Is This The Time for A New PP?

[portart]

Stocks are up, how much farther can they go? 40% last year, 8% this year?? Probably more set to drop or not move.  Gold...strong dollar and all other currencies suck, not gold friendly at this point in time and could have another hard turn down. Bonds? The rates have to tick up soon by the Fed and kill the bonds. Cash? Cash is neutral...With more deflation on the horizon ala Japan style with all the printing doing nothing major to boost inflation, cash looks pretty good right now. How about a temporary PP with 50% cash and 14% gold, stocks and bonds until we see a washout? Just saying.... Lock in some gains, sit and wait.

[portart]

http://www.marketwatch.com/story/you-ne ... =afterbell

[portart]

http://www.kitco.com/ind/Merk/2014-08-2 ... -Exit.html

[Ad Orientem]

Rule #4: No one can predict the future.

Events in the investment markets result from the decisions of millions of different people. Investor advisors have no more ability to predict the future actions of human beings than psychics and fortune-tellers do. And so events never unfold as we were so sure they would.

Yes, there have been forecasts that came true. But the only reason we notice them is because it’s so exceptional for even one to come true. We forget about all the failed predictions because they’re so commonplace.

No one can reliably tell you what stocks will do next year, whether we’ll have more inflation, or how the economy will perform.

From here...
http://gyroscopicinvesting.com/forum/pe ... al-safety/

[dualstow]

For portart -

http://www.bogleheads.org/forum/viewtop ... 0&t=145185

[barrett]

Portart,

Maybe the PP isn't really what you are looking for. Or maybe you just want a PP with some modifications. Perhaps a Portart Portfolio. Though I wish I had discovered it earlier, the HBPP might not be the right fit for everyone at all points in their investing careers. I'm at a point where preservation of assets is really important to me and I like the fact that it has had very few down years.

I see valuations as being high as well, at least in stocks and bonds, but it may be that we are just in for a few years of lower returns. Hope you end up finding some allocation that makes you comfortable (or very comfortable).

[portart]

It appears, by luck, instinct, timing or reports, that I sold down at the right time. I went back into my GDX, GDXJ PP positions and part of my GLD positions after a 2% plus sell off. Things could sell off more, stay the same or go up but anytime my PP went down harder was when gold took a hit. I do believe corrections are coming in the other areas but gold looks like a terrific bargain at these levels or anything lower. My acct. values are holding near highs so it's all good. All this part of the problem of reading too many articles but this time it appears to have saved some losses.

[barrett]

Portart,

All I would say is that people get paid to write articles and they get readers hooked if they sound like they know something and the something that they know is sensational. I personably find it laughable when a commentator says something like "stocks sold off today on the news from The Ukraine." A more honest statement would be "stocks sold off for some damn unknown reason."

Back to HB Rule #4 that the future is unknowable. It does seem to me that something has to give at some point but I think that is always the case and we just don't know what that something is.

[buddtholomew]

It appears, by luck, instinct, timing or reports, that I sold down at the right time. I went back into my GDX, GDXJ PP positions and part of my GLD positions after a 2% plus sell off. Things could sell off more, stay the same or go up but anytime my PP went down harder was when gold took a hit. I do believe corrections are coming in the other areas but gold looks like a terrific bargain at these levels or anything lower. My acct. values are holding near highs so it's all good. All this part of the problem of reading too many articles but this time it appears to have saved some losses.

Interesting...I hate my GLD and GDX holdings and will not consider re-balancing into either of these assets until they violate a tolerance band. From my perspective, there is too much at stake to allow GLD/GDX to outperform the equities market and derail the facade of an economic recovery.

[Libertarian666]

It appears, by luck, instinct, timing or reports, that I sold down at the right time. I went back into my GDX, GDXJ PP positions and part of my GLD positions after a 2% plus sell off. Things could sell off more, stay the same or go up but anytime my PP went down harder was when gold took a hit. I do believe corrections are coming in the other areas but gold looks like a terrific bargain at these levels or anything lower. My acct. values are holding near highs so it's all good. All this part of the problem of reading too many articles but this time it appears to have saved some losses.

Interesting...I hate my GLD and GDX holdings and will not consider re-balancing into either of these assets until they violate a tolerance band. From my perspective, there is too much at stake to allow GLD/GDX to outperform the equities market and derail the facade of an economic recovery.

So you think the powers that be can hold reality at bay indefinitely? They've been doing it for decades already, but I think some of the cracks are beginning to show...

[barrett]

Bud,

I actually think that gold is so widely ignored by most people in the US that it's not really on their radar if it's going up or down. Also, unless there is high inflation I think the price of gold is just dismissed as "one of those things." It's the same diagnosis I get from doctors in most cases.

