Bonds and the PP -- still make sense?

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Re: Bonds and the PP -- still make sense?

Post by ahhrunforthehills » Fri Sep 11, 2020 4:31 pm

When I try to think all this through...

Can LTT go down? Yes, but there is likely a floor that is VERY close. Once near 0% interest, people will transition to gold. Gold is basically a zero coupon treasury without the counter-party risk.
Can LTT go up? Not likely since it will put downward pressure on the markets

Can STT go down? Not enough to care.
Can STT go up? Not enough to care.

Can Stocks go down? The fed is sitting on a huge pile of money ready to inject at a moment's notice into the market. Not likely.
Can Stocks go up? Didn't the fed recently sell back some of their positions when the market went to high. Sure does seem like they are keeping markets in a set range.

Can Gold go down? Of course. But ask yourself what else is happening if it does. If gold goes down, that means confidence has been restored. That means that stocks are up. If stocks are up, then the fed will want to use the opportunity to raise rates to give itself some breathing room (which will kill long term treasuries).
Can Gold go up? Of Course.

LTT is a dog long-term. The United States will not allow serious deflation to occur. With no gold standard, they can simply helicopter money the deflation away. Debased currency is bullish for stocks and gold.

I agree that the principles behind the PP appear broken at super low interest rates. I think a 10%-15% allocation in LTT is not a bad idea for those in a traditional PP.

Personally, I think that LTT still have some juice left in them. However, I don't think anyone on this forum is going to beat the big boys to the trade. By the time the retail investors start to move it will probably be too late.

The pig gets fat and the hog gets slaughtered.
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Re: Bonds and the PP -- still make sense?

Post by Tortoise » Fri Sep 11, 2020 4:36 pm

ahhrunforthehills wrote:
Fri Sep 11, 2020 4:31 pm
Can LTT go down? Yes, but there is likely a floor that is VERY close. Once near 0% interest, people will transition to gold.
Is that what has happened in countries that have even lower long-term interest rates than those in the U.S.? They've largely transitioned to gold?
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Re: Bonds and the PP -- still make sense?

Post by ahhrunforthehills » Fri Sep 11, 2020 4:58 pm

Tortoise wrote:
Fri Sep 11, 2020 4:36 pm
ahhrunforthehills wrote:
Fri Sep 11, 2020 4:31 pm
Can LTT go down? Yes, but there is likely a floor that is VERY close. Once near 0% interest, people will transition to gold.
Is that what has happened in countries that have even lower long-term interest rates than those in the U.S.? They've largely transitioned to gold?
Other countries do not have world reserve status with the ability to export inflation.

The rest of the world flees to US Treasuries for safety when they lack options in their own country, no? Where will people go when their Treasury life-boat springs a leak? Typically gold AFAIK.
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Re: Bonds and the PP -- still make sense?

Post by Tortoise » Fri Sep 11, 2020 5:35 pm

I think we might be conflating the ideas of yield-seeking and flight to safety.

For example, a person might switch from one country's LTT to another country's LTT because the latter offers a higher yield. That would be yield-seeking.

Alternatively, a person might switch from a given country's LTT to another country's LTT -- or gold -- because he wants greater safety (i.e., lower risk of losing his principal via default or inflation). That would be flight to safety.

In your previous post, you said that if U.S. LTT yields approach zero, holders of those LTTs will likely transition to gold. I assume you didn't mean such people would be motivated primarily by yield-chasing since gold doesn't pay interest. That implies you must have been referring to a flight to safety.

If so, what is it about LTTs yielding close to zero that would imply lower safety (such as higher risk of default or inflation)?
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Re: Bonds and the PP -- still make sense?

