Oh how it hurts to see no gains

[mathjak107]

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

[vnatale]

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

[vnatale]

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

[vnatale]

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.

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

[vnatale]

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

[mathjak107]

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

[Libertarian666]

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.

[vnatale]

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

[Libertarian666]

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.

[vnatale]

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.

It was a compliment! You are FAR more interesting than a Mr. Everyman!

Vinny

[Libertarian666]

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.

It was a compliment! You are FAR more interesting than a Mr. Everyman!

Vinny

I know. I was just pulling your leg.

[D1984]

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

Is the Fidelity Insight Income model the one at https://www.fmandi.com/about/performance/perf_i.php ? If so, it seems it (the Insight Income Model by itself without any gold added) has returned a CAGR of just under 5.40% since its 12-31-1991 inception and has managed to do so while losing nearly 19% in 2008; given that both the November 2008 low and the final early March 2009 low were lower than the 12-31-2008 close I would suspect this implies a MaxDD of around 22 or 23% on a month-to-month basis. How is this better than, say, a mix of 60% Vanguard Wellesley, 30% STTs, and 10% cash; such a portfolio would've had a worst year of -3.75% and a maxDD on a month-to-month worst basis of -9.57% while providing a CAGR of almost a full point higher than the Insight Income model? Oh, BTW, the above is assuming you do not use admiral shares for VFISX and VWINX and then only use T-bills as cash; if you used Admiral shares and used a money market account/high-yield savings/MMMF/I-bond combo for the cash that would skew the results even further against the Insight Income model.

I'm not trying to insult you or pick on the Fidelity Advisor newsletter but I am curious to know how one could come to the conclusion that the Insight Income model is such great shakes if it can't even beat a plain boring mix of VWINX, cash, and short-term treasuries yet still manages a maxDD that is over twice as much and requiring one to pay $127 a year to access it to boot.

I don't get it; while the Unique Opportunities and the Select have pulverized their benchmark it seems that the Income model has done worse than any reasonable similar benchmark for it (indeed, no benchmark is provided on their website). What gives?

[mathjak107]

the income model is 75% low volatility bond funds , it is not designed to be a growth and income model , it is designed for current income , to be used in conjunction with a growth oriented model too . big difference compared to wellesly which is a growth and income model . that is why there is an income model and a growth and income model . two different purposes

it really is designed to provide more yield than a total bond fund but that really is it . its goal is to be 67% less volatile than the s&p 500

2008 was a fluke ... the fidelity ULTRA conservative bond funds held paper that eventually turned out to be not trade-able ... so even a total bond fund was down ..

none of the models contain what they did in 2008 . even fidelitty ultra conservative bond fund got hit bad in 2008 from these products that froze up in the credit markets .

my money market broke the buck and went under so it really was an exceptional time and those products are now gone ..


it gained 11% last year .. not bad from 75% bonds and not taking on excessive interest rate risk like TLT . .

i am using it as a holding place now coupled with my trading until i get more value in the growth and income model after a correction .

we had over 350k in gains last year so we can sit back a bit and chill now .

https://www.fmandi.com/about/models.php