Oh how it hurts to see no gains

General Discussion on the Permanent Portfolio Strategy

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MediumTex
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Re: Oh how it hurts to see no gains

Post by MediumTex » Fri Jun 21, 2013 11:19 pm

PkgMan,

Nice to hear from you.

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

Come around more.
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Re: Oh how it hurts to see no gains

Post by AdamA » Fri Jun 21, 2013 11:26 pm

MediumTex wrote: 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!
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Re: Oh how it hurts to see no gains

Post by koekebakker » Sat Jun 22, 2013 1:31 am

moda0306 wrote:
doodle wrote: 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...
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Re: Oh how it hurts to see no gains

Post by Ad Orientem » Sat Jun 22, 2013 1:44 am

koekebakker wrote:
moda0306 wrote:
doodle wrote: 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.
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Re: Oh how it hurts to see no gains

Post by steve » Sat Jun 22, 2013 7:00 am

Ad Orientem wrote:
koekebakker wrote:
moda0306 wrote: 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.
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Re: Oh how it hurts to see no gains

Post by Pkg Man » Sat Jun 22, 2013 11:43 am

AdamA wrote:
MediumTex wrote: 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
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Re: Oh how it hurts to see no gains

Post by Xan » Sat Jun 22, 2013 11:52 am

Pkg Man wrote:Thanks MT and AdamA, I'll try to visit more often
Please do!  It's always nice to see another Southern flag avatar.  :-)
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Re: Oh how it hurts to see no gains

Post by dragoncar » Sat Jun 22, 2013 1:44 pm

MediumTex wrote:
buddtholomew wrote: Our only hope...
Surely we aren't down to our last hope.
Image
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Re: Oh how it hurts to see no gains

Post by frugal » Sat Jun 22, 2013 5:36 pm

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
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Re: Oh how it hurts to see no gains

Post by annieB » Sat Jun 22, 2013 6:11 pm

Frugal:

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

What is your PP doing where you are?

Cheers to you.
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Re: Oh how it hurts to see no gains

Post by frugal » Mon Jun 24, 2013 10:25 am

annieB wrote: 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:



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Re: Oh how it hurts to see no gains

Post by dragoncar » Mon Jun 24, 2013 12:40 pm

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)
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Re: Oh how it hurts to see no gains

Post by Pkg Man » Fri Jun 28, 2013 6:48 pm

Xan wrote:
Pkg Man wrote:Thanks MT and AdamA, I'll try to visit more often
Please do!  It's always nice to see another Southern flag avatar.  :-)
Likewise
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Re: Oh how it hurts to see no gains

Post by vnatale » Mon Jan 20, 2020 12:41 pm

Tyler wrote:
Thu May 16, 2013 10:04 am
hoost wrote: I had a similar experience last year when I started my portfolio.  Looking backward, I had chosen the worst month of the year to start a PP; I still ended the year up 4 or 5%.  It all evens out eventually, but starting out it can be painful to watch.
Starting a PP in a bad month sure beats ending a VP in a bad month.

The grass is always greener until it catches fire.
Another "Tyler" phrase to incorporate into the future written Permanent Portfolio Creed!

Vinny
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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Re: Oh how it hurts to see no gains

Post by mathjak107 » Mon Jan 20, 2020 12:43 pm

Of course the question is how many times has your lawn caught fire ?

One of the problems with sayings and mantras is they sound so good but have little meaning..

Will Rogers was just full of great sounding stuff that was either really quite silly or just wrong.

Some of my favorite are buy land , they are not making anymore of it ...yet the huge battery park city here in nyc sits where the water was .

Buy low sell high , we know how that turned out when investors thought when we fell 2000 points in 2008 was low ..who knew we had 4000 more to go .....buy high and sell higher has made far more money for investors as the trend is your friend

Live below your means is quite useless and really not actionable ....how much is living below your means ?. It is actually the savings rate that is important and builds slack in a plan..simply living slightly below income with most of the budget in non discretionary bills don’t help

Only buy stocks that go up , if they are not going to go up don’t buy them.

