I'm Done!

General Discussion on the Permanent Portfolio Strategy

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buddtholomew
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I'm Done!

Post by buddtholomew » Wed Mar 14, 2012 12:58 pm

I am tired of watching my portfolio total decline on a daily basis. Gold and Treasuries are taking another beating today. The portfolio served its purpose when markets were in decline, but now it is time to transition to a more conventional 60/40 allocation.
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.
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stone
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Re: I'm Done!

Post by stone » Wed Mar 14, 2012 1:19 pm

buddtholomew wrote: I am tired of watching my portfolio total decline on a daily basis. Gold and Treasuries are taking another beating today. The portfolio served its purpose when markets were in decline, but now it is time to transition to a more conventional 60/40 allocation.
Where do you predict stocks will rise to and why?

I was presuming that it was on the cards for stocks to indulge in another plunge fairly soon.
"Good judgment comes from experience. Experience comes from bad judgment." - Mulla Nasrudin
murphy_p_t
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Re: I'm Done!

Post by murphy_p_t » Wed Mar 14, 2012 1:35 pm

buddtholomew wrote: I am tired of watching my portfolio total decline on a daily basis. Gold and Treasuries are taking another beating today. The portfolio served its purpose when markets were in decline, but now it is time to transition to a more conventional 60/40 allocation.
how long have you been w/ the PP?
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buddtholomew
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Re: I'm Done!

Post by buddtholomew » Wed Mar 14, 2012 1:37 pm

stone wrote:
buddtholomew wrote: I am tired of watching my portfolio total decline on a daily basis. Gold and Treasuries are taking another beating today. The portfolio served its purpose when markets were in decline, but now it is time to transition to a more conventional 60/40 allocation.
Where do you predict stocks will rise to and why?

I was presuming that it was on the cards for stocks to indulge in another plunge fairly soon.
I do not attempt to forecast the price of stocks in the future. I am more concerned with preservation of capital and have grown weary of watching the PP decline over the last few weeks.
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.
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buddtholomew
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Re: I'm Done!

Post by buddtholomew » Wed Mar 14, 2012 1:38 pm

murphy_p_t wrote:
buddtholomew wrote: I am tired of watching my portfolio total decline on a daily basis. Gold and Treasuries are taking another beating today. The portfolio served its purpose when markets were in decline, but now it is time to transition to a more conventional 60/40 allocation.
how long have you been w/ the PP?
Almost a year. Waiting to complete 12+ months before realizing gains and moving on.
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.
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MediumTex
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Re: I'm Done!

Post by MediumTex » Wed Mar 14, 2012 1:48 pm

buddtholomew wrote:
murphy_p_t wrote:
buddtholomew wrote: I am tired of watching my portfolio total decline on a daily basis. Gold and Treasuries are taking another beating today. The portfolio served its purpose when markets were in decline, but now it is time to transition to a more conventional 60/40 allocation.
how long have you been w/ the PP?
Almost a year. Waiting to complete 12+ months before realizing gains and moving on.
So you've had about a 10-12% gain over the 12 month period?

Is that more or less than you hoped for when you adopted the strategy?

I took a look at Vanguard Wellington (close to a 60/40 split) and its return over the last year has been around 8%, but with a lot more volatility.

I understand that you don't like volatility, but it seems to me that where you are going you are going to see WAY more volatility than you have experienced with the PP.

I'm just trying to understand what your strategy is.
Only strength can cooperate. Weakness can only beg.
-Dwight Eisenhower
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KevinW
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Re: I'm Done!

Post by KevinW » Wed Mar 14, 2012 1:50 pm

MediumTex wrote: I took a look at Vanguard Wellington (close to a 60/40 split) and its return over the last year has been around 8%, but with a lot more volatility.
As an aside, I use Vanguard Balanced Index Fund Admiral (VBIAX) for these kinds of quick comparisons. Now that the LifeStrategy funds have strict asset allocations, they will make for good benchmarks too.
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buddtholomew
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Re: I'm Done!

Post by buddtholomew » Wed Mar 14, 2012 1:57 pm

MediumTex wrote:
buddtholomew wrote:
murphy_p_t wrote: how long have you been w/ the PP?
Almost a year. Waiting to complete 12+ months before realizing gains and moving on.
So you've had about a 10-12% gain over the 12 month period?