Post by Kevin K. » Fri Sep 11, 2020 5:54 pm

It seems to me that some of us (yours truly included) take it as gospel that LTT's or Treasuries in general always offer substantial protection during flights to safety since they did so spectacularly during the 2008 crisis (after which the PP gained a lot of adherents). But historically this hasn't been the case, as this article (which I posted earlier in this thread) points out (see "Bonds go up when stocks go down):

https://movement.capital/the-bond-offer-you-can-refuse/

At less than 1.5% LTT's would have to go to 0% or even negative to offer another big bump to the PP as they did during the first quarter of this year. Could it happen? Sure - and I can see leaving 10-15% in them to take advantage of that kind of last hurrah scenario, but personally I think replacing most of the LTT's with iBonds, 6-12 month CD's paying ~.80% and T-bills makes sense. It's probably a somewhat easier pill to swallow for me because I'm running a modified version of the Golden Butterfly so the bond + cash allocation is only 40%; I know the idea of putting most or all of the PP's 50% bond and cash allocation into safe cash with a negative real return is going to be a no-go for most (as is monkeying with the PP at all, of course).
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Re: Bonds and the PP -- still make sense?

Post by ahhrunforthehills » Fri Sep 11, 2020 11:50 pm

Tortoise wrote:
Fri Sep 11, 2020 5:35 pm

If so, what is it about LTTs yielding close to zero that would imply lower safety (such as higher risk of default or inflation)?
LTT getting closer to zero increases the risk of future inflation. Why would it not?

Just to clarify, I think default of LTT bonds is obviously EXTREMELY unlikely. However, with that said, it is important to still keep in mind that gold has absolutely zero counterparty risk. It might seem like a minor point... but even HB was a stickler for Treasuries over Bank Account, Physical instead of paper. That extra layer clearly mattered.

Furthermore, once LTTs drop below zero, they essentially become an investment put. Another HB no-no.

Aside from the HB koolaid...

I do not view this as a “risk” matter. I do view it as a yield matter. Going negative on rates basically fines the banks for not loaning money. The banks simply pass those costs onto its customers. From my understanding, that is a large reason why governments view this approach as destructive instead of helpful. There is also the negative impact it has on pensions, savers, and the elderly. Again, not very helpful.

Keep in mind that, again, the countries that have negative rates have had different objectives than we would. USD exports are only like 12% of GDP, so trying to have a more competitive exchange rate would have a lot less of an impact than it would for those other countries (not to mention it didn’t even appear to really help them that much).

Again, I’m just not seeing it.

The US can implement YCC, but isn’t that inflationary?

I am not trying to rain on anybody’s parade and certainly not trying to convince anyone here what to do.

However, after months of searching I haven’t found a single convincing reason that made me think holding LTTs could be profitable over the long term. I don’t see the limited gains that could still be juiced from it being worth the risk.
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Re: Bonds and the PP -- still make sense?

Post by mathjak107 » Sat Sep 12, 2020 5:30 am

ahhrunforthehills wrote:
Fri Sep 11, 2020 11:50 pm
Tortoise wrote:
Fri Sep 11, 2020 5:35 pm

If so, what is it about LTTs yielding close to zero that would imply lower safety (such as higher risk of default or inflation)?
LTT getting closer to zero increases the risk of future inflation. Why would it not?

Just to clarify, I think default of LTT bonds is obviously EXTREMELY unlikely. However, with that said, it is important to still keep in mind that gold has absolutely zero counterparty risk. It might seem like a minor point... but even HB was a stickler for Treasuries over Bank Account, Physical instead of paper. That extra layer clearly mattered.

Furthermore, once LTTs drop below zero, they essentially become an investment put. Another HB no-no.

Aside from the HB koolaid...

I do not view this as a “risk” matter. I do view it as a yield matter. Going negative on rates basically fines the banks for not loaning money. The banks simply pass those costs onto its customers. From my understanding, that is a large reason why governments view this approach as destructive instead of helpful. There is also the negative impact it has on pensions, savers, and the elderly. Again, not very helpful.

