Is the PP going to hold up?

General Discussion on the Permanent Portfolio Strategy

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sophie
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Re: Is the PP going to hold up?

Post by sophie » Sun Feb 11, 2018 10:03 am

Buddtholomew, what are you struggling with exactly? Is it just buying anything in this climate that is unnerving? I can relate to that, but so far I can stick with PP therapy. I'd definitely look at alternatives if that got too difficult to implement.

What about switching to the Desert portfolio? It's tailor made for you. Enough stocks to let you enjoy the good times, just enough gold to cushion the losses in a 1970s style scenario, and the rest is extremely user-friendly short to intermediate bonds. And not much of the worst type of PP tracking error. If you did that, your rebalance would have you buying a bit of gold, a nice slug of attractively priced stocks, and 5 year bonds to be held to maturity instead of LTTs. If you even need to rebalance.
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Re: Is the PP going to hold up?

Post by jhogue » Sun Feb 11, 2018 10:39 am

If Buddtholomew did not exist, this forum would have to invent him.

Keeping a perpetual worrier around lets the rest of us see just how ridiculous it is to try to micro-manage the Permanent Portfolio

Thanks, Bud.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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buddtholomew
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Re: Is the PP going to hold up?

Post by buddtholomew » Sun Feb 11, 2018 10:54 am

I am the “Resident Worrier” O0

Sophie, let me try and lay out the details:

Stocks/Gold/LTT’s/Cash
25/21/16/38

I am cash heavy at 38% and am comfortable with the Gold allocation as it is 7.5% of total portfolio. That leaves Stocks and LTT’s with the SPY down approximately 10% from recent highs and treasuries down around 8%

1. Buy LTT’s to bring allocation closer to 20%.
2. Buy LTT’s and stocks with the recent correction although stocks are at 25%
3. Buy LTT’s in PP and stocks in retirement accounts.
3. Do nothing.

Overall portfolio is 53.5/39/7.5 with healthy slug of ITT.’s in Tax-deferred so closely resembles what you are outlining.
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Kriegsspiel
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Re: Is the PP going to hold up?

Post by Kriegsspiel » Sun Feb 11, 2018 11:20 am

bud used to have an avatar and a Resident Worrior tag, but he's really been lacking in his forum identity hygiene recently.
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Re: Is the PP going to hold up?

Post by Kriegsspiel » Sun Feb 11, 2018 11:26 am

If I were you, bud, I'd go with option 1.
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jhogue
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Re: Is the PP going to hold up?

Post by jhogue » Sun Feb 11, 2018 1:04 pm

Bud,

Don’t just do something, stand there!

I don’t see anything wrong with keeping a 38% cash position until the equity markets simmer down. It will dampen the volatility of your overall portfolio.

But, then again, maybe that is just me. I signed up for the PP because I wanted less drama, not more.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: Is the PP going to hold up?

Post by ochotona » Sun Feb 11, 2018 8:30 pm

Budd:

Instead of just thinking "stocks or bonds", why not buy some short term corporate bond which matures in about 6-12 months? Kick the can forward 6-12 months, and earn way better than bank cash, it's riskier than Treasuries, but way less risky than stocks. don't buy high yield.

You might have less potential for buyer's remorse in 6-12 months... maybe stocks will be in a real bear market (or not), and maybe bond prices will have stopped falling (or not). Maybe also put in a limit order for gold at $1280.
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sophie
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Re: Is the PP going to hold up?

Post by sophie » Sun Feb 11, 2018 10:07 pm

So jhogue and ochotona basically vote same: Budd, hang on to your cash. Probably a good idea. That's a lot of stocks you have, especially after last week. I vote the same.

Maybe you want to switch your perspective from the PP and Some Other Portfolio which are somehow intertwined, to just one master portfolio with 7.5% gold, X% stocks, and the rest IT. What's your desired stock allocation?
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Re: Is the PP going to hold up?

Post by glennds » Mon Feb 12, 2018 9:59 am

Granted it's only been a day and the PP is a marathon, not a sprint BUT....