[Lowe]

Gold has been declining since I have been in the PP.  Unfortunately I started around the time gold hit its peak in 2011, close to its all time high.

I look at the decades between 1980 and 2011, and I think, why am I buying this metal?

[dualstow]

Gold has been declining since I have been in the PP.  Unfortunately I started around the time gold hit its peak in 2011, close to its all time high.

I look at the decades between 1980 and 2011, and I think, why am I buying this metal?

Me too. I think I had a few weeks where it was up and since then it's been...less than golden.  That's ok, though.

[buddtholomew]

Gold has been declining since I have been in the PP.  Unfortunately I started around the time gold hit its peak in 2011, close to its all time high.

I look at the decades between 1980 and 2011, and I think, why am I buying this metal?

Me too. I think I had a few weeks where it was up and since then it's been...less than golden.  That's ok, though.

Me three...Current CAGR of 4.35%...PP has a long way to go to return to the +/- 9% CAGR.

[Lowe]

If we are going to talk about changing the PP, then I want to talk about decreasing the gold allocation, by substituting other assets.  Are there any assets that work?

[barrett]

Gentlemen, just playing devil's advocate here. Bud, has the PP bested inflation in your estimate? Also isn't it possible that buying gold at $1200 - $1300 might be looked at as a bargain in two or three years? I don't know the answers but the general idea is that the PP forces you to sell some up assets and accumulate some down assets. For a lot of people that would mean selling stocks and buying gold right about now.

I know that I have been spared the gold discomfort because I started my PP at the beginning of this year and everything is up for me so far.

[dualstow]

Also isn't it possible that buying gold at $1200 - $1300 might be looked at as a bargain in two or three years?

This is how I think about it, although I'm prepared to wait 20 or 30 years.

[barrett]

I think out of all the assets in the PP, gold stands the best chance of running way up in the next few years. Of course if I knew that for certain, I would go all in. It just doesn't seem to be a bad idea to have hard assets when the debt is growing ever higher and the US most likely will try to inflate it away.

3000 posts, Dualstow. You now enter the inner sanctum.

[dragoncar]

If we are going to talk about changing the PP, then I want to talk about decreasing the gold allocation, by substituting other assets.  Are there any assets that work?

Beanie babies

[portart]

The issue with gold is that it can languish for many years. When it does move, it can make up for years of nothing with breathtaking force. I bought my first large investment in gold when it was hated during the dot com era. It was scraping along the sidewalk at $280.00 an oz and all anyone wanted to buy was Cisco and AOL. My rational then, before I was in PP, was that it probably couldn't go lower so it was, in my mind, a low risk play. As it turned out that was the bottom. When things fell apart in the tech sector it began a crazy move that eventually topped out at $1,923. I sold out at $1,100 to pay off a large part of my mortgage to reduce personal debt.  It now is still above my sell price and it could revisit that price. I have done some trading in and out of my GDX and GDXJ and have raised some cash in my overall portfolio, having reached my financial goals for retirement. I may move some of that cash back into other things when I believe they are deals, such as the gold stocks.

We are now in a holding pattern once more as the market is providing a long bull market of growth. Be sure though, when the party in equities ends, gold will once more be waiting for it's next major move, and it probably will eclipse it's former highs by leaps and bounds. Much of the recovery we have seen in the markets isn't from normal market forces. Debt eventually will have to be serviced and the Fed's hopes of reflating away the debt hasn't panned out.

I am back to buying gold but this time I am also buying gold in the form of gold stocks. The gold stocks charts are similar to what gold was when it was on the bottom. If you look the charts, its all the same levels it was many years ago signifying a lower level of risk then the market which, when it falls, will be far lower being at all time highs. If they do nothing, you are at least close to the bottom waiting rather then the blood bath that the market will experience at some point in time, whenever that is.

So you new buyers of gold, keep the faith. Hold your 25% equities to ride out what is left, comfortable in the knowledge that your gold will save the day when fear drives the public back into it. It could be many things, a currency crises, a war, or simply inflation.

[LC475]

Portart, I don't think Harry Browne would have any very strong nor strenuous objection to your allocation. He advised always erring on the side of caution, and what could be more cautious than increasing your cash allocation?

[push3r]

I'm in the same boat as Portart.  Stocks, Gold, and Bonds, all look not so attractive right now for obvious reasons.  So, I guess I'll just sit on the sideline with boring cash and see. 

I think I saw some posts about the possibility of all three (stocks, gold and bonds) going down at the same time.  Is there an environment that this can happen?

[dualstow]

I think I saw some posts about the possibility of all three (stocks, gold and bonds) going down at the same time.  Is there an environment that this can happen?

I don't know what the cause would be, but we've certainly seen it happen, many times. That's why I continue to hold all four assets. Hard tell tell which one(s) would recover first.

