Help Diversifying the PP for Global World

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Jim Taylor
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Help Diversifying the PP for Global World

Post by Jim Taylor » Mon Aug 06, 2018 1:33 pm

I have read people say that the global economy is much more relevant today than it was when Harry came up with the PP. I wonder if a global PP is better than doing a US or any other country specific one. Or would adding some global aspects to the PP be the best course of action. Browne always said that PRPFX is a fine choice, but not as good as his 4x25. Of course it would be hard for him to be very critical of a fund he was an advisor for and run by a friend. Nevertheless he did say the 25% decision was not from any merits of testing or math, he just felt it made sense. He said that one could adjust the percentages as one saw fit as long as they kept them that way and did not constantly readjust. He said to keep at least 15% but no more than 35% in any one part.

The original PP works very well already since Gold is totally universal globally. Many people buy US stocks across the world, and of course treasuries are the reserve currency.

I like the idea of the golden butterfly 5x20, but in reality two of the 20's is really just 40% in stocks. What if we stuck with the 5x20, with the 4 original asset's, but made the fifth 20 section international.

20% Stocks
20% Short Term Treasuries
20% Long Term Treaturies
20% Gold
20% International
~5% Int stocks
~5% intl cash?? Not sure what this would be
~5% intl bonds (Unhedged)
~5% gold but how to invest so it is priced against international currencies?

The problem I see is gold is gold throughout the world. Unless the international gold can be priced in international currencies, then we would still be at 25% holding gold. Then I am not sure what to use for international cash. Would it still be short term treasuries anyways? Or is there a fund that does a mixture of soverign short term bonds?

In the end does this help protect one more than sticking with the simple 4? Its more of a headache, but does reduce most of the holdings so that any one item is less of a hit, but if the global choices are inferior then it is not worth it. Then again since the original PP asset's have international pull, would the international products behave much different anyways, again making it not worth the effort.
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europeanwizard
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Re: Help Diversifying the PP for Global World

Post by europeanwizard » Mon Aug 06, 2018 2:22 pm

What you could do, is keep an original PP. Then as part of your variable portfolio, add a few things which you think add some value.

My EU PP barely protected against inflation last year. However I did have some gains because I've got a small variable portfolio with peer-to-peer lending and a tiny bit of crypto. It worked well.
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Kriegsspiel
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Re: Help Diversifying the PP for Global World

Post by Kriegsspiel » Mon Aug 06, 2018 5:51 pm

I agree with europeanwizard, and have a regular vanilla PP that I rebalance within itself, and a VP with roughly half US stocks, and half international stocks.
Jim Taylor
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Re: Help Diversifying the PP for Global World

Post by Jim Taylor » Mon Aug 06, 2018 6:26 pm

Good points there thank you. I see the logic of keeping the PP simple and using the VP for more complex and concentrated bets.
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