Gyroscopic Investing

Curious about everyone's adherence to Perm. port. If option isn't included in poll, please elaborate below

I chose the pure PP option because it's the closest to what I'm actually doing right now.

• 25% gold etfs and some bullion
• 25% stocks (1/3 each in world market cap, developed market small cap value, emerging market small cap value)
• 25% domestic government intermediate term bonds
• 25% global government intermediate term bonds with currency hedging

Instead of the bond barbell it's all intermediates with global diversification. The stocks are also globally diversified with factors. It's pretty well pure PP with very minor modifications.

80% HBPP + 20% VP

The only asset I'm slightly light on these days in LTT. Its the only asset I feel comfortable tinkering in and out of. I jump in and out between cash and LTT as prices of TLT or EDV bounce up or down anything more than about 7-10%.

The rest is right in line with Harry. I've thought about diversifying stocks into 5% international and rebalancing every year but haven't pulled trigger on that.

These PP adherence polls/discussions always remind me of this scene from Curb Your Enthusiasm.

I switched from the PP to the GB a few years go but I don't see a selection in your poll that would accurately cover this so I didn't answer.

If you wanted to add one you could say something like "I use a variant of the PP (GB, etcetera) and stick to it the same as I did the pure PP".

PP fo’ life!

GB heretics start your own forum.

As per footer on this post but gold is physical

VP: Physical Silver. Also odds & ends that I will sell if I can break even.

Why? Advisor in Smithy's avatar told me so. Wearing a suit, so must be smart

I exited the PP years ago and am about 90% stocks, 10% bonds. I'm not counting the cash in my checking and savings accounts, which is for short to medium-term spending.

Hal wrote: ↑Wed Dec 16, 2020 9:10 pm As per footer on this post but gold is physical

VP: Physical Silver. Also odds & ends that I will sell if I can break even.

Why? Advisor in Smithy's avatar told me so. Wearing a suit, so must be smart

The GoldSmith PP will always be my favourite!

As an aside, I do thank you for the vote of confidence in an idea I offered on this board. That really means a lot!

Tonight I am rereading some of the original PP thread over at the Knuckleheads forum. Good times. It's just too bad I wasn't around then.

As far as money in the markets, I'm 50/50 a vanilla PP and a VP (was all stocks at one point, but I have some cash in it now). Plus a house that I own.

45% stocks, 30% physical metal (silver, plat, and gold), maybe 5% cash and about 20% in large and junior miners.

I'm really wanting a big run in the miners this year to at least get the hui miners index up to its historical average against gold so i can sell them and get more ounces.

Likewise I'm not adding any more silver unless the GSR is over 80. I'd love to see it drop below 40 and i would trade out for gold, except I'd keep a few hundred ounces of junk silver just in case.

If the miners had a big run and both stocks and gold look way overpriced I'll have a pile of cash.

M last pp yearly high was 19.49% on 8/10 (low was -10.75% on 3/19, wow, 30% swing). Today, just popped over 19% again. Within 0.3% of yearly high.

Given what has happened this year with the economy, my old self would be SO pissed off at the world -- how can stocks keep on rising when the world sucks?

My new self understands there is almost no correlation and is just chugging along.

Cortopassi wrote: ↑Thu Dec 17, 2020 10:37 am Given what has happened this year with the economy, my old self would be SO pissed off at the world -- how can stocks keep on rising when the world sucks?

I often wrestle with this myself and eventually came up with the following explanation, which at least makes sense to me:

When the stock market goes down, everybody loses, because of how much of global wealth is dependent on the stock market. Whereas when it goes up, everybody wins. Therefore there is an enormous incentive for it to always go up, as much as is possible. Since the stock market is essentially a market based barometer of public opinion, people are literally willing it to constantly increase simply by continuing to buy shares of stocks on the secondary market even when the real economy is in the shitter. Companies can also goose this trend by buying back their own stock or declining to issue new stock in the primary market, ensuring that the increasing amount of money in the secondary market is chasing a flat or declining quantity of stock, which has an inherently inflationary effect on the price of stock.

Cortopassi wrote: ↑Thu Dec 17, 2020 10:37 am M last pp yearly high was 19.49% on 8/10 (low was -10.75% on 3/19, wow, 30% swing). Today, just popped over 19% again. Within 0.3% of yearly high.

Given what has happened this year with the economy, my old self would be SO pissed off at the world -- how can stocks keep on rising when the world sucks?

My new self understands there is almost no correlation and is just chugging along.

Stock market is forward looking not present looking. It bottomed within weeks of the top in unemployment claims. If you look back historically at recessions it bottomed at the same time as it always does, within a few weeks of a top in unemployment claims. So it did exactly what it always has done in the past. This was part of the reason I was telling everyone here back in the spring to rebalance (and why I went levered long and traded all my LTT's for stocks). This recession was just quicker than most, but really no different other than the speed.

