Gyroscopic Investing

I note Table 3.1 of Craigr’s book states the performance of PP in 2008 is -2.0% (Nominal Return) and -2.1% (real returns-adjusted for inflation).

However, the performance of PRPFX (the PP fund) suffered a drop of 35.99 (4 Jan 2008) to 32.19 (26 Dec 2008) which means a great loss of 10.55% (although it is still a small number when compared to the loss of stock).

How to explain the -10.55% of PRPFX as compare to -2.1% as stated in Craigr’s book. I note the portfolio of PRPFX is more complicate than the original PP. Is it the sole reason? Or is it due to the different of calculation method?

Anyone can help to explain the above? Thank you.

The PRPFX fund does not hold a lot in long term bonds and growth assets like stocks. It tends to hold more inflation hedges (gold, silver, Swiss francs, timber, etc.). So in a deflationary market like 2008 it will suffer as long-term bonds are key and it doesn't hold a lot of them. In prosperous markets it can suffer because it doesn't hold a lot of growth assets like stocks. However if we get bad inflation then I suspect the fund will do quite well compared to the more standard 4x25 split.