Oh how it hurts to see no gains

[Khisanth]

I recently also traded in some GLD for some American Eagle coins. Boy, I have to say that made a huge difference. I still keep track of gold value of GLD and combine it with the coins, but now I feel myself itching to buy more COINS, rather than having a feeling of oh shit should I sell GLD?

Holding those coins in my hand definitely made a big difference in my perspective. It's something tangible, and going back to the coin dealer to sell them takes a lot more effort. Electronic bits of numbers on the computer screen make it far too easy to execute emotional trades.

But, I realize for an IRA that might not be feasible. I dumped my IRA into PRPFX since they do assert holding actual bullion.

[craigr]

I do have a question that I can't seem to find the answer to anywhere.  Browne clearly states in his book that you should only check your account once per year, in regards to rebalancing.  But I do not recall Craig's book saying that.  Browne said you only need to check your accounts once per year and if everything is inside the 15/35 bands, don't consider rebalancing again for another 12 months.  My PP is only 11 days old.  If, for example, gold goes down 50% over the next 6 months (I sure hope not), pushing itself below 15% of my portfolio, should I rebalance immediately at the 15% band, or should I only rebalance on the one year anniversary of my portfolio?  Also, I started my PP in the middle of the year.  If I am going to rebalance once per year, doesn't it makes sense for me to rebalance at the very beginning of each year so that I don't have to pay out the taxes triggered by rebalancing until April of the following year?  I think it makes sense to try to put as much space as possible between the day you rebalance and the day you pay taxes.

A few points:

1) Tex hit the major issue which is if you hear about something really big you probably are going to want to look at things. This is really true in the age of the Internet. But if you did it once a year it probably would still be fine. I don't have the numbers in front of me, but I suspect if you skipped paying attention to the markets in 2008's crash and then the recovery in 2009 you'd probably find almost no impact to the portfolio. Stocks crashed. Bonds went up. Bonds crashed. Stocks went up. If you ignored it all you probably were still fine even with no rebalancing.

2) My experience has continually shown to me that the more I tinker with my investments, the less money I make. Highly scientific I know, but it's just what I've found personally. I make more money leaving things alone, staying diversified, and ignoring the markets.

3) Tex/Mike was also an author on the book.

[frugal]

I do have a question that I can't seem to find the answer to anywhere.  Browne clearly states in his book that you should only check your account once per year, in regards to rebalancing.  But I do not recall Craig's book saying that.  Browne said you only need to check your accounts once per year and if everything is inside the 15/35 bands, don't consider rebalancing again for another 12 months.  My PP is only 11 days old.  If, for example, gold goes down 50% over the next 6 months (I sure hope not), pushing itself below 15% of my portfolio, should I rebalance immediately at the 15% band, or should I only rebalance on the one year anniversary of my portfolio?  Also, I started my PP in the middle of the year.  If I am going to rebalance once per year, doesn't it makes sense for me to rebalance at the very beginning of each year so that I don't have to pay out the taxes triggered by rebalancing until April of the following year?  I think it makes sense to try to put as much space as possible between the day you rebalance and the day you pay taxes.

A few points:

1) Tex hit the major issue which is if you hear about something really big you probably are going to want to look at things. This is really true in the age of the Internet. But if you did it once a year it probably would still be fine. I don't have the numbers in front of me, but I suspect if you skipped paying attention to the markets in 2008's crash and then the recovery in 2009 you'd probably find almost no impact to the portfolio. Stocks crashed. Bonds went up. Bonds crashed. Stocks went up. If you ignored it all you probably were still fine even with no rebalancing.

2) My experience has continually shown to me that the more I tinker with my investments, the less money I make. Highly scientific I know, but it's just what I've found personally. I make more money leaving things alone, staying diversified, and ignoring the markets.

3) Tex/Mike was also an author on the book.

ehehe yes I think he doesn't know


Craig and MT, do you feel that EU-PP is also still valid?



tks

[buddtholomew]

In my opinion, the PP is more risky in the short to intermediate term as the volatile asset classes lose their negative correlation when markets decline. Our only hope is for one of the investments to rebound and produce gains that outpace the losses in the remaining assets. Adding additional funds to the portfolio while still within tolerance bands may only result in further losses as SPY, GLD and TLT continue to fall. Re-balancing when outside of tolerance bands makes sense as we do not know which asset will fulfill this role during the portfolio recovery.

[MediumTex]

Our only hope...

Surely we aren't down to our last hope.

