Moving up to 4.9%

[ppnewbie]

Need to rebalance more into LTT's. This is good news.

[mathjak107]

or it could be throwing good money after bad.

there has been no good news when it comes to long term bonds .

they haven’t had a positive return now for anyone holding them the last decade , the last 5 years , the last 3 years , the last one year

1 yr minus 7%

3 yr minus 13%

5 yr minus 7%

you would hard pressed to find any time frame the last 25 years where equities and gold didn’t beat equities and bonds

10 year minus 2%

in fact they returned less then cash the last 15 years at about a 2% cagr

you would hard pressed to find any time frame the last 25 years where equities and gold didn’t beat equities and bonds

[perfect_simulation]

The PP forces you to buy the under performing asset so it makes sense to buy LTTs. But....its not easy

[flyingpylon]

We lose money on every purchase but we make it up in volume.

[yankees60]

We lose money on every purchase but we make it up in volume.

!!!!!!!!!!!!

Even though far from original ... always makes the humorous point when I read it.

[ppnewbie]

or it could be throwing good money after bad.

there has been no good news when it comes to long term bonds .

they haven’t had a positive return now for anyone holding them the last decade , the last 5 years , the last 3 years , the last one year

1 yr minus 7%
3 yr minus 13%
5 yr minus 7%

you would hard pressed to find any time frame the last 25 years where equities and gold didn’t beat equities and bonds

10 year minus 2%

in fact they returned less then cash the last 15 years at about a 2% cagr

you would hard pressed to find any time frame the last 25 years where equities and gold didn’t beat equities and bonds

All very true. The main thing I am hoping is that it will be protection in a deflationary environment. I do need to think about how much protection it offers at very low rates.

[mathjak107]

meh , more is given up in preparation or anticipation of this deflationary environment then ends up being lost in it if and when it ever comes .

massive federal deficits and sticky inflation make it very unlikely we will see deflation.

it is more likely that more has been given up on the money in long term bonds then one can ever make back

[ppnewbie]

Then it seems easiest to just VTI (VTSAX) and chill. Which incidentally, I do for my kids because I do think with dividends reinvested and long enough time horizion, the numbers work. But if I you start with a thesis that you actually have no idea what is going to happen, then I think LTT or some deflationary hedge make sense.

[mathjak107]

i have been an investor since 1987..

i was always 100% equities until pre retirement.

thru crashes , wars , the great recession, the covid shutdown , etc and equities have always been the horses over typical accumulation stages .

betting they wouldn’t be has been betting against the house .

my view has always been that there is little financial logic to owning less capable assets like bonds in the accumulation stage as long term investors , which are used to mitigate temporary short term dips but permanently hurt long term returns

of course now ii am retired and try to have a low volatility portfolio . but at this point i own only short term bonds with the longest going out 3.7 years along with floating rate high yield funds in the fixed income side

[flyingpylon]

i have been an investor since 1987..

i was always 100% equities until pre retirement.

thru crashes , wars , the great recession, the covid shutdown , etc and equities have always been the horses over typical accumulation stages .

betting they wouldn’t be has been betting against the house .

my view has always been that there is little financial logic to owning less capable assets like bonds in the accumulation stage as long term investors , which are used to mitigate temporary short term dips but permanently hurt long term returns

of course now ii am retired and try to have a low volatility portfolio . but at this point i own only short term bonds with the longest going out 3.7 years along with floating rate high yield funds in the fixed income side

What year did you retire (or what year did you reduce your equity allocation if that was different)?

[mathjak107]

i retired in 2015 and reduced a few years prior to about 60/40

a better glide path for approaching retirement has been realized and is called the red zone .

i just passed thru the red zone and am ramping equities back up from about 40% to 50- 60%

https://www.kitces.com/blog/managing-po ... -red-zone/

[ppnewbie]

i retired in 2015 and reduced a few years prior to about 60/40

a better glide path for approaching retirement has been realized and is called the red zone .

i just passed thru the red zone and am ramping equities back up from about 40% to 50- 60%

https://www.kitces.com/blog/managing-po ... -red-zone/

Very interesting! Did you follow this? And if so what did the bottom of the V look like where the equity exposure drops to 30 percent? Was it the short term bonds you mentioned?

[mathjak107]

i didn’t know about the red zone glide path when i retired …but i went into retirement at 60/40 ..

i further reduced equities down as the daily swings were very wild . i went down to about 40% , where i held until recently when i started to increase up again.. once you pass thru the proverbial red zone you can ramp back up to about 60% .

i don’t need 60% at this stage as market gains were pretty good thru my retirement and despite pulling 6 figures a year out we are higher today then the day i retired. so about 50% is my target to maintain.

but the bond side is very light … i don’t go out longer than roughly 3.7 years.

i don’t want the drag of anything longer .

i have an experimental portfolio called the carolina reaper which has a very very good sharpe ratio and has beaten 60/40 with far less risk using leveraged risk parity

it uses

20% upro

13% tyd and 67% dbmf managed futures fund .

tyd in that experimental portfolio is a 3x bond fund .


but the fact is it gets only .13 cents out of every dollar , upro the 3x stock fund gets 20 cents , and with that it has gotten 60/40 like returns with just .39 cents .

the .67 cents left get hedged in dbmf
it’s risk vs reward has blown the pp away.

it stood up to the covid drop and the 2022 debacle very well compared to other portfolios

[dualstow]

Need to rebalance more into LTT's. This is good news.