There are loads of these meaningless quips
Last edited by mathjak107 on Mon Jan 20, 2020 1:03 pm, edited 1 time in total.
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Re: Oh how it hurts to see no gains

Post by vnatale » Mon Jan 20, 2020 1:02 pm

Pointedstick wrote:
Sat May 18, 2013 3:15 pm
Ad Orientem wrote:
melveyr wrote: Budd,

You might enjoy a copy of Zvi Bodie's book "Worry Free Investing." You might be an investor that should be 100% short-term TIPS.
+1

Based on his comments it sounds like Budd has a near zero risk tolerance, even in the short term. 100% T Bills / ST TIPS is the only place I can think of that fits his risk profile.
Knowing what I know about Budd from his posts here, I believe there are two things at play:
1. Near-zero downside volatility tolerance
2. Envy at not being invited to the stock party

Despite the contradictory nature of these desires, I think it's possible to find a happy medium by separating them into a PP/VP split portfolio model. So my recommendation would be as follows:

PP: 80% I-Bonds, T-bills, 2-yr treasuries, S-TIPS
VP: 20% total stock market fund

The PP part has almost no fluctuation so you don't have to worry about nominal dollar losses, while the VP part allows you to "ride the lightning" when stocks are hot, but your downside has a hard limit of 20% of your total assets. And in practice most stock crashes don't result in 100% losses.

Such a short-term-bond-heavy portfolio has historically performed a lot stronger than many may realize:

[align=center]Image[/align]
If one were interested in achieving even less volatility with the corresponding less income than the Permanent Portfolio what do you think of having a "Variable Portfolio" consisting of what Pointedstick proposed for Budd's Permanent Portfolio: PP: 80% I-Bonds, T-bills, 2-yr treasuries, S-TIPS?

Typically the Variable Portfolio is proposed and viewed as "gambling" money in search of greater return (but along with the greater risk)? So, this would be opposite to that theme in that it'd be, instead, seeking primarily lower risk and accepting the lower return.

Vinny
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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Re: Oh how it hurts to see no gains

Post by mathjak107 » Mon Jan 20, 2020 1:05 pm

Tips are a poor proxy for keeping up with ones own personal cost of living.. that takes growth vehicles to be on the safe side not bonds tied to some price change index that tracks goods and services you may have little use of for much of it
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Re: Oh how it hurts to see no gains

Post by vnatale » Mon Jan 20, 2020 1:08 pm

Tyler wrote:
Wed May 22, 2013 5:49 pm
Pointedstick wrote: Seen in this light, I can absolutely understand the appeal of such a portfolio. It seems like it's very psychologically well suited for someone whose two major goals are participating to a large extent in the stock party, but losing less than others when the party ends.
Yeah, that makes sense. But I'd personally also be upset at missing out on the cash and gold parties. With the PP there's always a party!

(Still enjoying the party pics, MT)
Yet another Tyler phrase - "With the PP there's always a party!" - to add to the Permanent Portfolio Creed!

Vinny
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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Re: Oh how it hurts to see no gains

Post by vnatale » Mon Jan 20, 2020 1:26 pm

Libertarian666 wrote:
Wed May 29, 2013 5:57 pm
I guess I must be weird. I value my portfolio every week, and am down a lot more than 2% for the year (being very gold-heavy), but that doesn't impel me to do anything stupid.
You weird??!! Prior to reading what you wrote above I had a picture of you as being Mr. Everyman.

Vinny
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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Re: Oh how it hurts to see no gains

Post by vnatale » Mon Jan 20, 2020 1:31 pm

dualstow wrote:
Tue Jun 04, 2013 3:00 pm
I haven't actually watched Game of Thrones yet but I love the analogy. I recently learned that the flag on my neighbor's flagpole is a "direwolf", so I guess the show's getting popular.

I tend to think of the movie Roadhouse, a cheesy film featuring Patrick Swayze as a guy who cleans up bars that used to be nice but that have gotten too rowdy, even violent. In the beginning of the film he drives a nice car, a Mercedes or something. But he hides it in a garage and takes a junker to work because he's experienced and he knows that whatever he drives, it's going to be destroyed (by angry bar patrons).

We can't bulletproof a single pet asset or hide it away, but if we accept in advance that something is going to be hammered, we can take steps to protect our overall wealth and sell high when we're supposed to.
Tyler wrote: Watching the markets right now feels like watching Game of Thrones. You know full well that you're being set up for one of the major characters to be killed off, but you have no idea who or when.  The worst thing to do is to get too invested into one guy -- when it inevitably goes down, you're gonna be pissed.
NOT "cheesy'"! I must have seen it at least five times. And, it has all that great live music by Jeff Healey, who unfortunately left us in 2008 at the far too young age of 41.