Keep in mind that, again, the countries that have negative rates have had different objectives than we would. USD exports are only like 12% of GDP, so trying to have a more competitive exchange rate would have a lot less of an impact than it would for those other countries (not to mention it didn’t even appear to really help them that much).

Again, I’m just not seeing it.

The US can implement YCC, but isn’t that inflationary?

I am not trying to rain on anybody’s parade and certainly not trying to convince anyone here what to do.

However, after months of searching I haven’t found a single convincing reason that made me think holding LTTs could be profitable over the long term. I don’t see the limited gains that could still be juiced from it being worth the risk.
pretty much my exact feeling at this point ... i doubt hb would have taken the risk ... it has turned in to pure speculation on rates and inflation because of the weight and volatility long term bonds have. this is not just a case of rates falling .. it is rates falling in to negative , something that may have bad ramifications .
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Re: Bonds and the PP -- still make sense?

Post by Kriegsspiel » Sat Sep 12, 2020 7:22 am

My thought is even if bonds get devastated, the other assets should make up for it. If nobody wants to buy bonds, they'll probably want to buy gold or stocks.
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Re: Bonds and the PP -- still make sense?

Post by mathjak107 » Sat Sep 12, 2020 7:46 am

Kriegsspiel wrote:
Sat Sep 12, 2020 7:22 am
My thought is even if bonds get devastated, the other assets should make up for it. If nobody wants to buy bonds, they'll probably want to buy gold or stocks.
at this point that could be more a speculation then anything else, stagflation if it happens is not good for any assets .. i am very skeptical of long term bonds going forward ... we are all basically guessing at the outcome and hoping .... but sometimes i think discretion is the better part of valor and far less interest rate sensitive bond types may be a safer choice .
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Re: Bonds and the PP -- still make sense?

Post by Tortoise » Sat Sep 12, 2020 2:21 pm

ahhrunforthehills wrote:
Fri Sep 11, 2020 11:50 pm
LTT getting closer to zero increases the risk of future inflation. Why would it not?
Not exactly. HB’s explanation of the PP was that LTT yields tend to go lower when the market expects deflation in the future, and higher when the market expects inflation in the future. So if LTT yields approach zero, that would suggest the market has deflationary expectations.

Will inflation come eventually? Almost certainly. I just have no confidence in my ability to predict when it will arrive, so I choose to remain fully invested in all four PP assets at all times. Makes my life a lot simpler and more worry-free.

Like Kriegs said, if LTTs take a hit, one or more of the other three assets will probably dampen the blow eventually. The PP is a single diversified portfolio, not a collection of four separate portfolios.
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Re: Bonds and the PP -- still make sense?

Post by Smith1776 » Sat Sep 12, 2020 2:29 pm

A bit of a Canadian wrinkle in this discussion.

I can understand the appeal of following Ray Dalio's advice and diversifying the PP away from nominal bonds into TIPS. However, inflation linked bonds are not as enticing as a diversifier here in the north. Canada's version of TIPS are called Real Return Bonds (RRBs).

The problem with RRBs is that they don't have the deflation floor that TIPS have. You can lose arbitrarily large amounts of principal and coupon payments during a deflationary spiral. As such, perhaps the temptation to diversify into inflation linked bonds is generally less tempting for me than for others. Consequently, that may colour my perspective in this discussion.

TIPS are actually quite a phenomenal instrument, as far as paper goes. RRBs aren't as great of a deal.
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Re: Bonds and the PP -- still make sense?

Post by mathjak107 » Sat Sep 12, 2020 2:54 pm

Tortoise wrote:
Sat Sep 12, 2020 2:21 pm
ahhrunforthehills wrote:
Fri Sep 11, 2020 11:50 pm
LTT getting closer to zero increases the risk of future inflation. Why would it not?
Not exactly. HB’s explanation of the PP was that LTT yields tend to go lower when the market expects deflation in the future, and higher when the market expects inflation in the future. So if LTT yields approach zero, that would suggest the market has deflationary expectations.