That said, we are still in a secular bull market. Q1 2020 was a cyclical bear market in a secular bull trend. The secular bear market is inevitable and eventually will come. Just wait for the next wave of deflation that takes the entire yield curve to 0, the Fed refuses to go negative, and deflation keeps going... That's when the real stock market crisis and new secular bear market will begin. I think we are still at least a couple years out from that, but I think that it will happen, and it will be brutal.

Today marks the longest period of time that I've held a PP variant and haven't further tinkered with it. I think I'm settled, folks.

I follow the standard 4 x 25 PP with no VP.


I also track the tax efficiency of my portfolio:

10% taxable (mostly cash) + 52% tax deferred (including savings bonds) + 38% tax exempt (Roth IRAs)

Taxes and inflation are the enemies of personal wealth.

pmward wrote: ↑Thu Dec 17, 2020 10:56 am

Cortopassi wrote: ↑Thu Dec 17, 2020 10:37 am M last pp yearly high was 19.49% on 8/10 (low was -10.75% on 3/19, wow, 30% swing). Today, just popped over 19% again. Within 0.3% of yearly high.

Given what has happened this year with the economy, my old self would be SO pissed off at the world -- how can stocks keep on rising when the world sucks?

My new self understands there is almost no correlation and is just chugging along.

The secular bear market is inevitable and eventually will come. Just wait for the next wave of deflation that takes the entire yield curve to 0, the Fed refuses to go negative, and deflation keeps going... That's when the real stock market crisis and new secular bear market will begin. I think we are still at least a couple years out from that, but I think that it will happen, and it will be brutal.

It's possible that at the point you reference, the Fed, having hit the floor in interest rates, might turn its attention to other tools to keep the deflation in check. Money supply being the obvious one. That could go on for a while, and if there is no opportunity for them to tighten, then we could have a debt bubble which could bring us back to the bear market you describe. If it were precipitous it could be a panic depression-like situation.

But then again, a lot of smart people were predicting all of this in 2010 and it didn't happen so who knows. John Paulsen invested billions in gold at that time, certain that runaway inflation was on the horizon, and he got his head handed to him.

4x25 with 30/20% rebalance bands. Keeping it simple. :-)

Cortopassi wrote: ↑Thu Dec 17, 2020 10:37 am Given what has happened this year with the economy, my old self would be SO pissed off at the world -- how can stocks keep on rising when the world sucks?

My new self understands there is almost no correlation and is just chugging along.

Ahh, there it is: the beauty of the philosophy, the mindset of the PP.

blue_ruin17 wrote: ↑Sat Jan 02, 2021 10:37 pm

Cortopassi wrote: ↑Thu Dec 17, 2020 10:37 am Given what has happened this year with the economy, my old self would be SO pissed off at the world -- how can stocks keep on rising when the world sucks?

My new self understands there is almost no correlation and is just chugging along.

Ahh, there it is: the beauty of the philosophy, the mindset of the PP.

Thank you. Took way too long to realize that.

Interesting that 45% of people on a Permanent Portfolio forum don’t adhere to a traditional PP. May I ask the reasons some of you have decided to tinker or not follow it at all? Were you in it and decided to tinker or were you never in a traditional 4x?

jalanlong wrote: ↑Mon Jan 18, 2021 3:42 pm Interesting that 45% of people on a Permanent Portfolio forum don’t adhere to a traditional PP. May I ask the reasons some of you have decided to tinker or not follow it at all? Were you in it and decided to tinker or were you never in a traditional 4x?

I was in it as defined for one year (2014), then I adjusted stocks up to 35%, added 5% silver (since I already owned it) and dropped cash to 10%.

Then in 2020 I dropped stocks to 30%, bonds to 24% and raised cash to 16%.

If anything I feel the need to get the cash % up in 2021, probably by dropping stocks and silver a couple points each.

I've also a few times rebalanced outside of my rules of either once a year or when bands are hit.

My returns:

2014 4.04%
2015 -3.26%
2016 6.17%
2017 12.97%
2018 -4.09%
2019 18.66%
2020 20.07%
2021 -1.60%

jalanlong wrote: ↑Mon Jan 18, 2021 3:42 pm Interesting that 45% of people on a Permanent Portfolio forum don’t adhere to a traditional PP. May I ask the reasons some of you have decided to tinker or not follow it at all? Were you in it and decided to tinker or were you never in a traditional 4x?

I had a PP + VP but most of the VP was eliminated in an all-cash acquisition. After thinking about what I should do next I decided to stop kidding myself and settled on the GB.