The All-Weather Portfolio for Uncertain Times

General Discussion on the Permanent Portfolio Strategy

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vnatale
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The All-Weather Portfolio for Uncertain Times

Post by vnatale » Sat May 13, 2023 8:21 pm

This blog is designed to record the investment journey of a UK based small investor.


The All-Weather Portfolio for Uncertain Times

https://diyinvestoruk.blogspot.com/2023 ... rtain.html

"Could this is the ultimate set-and-forget portfolio?"

"Further reading - The Permanent Portfolio by Craig Rowland & J.M. Lawson"
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Dieter
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Re: The All-Weather Portfolio for Uncertain Times

Post by Dieter » Sat May 13, 2023 11:20 pm

vnatale wrote:
Sat May 13, 2023 8:21 pm
This blog is designed to record the investment journey of a UK based small investor.


The All-Weather Portfolio for Uncertain Times

https://diyinvestoruk.blogspot.com/2023 ... rtain.html

"Could this is the ultimate set-and-forget portfolio?"

"Further reading - The Permanent Portfolio by Craig Rowland & J.M. Lawson"
Weird portfolio — never heard of it 🙂
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vnatale
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Re: The All-Weather Portfolio for Uncertain Times

Post by vnatale » Sun May 14, 2023 8:27 am

Dieter wrote:
Sat May 13, 2023 11:20 pm

vnatale wrote:
Sat May 13, 2023 8:21 pm

This blog is designed to record the investment journey of a UK based small investor.


The All-Weather Portfolio for Uncertain Times

https://diyinvestoruk.blogspot.com/2023 ... rtain.html

"Could this is the ultimate set-and-forget portfolio?"

"Further reading - The Permanent Portfolio by Craig Rowland & J.M. Lawson"


Weird portfolio — never heard of it 🙂


!!!!!!!!!!!!!!!!!!!!!!
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
D1984
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Re: The All-Weather Portfolio for Uncertain Times

Post by D1984 » Sun May 14, 2023 7:37 pm

vnatale wrote:
Sat May 13, 2023 8:21 pm
This blog is designed to record the investment journey of a UK based small investor.


The All-Weather Portfolio for Uncertain Times

https://diyinvestoruk.blogspot.com/2023 ... rtain.html

"Could this is the ultimate set-and-forget portfolio?"

"Further reading - The Permanent Portfolio by Craig Rowland & J.M. Lawson"
It seems to me he just copied the PP allocation percentages and everything and renamed it the "All-Weather Portfolio". Correct me if I'm wrong but I was under the impression that the actual "All-Weather Portfolio" was Ray Dalio's creation and consisted of a blend of stocks, IT Treasuries, LT Treasuries, commodities, and gold.

Also, the guy that put together that DIY Investor website went ahead and repeated a myth that has been debunked many times already (namely that the US stock market took 25 years or so to recover from the crash after the 1929 peak). To wit:

"during the Wall St crash of 1929, the Dow Jones index fell almost 90% from 381 in September 1929 to a low of 41 in July 1932. It was not until the end of 1954 that the index passed its previous peak of 381"

While technically true, this is more than a little misleading. For starters, it doesn't include the effects of inflation and/or deflation and also doesn't--since the DJIA is a price only index--include the compounding generated by reinvesting dividends.

Second, the folks that managed the DJIA decided (for some inexplicable reason) to kick out Coca-Cola in mid-1935 and IBM in late 1939. Had they not done this (and IIRC had they also not kicked out United Aircraft when it broke up into several different aircraft and aircraft engine manufacturers but had instead held all the successor stocks; aircraft manufacturers struggled during the Depression but--for rather obvious reasons--did pretty well during 1941-1945....EDITED TO ADD: After rechecking my sources, it appears they kicked out United Aircraft in the mid-1930s and re-added it again in 1939; however, since the "early 1930s United Aircraft & Transport Corp." split into several different companies it still only had a weight--when re-added to the index--in the 1941-45 period of perhaps around 40 or 45% of what it would've been had they simply kept all of the successor companies in the index) then the dividends-reinvested total return of the Dow would've reached its 1929 peak level in early 1946.