Will inflation come eventually? Almost certainly. I just have no confidence in my ability to predict when it will arrive, so I choose to remain fully invested in all four PP assets at all times. Makes my life a lot simpler and more worry-free.

Like Kriegs said, if LTTs take a hit, one or more of the other three assets will probably dampen the blow eventually. The PP is a single diversified portfolio, not a collection of four separate portfolios.
he only problem is while the pp is one overall portfolio , when two or more of those powerful movers happen to move in the same direction as a trend the portfolio can move as much as 80-100% equities .

we have so much more effecting bonds and gold then just economic outcomes ...
like we saw in march , margin calls and lack of liquidity killed bonds and gold as stocks plunged ....you have machines doing 80% of all trades in a day with no regard for much other then their own software
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Re: Bonds and the PP -- still make sense?

Post by Tortoise » Sat Sep 12, 2020 3:06 pm

If you look at short timeframes on the order of days or a few months, I agree.

If you look at longer timeframes on the order of a couple of years or more, I think PP assets moving together tend to eventually separate and go their own ways again.
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Re: Bonds and the PP -- still make sense?

Post by mathjak107 » Sat Sep 12, 2020 4:34 pm

Tortoise wrote:
Sat Sep 12, 2020 3:06 pm
If you look at short timeframes on the order of days or a few months, I agree.

If you look at longer timeframes on the order of a couple of years or more, I think PP assets moving together tend to eventually separate and go their own ways again.
At least they used to
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Re: Bonds and the PP -- still make sense?

Post by Tortoise » Sat Sep 12, 2020 4:48 pm

mathjak107 wrote:
Sat Sep 12, 2020 4:34 pm
Tortoise wrote:
Sat Sep 12, 2020 3:06 pm
If you look at short timeframes on the order of days or a few months, I agree.

If you look at longer timeframes on the order of a couple of years or more, I think PP assets moving together tend to eventually separate and go their own ways again.
At least they used to
They still do.
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Re: Bonds and the PP -- still make sense?

Post by Kriegsspiel » Sat Sep 12, 2020 5:29 pm

mathjak seems to make some money playing the short game, no shade there. I just like to put some of my money on cruise control and accept the returns it gives. Like the quant analyst at the hedge fund who said he has all his money in the total market index. Well... not like that at all, but the same ethos.
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Re: Bonds and the PP -- still make sense?

Post by mathjak107 » Sat Sep 12, 2020 6:16 pm

The problem is after a while even moderate downturns on large dollars become insane amounts .....a mere 7% drop today when fuel tanks are full for me represents a decade of maxing out my 401k at catch up ..


So as the dollars you deal with get bigger , protecting that money from these drops becomes important ....with me at 68 and my wife at 70 these spectacular dollar rides ain’t no fun ...

So after a nice run up like we had the last few years and being at all time highs there are things I will consider more risky at times that other times are the safer path .....


I am not comfortable with long term bonds at these levels ...I think the downside far exceeds any likely upside or protection .

I think gold may actually work out well and is way less riskier in my opinion than TLT .....

I still own loads of bonds but nothing that is overly interest rate sensitive
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Re: Bonds and the PP -- still make sense?

Post by Kriegsspiel » Sat Sep 12, 2020 7:01 pm

mathjak107 wrote:
Sat Sep 12, 2020 6:16 pm
The problem is after a while even moderate downturns on large dollars become insane amounts .....a mere 7% drop today when fuel tanks are full for me represents a decade of maxing out my 401k at catch up ..


So as the dollars you deal with get bigger , protecting that money from these drops becomes important ....with me at 68 and my wife at 70 these spectacular dollar rides ain’t no fun ...

So after a nice run up like we had the last few years and being at all time highs there are things I will consider more risky at times that other times are the safer path .....


I am not comfortable with long term bonds at these levels ...I think the downside far exceeds any likely upside or protection .

