optimistic tilt anyway.

One day I will tell stories of what happened "back in 1999" and people will look at me like I just came stumbling out of a crypt.  Crazy to think about.  That was, like, yesterday.

I remember listening to Prince singing about partying like it's 1999 back in jr. high and thinking to myself how absurdly far off in the future that was.  That was probably around 1984.

[MediumTex]

To have the same conversation with us, week after week after week — and your unwillingness to see any other points of view — I fail to see why you would want to start these conversations in the first place. You can't be reasoned with.

And if you can't be convinced otherwise, why are even having these conversations?

It strikes me as either trolling or larger cerebral issues. I just can't seem to figure out what your motive is.

I used to be just like doodle.  I understand where he is coming from.

You know how a blacksmith works a piece of metal on his anvil?  That's what reality does to our thinking as we move through life.  I think that doodle's thinking is just in the early stages of this process.

I'm not saying he is wrong, but we are to some extent talking past one another here.  Doodle is talking about futures of which he is certain, and we are talking about the concept that no future is certain.

[doodle]

Gumby,

I prefer dialectic to debate. Both sides have their own viewpoints but it is not necessarily about proving the other side that they are wrong, or have "cerebral problems".

Predicting the future is impossible, I admit. I don't know what will happen but at the end of the day, I must be able to sleep comfortably. Living in an economy where my life is so interdependent on other people and the system at large leaves me with a feeling of uncertainty.

I believe in a natural process of birth, growth, decay, death and rebirth. Throughout history it has happened again and again. I happen to believe that we are transferring from the decay to death stage. That sounds morbid to you. I just see it as a natural transition in the affairs of the world. We will eventually arrive at our rebirth and the world will move on.

That is just how I see it. I have espoused my view point and maybe it has caused some to look at the world differently. I know that I have gained from the discussion and learned more about MMT and how our money and banking system functions. At the end of the day though everyone must place their bets and hope for the best.

[Gumby]

To have the same conversation with us, week after week after week — and your unwillingness to see any other points of view — I fail to see why you would want to start these conversations in the first place. You can't be reasoned with.

And if you can't be convinced otherwise, why are even having these conversations?

It strikes me as either trolling or larger cerebral issues. I just can't seem to figure out what your motive is.

I used to be just like doodle.  I understand where he is coming from.

I'm not so sure. He's not even trying to ask questions or learn about the PP at this point. He just shows up every few days and says, "these numbers don't add up!!" (We know!)

[Gumby]

Gumby,

I prefer dialectic to debate. Both sides have their own viewpoints but it is not necessarily about proving the other side that they are wrong, or have "cerebral problems".

Predicting the future is impossible, I admit. I don't know what will happen but at the end of the day, I must be able to sleep comfortably. Living in an economy where my life is so interdependent on other people and the system at large leaves me with a feeling of uncertainty.

I believe in a natural process of birth, growth, decay, death and rebirth. Throughout history it has happened again and again. I happen to believe that we are transferring from the decay to death stage. That sounds morbid to you. I just see it as a natural transition in the affairs of the world. We will eventually arrive at our rebirth and the world will move on.

That is just how I see it. I have espoused my view point and maybe it has caused some to look at the world differently. I know that I have gained from the discussion and learned more about MMT and how our money and banking system functions. At the end of the day though everyone must place their bets and hope for the best.

You're talking to us about placing bets, but we've explained to you that the PP is agnostic to the future.

I realize that you have a valid opinion. But what is your motive of having these conversations? It doesn't seem to be about investment strategy. You've dismissed practically everything we've said to you. What's the point? You don't even seem to want to learn about why the PP would allow you to sleep soundly at night.

[doodle]

My primary issue is that I believe that the US dollar (a central component of the PP) is facing an almost inevitable decline as the worlds reserve currency. This along with other issues facing our country that we have talked about here cause me to question whether or not the portfolio will function according to Harry Browne's thesis....

25% of your assets will supposedly weather the storm but a lot of people here don't consider that the government could destroy the price of gold in the US by simply taxing it at 90% rates or making ownership of gold illegal.

I am simply looking at the worst case scenario and thinking...."What about if this happens?"

Maybe it is all just mental masturbation...i dont know.

[MediumTex]

But what is your motive of having these conversations? It doesn't seem to be about investment strategy. You've dismissed practically everything we've said to you. What's the point? You don't even seem to want to learn about why the PP satisfies your concerns.

What is the motive of water dripping on a rock? 

[MediumTex]

My primary issue is that I believe that the US dollar (a central component of the PP) is facing an almost inevitable decline as the worlds reserve currency. This along with other issues facing our country that we have talked about here cause me to question whether or not the portfolio will function according to Harry Browne's thesis....

25% of your assets will supposedly weather the storm but a lot of people here don't consider that the government could destroy the price of gold in the US by simply taxing it at 90% rates or making ownership of gold illegal.

I am simply looking at the worst case scenario and thinking...."What about if this happens?"

Actually, 50% of the PP would protect you since stocks are also a great hedge against currency collapse.

I think you are still in that stage of viewing the PP as too deeply counterintuitive for your taste even though it rocked the last time it looked like the U.S. dollar might collapse in the 1970s.

That's cool.  You may feel differently after a few more strokes from the blacksmith's hammer.  The PP will be there when you are ready for it.

[AdamA]

It strikes me as either trolling

Hilarious concept.

[moda0306]

Also keep in mind we're not Zimbabwe.  Our currency collapse would shake world markets to their core.  Gold would, in my estimation, provide more than real return in this situation.

That's why the PP works so well for us vs foreigners.  Gold will move much more exponentially on troubles with our currency than with others.