Is it THAT dire?

[buddtholomew]

Our only hope...

Surely we aren't down to our last hope.

Is it THAT dire?

No, absolutely not. I am somewhat pleased with this recent decline as I now have a perspective on the portfolio that is difficult to attain through charts alone. It has certainly been a rough week for my other investment strategy as well. Re-balancing bands have moved only slightly and I am well prepared to sustain this decline.

My concern of late has been the rise in muni yields, with a percentage loss on par with the permanent portfolio. Never in my wildest dreams did I expect bonds to behave in this fashion. I'm genuinly shocked...where is the flight to the safety of treasuries and how long can interest rates rise until the mortgage and lending market collapses?

[Alanw]

Our only hope...

Surely we aren't down to our last hope.

Is it THAT dire?

I don't know. Interest rates heading to 18%, gold to $300/oz., Dow to 7,000 and cash losing 20% of its value to inflation each year.  Looks pretty dire to me.

[Pkg Man]

Haven't checked in here in a while but thought I'd drop by and say hello.

I stopped tracking my portfolio very closely more than a year ago, but as best I can tell YTD the PP is down 5-6%.  While I'm not happy to see that (although I am very happy that I was unsuccessful in getting my folks to invest in the PP late last year), this is not dire at all.  In 2008 I saw losses of around 30% or more. This is nowhere near that stomach-churning period.

I do wish I had set rebalance bands at 20/30 rather than 15/35, but that is just hindsight and no guarantee it will be the best approach in the future. I can't say what will happen the rest of this year, or any other period of time for that matter, but I don't have any regrets about getting into the PP and have no intentions to change anything now.

[Alanw]

Our only hope...

Surely we aren't down to our last hope.

Is it THAT dire?

No, absolutely not. I am somewhat pleased with this recent decline as I now have a perspective on the portfolio that is difficult to attain through charts alone. It has certainly been a rough week for my other investment strategy as well. Re-balancing bands have moved only slightly and I am well prepared to sustain this decline.

My concern of late has been the rise in muni yields, with a percentage loss on par with the permanent portfolio. Never in my wildest dreams did I expect bonds to behave in this fashion. I'm genuinly shocked...where is the flight to the safety of treasuries and how long can interest rates rise until the mortgage and lensing market collapses?

Remember 2008 when things really looked dire?  Stocks were tanking daily.  It took LTT's a month or so to kick in but when they did they did it with a vengeance to save the portfolio.  I believe LTT's are the portfolios most over sold asset at this time.

[Pointedstick]

My concern of late has been the rise in muni yields, with a percentage loss on par with the permanent portfolio. Never in my wildest dreams did I expect bonds to behave in this fashion. I'm genuinly shocked...where is the flight to the safety of treasuries and how long can interest rates rise until the mortgage and lending market collapses?

Are you saying it's a good time to buy munis? I honestly am really tempted with rates where they're at right now.

[buddtholomew]

One lesson i've learned of late is to wait until a tolerance band is breached before contributing additional funds. Re-balancing methodically removes any self doubt, unlike buying or selling based on recent price removements. In other words, the yields are attractive, but may become more attractive.

[Pointedstick]

One lesson i've learned of late is to wait until a tolerance band is breached before contributing additional funds. Re-balancing methodically removes any self doubt, unlike buying or selling based on recent price removements. In other words, the yields are attractive, but may become more attractive.

True. But this would be for my VP and would be purely for the income stream; I would never add munis to my PP.

[MediumTex]

PkgMan,

Nice to hear from you.

I'm glad you stopped by.  I wondered if you were gone for good.

Come around more.

[AdamA]

PkgMan,

Nice to hear from you.

I'm glad you stopped by.  I wondered if you were gone for good.

Come around more.

+1, but congrats on ignoring your portfolio for the past year!

[koekebakker]

If you think 25% gold is too much...

1. Do you not follow the traditional PP?

2. What do you think the right amount would be?

I follow pretty close to a traditional PP, with the exception that I try to keep gold to more like 10% of my portfolio, and cash to little-more than my emergency fund (6 months income).

This doesn't skew my cash too much btw .

I tend to see gold as a leveraged asset, not just a simple store of value.  So I think it would absolutely explode in real terms if there was a currency collapse of the USD.  So I really see it more as insurance.  I don't need 25% of my assets in it to get the desired effect.. plus I have a lot of home on my balance sheet so I see an inflation hedge as less vital to me than it would be to a retiree or a renter.