I think gold may actually work out well and is way less riskier in my opinion than TLT .....

I still own loads of bonds but nothing that is overly interest rate sensitive
budd, you're posting under the wrong account again.
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Re: Bonds and the PP -- still make sense?

Post by Smith1776 » Sat Sep 12, 2020 7:36 pm

Kriegsspiel wrote:
Sat Sep 12, 2020 7:01 pm


budd, you're posting under the wrong account again.
lol
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Re: Bonds and the PP -- still make sense?

Post by ahhrunforthehills » Sat Sep 12, 2020 10:33 pm

Tortoise wrote:
Sat Sep 12, 2020 3:06 pm
If you look at short timeframes on the order of days or a few months, I agree.

If you look at longer timeframes on the order of a couple of years or more, I think PP assets moving together tend to eventually separate and go their own ways again.
I think that using TIME as a factor oversimplifies these dynamics. TIME is not what realigns correlations, it is the underlying factors.

This situation is the equivalent of building a teeter-totter on a hill. The lower rates get, many more external factors start coming into play which impact correlations (or lack thereof).

Fun fact, in case you were unaware, in 1981 Browne was advising people to adjust their holdings based on expected inflation levels. He had 6 different options of varying levels of deflation/inflation. Long story short, he would have advised 5% LTT if you were “Uncertain” about inflation levels going forward. It looks like he advised an LTT allocation of -10% (yes, that is a NEGATIVE) if you expected “Rising Inflation” (and by -15% if you were expecting “Runaway Inflation”).

1981 was of course the very end of a 30+ year LTT rate increase from 2.09% to 14.14% that began around 1946.

After he wrote those words, yields went from 14.14% in 1981 to 0.74% in 2020. Not a surprise at all that he later up’d his LTT allocation to 25% in the middle of that falling rate environment.

Harry Brown seemed to suffer from the same recency bias as every other human. He literally came up with the PP in the midrange of those interest rates coming down.

If I split the difference between Harry Brown #1 (recency bias of rising rates) and Harry Browne #2 (recency bias of falling rates) I still come up with about 10% LTT holdings (if not less)

Harry Browne today would have dumped the 4x25 PP in a heartbeat as LTT interest rates approach zero. No doubt.
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Re: Bonds and the PP -- still make sense?

Post by boglerdude » Sun Sep 13, 2020 5:43 am

What was going on culturally from 66-86 when inflation was over 2%

These days millions of us are obsessing daily about the inflation number. So how did the Fed get away with being over 2%
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Re: Bonds and the PP -- still make sense?

Post by mathjak107 » Sun Sep 13, 2020 7:42 am

ahhrunforthehills wrote:
Sat Sep 12, 2020 10:33 pm
Tortoise wrote:
Sat Sep 12, 2020 3:06 pm
If you look at short timeframes on the order of days or a few months, I agree.

If you look at longer timeframes on the order of a couple of years or more, I think PP assets moving together tend to eventually separate and go their own ways again.
I think that using TIME as a factor oversimplifies these dynamics. TIME is not what realigns correlations, it is the underlying factors.

This situation is the equivalent of building a teeter-totter on a hill. The lower rates get, many more external factors start coming into play which impact correlations (or lack thereof).

Fun fact, in case you were unaware, in 1981 Browne was advising people to adjust their holdings based on expected inflation levels. He had 6 different options of varying levels of deflation/inflation. Long story short, he would have advised 5% LTT if you were “Uncertain” about inflation levels going forward. It looks like he advised an LTT allocation of -10% (yes, that is a NEGATIVE) if you expected “Rising Inflation” (and by -15% if you were expecting “Runaway Inflation”).

1981 was of course the very end of a 30+ year LTT rate increase from 2.09% to 14.14% that began around 1946.

After he wrote those words, yields went from 14.14% in 1981 to 0.74% in 2020. Not a surprise at all that he later up’d his LTT allocation to 25% in the middle of that falling rate environment.

