PP Five years out?

General Discussion on the Permanent Portfolio Strategy

Moderator: Global Moderator

Post Reply
bedraggled
Executive Member
Executive Member
Posts: 705
Joined: Sat Sep 13, 2014 4:20 am

PP Five years out?

Post by bedraggled » Thu Apr 02, 2020 11:21 am

With the possibility of negative interest rates ahead, might the PP deliver a CAGR of 3% in the next 5 years? Does this sound reasonable?

And, yes, I know we cannot predict the future.

Thanks.
User avatar
jalanlong
Executive Member
Executive Member
Posts: 829
Joined: Mon Jul 01, 2019 7:30 am

Re: PP Five years out?

Post by jalanlong » Thu Apr 02, 2020 11:33 am

bedraggled wrote:
Thu Apr 02, 2020 11:21 am
With the possibility of negative interest rates ahead, might the PP deliver a CAGR of 3% in the next 5 years? Does this sound reasonable?

And, yes, I know we cannot predict the future.

Thanks.
As an addition to that question, I would like to know what is the minimum return most people would accept on the PP (or any portfolio) before deciding to just place all their funds in a "high" rate savings account. Certainly at some point the volatility, counterparty risk and/or just general time consumed by managing a portfolio is no longer compensated enough to make the portfolio worth it vs a simple, basic insured savings account (or IBonds or what have you).
User avatar
Tyler
Executive Member
Executive Member
Posts: 2066
Joined: Sat Nov 12, 2011 3:23 pm
Contact:

Re: PP Five years out?

Post by Tyler » Thu Apr 02, 2020 12:00 pm

jalanlong wrote:
Thu Apr 02, 2020 11:33 am
As an addition to that question, I would like to know what is the minimum return most people would accept on the PP (or any portfolio) before deciding to just place all their funds in a "high" rate savings account. Certainly at some point the volatility, counterparty risk and/or just general time consumed by managing a portfolio is no longer compensated enough to make the portfolio worth it vs a simple, basic insured savings account (or IBonds or what have you).
I have no idea what the future holds, but I imagine that the conditions that make the PP undesirable would also beat down interest rates on savings accounts just as badly. High returns in a savings account (compared to safe treasury rates) are generally a sign that there's more risk there than you realize.
User avatar
I Shrugged
Executive Member
Executive Member
Posts: 2062
Joined: Tue Dec 18, 2012 6:35 pm

Re: PP Five years out?

Post by I Shrugged » Thu Apr 02, 2020 1:13 pm

bedraggled wrote:
Thu Apr 02, 2020 11:21 am
With the possibility of negative interest rates ahead, might the PP deliver a CAGR of 3% in the next 5 years? Does this sound reasonable?

And, yes, I know we cannot predict the future.

Thanks.
3% gross, or real?
Probably the same number, lol.

It sounds reasonable but conservative. If you could lock that deal in, would you?
I think I'd take 2% real if I could lock it in.
bedraggled
Executive Member
Executive Member
Posts: 705
Joined: Sat Sep 13, 2014 4:20 am

Re: PP Five years out?

Post by bedraggled » Thu Apr 02, 2020 1:56 pm

3% real is what I meant. Can we dare assume 3% real, averaged over the next 5 years? 2% would be ok, too.

I would like to think the PP could handle negative rates and float along giving better than 0.1% on a bank savings account. Therefore 2% real would be ok, too.

That 1966-1981 era may be upon us or maybe the time of Japan since 1990.

Your thoughts, please.
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: PP Five years out?

Post by pmward » Thu Apr 02, 2020 2:30 pm

bedraggled wrote:
Thu Apr 02, 2020 1:56 pm
3% real is what I meant. Can we dare assume 3% real, averaged over the next 5 years? 2% would be ok, too.

I would like to think the PP could handle negative rates and float along giving better than 0.1% on a bank savings account. Therefore 2% real would be ok, too.

That 1966-1981 era may be upon us or maybe the time of Japan since 1990.

Your thoughts, please.
You can go to Tyler's website and look at how the PP performed for a Japanese investor. It really didn't do all that bad considering...
bedraggled
Executive Member
Executive Member
Posts: 705
Joined: Sat Sep 13, 2014 4:20 am

Re: PP Five years out?

Post by bedraggled » Thu Apr 02, 2020 5:20 pm

Thanks, pmward. I will do that.

Cheers.
User avatar
mathjak107
Executive Member
Executive Member
Posts: 4456
Joined: Fri Jun 19, 2015 2:54 am
Location: bayside queens ny
Contact:

Re: PP Five years out?

Post by mathjak107 » Mon Apr 06, 2020 3:55 am

pmward wrote:
Thu Apr 02, 2020 2:30 pm
bedraggled wrote:
Thu Apr 02, 2020 1:56 pm
3% real is what I meant. Can we dare assume 3% real, averaged over the next 5 years? 2% would be ok, too.

I would like to think the PP could handle negative rates and float along giving better than 0.1% on a bank savings account. Therefore 2% real would be ok, too.

That 1966-1981 era may be upon us or maybe the time of Japan since 1990.

Your thoughts, please.
You can go to Tyler's website and look at how the PP performed for a Japanese investor. It really didn't do all that bad considering...
if you were in japan and just bought equity markets in other parts of the world you did okay ... everyone assumes you only bought that countries market.
Post Reply