frommi,
Where are you getting all these conclusions?
I don't think we agree with that. Rebalancing can add to returns, and SIGNIFICANTLY reduces risk. In fact, not rebalancing is simply asinine. Why start with 4x25 if 10/60/10/20 is remotely acceptable.
The current P/E:10 of the stock market, if memory serves, flips to yield about 4.5%. So even if earnings don't increase, the stock market will yield earnings of 4.5% over time... if that's not beating inflation, then we are truly using the higher rates proposed by folks on this board, which I don't think many people have agreed are accurate.
But even with your premise being valid (which it doesn't appear to me as such), saying that the PP will be "expected" to break even (nominally), and that other assets can do that, is looking at this in a vacuum. Even if I "expect" the PP to "break even nominally," just like a savings account, it's what the PP doesn't when the UNEXPECTED happen that makes it so robust. I don't think my life, disability, long-term care or liability insurance will EVER break even based on what I "expect" to happen. Luckily, I'm very, very prepared for the "unexpected."
So now that you've glossed over the robust nature of the PP by adding a couple false premises, and an over-simplified RoR analysis, we come to the last piece, that "if we try," we can find better investments.
Surely, we can... but let's please analyse those investments for the same robustness of the PP in UNexpected events, or, maybe more useful, as an addition to the PP, as a very robust "insurance-like" portfolio vs a speculative portfolio that we identified and priced based on some micro-economic assumptions, and risk.
This is usually the point that some kind of "technically-proven" strategy of adding SCV/EM combo works historically, or that inserting gold miners SHOULD improve return, or that land is "the only thing they're not making more of," or that if you read Warren Buffett's book and do X, you'll do great.
I have some problems with the PP... I think the gold allocation is too high, and it might be a little bit too assumptive regarding treasury debt and not diversifying into foreign fiat currency arrangements, but as a macro-guy I can't stand investment strategies based on technicals or "historically, XYZ has recovered to a Q% return by 36 months and blah, blah, blah," as a CORE investment strategy... definitely as an option for a speculative piece beyond "what I can afford to lose" (thought that's a tough line to draw), but as a core, you need something robust as all-f*ck. I refuse to be the guy holding nothing but his d*ck and a "historical rate of return" chart. No chance... or no chance that's within my control, anyway.
So I love value investing and technical trades as my speculative venture of money that I don't need...
But if you get too far away from macroeconomic fundamentals, you have an increasingly fragile beast that simply cannot be judged on the same qualities of the PP. Even if the PP fails to provide real returns for some more extended period, it's still got fundamentals working for it that NO other strategy I've seen truly does. Show me a -1% real yield in the PP over a 3-year stretch, and I'll 1) probably be wanting to throw a ton of money into it to grab the bounce, and 2) not shedding one tear, as I'll be looking all the systemic risk people are taking on in their wealth to obtain their 2% positive real number... all the time people are putting into it that could go into honing their skills or budgeting better or enjoying the time they have on this earth... they time they might spend stressing about their strategy that they heard "if they try" will work for them... trying to decide when to buy or sell, and in what quantities.
There's always some "reason" that some investment should beat the PP. Then there's always a VERY easy-to-design scenario where you loose most of your original investment in those "strategies" (that unfortunately leaving you in a position of competing with supercomputers and billionaire fund-managers to get an edge that one of them).
Sorry folks. I'm not going to be the guy inclined to jump out of a building just so a few years earlier I could be the "tech-stock" babbler at the local BBQ, talking about how my $150,000 in Tesla just grew to $160,000. Systemic risk just ain't worth it. Always leave yourself a back-door if you can, and the 3 non-stock assets within the PP are my back-door. The RoR they earn me by making life/career/cash-flow-decisions along the way from a position of confidence and strength more than make up for the lack of RoR that they themself have.
Rant: Complete
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"Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds."
- Thomas Paine