[HB Reader]

Are you not concerned that your predictions about the future may be wrong, and that you are needlessly speculating when the PP would provide you all the protection that you need?

If you had lived through the 1970s and early 1980s, you would know that the current social mood has happened before (I was a kid back then and remember well the overall foul mood among the people, disgust with politicians, fear over world events, etc.), and people back then were saying the exact same things you are saying now.  The problem is they were all wrong.  The U.S. didn't collapse; the U.S. dollar didn't collapse, the U.S. bond market didn't collapse; the U.S. never saw hyperinflation.  Are the people expressing similar fears today right this time?  I don't know, but I'm not interested in betting on the matter.  I would rather just snuggle up with my PP and a bowl of popcorn and watch things unfold without any money on any particular outcome.

I truly believe that you are not grasping the peace of mind that the PP can provide.  If you understood this dimension of it, I think you would feel differently.

But to be honest, I used to feel like you feel now.  It was something I just had to grow out of, and I don't say that to trivialize how you are feeling now; rather, I say that because I learned a lot of valuable lessons in the process of discovering that even when I was totally convinced of something I could still be totally wrong, and when I discovered that there is a viable alternative to this trial and error approach to reality in the form of the PP it really clicked with me.

doodle, I think you are running with the herd and you don't even know it.  When you are able to separate yourself from the groupthink you are participating in, I think the world will look like a very different place.

Remember that our ultimate goal is what Harry Browne called "a mental state of well-being."  Seek that and different paths may present themselves.

Yep, I hit my twentieth birthday in 1972 and that was exactly the evolution I experienced in the late 70s and early 80s.  I was absolutelly convinced everything would come crashing down, but it didn't happen.  And I eventually ended up working in the belly of the beast!

The world is a very big place that will go its own way regardless of what I'm sure will happen.  It's also full of people who see things very differently than I do.

In the financial sphere, the PP is the best coping mechanism that I've come across.

[HB Reader]

Rural Appalachia WV, TN, mostly as well as parts of Texas....how is the Hill Country?

The Hill Country is great, but it is very hard to find much acreage for sale at any kind of reasonable cost.  I tried for several years.

[doodle]

If you were looking to pick up some nice land for a decent price in the US what areas of the country would you start looking in? BTW..I prefer temperate climates.

[MediumTex]

If you were looking to pick up some nice land for a decent price in the US what areas of the country would you start looking in? BTW..I prefer temperate climates.

There are MANY nice places in Texas to look.

Draw a 100 mile radius around Austin and start shopping around.

If that doesn't get you anything interesting do the same with the Dallas/Fort Worth area.  I am certain you will find something at a reasonable price in North Texas.

If you want REALLY cheap land, look in far west Texas or parts of rural Colorado.

[Liz L.]

Doodle, I find it both frustrating and incredibly boring that you endlessly hold forth with opinion and philosophy rather than discuss actual personal investment strategy.

What EXACTLY are you doing with your money currently? That's what I would be interested to hear about.

For the record, after getting lots of practical advice here, my husband and I are currently 100% in the PP. Although I feel anxiety about current events, I don't see a better way. My husband doesn't even feel the anxiety, he is just really pleased that we no longer have a "festering" portfolio.

[TBV]

Sorry for continuing a prior conversation, but.....

If so, then how do you explain the role of venture capital, which by definition focuses on incubating companies who have precious little current demand for their products and services?  Many wildly successful companies were started in recessions.  Here's a short list.... http://www.focus.com/fyi/14-big-busines ... recession/

All of those companies were started with the belief that the demand already existed. As the article stated...

Why do these companies succeed? Usually it's because the founders recognized a market need and filled it

Which demonstrates precisely why goosed-up consumer demand and factories running at full capacity are NOT necessary precursors for productive investment of capital.  And why it is incorrect to give priority to policies that favor spending over investment.  It also demonstrates that strategic investment can anticipate FUTURE demand and in so doing stimulate far greater growth than government can gain through hand-outs.  Or do you think that CETA had a greater economic impact than Microsoft?

[doodle]

Well this is how I am divided up at the moment.

17.5 US Stocks
7.5 Intl/Emg Mkts stocks

30% Commodities (GLD/SLV/AGRICULTURE)

5% (working on split with Chinese Yuan and Chilean Peso)

40% 5 year t-bond ladder.

[MediumTex]

Well this is how I am divided up at the moment.

17.5 US Stocks
7.5 Intl/Emg Mkts stocks

30% Commodities (GLD/SLV/AGRICULTURE)

5% (working on split with Chinese Yuan and Chilean Peso)

40% 5 year t-bond ladder.

With a mix like that, why not just buy PRPFX?

[moda0306]

TBV,

Entrepreneurs can definitely succed in recessions, but we're talking about the broad economy here... about putting millions of people back to work and repairing balance sheets.

A solid, solid portion of this is going to be done with existing businesses... existing factories... existing ideas.

Letting demand collapse and giving tax cuts to producers isn't going to send a flood of entrepreneurs into creating new ideas and hiring millions of people as a result.  You'll see this somewhere, yes, but 1) this activity may well have happened equally or even better in an economy running at full capacity (the 90's were hardly a time of no entreprenurial ventures and great ideas) and 2) will not make up for the overall shrinking of aggregate demand.

These anecdotal stories about entrepreneurs in recessions sparking demand for new products based off great ideas and hiring a lot of unemployed people are certainly fun to hear, but the math just doesn't work.  Entrepreneurs have ideas and access to capital in good economies, too.  In fact, a world of low demand and closing factories is probably a lot more scary to 95% of entrepreneurs than encouraging.

[moda0306]

So doodle,

You think there could very well be the fall of the dollar, but you're buying your gold through ETF's?

I'd probably go physical if I were you.