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Meb Faber- Perm Port Timing vs. PP vs. Ivy
Posted: Thu Oct 28, 2010 7:30 pm
by hrux
Re: Meb Faber- Perm Port Timing vs. PP vs. Ivy
Posted: Thu Oct 28, 2010 7:39 pm
by craigr
Looking at his graph, the timing of the gold market in the late 1970s seemed to be where the breakout happened. After that I don't see a significant boost:
I'm still not sold on market timing. It's especially costly for taxable investors. Thanks for the link though. Always interesting to see what other people are doing.
Re: Meb Faber- Perm Port Timing vs. PP vs. Ivy
Posted: Thu Oct 28, 2010 7:40 pm
by hrux
Mebane states: "One of the difficulties with the PERM portfolio, certainly today, is that there is a very high allocation to cash (yielding 0%) and long bonds (yielding 3.8%) – which implies that half of your portfolio is targeted to return less than 2%."
I am still struggling with the PP due to this simple fact.
Re: Meb Faber- Perm Port Timing vs. PP vs. Ivy
Posted: Thu Oct 28, 2010 7:44 pm
by craigr
hrux wrote:
Mebane states: "One of the difficulties with the PERM portfolio, certainly today, is that there is a very high allocation to cash (yielding 0%) and long bonds (yielding 3.8%) – which implies that half of your portfolio is targeted to return less than 2%."
I am still struggling with the PP due to this simple fact. ???
Yes well it's just a reality of the market. Nothing is paying high interest. But I would just say that profits from the long bonds and gold have been able to buy a lot of stocks really cheap throughout 2009 and 2010. So although bond rates look bleak going forward, someone rebalancing the portfolio as they should is very likely to reap huge stock gains if the market turns around.
But, if deflation keeps going however the low rates today may seem mouth watering. Long bonds in the 1930s went to around 2%. So rates could keep falling. We just don't know.