No where to hide

General Discussion on the Permanent Portfolio Strategy

Moderator: Global Moderator

DragonJoey3
Full Member
Full Member
Posts: 56
Joined: Wed Dec 05, 2012 3:00 pm

Re: No where to hide

Post by DragonJoey3 » Tue Feb 02, 2016 2:29 pm

4x4 wrote:
MachineGhost wrote:
mathjak107 wrote: they may end up severely under funded  for that luxury and that is the danger.
There is no alternative.  Load up on obscenely overvalued stocks?  Load up on longest duration T-Bonds while they're at a 5,000 year low in interest rates, soon to reverse course starting in the next few days?  Load up on a useless, barbarous lump of shiny metal that is no longer money, never will be again and will only have demand in that short period of time where confidence in government and the financial system has been lost but is still standing like a mirage?

Seriously man, you better plan for a SWR way below what you expect historically because neither stocks nor bonds are going to offer that for the next 17 years.  Again, what is the alternative?
In reference to the portion above I bolded, truer words may have never been spoken.

Is there not ANY time in history we can look to to see how history will rhyme this time around???
I think there is any number of different ways that things could work out for the better, and the idea that "the good times are over, and we're all screwed" is wrong.

Social Security/Medicare/Medicaid will bankrupt the US!

The most common age in America is now 22!  With the 2nd and third most common ages being 21 and 23! source.  Although millennials may get the rap for having "bad work ethic" so has every other generation for every decade ever, and like it or not they are entering the workforce in droves.  Like it or not old people die, and yes medical care in the US needs reform, but the baby boomers aside we are leveling out in population growth, and there is no reason to think that it won't remain solvent for years to come.

China/India/Brazil is going to overtake us and we will all be broke!

The list of former economic superpowers [Germany, Britain, etc...] has a long list of problems, but life went on in those countries, and life will continue in the US.  Of course China will overtake us in terms of economic output, they outnumber us 3 to 1, how could they not?  It will take time, and there is no reason that even if not the #1 economy in the world that the US will not continue to be prosperous and to provide one of the highest standards of living the world over.

Climate change will kill us all

The good news is many people are waking up to the reality that you can't just take trillions of tons of carbon out of the ground light it on fire and say "nah that won't cause any change at all!"  If scientific data is correct (and I know some reading this would question it) then yes, there will be problems in the future and pipers to pay, but the US is better positioned than most countries to deal with it (sorry Bangladesh you are done for.)

The US will go Japanese and deflation ad nauseum.

There are any number of reasons this won't happen, most of which are too complex to get into on a single comment ranging from exports/natural resources, to birth rates, to immigration and exchange with other countries.  Even if the US does go Japan and deflation continues, the fact is that many reading this are still much better off than their fellow man/ rest of the country.

Terrorists will kill us all.

There are many fewer terrorists than you might think.

Nuclear war with Russia.

Well that's always a possibility, but I don't really think Russia wants that.  At the moment most Russians just want to be able to afford toilet paper.

AND ON AND ON IT GOES!

Back in the "glory days" of the US we had just emerged from WWII, where unemployment was 0%.  We had the highest debt to GDP ratio ever, we went off the gold standard, we were in constant fear of A-bombs falling "Duck and Cover anyone?", we were certain the world would end at any moment, and what followed?  One of the greatest technological and financial growth periods in modern history.  The US went from the superpower that saved the world, to the superpower that owned the world!

I think far too many people look at history, they see 4% as the safe return from the over 100 years of stock market history, and they think, "yea, that'll never last, this time is different."

I think the PP does a great job at providing economic safety in the worst of times, and decent prosperity in the best.  Living in a country that supports free-markets, living below your means, investing the rest, and saving for the future -- these are some of the core tenants of the PP, and they will work.

Perhaps there are dark times ahead, but in the words of Albus Dumbledore ~ "Happiness can be found, even in the darkest of times, if one only remembers to turn on the light.'
User avatar
Cortopassi
Executive Member
Executive Member
Posts: 3338
Joined: Mon Feb 24, 2014 2:28 pm
Location: https://www.jwst.nasa.gov/content/webbL ... sWebb.html

Re: No where to hide

Post by Cortopassi » Tue Feb 02, 2016 2:39 pm

Good post to remind us all, especially the older ones among us, that things are never as bad as they might seem.