If Budd (or anyone) had held his nose taken Option #1 last week, it would be looking like a pretty good move today seeing as how long T bond is up 80bps as of a few minutes ago.

Who would have thought that would be remotely possible when the all the hysteria last week was reportedly due to inflation and interest rate concerns?
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ochotona
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Re: Is the PP going to hold up?

Post by ochotona » Mon Feb 12, 2018 10:59 am

Budd maybe buy Pacer ETF symbol PTLC and let it get you out of trouble automatically. Instead of SP500 index fund.
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Re: Is the PP going to hold up?

Post by buddtholomew » Mon Feb 12, 2018 11:12 am

Yikes, everyone is all over the map...
I’ll just stick to the plan and rebalance into LTT’s.
Thanks for all the input.
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ochotona
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Re: Is the PP going to hold up?

Post by ochotona » Mon Feb 12, 2018 12:17 pm

buddtholomew wrote:Yikes, everyone is all over the map...
I’ll just stick to the plan and rebalance into LTT’s.
Thanks for all the input.
Trying to guess how to make you happy is all over the map
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buddtholomew
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Re: Is the PP going to hold up?

Post by buddtholomew » Mon Feb 12, 2018 12:21 pm

ochotona wrote:
buddtholomew wrote:Yikes, everyone is all over the map...
I’ll just stick to the plan and rebalance into LTT’s.
Thanks for all the input.
Trying to guess how to make you happy is all over the map
Bad choice of words, sorry.
What I meant is there are a variety of opinions and rather than deviate from the plan will follow the plan.
Not trying to make drastic changes to the portfolio.

Got to stop typing while driving.
Appreciate all the help, thank you.
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Re: Is the PP going to hold up?

Post by dualstow » Mon Feb 12, 2018 8:12 pm

Tyler wrote:FYI -- This thread inspired a longer post about the benefits of investing firewalls, and naturally there's a good PP example. For full effect, be sure to read it while drinking coffee next to a warm fire. ;)

https://portfoliocharts.com/2018/02/10/ ... e-markets/
I missed this post earlier, although I had seen the p’charts post. Good stuff. And I was drinking coffee!
ISHARES TRUST 20+ YEAR TREASURY BD ETF's price dropped 2.51 % to $136.89 at 01:17 PM EST today.
-- vanguard email to me
https://www.city-journal.org/journalism-advocacy-over-reporting
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Re: Is the PP going to hold up?

Post by KevinW » Tue Feb 13, 2018 12:29 am

bitcoininthevp wrote:
I propose a portfolio which is a traditional permanent portfolio mix with a bitcoin variable portfolio sidecar.

Hows:
  • 24% gold
    24% cash
    24% stocks
    24% long term bonds
    4% bitcoin
Turns out the back testing is amazing.

