There's a new Boglehead thread on the PP.
http://www.bogleheads.org/forum/viewtop ... lit=craigr
As usual, craigr is doing a masterful job of explaining it.
New Boglehead Thread On The PP
Moderator: Global Moderator
Re: New Boglehead Thread On The PP
The Bogleheads on that thread are poo-pooing the PP because: "gold has done really well over the last 30 years so that's why the PP has had remarkable success."
And how about 10 years from now... suppose Gold take a crap and the PP still performs well. Will their anti-PP argument be: "Well Cash has done really well over the last decade and the PP holds 25% cash so that explains it. But going forward, cash won't even beat inflation so the PP is doomed to fail."
Couldn't we counter poo-poo that the Wellesly Fund had good success over the last 30 years because stocks have done well? But that doesn't mean stocks will continue to outperform going forward. Or that The 60/40 Bogleheads portfolio has done well because it's a falling interest rate market and their bonds have done super well because of it? But when interest rates rise, their bonds will die and it may also kill stocks because businesses have to borrow at higher rates?
And how about 10 years from now... suppose Gold take a crap and the PP still performs well. Will their anti-PP argument be: "Well Cash has done really well over the last decade and the PP holds 25% cash so that explains it. But going forward, cash won't even beat inflation so the PP is doomed to fail."
Couldn't we counter poo-poo that the Wellesly Fund had good success over the last 30 years because stocks have done well? But that doesn't mean stocks will continue to outperform going forward. Or that The 60/40 Bogleheads portfolio has done well because it's a falling interest rate market and their bonds have done super well because of it? But when interest rates rise, their bonds will die and it may also kill stocks because businesses have to borrow at higher rates?