Is that more or less than you hoped for when you adopted the strategy?

I took a look at Vanguard Wellington (close to a 60/40 split) and its return over the last year has been around 8%, but with a lot more volatility.

I understand that you don't like volatility, but it seems to me that where you are going you are going to see WAY more volatility than you have experienced with the PP.

I'm just trying to understand what your strategy is.
The 10-12% unrealized gain is actually more than I expected and I would like to realize these profits before they vanish. I do not have a strategy in-mind, as I was convinced that the PP was the right portfolio for me. However; declines of > 1% on a daily basis is definitely not what I had in mind.
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.
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Re: I'm Done!

Post by BugMan » Wed Mar 14, 2012 2:03 pm

Have you considered using PRPFX instead of the 4x25? I know it's not perfect (active manger, fees, etc.) but it does serve the purpose of "hiding" volatility within the contents. Thoughts?


buddtholomew wrote:
MediumTex wrote:
buddtholomew wrote: Almost a year. Waiting to complete 12+ months before realizing gains and moving on.
So you've had about a 10-12% gain over the 12 month period?

Is that more or less than you hoped for when you adopted the strategy?

I took a look at Vanguard Wellington (close to a 60/40 split) and its return over the last year has been around 8%, but with a lot more volatility.

I understand that you don't like volatility, but it seems to me that where you are going you are going to see WAY more volatility than you have experienced with the PP.

I'm just trying to understand what your strategy is.
The 10-12% unrealized gain is actually more than I expected and I would like to realize these profits before they vanish. I do not have a strategy in-mind, as I was convinced that the PP was the right portfolio for me. However; declines of > 1% on a daily basis is definitely not what I had in mind.
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Re: I'm Done!

Post by stone » Wed Mar 14, 2012 2:09 pm

Buddtholowmew, my UK PP seems to do nothing for weeks then have a spasm of a 4% loss that then quickly corrects to make up that 4% loss giving a 1% overall gain. Those 1% gains seem to build up to give about 1% per month as gains. I guess that has been what you have been seeing too? I'm less and less expecting to see a long series of 4% losses with no correction. In fact if we do get 8% yield LTT and $200 gold by the summer, I'm sure I'll just rebalance into them with gung-ho confidence.

I guess it is the overall portfolio volatility that bugs you rather than the individual components' volatility?
"Good judgment comes from experience. Experience comes from bad judgment." - Mulla Nasrudin
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MediumTex
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Re: I'm Done!

Post by MediumTex » Wed Mar 14, 2012 2:09 pm

buddtholomew wrote: The 10-12% unrealized gain is actually more than I expected and I would like to realize these profits before they vanish. I do not have a strategy in-mind, as I was convinced that the PP was the right portfolio for me. However; declines of > 1% on a daily basis is definitely not what I had in mind.
The PP has been up 3 out of the last 5 days.

YTD it's up about 1%.

It's having a bad day today, but I wouldn't choose a bad day to sell everything.  If I was going to move to a different strategy I would probably do it when the PP is hitting a peak.
Only strength can cooperate. Weakness can only beg.
-Dwight Eisenhower
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Gosso
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Re: I'm Done!

Post by Gosso » Wed Mar 14, 2012 2:13 pm

buddtholomew wrote: The 10-12% unrealized gain is actually more than I expected and I would like to realize these profits before they vanish. I do not have a strategy in-mind, as I was convinced that the PP was the right portfolio for me. However; declines of > 1% on a daily basis is definitely not what I had in mind.
As I type this the Canadian PP is down 1.08% for the day, while a Canadian 60/40 is down 0.87% for the day.  Over the past year the Canadian PP has gained 7.8%, while the 60/40 is down 1.1%.

I don't think it is possible to completely eliminate daily/weekly/monthly fluctuations from the total portfolio, while still maintaining a decent annual real return of 3-6%.

I suppose you could go all short term bonds, but that is a guaranteed real loss on your assets.

It's tough, and I can sense your frustration, but all I can do is tell you to simply accept that there will be some daily/weekly fluctuations in the total value of the PP.  If you cannot accept this then go with all short term bonds...although I won't even get into the risks your taking with this option.

I wish you luck in whatever decision you make.

PS - Before you posted this I was thinking of making a new thread saying that now would be a great time to jump into the PP.
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