Third, the DJIA isn't the whole market nor is it a particularly broad index. If you had (and all of the following examples will be assuming an investment made at the 1929 peak) instead chosen the S&P 90 (the "S&P Composite" ), you would have been at breakeven in real dividend reinvested terms by late July or early August 1945; for the broader S&P 423 stock index you would've been at breakeven in real terms (with reinvested dividends) towards the middle or end of January 1945, and the TSM index would've--had it existed back then--been at breakeven in real terms (again, when including the effects of reinvested dividends) by late June of 1944.

Finally, the above dates aren't even actually the first "real terms breakeven" dates; for the three S&P indices mentioned above (albeit not for the DJIA) you would've been at breakeven for the very first time by mid or late November 1936 and could've at least sold at no loss in real terms (and quite likely at a slight gain depending on the exact day you sold) at any point from then until some time in April of 1937. Granted, the "in real terms total return indexes" mentioned above did fall once more during the 1937-38 and 1939-early 1942 bear markets and would not been permanently higher again until the mid to late 1940s but if you are looking for the first time frame you could've sold without a loss then late 1936 or early 1937 would've been it.
Last edited by D1984 on Sun May 14, 2023 8:14 pm, edited 2 times in total.
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vnatale
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Re: The All-Weather Portfolio for Uncertain Times

Post by vnatale » Sun May 14, 2023 7:49 pm

D1984 wrote:
Sun May 14, 2023 7:37 pm

vnatale wrote:
Sat May 13, 2023 8:21 pm

This blog is designed to record the investment journey of a UK based small investor.


The All-Weather Portfolio for Uncertain Times

https://diyinvestoruk.blogspot.com/2023 ... rtain.html

"Could this is the ultimate set-and-forget portfolio?"

"Further reading - The Permanent Portfolio by Craig Rowland & J.M. Lawson"


It seems to me he just copied the PP allocation percentages and everything and renamed it the "Al-Weather Portfolio". Correct me if I'm wrong but I was under the impression that the actual "All-Weather Portfolio" was Ray Dalio's creation and consisted of a blend of stocks, IT Treasuries, LT Treasuries, commodities, and gold.

Also, the guy that put together that DIY Investor website went ahead and repeated a myth that has been debunked many times already (namely that the US stock market took 25 years or so to recover from the crash after the 1929 peak). To wit:

"during the Wall St crash of 1929, the Dow Jones index fell almost 90% from 381 in September 1929 to a low of 41 in July 1932. It was not until the end of 1954 that the index passed its previous peak of 381"

While technically true, this is more than a little misleading. For starters, it doesn't include the effects of inflation and/or deflation and also doesn't--since the DJIA is a price only index--include the compounding generated by reinvesting dividends.

Second, the folks that managed the DJIA decided (for some inexplicable reason) to kick out Coca-Cola in mid-1935 and IBM in late 1939. Had they not done this (and IIRC had they also not kicked out United Aircraft when it broke up into several different aircraft and aircraft engine manufacturers but had instead held all the successor stocks; aircraft manufacturers struggled during the Depression but--for rather obvious reasons--did pretty well during 1941-1945) then the dividends-reinvested total return of the Dow would've reached its 1929 peak level in early 1946.

Third, the DJIA isn't the whole market nor is it a particularly broad index. If you had (and all of the following examples will be assuming an investment made at the 1929 peak) instead chosen the S&P 90 (the "S&P Composite" ), you would have been at breakeven in real dividend reinvested terms by late July or early August 1945; for the broader S&P 423 stock index you would've been at breakeven in real terms (with reinvested dividends) towards the middle or end of January 1945, and the TSM index would've--had it existed back then--been at breakeven in real terms (again, when including the effects of reinvested dividends) by late June of 1944.

Finally, the above dates aren't even actually the first "real terms breakeven" dates; for the three S&P indices mentioned above (albeit not for the DJIA) you would've been at breakeven for the very first time by mid or late November 1936 and could've at least sold at no loss in real terms (and quite likely at a slight gain depending on the exact day you sold) at any point from then until some time in April of 1937. Granted, the "in real terms total return indexes" mentioned above did fall once more during the 1937-38 and 1939-early 1942 bear markets and would not been permanently higher again until the mid to late 1940s but if you are looking for the first time frame you could've sold without a loss then late 1936 or early 1937 would've been it.


He was merely calling The Permanent Portfolio "The All-Weather Portfolio". He was not attempting to claim that he was inventing anything new. He started off by discussing that Harry Browne had invented it and then he concluded with giving Craig and Tex's book as a reference.

However, the rest of your criticisms / corrections seem valid.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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