Harry Brown seemed to suffer from the same recency bias as every other human. He literally came up with the PP in the midrange of those interest rates coming down.

If I split the difference between Harry Brown #1 (recency bias of rising rates) and Harry Browne #2 (recency bias of falling rates) I still come up with about 10% LTT holdings (if not less)

Harry Browne today would have dumped the 4x25 PP in a heartbeat as LTT interest rates approach zero. No doubt.
exactly my sentiments ...it reaches a point that betting on negative rates is a speculation and no longer part of the traditional process where lower rates and economic slow down go hand in hand and counted on like night follows day .

you can only take the elevator to the lowest floor and then the steps have to be counted on to get to the sub basement .... then counting on disabled folks to take the steps to get to the sub basement ....it likely won't happen much .

... my opinion is we entered a different world then harry ever pictured .....

i remember we laughed at having a 5-1/4% passbook account . who knew lol...

so i simply replaced the bond portion of the pp but kept everything else pretty much .

the model i use is 21.20 % equities but uses a fund with a higher beta than an index fund up 24% ytd ,,, 25% ultra conservative bond fund , 19% short term treasury fund 1-3 years , 18% total bond fund , 18% managed high income fund ( numbers rounded )

then i keep 250-300k in gold riding herd .
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Re: Bonds and the PP -- still make sense?

Post by Kevin K. » Sun Sep 13, 2020 10:37 am

ahhrunforthehills wrote:
Sat Sep 12, 2020 10:33 pm
Tortoise wrote:
Sat Sep 12, 2020 3:06 pm
If you look at short timeframes on the order of days or a few months, I agree.

If you look at longer timeframes on the order of a couple of years or more, I think PP assets moving together tend to eventually separate and go their own ways again.
I think that using TIME as a factor oversimplifies these dynamics. TIME is not what realigns correlations, it is the underlying factors.

This situation is the equivalent of building a teeter-totter on a hill. The lower rates get, many more external factors start coming into play which impact correlations (or lack thereof).

Fun fact, in case you were unaware, in 1981 Browne was advising people to adjust their holdings based on expected inflation levels. He had 6 different options of varying levels of deflation/inflation. Long story short, he would have advised 5% LTT if you were “Uncertain” about inflation levels going forward. It looks like he advised an LTT allocation of -10% (yes, that is a NEGATIVE) if you expected “Rising Inflation” (and by -15% if you were expecting “Runaway Inflation”).

1981 was of course the very end of a 30+ year LTT rate increase from 2.09% to 14.14% that began around 1946.

After he wrote those words, yields went from 14.14% in 1981 to 0.74% in 2020. Not a surprise at all that he later up’d his LTT allocation to 25% in the middle of that falling rate environment.

Harry Brown seemed to suffer from the same recency bias as every other human. He literally came up with the PP in the midrange of those interest rates coming down.

If I split the difference between Harry Brown #1 (recency bias of rising rates) and Harry Browne #2 (recency bias of falling rates) I still come up with about 10% LTT holdings (if not less)

Harry Browne today would have dumped the 4x25 PP in a heartbeat as LTT interest rates approach zero. No doubt.
This is a really great post! And I really appreciate the points you and mathjak107 are driving home here - including that with no disrespect for Harry Browne's genius both he and his recommendations were products of their time - how could it be otherwise?

What I've come around to - and I'm nowhere near as well-versed in the entire body of Browne's work (radio shows, interviews, etc.) as you folks are - is the view that the principles Browne taught (diversification of assets based on economic conditions, not just backtesting, a healthy distrust of both Wall Street and Washington, etc.) are "Permanent" but the 4 x 25% isn't.
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Re: Bonds and the PP -- still make sense?

Post by PrimalToker » Sun Sep 13, 2020 3:20 pm

Kevin K. wrote:
Sun Sep 13, 2020 10:37 am
ahhrunforthehills wrote:
Sat Sep 12, 2020 10:33 pm
Tortoise wrote:
Sat Sep 12, 2020 3:06 pm
If you look at short timeframes on the order of days or a few months, I agree.