Ill need your help with the name.
How about the "Fifth Element Portfolio"?

~~~

Moments like these remind me why I like holding the PP. I hear chatter about a meltdown in the markets, and instead of feeling anxious, I have the same mindset as when I sit down to watch the latest episode of Sunny in Philadelphia. "What hilarious predicament did the clowns cook up this week?"

Just stay the course, let the portfolio whir along as designed, and enjoy life.
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Re: Is the PP going to hold up?

Post by stuper1 » Tue Feb 13, 2018 9:50 am

bitcoininthevp wrote:
I propose a portfolio which is a traditional permanent portfolio mix with a bitcoin variable portfolio sidecar.

Hows:
  • 24% gold
    24% cash
    24% stocks
    24% long term bonds
    4% bitcoin
Turns out the back testing is amazing.
Sure, the backtesting of that portfolio would be amazing at this point. It would be even better if you just put 100% in bitcoin. Do you really think that the next 9 years of bitcoin price increases will be anything like the last 9 years? I guess it could be, but how much money should one bet on that? For me, the answer would be: no more than I can afford to lose.
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Re: Is the PP going to hold up?

Post by bitcoininthevp » Wed Feb 14, 2018 9:45 am

stuper1 wrote:
bitcoininthevp wrote:
I propose a portfolio which is a traditional permanent portfolio mix with a bitcoin variable portfolio sidecar.

Hows:
  • 24% gold
    24% cash
    24% stocks
    24% long term bonds
    4% bitcoin
Turns out the back testing is amazing.
Sure, the backtesting of that portfolio would be amazing at this point. It would be even better if you just put 100% in bitcoin. Do you really think that the next 9 years of bitcoin price increases will be anything like the last 9 years? I guess it could be, but how much money should one bet on that? For me, the answer would be: no more than I can afford to lose.
I should have indicated sarcasm for my back testing comment :)
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buddtholomew
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Re: Is the PP going to hold up?

Post by buddtholomew » Wed Feb 14, 2018 10:14 am

For the record I haven’t purchased TLT, still mulling it over and with today’s CPI number it looks less appealing now.
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Re: Is the PP going to hold up?

Post by Cortopassi » Wed Feb 14, 2018 10:17 am

Hope you bought gold.. :D
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Re: Is the PP going to hold up?

Post by craigr » Wed Feb 14, 2018 1:59 pm

Howdy folks!

I rebalanced from stocks in January and February as they hit the way upper band for me. I had overweighted stocks in my VP after Trump's election figuring it would be a good boost and it paid off well also.

But now I'm back again at the boring 25% bands as I usually am and am not too fussed about things. The market dip last week would have been scarier if I wasn't diversified. But even with the market dip, it is still up quite a lot from when Trump got into office so it's good to keep things in perspective.

I have been running this portfolio now for over 10 years at this point and the one thing I've learned is over time it all kind of works out. And by not owning too much of any one single asset, it's hard to get as badly burned as can happen with other allocations.

Hope all of you are well.
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Re: Is the PP going to hold up?

Post by blue_ruin17 » Sat Feb 17, 2018 1:06 pm

Good to hear from you Craig, and thanks for stopping by.

I always find it fascinating to witness my own reaction to market fluctuations... with the PP, you observe the market madness from what feels almost an out-of-body experience: even though a full quarter of my core assets are invested in a particular asset that has plunged, I am totally emotionally disconnected from any feelings of panic, impending doom, or even of mild anxiety. The zen-like poise that the PP allows you to assume even in the midst of severe volatility or panic really is one of the most important features built-in to the PP.
"Like a confident pack, a confident portfolio provides both strength in fact, as well as — and this is the part I bet you’re missing right now and the focus of this note — strength in spirit."
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Re: Is the PP going to hold up?

Post by dualstow » Tue Feb 20, 2018 12:19 am

aha, so that’s you in the avatar. O0
ISHARES TRUST 20+ YEAR TREASURY BD ETF's price dropped 2.51 % to $136.89 at 01:17 PM EST today.
-- vanguard email to me
https://www.city-journal.org/journalism-advocacy-over-reporting
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Re: Is the PP going to hold up?

Post by blue_ruin17 » Tue Feb 20, 2018 2:21 pm

;)
"Like a confident pack, a confident portfolio provides both strength in fact, as well as — and this is the part I bet you’re missing right now and the focus of this note — strength in spirit."
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Re: Is the PP going to hold up?

Post by dualstow » Wed Feb 21, 2018 3:44 pm

Your kindred spirit, Budd?

https://www.bogleheads.org/forum/viewto ... 3#p3795060
(BOGLEHEAD fantasytensai)
What do I do with my bond funds that have been dropping like a rock? I'm already at 80/20 but I still feel absolutely screwed by my bond fund allocations. I have the risk tolerance for 90/10 but it just sickens me to sell VBTLX at such a huge loss.
ISHARES TRUST 20+ YEAR TREASURY BD ETF's price dropped 2.51 % to $136.89 at 01:17 PM EST today.
-- vanguard email to me
https://www.city-journal.org/journalism-advocacy-over-reporting
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Re: Is the PP going to hold up?

Post by buddtholomew » Thu Mar 01, 2018 9:00 am

I'll answer the OP's question - No.
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