Gyroscopic Investing

Hello everyone—this is my first post on this forum. I found it while trying to do some research on PRPFX.

PRPFX is about 9% of my equity portfolio. I bought it in 2005 and added to that position in 2007 and 2010. I’m not a diehard about it or Harry Browne—my intent was to dampen volatility of the rest of my portfolio while also getting some metals, natural resource, and foreign currency exposure.

Gold has been on a rampage and eventually is going to come down rather severely. I have no idea when or by how much. Considering that, I am curious about PRPFX real world performance when gold is flat or down.

A cursory look at a chart shows excellent performance in the last 10 years and not so good previously—presumably due to gold’s strong action in the last 10 years after being poor between 1980 and 2000.

Two specific questions:

Does anyone have PRPFX total annual returns for years prior to 1996?

Does anyone have PRPFX prices prior to June 20, 1996—the earliest date available at the Yahoo historical price site?

I’d like to compare gold and broad indexes to PRPFX since its inception, particularly from 1982 to 2000, when gold was in the tank.

Here are some relevant dates and prices that I have dug up for anyone interested:

12/31/73: gold 112.25 (I can’t find earlier yearly closes, only “average yearly”? prices)
1/21/80: gold closes at all time high of 850.00
12/1/82: PRPFX inception date; gold 440.25
6/20/96: PRPFX 18.31 (adjusted per Yahoo 13.20); gold 384.40; earliest date shown at Yahoo
9/1/99: gold at post 1980 low of 252.85; PRPFX 18.27 (adjusted per Yahoo 14.67)
12/31/00: lowest gold yearly close since 1978 at 272.65; PRPFX 18.16 (adjusted 16.07)
11/9/10: gold at all time high of 1421; PRPFX 45.23 (adjusted 45.23)

Here are PRPFX annual total returns for 1996 to 2009. I don’t know how they will format when posted.

1.66
5.64
3.45
1.15
5.88
3.81
14.36
20.45
12.05
7.62
13.82
12.43
-8.36
19.08

I got the gold prices here:  http://www.usagold.com/reference/prices/history.html

If the Yahoo prices for PRPFX can be believed, these look like some preliminary numbers:

6/20/96 (first price for PRPFX) to 9/1/99 gold low: gold down 34.2%; PRPFX up 11.1% (the SP 500 more than doubled in the period)

6/20/96 (first price for PRPFX) to 12/31/2000: gold down 29.1%; PRPFX up 21.7% (the SP 500 doubled in the period)

6/20/96 (first price for PRPFX) to 10/28/03: gold absolutely flat; PRPFX up 63.6 % (the SP 500 was up 58.1% in the period)

6/20/96 (first price for PRPFX) to 11/9/10: gold up 270%; PRPFX up 243% (the SP 500 was up 83.3% in the period)

All of those time periods appear flattering, but they don’t provide a clue as to how PRPFX might do when gold is flat to down over long periods.

PRPFX fell 9% in 5 weeks (May/June 2006), during which time gold fell 22% and the SP fell 5%. It fell 6.7% in April 2004, during which time gold was down 8.3% and the SP was down 1.6%. So it can be volatile in certain circumstances.

Any comments appreciated, particularly pointers to PRPFX prices and returns pre-1996.

Well, a little more work shows the following:

Bill Bernstein gives the annual average return (CAGR) for 1983 to 2009 as 6.62% in his article ("Wild About Harry") on PRPFX at efficientfrontier.com.

I have the returns for 1996 to 2009 as above in my original post.

I did some trial and error with Excel's GEOMEAN formula, plugging in hypothetical returns for each year from 1983 to 1995 to find a number that would yield a CAGR of 6.62% for 1983-2009, when combined with my known figures for 1996 to 2009.

It turns out that that number is 5.36%.

That is--a fund that returns 5.36% for each year between 1983 and 1995 and then has the returns shown in my first post for 1996 to 2009 will in fact have a CAGR of 6.62% for 1983 to 2009, agreeing with Bernstein.

5.36% per year for 1983 to 1995 isn't too bad. Gold was virtually flat over that period (from 382.40 to 387.00), but the SP 500 was up 15.98% per year.

How many of you would stay with a portfolio that returned only 1/3 of the SP for more than a decade? I'd guess a lot of buyers in 1983-90 tossed in the towel when they had to listen to friends at cocktail parties bragging about the returns of their large cap portfolios.

But I still have no idea at all about the specific performance of PRPFX each year from 1983 to 1995.

Anyone?

The fund's website has a nice PDF of annual returns since fund inception.

MediumTex:

Can you point me to the specific link or name of the specific PDF? I looked at the schedule of investments, annual report, prospectus, and SAI.

I can find year by year returns dating back to 2000.

I can find average annual returns since inception and for the most recent 5, 10, and 15 year periods.

I can’t find year by year returns back into the 1980s and the first half of the 1990s.

The web site is a bit convoluted, so I may be overlooking it or blind as a bat.

ignatz wrote: MediumTex:

Can you point me to the specific link or name of the specific PDF? I looked at the schedule of investments, annual report, prospectus, and SAI.

http://permanentportfoliofunds.com/pdfs ... eturns.pdf

Thank you!!!!!