If you look at longer timeframes on the order of a couple of years or more, I think PP assets moving together tend to eventually separate and go their own ways again.
I think that using TIME as a factor oversimplifies these dynamics. TIME is not what realigns correlations, it is the underlying factors.

This situation is the equivalent of building a teeter-totter on a hill. The lower rates get, many more external factors start coming into play which impact correlations (or lack thereof).

Fun fact, in case you were unaware, in 1981 Browne was advising people to adjust their holdings based on expected inflation levels. He had 6 different options of varying levels of deflation/inflation. Long story short, he would have advised 5% LTT if you were “Uncertain” about inflation levels going forward. It looks like he advised an LTT allocation of -10% (yes, that is a NEGATIVE) if you expected “Rising Inflation” (and by -15% if you were expecting “Runaway Inflation”).

1981 was of course the very end of a 30+ year LTT rate increase from 2.09% to 14.14% that began around 1946.

After he wrote those words, yields went from 14.14% in 1981 to 0.74% in 2020. Not a surprise at all that he later up’d his LTT allocation to 25% in the middle of that falling rate environment.

Harry Brown seemed to suffer from the same recency bias as every other human. He literally came up with the PP in the midrange of those interest rates coming down.

If I split the difference between Harry Brown #1 (recency bias of rising rates) and Harry Browne #2 (recency bias of falling rates) I still come up with about 10% LTT holdings (if not less)

Harry Browne today would have dumped the 4x25 PP in a heartbeat as LTT interest rates approach zero. No doubt.
This is a really great post! And I really appreciate the points you and mathjak107 are driving home here - including that with no disrespect for Harry Browne's genius both he and his recommendations were products of their time - how could it be otherwise?

What I've come around to - and I'm nowhere near as well-versed in the entire body of Browne's work (radio shows, interviews, etc.) as you folks are - is the view that the principles Browne taught (diversification of assets based on economic conditions, not just backtesting, a healthy distrust of both Wall Street and Washington, etc.) are "Permanent" but the 4 x 25% isn't.
I am not convinced HB would change his views based on today's environment, I've been re-listening to the HB radio shows which is his most recent thinking I think he would stick to 4x25 and say its all the same speculation he's heard for 5 decades claiming one asset had reached its end and to move into another. People said the same things "Can rates go lower?" "Rates are only up from here" "What about inflation?" "Is the LTT bull run is over?". The mere asking of these questions means you're speculating and predicting the future. You don't buy the bonds based on yield or what is happening in the economy, you buy the longest bonds you can no matter what because that is the best deflation protection you can buy at the time. He's also said if you're philosophically opposed to government bonds, buy the longest corporate bonds with the highest credit ratings, doesn't need to be treasuries.
The PP is based on the economic conditions from Austrian economics (the business cycle). Inflation, Deflation, Prosperity, Recession. If you don't agree with Austrian economics then the PP won't agree with you haha. However substituting a deflation asset like LTTs for another deflation asset such as STTs or even cash I think HB would agree it wouldn't break the PP but he would say you would lose the "kick" the long bonds give you during deflation.
Whether you stick with LTTs or move to cash it doesn't really matter, you're going to do better than the average investor out there.
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Re: Bonds and the PP -- still make sense?

Post by mathjak107 » Sun Sep 13, 2020 3:25 pm

We can’t make assumptions about what Harry would or wouldn’t do ....but we can draw our own conclusions based on all the info out there ..discussing Harry’s moves today is irrelevant , he ain’t here.

We are pretty much on our own here ....we all need to decide for ourselves and not count on what Harry would have done or not ...there is very strong logic out there as to why it could be a very risky bet to continue to hang out in Tlt ....

You may have more users today breaking ranks on long term bonds then ever before
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