I will find it hard not to buy some treasury bonds at 5%
I don’t think I can commit to 1/4 in 30-year bonds. That ship has sailed for me. At the same time, 5% in a risk-free instrument is very appealing. Even ten-year treasurys are approaching the 5% mark.

I had an epiphany in December: I don’t need to maximize returns. Isn’t that a weird thought?
This is the permanent portfolio forum, after all. I’m in the right place.

[mathjak107]

i tried warning people here for a long time about playing with long term bonds when rates were at historical lows and of course i got beaten up for it .

well those who drank the kool aid have lost not only money all these years on long term bonds but all the compounding that money should have had in simple equity or alternative investing funds all those years .

there are so many better ways to invest today using a world of alternative investments that used to only be available to the wealthy


thanks to the likes of those like cliff asness , they have brought to the small investor the ability to de-risk portfolios below what even the most conservative portfolios like the pp were known for , while providing superior returns compared to even a 60/40.

i have been de-risking more and more for 2025 after two of the biggest years in my entire retirement investing time frame .

for this year i have a target of 40-50% equities , currently in the 40% range again as i shed some of the money that were in my most aggressive funds like fidelity blue chip growth which doubled in two years .

even my s&p fund has grown extremely risky as the index’s allocation to tech has quadrupled since 1994 and is now more risky than nasdaq was back then .

not only that but just 7 stocks have been responsible for most of the growth .

so i have been moving away from being so heavy into tech by cutting back on my index funds and fidelity blue chip growth.

now that i have passed thru the proverbial danger zone in retirement as i enter my tenth year i can be as aggressive or defensive as i like and still be just fine .

so i will pop over to the variable portfolio and talk about the lifestyle changes i made for 2025

[perfect_simulation]

Any thoughts on tilting the PP to 15% LTT and 35% cash/tbills? If deflation is THAT uncommon, then tilting seems appropriate while keeping the core philosophy intact

[ppnewbie]

In again at 4.97%.

[ppnewbie]

Any thoughts on tilting the PP to 15% LTT and 35% cash/tbills? If deflation is THAT uncommon, then tilting seems appropriate while keeping the core philosophy intact

I use the Golden Butterfly. I a little less than 20 precent at the moment.

[ppnewbie]

Any thoughts on tilting the PP to 15% LTT and 35% cash/tbills? If deflation is THAT uncommon, then tilting seems appropriate while keeping the core philosophy intact

One thing to note is that, it is easy sound confident about the past, especially if it worked out. I view LTT's as the defense. You may never need it. If so you are dragging your portfolio. But if there is a crash, it could likely save the portfolio. Personally, I buy the full 30 year bond so I get the biggest whip if rates go down / markets crash / recession / etc. etc... I also get the biggest whip the other way.

[mathjak107]

the down turns we have been seeing have equities and bonds joined at the hip .

you have all the risk stocks have had with LT’s but not the gain potential.

to many better ways today to hedge that are not linked to either

[ppnewbie]

the down turns we have been seeing have equities and bonds joined at the hip .

you have all the risk stocks have had with LT’s but not the gain potential.

to many better ways today to hedge that are not linked to either

Rates are at 5 percent. In a market downturn do you believe the rates will go up or down? Also throw out better wasy to hedge against slow growth, deflation, recession.

[mathjak107]

bonds will likely fall in value as there is a good chance it will be the perception of higher inflation and either no more fed cuts or them reversing course and going up again that will cause a sell off like today as investors flee risk assets.

2022 showed how there is no see saw effect that says if stocks go down bonds go up … stocks and bonds got beat up

[ppnewbie]

bonds will likely fall in value as there is a good chance it will be the perception of higher inflation and either no more fed cuts or them reversing course and going up again that will cause a sell off like today as investors flee risk assets.

2022 showed how there is no see saw effect that says if stocks go down bonds go up … stocks and bonds got beat up

30 year rates at the beginning of 2022 were 1.75 percent so near its historic low. If we have a situation were the market crashes and we have inflation (so LTT's still lose money or stay flate). what is the hedge.

[mathjak107]

it was a different situation back then . those rates needed to have been raised way sooner then they were .

my guess is i think anyone still depending on long term bonds to save their bacon if stocks crash are betting on the wrong horse .

especially because investors have easy access to all kinds of alternative etfs and funds today that can do a far better job of see sawing with stocks reliably compared to bonds.

today was a good example of stocks taking it on the chin and bonds fell too and added no support

on the other hand alternative funds like CTA , up almost 2% today and dbmf up 1.06% are actually hedging. they are managed futures funds

less risky funds like qdsnx were up a little bit today too. they are a mix of different types of alternative fund strategy’s

[dualstow]

less risky funds like qdsnx were up a little bit today too. they are a mix of different types of alternative fund strategy’s

5-year return of 23% and an expense ratio equal to the yield? No thanks.
I understand your disdain for 30-year bonds, mathjak. They’re widely unloved. But qdsnx looks worse. What’s so great about it?