Gyroscopic Investing

For the purpose of performance comparison (and posterity) I created a hypothetical Permanent Portfolio on smartmoney.com and set it up with 1/1/2004 as a starting date. I applied 15/35 rebalancing bands and swept approximated dividends into cash until rebalancing. The SmartMoney.com portfolio aggregator spit out the following graph of the PP from 2004:

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Then I took a graph of PRPFX and overlayed it with a screengrab of the PP chart (above) to approximate a performance comparison between a 4x25 PP and PRPFX during the recent recession/recovery. Here's what that looked like:

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Finally, I scaled and placed the first chart from SmartMoney.com on top of Harry Browne's official Permanent Portfolio historical returns chart to extend the chart to what it should look like today. Here's the updated chart:

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Take a look and let me know if anything looks off!

Good info, Gumby!  The consistency is pretty amazing.  It's almost scary that when you look at the full 1970-present day graph that you can barely even see any evidence of 2008.  (I assure you that my portfolio at the time contained plenty of evidence that 2008 happened.)

I know that it's not a fantastic idea to track the portfolio day to day, but I was curious what people do to "see how it's doing", perhaps month to month.  Do you generally just check your own holdings or does everyone have their own SmartMoney graph that they look at?

Edit: Something else came to mind.  Does this chart track dividends?  TLT, for example, throws off such a (relatively) big dividend that it seems like you have to somehow work that in to get a good idea of how you're doing.

Yes, the PP charts track dividends.

For another comparison, I've overlaid the 1970-2010 PP graph, above, (again, the plots from 1970-2004 are directly from Harry Browne's original chart) on top of a logarithmic chart of the S&P 500 and the DOW — using the original Harry Browne chart as a reference for plotting points. Here's what that combined comparison chart looks like:

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I admit this chart looks too good to be true. Part of that is because the S&P 500 and the Dow graphs don't include their dividends (they are only shown as benchmarks) — while the PP graph includes dividends to Cash and reinvested upon rebalancing. I suppose that's not really a fair comparison, but it's the best I could do at the moment.

If someone can find a chart of the S&P 500 from 1970 to today with dividends reinvested, let me know and I'll do an overlay of the PP on it.

Other than that, please let me know if anyone spots something wrong with what I've done. I encourage you to double-check my work. I'm fairly certain the general shape of the PP graph is correct. The placement of the overlaid graph on the axis is what should be double-checked. But, from what I can tell, the performance and corresponding dates of both HB's original chart and this chart match up.

Interesting visual(s) Gumby.  Thanks for the work on this.

If someone can find a chart of the S&P 500 from 1970 to today with dividends reinvested, let me know and I'll do an overlay of the PP on it.

Yahoo! Finance historical prices gives an 'adjusted close' column that accounts for splits and dividends.

Here is the Inflation-Adjusted Real Return for the Permanent Portfolio compared to the Nominal Return.

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I was able to calculate the equivalent 1970 values using data from WolframAlpha.

Keep in mind that this is based on CPI data and the transactions don't include taxes and fees.