[goodasgold]

I'm in the same boat as Portart.  Stocks, Gold, and Bonds, all look not so attractive right now for obvious reasons.  So, I guess I'll just sit on the sideline with boring cash and see.

Welcome to the forum, pursh3r. Would you be willing to let us know how you became interested in the PP?

As to your comments, I hate to start off with a negative response, but history and experience can be wise teachers. I think it is not a good idea to hang back, putting everything in cash, because it is impossible to predict how the various markets will jump, and once they have jumped it may be too late to cash in (forgive the pun  ) advantageously. As we worshippers in the Church of St. Harry Browne know, history is strewn with the skeletons of wannabe experts, many with impressive credentials, who took action based on "sure bets" and the four most fatal words in any investor's vocabulary: ("This time is different.") It is best to just bite the bullet and jump into the 4X25 PP whole hog (aside from a Variable Portfolio, of course.)

I think I saw some posts about the possibility of all three (stocks, gold and bonds) going down at the same time.  Is there an environment that this can happen?

This situation is extremely rare, although there are precedents, such as during 1981's Fed-induced "tight money recession." This type of recession is severe but usually of short duration. This is one of the few times when cash can save our proverbial bacon, providing dry powder for rebounding the PP way. But, once again, it is almost impossible to predict when such a situation will recur, if it ever does. For this reason, the tried and true 4X25 is the best way to go.

[push3r]

I'm in the same boat as Portart.  Stocks, Gold, and Bonds, all look not so attractive right now for obvious reasons.  So, I guess I'll just sit on the sideline with boring cash and see.

Welcome to the forum, pursh3r. Would you be willing to let us know how you became interested in the PP?

As to your comments, I hate to start off with a negative response, but history and experience can be wise teachers. I think it is not a good idea to hang back, putting everything in cash, because it is impossible to predict how the various markets will jump, and once they have jumped it may be too late to cash in (forgive the pun  ) advantageously. As we worshippers in the Church of St. Harry Browne know, history is strewn with the skeletons of wannabe experts, many with impressive credentials, who took action based on "sure bets" and the four most fatal words in any investor's vocabulary: ("This time is different.") It is best to just bite the bullet and jump into the 4X25 PP whole hog (aside from a Variable Portfolio, of course.)

I think I saw some posts about the possibility of all three (stocks, gold and bonds) going down at the same time.  Is there an environment that this can happen?

This situation is extremely rare, although there are precedents, such as during 1981's Fed-induced "tight money recession." This type of recession is severe but usually of short duration. This is one of the few times when cash can save our proverbial bacon, providing dry powder for rebounding the PP way. But, once again, it is almost impossible to predict when such a situation will recur, if it ever does. For this reason, the tried and true 4X25 is the best way to go.

Thanks. I am glad to have found a forum dedicated to hbpp.  I started self-directed investing back in 2005; and followed and read as much as I could about investing and the financial market.  Lucky me, I knew about index investment from the beginning in that it was the way to go and that the market was totally unpredictable.  I knew about diversification and looked for something that doesn't move in lock step with the market as I observed that when the-shit-hit-the-fan, almost everything goes the same way.  I really liked the Hussman Funds as Mr. Hussman was doing things not done by other funds in that he plays with options to increase/decrease risks based on facts/data about future returns...something like that.  He was right in the beginning, during the dotcom bust, but ever since the 2008 crash and QE, things had not been great.  So, I got frustrated since I couldn't find any decent strategy and that I did not want to talk to a financial adviser because I know that they are all the same in terms of recommending the standard stock/bond diversification portfolio.

Anyway, recently, I knew that I had to do something about my cash, so I started doing some reading again after putting off investment for a couple years. Additionally, I kind of got sick of the whole system and wish I could just go live on an island, living off the land and the sea. I don't remember how I came to HBPP, but somehow I happened upon it.  I checked out Craig's blog (crawlingroad.com), his book, and looked at the back-test results. I was amazed to find that the HBPP was such a simple strategy that kinds of line-up with my observation of the market; and that it has decent real risk adjusted return.  So, I was hooked.

The thing that still bothers me about the HBPP is the play with gold.  It would be a total pain to get, say 12.5% in real gold coin, and 12.5% in gold ETF for ease of rebalancing.  I can't imagine myself buying gold coin and lock it up in the safety deposit box at the bank.  Don't get me wrong, I don't mind owning gold as an investment (I made a small profit speculating on GLD when GOLD was at $500), but owning physical gold in this day and age is a bit too much work and weird.

As for all 3 core assets going down, maybe I am not knowledgeable enough to know that this type of environment is rare.  Have we ever had a time when stocks, bonds, and gold are "overvalued" like now?