Oh how it hurts to see no gains

General Discussion on the Permanent Portfolio Strategy

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Pkg Man
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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
"I only regret that I have but one lap to give to my cats."
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mathjak107
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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
"I only regret that I have but one lap to give to my cats."
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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
"I only regret that I have but one lap to give to my cats."
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Re: Oh how it hurts to see no gains

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

technovelist 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 only regret that I have but one lap to give to my cats."
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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
"I only regret that I have but one lap to give to my cats."
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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
"I only regret that I have but one lap to give to my cats."
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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 technovelist » Mon Jan 20, 2020 4:59 pm

vnatale wrote:
Mon Jan 20, 2020 1:26 pm
technovelist 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

technovelist wrote:
Mon Jan 20, 2020 4:59 pm
vnatale wrote:
Mon Jan 20, 2020 1:26 pm
technovelist 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
"I only regret that I have but one lap to give to my cats."
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