Gyroscopic Investing

From http://www.etfreplay.com/combine.aspx, the answer is 9.5%

Pretty darn good! The winning asset was bonds, at 27% YTD return. Stocks did well too, with a broad market index gaining 13%. Gold and cash were the laggards, each yielding basically zero percent. If you believe CPI-U (1.3% for the last 12 months) to be reasonably representative of inflation, that gives us PP holders approximately an 8.2% real return!

The big loser this year was PRPFX, which ended the year flat, probably due to excessive inflation assets and not enough long bonds.

Edit: correct numbers now

I'm picturing Harry Browne with a Santa cap on.

Thank you for that, oh Pointed one! Excellent returns and low downside risk. This is why I invest in the PP and sleep like a baby.

I posted a year review here showing +9.1% with Morningstar's data and the basic ETFs. It could be higher if you own bonds directly with longer maturity than the ETF, but it's close enough. It was a good year compared to last even with market volatility and gold being basically flat:

https://web.archive.org/web/20160324133 ... urns-2014/

I'm perplexed.  My tracking of my portfolio says 6.7% - huge difference.  I don't know if I went wrong somewhere in the tracking, if it's the funds I'm holding or if I missed a rebalance.  Etf replay doesn't track all my funds bc I'm not all ETFs.  Does anyone know where I could backtest the following portfolio:

Stocks - FSTVX
Bonds -.TLT
Gold - PHYS
Cash - SHY

I am very disappointed to learn that, with all of the positive features of the HBPP, that it is not a cure for bad hair, as evidenced by Craig's blog. Very disappointing!

Reub wrote: I am very disappointed to learn that, with all of the positive features of the HBPP, that it is not a cure for bad hair, as evidenced by Craig's blog. Very disappointing!

Ah, you don't want the Crawling Road blog. You want a different anagram of his name: ROGAIN’D CRAWL

Desert wrote: Craig, congrats on the Fuji summit!  Did you climb in August?

I did climb on August. It was hot. I've climbed a few mountains, but Fuji was so packed with people it was like a Disney ride to get up there!

Pointedstick wrote:
The big loser this year was PRPFX, which ended the year flat, probably due to excessive inflation assets and not enough long bonds.

Flat? The last time I looked PRPFX was down around 8%. Did I misread something or did they have a sudden last minute bounce?

Ad Orientem wrote:

Pointedstick wrote:
The big loser this year was PRPFX, which ended the year flat, probably due to excessive inflation assets and not enough long bonds.

Flat? The last time I looked PRPFX was down around 8%. Did I misread something or did they have a sudden last minute bounce?

I'm just going by etfreplay:

[img width=600]https://i.imgur.com/SEAqSES.png[/img]

And Morningstar seems to agree.

Looks like the 2014 PP return was a little lower than I originally posted because when I looked yesterday, the tool hadn't yet taken into account the last day's performance.

Pointedstick wrote:

Ad Orientem wrote:

Pointedstick wrote:
The big loser this year was PRPFX, which ended the year flat, probably due to excessive inflation assets and not enough long bonds.

Flat? The last time I looked PRPFX was down around 8%. Did I misread something or did they have a sudden last minute bounce?

I'm just going by etfreplay:

[img width=600]https://i.imgur.com/SEAqSES.png[/img]

And Morningstar seems to agree.

Looks like the 2014 PP return was a little lower than I originally posted because when I looked yesterday, the tool hadn't yet taken into account the last day's performance.

Hmm Yahoo charts show a drop of a little over 8%...

https://finance.yahoo.com/echarts?s=PRP ... 2linear%22}

However taking a closer look I see a precipitous drop in December. I am going to guess this was a repeat of what happened last year where there was a large end of the year distribution that skewed the charts.

TennPaGa wrote:

Ad Orientem wrote:
However taking a closer look I see a precipitous drop in December. I am going to guess this was a repeat of what happened last year where there was a large end of the year distribution that skewed the charts.

[img width=500]http://i.imgur.com/66gwanq.png[/img]

Yep.  The big drop on Dec 9-10 coincided with a LT cap gain + dividend payout of $3.17 on 12-10-2014.

http://www.permanentportfoliofunds.com/pd_div.htm

Yes, another hefty, end of year, taxable distribution of around 8%! PRPFX is certainly NOT the HBPP.

Ok, I back tested my funds on Yahoo Finance - my original numbers were not starting at the beginning of the year so I did a little better than I thought - 7.98% return.  Still curious where the discrepancy is coming from though.  Did my individual funds really under perform by that much?  My funds again:

Stocks - FSTVX
Bonds - TLT
Cash - SHY
Gold - PHYS

Also, when calculating the YTD, are people here using the prices from the close of Dec 31 2013 to close Dec 31 2014 or the open Jan 2nd 2013 to close Dec 31 2014?

Holy Mathilda.  PRPFX is really having a hard time of it.  Doesn't even look like the PP's first cousin anymore.  Are the light long bonds, silver, Swiss francs, and natural resource stocks really that much of a drag, or there some serious management issues going on?

