The Awesome Portfolio

General Discussion on the Permanent Portfolio Strategy

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I Shrugged
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The Awesome Portfolio

Post by I Shrugged » Thu Dec 03, 2020 9:57 am

Not very different from the PP. BTW I enjoy this guy's free weekly email.

https://www.mauldineconomics.com/the-10 ... -portfolio
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Kriegsspiel
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Re: The Awesome Portfolio

Post by Kriegsspiel » Thu Dec 03, 2020 11:35 am

Adding a component of real estate to the 4 PP assets, that's pretty much what I'm doing. I call it the same thing, too ;D
I hated all the things I had toiled for under the sun, because I must leave them to the one who comes after me. Who knows whether that person will be wise or foolish? Yet they will have control over all the fruit of my toil into which I have poured my effort and skill under the sun. . . Nothing is better for a man than to eat and drink and enjoy his work.
- Ecclesiastes
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Smith1776
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Re: The Awesome Portfolio

Post by Smith1776 » Thu Dec 03, 2020 12:51 pm

Couldn't resist. ^-^


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“On balance, the financial system subtracts value from society.”
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Hal
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Re: The Awesome Portfolio

Post by Hal » Thu Dec 03, 2020 3:13 pm

Heh, that's what this character suggested as well ;)
https://www.youtube.com/watch?v=fswWHYhQSgE
Aussie GoldSmithPP - 25% PMGOLD, 75% VDCO
vincent_c
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Re: The Awesome Portfolio

Post by vincent_c » Thu Dec 03, 2020 3:35 pm

An investment property typically has the same kind of risk exposures as the PP so

land proxies gold which has no default risk
rents are dependent on credit risk
financing depends on interest rates and amortizations typically are long duration
you might even say the equity in the property is a cash buffer

This is why I weight low rise investment properties against the entire PP rather than combine it as part of the pie itself. The issues are that real estate is less liquid than a PP, have idiosyncratic risks so it's basically a business, and higher transaction costs. It's more difficult to rebalance too so you would really need an exceptionally large portfolio to justify it as a diversifier to the PP.
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I Shrugged
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Re: The Awesome Portfolio

Post by I Shrugged » Thu Dec 03, 2020 3:55 pm

REITs overcome several of those objections, though.
vincent_c
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Re: The Awesome Portfolio

Post by vincent_c » Thu Dec 03, 2020 4:14 pm

REITs are great if you can find one that actually does what you want, you can typically find good options for senior homes, healthcare, office, and apartments. Some of the commercial retail REITs are diversifying themselves into condos and property development.

I have no problem with paying the property management fee equivalent in the trustee and administrative costs associated with REITs which I have found many REITs to be reasonable and this makes it a truly passive investment.

I don't know any REITs that give you pure exposure to low rise multiplex rental properties though and REIT etfs especially VNQ seems to contain not only property REITs but also mortgage REITs and property developers.
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Kriegsspiel
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Re: The Awesome Portfolio

Post by Kriegsspiel » Thu Dec 03, 2020 4:25 pm

vincent_c wrote:
Thu Dec 03, 2020 4:14 pm
REITs are great if you can find one that actually does what you want, you can typically find good options for senior homes, healthcare, office, and apartments. Some of the commercial retail REITs are diversifying themselves into condos and property development.

I have no problem with paying the property management fee equivalent in the trustee and administrative costs associated with REITs which I have found many REITs to be reasonable and this makes it a truly passive investment.

I don't know any REITs that give you pure exposure to low rise multiplex rental properties though and REIT etfs especially VNQ seems to contain not only property REITs but also mortgage REITs and property developers.
I usually think of individual properties a bit like individual stocks, and REITs are a bit like index funds. Although really, it's more like you're starting your own business, and REITs are the corporation's stock, just like any other company except this one is in the real estate business. Just like you'd be, if you did it yourself. If you hire a property manager and they do everything for you, it's kind of a tiny REIT where you own all the shares. Anyways, I'm just rambling now.

Anything real estate-related is in my VP.
I hated all the things I had toiled for under the sun, because I must leave them to the one who comes after me. Who knows whether that person will be wise or foolish? Yet they will have control over all the fruit of my toil into which I have poured my effort and skill under the sun. . . Nothing is better for a man than to eat and drink and enjoy his work.
- Ecclesiastes
PrimalToker
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Re: The Awesome Portfolio

Post by PrimalToker » Thu Dec 03, 2020 4:36 pm

He has a new portfolio now? What happened to the old one?
https://www.mauldineconomics.com/editor ... olio-today
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I Shrugged
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Re: The Awesome Portfolio

Post by I Shrugged » Thu Dec 03, 2020 6:20 pm

PrimalToker wrote:
Thu Dec 03, 2020 4:36 pm
He has a new portfolio now? What happened to the old one?
https://www.mauldineconomics.com/editor ... olio-today
Performance chaser?
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Re: The Awesome Portfolio

Post by foglifter » Thu Dec 03, 2020 6:41 pm

REITS index is pretty much a sector mid cap fund. Meb Faber uses REITS in his Ivy Portfolio as well. The way I see it, replacing REITS with SC or SCV provides better diversification and allows to capture value and size factors. I just compared this portfolio with GB, not surprisingly GB has higher returns with slightly lower volatility, lower max drawdown, and higher Sharpe ratio:
https://tinyurl.com/yxnhjkva


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"Let every man divide his money into three parts, and invest a third in land, a third in business, and a third let him keep in reserve."
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vincent_c
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Re: The Awesome Portfolio

Post by vincent_c » Thu Dec 03, 2020 11:42 pm

Kriegsspiel wrote:
Thu Dec 03, 2020 4:25 pm
vincent_c wrote:
Thu Dec 03, 2020 4:14 pm
REITs are great if you can find one that actually does what you want, you can typically find good options for senior homes, healthcare, office, and apartments. Some of the commercial retail REITs are diversifying themselves into condos and property development.

I have no problem with paying the property management fee equivalent in the trustee and administrative costs associated with REITs which I have found many REITs to be reasonable and this makes it a truly passive investment.

I don't know any REITs that give you pure exposure to low rise multiplex rental properties though and REIT etfs especially VNQ seems to contain not only property REITs but also mortgage REITs and property developers.
I usually think of individual properties a bit like individual stocks, and REITs are a bit like index funds. Although really, it's more like you're starting your own business, and REITs are the corporation's stock, just like any other company except this one is in the real estate business. Just like you'd be, if you did it yourself. If you hire a property manager and they do everything for you, it's kind of a tiny REIT where you own all the shares. Anyways, I'm just rambling now.

Anything real estate-related is in my VP.
I’m curious.

How do you guys determine how much to allocate to the VP? I know it’s for money you are willing to lose but can you give me an idea in ratio terms relative to the PP how big a VP should be capped at?
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