Adding gold to my portfolio is what I've really learned from Browne and the PP. I remember laughing about investing in gold a couple of years ago but now I would feel completely naked without it

Given gold's volatilty, I believe 25% is a bit over the top though and it's the main reason I will probably never go 4x25. I'm at 10% right now and might go to 15%, but that's it for me. I do like the symmetry of 4x25 though...

[Ad Orientem]

If you think 25% gold is too much...

1. Do you not follow the traditional PP?

2. What do you think the right amount would be?

I follow pretty close to a traditional PP, with the exception that I try to keep gold to more like 10% of my portfolio, and cash to little-more than my emergency fund (6 months income).

This doesn't skew my cash too much btw .

I tend to see gold as a leveraged asset, not just a simple store of value.  So I think it would absolutely explode in real terms if there was a currency collapse of the USD.  So I really see it more as insurance.  I don't need 25% of my assets in it to get the desired effect.. plus I have a lot of home on my balance sheet so I see an inflation hedge as less vital to me than it would be to a retiree or a renter.

Adding gold to my portfolio is what I've really learned from Browne and the PP. I remember laughing about investing in gold a couple of years ago but now I would feel completely naked without it

Given gold's volatilty, I believe 25% is a bit over the top though and it's the main reason I will probably never go 4x25. I'm at 10% right now and might go to 15%, but that's it for me. I do like the symmetry of 4x25 though...

I sympathize. Gold is my least favorite asset and I agree that its volatility is much higher than either stocks or LTTs. But I too have come to accept that having a portfolio without gold is like driving a car without insurance. That 25% is really hard for me though.

[steve]

I follow pretty close to a traditional PP, with the exception that I try to keep gold to more like 10% of my portfolio, and cash to little-more than my emergency fund (6 months income).

This doesn't skew my cash too much btw .

I tend to see gold as a leveraged asset, not just a simple store of value.  So I think it would absolutely explode in real terms if there was a currency collapse of the USD.  So I really see it more as insurance.  I don't need 25% of my assets in it to get the desired effect.. plus I have a lot of home on my balance sheet so I see an inflation hedge as less vital to me than it would be to a retiree or a renter.

Adding gold to my portfolio is what I've really learned from Browne and the PP. I remember laughing about investing in gold a couple of years ago but now I would feel completely naked without it

Given gold's volatilty, I believe 25% is a bit over the top though and it's the main reason I will probably never go 4x25. I'm at 10% right now and might go to 15%, but that's it for me. I do like the symmetry of 4x25 though...

I sympathize. Gold is my least favorite asset and I agree that its volatility is much higher than either stocks or LTTs. But I too have come to accept that having a portfolio without gold is like driving a car without insurance. That 25% is really hard for me though.

Unlike others I love gold, always have. About a year or so ago I came close to a re-balance point, it reached close to 32,33% and since I set my mind to rebalanced at 35% I did not re balance, in hind site maybe 20/30 band would have worked better at least for the short term. Who really knows over time what will be better,  but since I do not have a crystal ball I have no regrets.  The PP strategy suits me better than anything else I have ever examined.

[Pkg Man]

PkgMan,

Nice to hear from you.

I'm glad you stopped by.  I wondered if you were gone for good.

Come around more.

+1, but congrats on ignoring your portfolio for the past year!

Thanks MT and AdamA, I'll try to visit more often

[Xan]

Thanks MT and AdamA, I'll try to visit more often

Please do!  It's always nice to see another Southern flag avatar.  :-)

[dragoncar]

Our only hope...

Surely we aren't down to our last hope.

[frugal]

Medium Tex an Craig Roland,

the european citizen should continue to have an EU-HB-PP, right?

What are the dangerous comparing to US-HB-PP ?


Tks

[annieB]

Frugal:

The US PP is down right at five percent for 2013.

What is your PP doing where you are?

Cheers to you.

[frugal]

Frugal:

The US PP is down right at five percent for 2013.

What is your PP doing where you are?

Cheers to you.

similar negative performance 

well to confort myself and you all, this phrase:

[dragoncar]

Can I just say:

Ahhhhhhhhhhhhhhhhhhhh!

(I'm continuing to hold the PP, but I rebalanced out of cash fairly recently do I don't like this huge drop in net worth)

[Pkg Man]

Thanks MT and AdamA, I'll try to visit more often

Please do!  It's always nice to see another Southern flag avatar.  :-)

Likewise