Tom,
Generally it's the first business day of the year to the last. I haven't looked at the numbers but you need to remember that PHYS is a closed ended fund and as such it doesn't track the price of bullion. I have beat this horse to death on a lot of threads so what's one more? Closed ended gold funds almost always trade at some sort of premium or discount depending on market sentiment. That makes them wonderful for speculative investing, but they can seriously skew the returns on a PP. IMHO they are strictly VP material.

sophie wrote: Holy Mathilda.  PRPFX is really having a hard time of it.  Doesn't even look like the PP's first cousin anymore.  Are the light long bonds, silver, Swiss francs, and natural resource stocks really that much of a drag, or there some serious management issues going on?

When you are overweighted for inflation, and much of the world is mired in a near deflationary depression, you are not going to do well.

On a side note; PERM also underperformed the HBPP, though not horribly so. It posted a gain of slightly over 6%.

Ad Orientum - turns out I'm dumb and had an error in my spreadsheet for calculating the percentage.  The truth is that my margin of error isn't nearly as bad as I thought.  From open Jan 2, 2014 to close Dec 31, 2014 is a gain of 8.53% - much more believable difference in performance.

So PHYS doesn't track the price of bullion AT ALL?  Even though you can actually redeem it for bullion?  Is it worth completely selling out of and switching to GLD?

Tom wrote: Ok, I back tested my funds on Yahoo Finance - my original numbers were not starting at the beginning of the year so I did a little better than I thought - 7.98% return.  Still curious where the discrepancy is coming from though.  Did my individual funds really under perform by that much?  My funds again:

Stocks - FSTVX
Bonds - TLT
Cash - SHY
Gold - PHYS

It seems Yahoo! hasn't recorded the December dividend of 1.3% for FSTVX, but once that is included then FSTVX had a total return of 12.3%, which is close to the total return of SPY at 13.5%.  PHYS also closely matched GLD, where the returns where -1.9% and -2.2%, respectively.

Using the historical close adjusted prices from Yahoo! I get the following for the PP:
SPY = 13.5%
GLD = -2.2%
TLT = 27.3%
SHY = 0.45%
PP = 9.8% total return for 2014 (from Dec 31, 2013 to Dec 31, 2014)

Gosso - I must just be really really bad at math?  I'm calculating by subtracting my overall portfolio's ending value from teh starting value - dividing the difference by the starting value and multiplying by 100.  I'm getting 8.53% for my return.  I know there's differences between FSTVX vs SPY and PHYS vs GLD, but not that big of a difference for me to get 8.53% and you 9.8%

Tom wrote: Ad Orientum - turns out I'm dumb and had an error in my spreadsheet for calculating the percentage.  The truth is that my margin of error isn't nearly as bad as I thought.  From open Jan 2, 2014 to close Dec 31, 2014 is a gain of 8.53% - much more believable difference in performance.

So PHYS doesn't track the price of bullion AT ALL?  Even though you can actually redeem it for bullion?  Is it worth completely selling out of and switching to GLD?

8.5% is ball park for the PP's performance for this year. There will always be minor differences here and there. Regarding closed ended funds, I'm not saying they won't ever track the price of gold. I am saying that they frequently deviate based on market sentiment. If gold is hot, closed ended funds are likely to be smoking hot. If gold is cold, then these kinds of funds can smell like last weeks trash left to ferment in the furnace room. I'd stick to physical gold if at all possible. If you need or want a fund for ease of rebalancing then I'd probably just go with IAU.

Tom wrote: Gosso - I must just be really really bad at math?  I'm calculating by subtracting my overall portfolio's ending value from teh starting value - dividing the difference by the starting value and multiplying by 100.  I'm getting 8.53% for my return.  I know there's differences between FSTVX vs SPY and PHYS vs GLD, but not that big of a difference for me to get 8.53% and you 9.8%

Well when I use fstvx and phys for your PP I get 9.2%, and once you add in the missing dividend of 1.3% from fstvx then your PP has a return of 9.5%.  The difference between our numbers could be from start dates, dividends/interest, or the data might not be fully up-to-date.

Thanks Gosso!  I should clarify - I have two PPs.  One for my regular savings and one for retirement.  In my retirement I hold long term bonds directly and physical gold.

I hold funds for my regular savings b/c it's just easier and more liquid (particularly the gold portion) that way if I ever needed the cash in a hurry.  I went with PHYS since I'm likely to sell in the mid-term future and the tax treatment is better. Do I risk losing way more in gold beyond what bullion is losing by staying in PHYS?  If that's the case, I'm concerned, but this year and last weren't hot years for gold and it tracked fairly close to bullion both years. What is IAU about?

Thanks again!

Since I hold the Canadian PP, I thought I'd share how our results differ from what you guys had in 2014.

Stocks: +8.1%
Bonds: +11.5%
Gold: +4.4%
Cash: +0.1%
Total: +6.0%

As you can see the resource heavy Canadian stock market got hit hard by the pull back in oil price. However that exit of foreign investment and reduced economic activity resulted in lower currency value making gold positive relative to slight negative for US PP. Long bonds did not perform as good as the US I assume because of higher inflation since Canada imports a lot with a lower currency value.

Now one thing I've done with my PP that has helped this year is owning half Canadian, half US stock - helped with a 10-15% rise in currency and rise in US stock market. I just don't like how resource heavy the Canadian market is. In times of prosperity, the market won't necessarily go up since commodities are cyclical.  63% of the Canadian index is financials, mining and oil/gas - the S&P500 by comparison is 29%...