Gyroscopic Investing

It appears Global X is about to offer a PRPFX-like ETF.

http://etfdailynews.com/2011/11/15/glob ... anent-etf/

It's here:

http://etfdailynews.com/2012/02/07/glob ... uary-08th/

Since PRPFX has its own forum, should PERM also?

The two links above don't seem to be working.  I have however found two articles on the new permanent ETF which can be found here and here.  The first link has the breakdown of the fund's holdings...

Asset                       Weight
Physical Gold               20%
Physical Silver                 5%
Long-Term Treasuries 25%
Short-Term Treasuries 25%
Large Cap U.S. Stocks   9%
Small Cap U.S. Stocks   3%
International Stocks           3%
Natural Resources Equities   5%
Real Estate Stocks           5% 

It looks interesting.

beafet wrote: Since PRPFX has its own forum, should PERM also?

I just tweaked this sub-forum name to be more generic.

PERM up 0.20% today. I gotta buy just a little!

(PRPFX was down 0.63%)

What I'm curious to see is whether people will start holding PERM under high leverage on margin accounts and then periodically sell it off on a large scale in response to margin calls on "everything down" days. I'm wondering whether that might cause a novel phenomenon of correlated pluments for the PP underlying assets if PERM gets big and gets treated in that way. Fingers crossed that that won't happen.

stone wrote: What I'm curious to see is whether people will start holding PERM under high leverage on margin accounts and then periodically sell it off on a large scale in response to margin calls on "everything down" days. I'm wondering whether that might cause a novel phenomenon of correlated pluments for the PP underlying assets if PERM gets big and gets treated in that way. Fingers crossed that that won't happen.

PERM would have to get VERY large for this to be a concern.

I think PERM would do well to grow to be a tenth the size of PRPFX.

MediumTex wrote:

stone wrote: What I'm curious to see is whether people will start holding PERM under high leverage on margin accounts and then periodically sell it off on a large scale in response to margin calls on "everything down" days. I'm wondering whether that might cause a novel phenomenon of correlated pluments for the PP underlying assets if PERM gets big and gets treated in that way. Fingers crossed that that won't happen.

PERM would have to get VERY large for this to be a concern.

I think PERM would do well to grow to be a tenth the size of PRPFX.

Agreed.  The markets that PERM and PRPFX invest in are the largest and most liquid markets in the world. PERM will not affect the US treasury market for example. A true stock bull market relative to gold will likely shift the PP back out o f the flavor of the month category anyway.

A bull stock market and/or a gold bear maket which causes PRPFX to under -perform will shake out any concern for a scenario where "everyone" is jumping on the PP bandwagon, as most will never actually understand the philosophies behind it.

I was surprised to learn that there has been something calculated, since 2006(?) called the Soloactive Permanent Index.  It's from a company in Germany that offers many other indices in their portfolio. 

The Soloactive Permanent Index, on which the PERM ETF is based, contains 25% stocks, 25% LT US Treasuries, 25% ST US Treasuries, and 25% Precious metals, the latter divvied up into 20% gold and 5% silver.

I read their brochure about the index, which I found here:

http://www.structured-solutions.eu/tl_f ... 0Index.pdf

I did not find anything in it about Harry Brown or the Permanent Portfolio concept, but it is clearly based on his work.  It looks like it was something they developed on their own, without intervening work done by another financial genius, now no longer with us.

smurff wrote: I was surprised to learn that there has been something calculated, since 2006(?) called the Soloactive Permanent Index.  It's from a company in Germany that offers many other indices in their portfolio. 

The Soloactive Permanent Index, on which the PERM ETF is based, contains 25% stocks, 25% LT US Treasuries, 25% ST US Treasuries, and 25% Precious metals, the latter divvied up into 20% gold and 5% silver.

An interesting find for sure. Thanks for posting it.

I agree that these index providers should provide credit for this work to Harry Browne, Terry Coxon and his associates. It is clearly based on the same ideas.

Convergent evolution?  Browne is not that famous outside of certain internet sites.

shoestring wrote: Convergent evolution?  Browne is not that famous outside of certain internet sites.

He was a New York Times best selling author, presidential candidate, wrote articles, gave speeches and generally was in the public eye quite a bit. He was not unknown. It is extremely unlikely this index just happened on its own.

I see PERM has an expense ratio of .49.  Does that include the expenses of the underlying ETF's or in addition to?

quenali wrote: I see PERM has an expense ratio of .49.  Does that include the expenses of the underlying ETF's or in addition to?

It is inclusive.  That said, I think it's on the high side for a passively managed fund.  Though certainly cheaper than PRPFX.

Clive wrote: You could say that Solactive is a bit like how Henry Varnum Poor's company, who used to publish yearly stock data, combined with Luther Lee Blake's Standard Statistics company/bureau to create the Standard and Poor's merged group who published more frequent stock data. i.e. mostly just share price/index mathematical stuff. Others then use those reference data (index) to create funds that attempt to mirror the mathematical index and that investors can actually trade.

Thanks for the research and for posting the info, Clive.  
I wondered where they came from and how long they've been at it (indexing).

craigr wrote:

shoestring wrote: Convergent evolution?  Browne is not that famous outside of certain internet sites.

He was a New York Times best selling author, presidential candidate, wrote articles, gave speeches and generally was in the public eye quite a bit. He was not unknown. It is extremely unlikely this index just happened on its own.

And yet most people have never heard of him.  Audie Murphy was an amazing person too yet few know of him.  I am sure there are thousands of people who are distinguished in some way yet lost to history.

shoestring wrote:

craigr wrote:

shoestring wrote: Convergent evolution?  Browne is not that famous outside of certain internet sites.

He was a New York Times best selling author, presidential candidate, wrote articles, gave speeches and generally was in the public eye quite a bit. He was not unknown. It is extremely unlikely this index just happened on its own.

And yet most people have never heard of him.  Audie Murphy was an amazing person too yet few know of him.  I am sure there are thousands of people who are distinguished in some way yet lost to history.

The point really is that Solactive (that the ETF bases their index) calls their index the Solactive Permanent Index:

http://www.structured-solutions.eu/aktu ... 000SLA1PM4

So it may be possible that there was convergent discovery. But what are the odds of convergent discovery and naming the index with the word "Permanent" in it? Those things all combined are incredibly remote. IMO.