Vinny
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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Re: Oh how it hurts to see no gains

Post by vnatale » Mon Jan 20, 2020 1:46 pm

Pointedstick wrote:
Wed Jun 19, 2013 3:46 pm
buddtholomew wrote: I am drawn to the PP philosophy, but the investment approach is not as conservative as I was initially led to believe - given historical annualized returns (4 down years with the largest decline of -6% over a +/-40-year time frame).
I can sympathize. If you like the idea of the PP but need it to be more conservative, why not boost cash at the expense of all the other assets? 55% cash and 15% stocks, bonds, and gold produces an extremely smooth ride but preserves the essence of the PP. Of course, such a portfolio will underperform a more stock-heavy portfolio even worse, so you'll still need to decide which is more important: capital preservation or growth from the stock market.
As I continue to read the posts in this Topic it seems that Pointedstick (above) gave me the answer to a question I'd just recently asked: " If you like the idea of the PP but need it to be more conservative, why not boost cash at the expense of all the other assets? 55% cash and 15% stocks, bonds, and gold produces an extremely smooth ride but preserves the essence of the PP."

Vinny
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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Re: Oh how it hurts to see no gains

Post by mathjak107 » Mon Jan 20, 2020 1:53 pm

When I don’t hold Tlt but own some gold I end up with an interesting low volatile model ..

When I take the fidelity insight income model which is 25% equities and consists of Ultra short term bonds ,short to intermediate term bonds and floating rate bonds and couple it with about 10% gold it is a nice little package with not a lot of interest rate volatility.

Unlike those days where Tlt has you cringing these bonds funds move only slightly in comparison. Equity coverage is the same .

That is one of the reasons I prefer it to the pp.. rising rates are not as damaging
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Re: Oh how it hurts to see no gains

Post by Libertarian666 » Mon Jan 20, 2020 4:59 pm

vnatale wrote:
Mon Jan 20, 2020 1:26 pm
Libertarian666 wrote:
Wed May 29, 2013 5:57 pm
I guess I must be weird. I value my portfolio every week, and am down a lot more than 2% for the year (being very gold-heavy), but that doesn't impel me to do anything stupid.
You weird??!! Prior to reading what you wrote above I had a picture of you as being Mr. Everyman.

Vinny
I believe that's the first time anyone has ever called me "Mr. Everyman".
I'm not insulted, just surprised.
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Re: Oh how it hurts to see no gains

Post by vnatale » Mon Jan 20, 2020 5:32 pm

Libertarian666 wrote:
Mon Jan 20, 2020 4:59 pm
vnatale wrote:
Mon Jan 20, 2020 1:26 pm
Libertarian666 wrote:
Wed May 29, 2013 5:57 pm
I guess I must be weird. I value my portfolio every week, and am down a lot more than 2% for the year (being very gold-heavy), but that doesn't impel me to do anything stupid.
You weird??!! Prior to reading what you wrote above I had a picture of you as being Mr. Everyman.

Vinny
I believe that's the first time anyone has ever called me "Mr. Everyman".
I'm not insulted, just surprised.
I was NOT being serious. And, just as in real life, because I'm generally so serious that no gets when I am making a joke I was afraid that the same thing would happen here.

You are definitely the OPPOSITE of Mr. Everyman!

Vinny
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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Re: Oh how it hurts to see no gains

Post by Libertarian666 » Mon Jan 20, 2020 5:43 pm

vnatale wrote:
Mon Jan 20, 2020 5:32 pm
Libertarian666 wrote:
Mon Jan 20, 2020 4:59 pm
vnatale wrote:
Mon Jan 20, 2020 1:26 pm
Libertarian666 wrote:
Wed May 29, 2013 5:57 pm
I guess I must be weird. I value my portfolio every week, and am down a lot more than 2% for the year (being very gold-heavy), but that doesn't impel me to do anything stupid.
You weird??!! Prior to reading what you wrote above I had a picture of you as being Mr. Everyman.

Vinny
I believe that's the first time anyone has ever called me "Mr. Everyman".
I'm not insulted, just surprised.
I was NOT being serious. And, just as in real life, because I'm generally so serious that no gets when I am making a joke I was afraid that the same thing would happen here.

You are definitely the OPPOSITE of Mr. Everyman!

Vinny
Aw, shucks.
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