I still have a good job, a good family, a nice house, smart kids and look forward to the same or better being available to them.  It is very easy to get caught up in the "we're all doomed" mindset.

In fact, I bookmarked the site below a few days ago, just to remind me the majority of people in this world are decent.

http://www.huffingtonpost.com/good-news/
Test of the signature line
User avatar
MediumTex
Administrator
Administrator
Posts: 9096
Joined: Sun Apr 25, 2010 11:47 pm
Contact:

Re: No where to hide

Post by MediumTex » Tue Feb 02, 2016 2:48 pm

DragonJoey3 wrote: The most common age in America is now 22!  With the 2nd and third most common ages being 21 and 23! source.  Although millennials may get the rap for having "bad work ethic" so has every other generation for every decade ever, and like it or not they are entering the workforce in droves.  Like it or not old people die, and yes medical care in the US needs reform, but the baby boomers aside we are leveling out in population growth, and there is no reason to think that it won't remain solvent for years to come.
Our demographics aren't as bad as some other places around the world, but there is still an enormous population that is about to exit the workforce, which will create a set of economic headwinds as the economy tries to structurally contract based upon a lower level of aggregate demand (old people don't buy as much stuff, especially when they don't have any money).

Here is where we are today.  This is unhealthy.  Too many people exiting their peak earning years and the cohort behind them isn't large enough to replace their spending and productivity, while ALSO supporting the people who are leaving the workforce.

[img width=480]http://www.indexmundi.com/graphs/popula ... d-2014.gif[/img]

Back in 1950, we had some rocking demographics.  With everyone smoking, driving unsafe cars, and eating a lot of fat, the herd had been thinned considerably by the time people got to retirement age.  And if you look at that fattest bar at the bottom, that was the baby boomers getting ready for a long life of productivity, consumption and entitlement.

[img width=480]http://2.bp.blogspot.com/-8--qv51wYOE/U ... .35+PM.png[/img]
Q: “Do you have funny shaped balloons?”
A: “Not unless round is funny.”
User avatar
Cortopassi
Executive Member
Executive Member
Posts: 3338
Joined: Mon Feb 24, 2014 2:28 pm
Location: https://www.jwst.nasa.gov/content/webbL ... sWebb.html

Re: No where to hide

Post by Cortopassi » Tue Feb 02, 2016 2:51 pm

"Back in 1950, we had some rocking demographics.  With everyone smoking, driving unsafe cars, and eating a lot of fat, "

I think you need to replace the eating a lot of fat with "starting to consume a lot of carbs, esp. sugar"  but that is another discussion.
Test of the signature line
User avatar
MediumTex
Administrator
Administrator
Posts: 9096
Joined: Sun Apr 25, 2010 11:47 pm
Contact:

Re: No where to hide

Post by MediumTex » Tue Feb 02, 2016 3:00 pm

Cortopassi wrote: Good post to remind us all, especially the older ones among us, that things are never as bad as they might seem.

I still have a good job, a good family, a nice house, smart kids and look forward to the same or better being available to them.  It is very easy to get caught up in the "we're all doomed" mindset.

In fact, I bookmarked the site below a few days ago, just to remind me the majority of people in this world are decent.

http://www.huffingtonpost.com/good-news/
In the U.S., we freak out when unemployment hits 9% and a few bad cops shoot people during traffic stops.  In many parts of the world, the population has never known unemployment levels below 20% and the military and police kill citizens regularly, and reporters who dare to cover it are often killed as well.

People in the U.S. have this weird tendency to lament the smallest setbacks, blaming them on everyone but themselves, and not realizing that to the rest of the world we must seem like a bunch of spoiled whiny children.  Considering what typically follows a generational financial crisis, the U.S. economy since 2008 has been doing great, but because it hasn't done as well as the 1980s and 1990s, all people want to do is complain.  Babies.
Q: “Do you have funny shaped balloons?”
A: “Not unless round is funny.”
DragonJoey3
Full Member
Full Member
Posts: 56
Joined: Wed Dec 05, 2012 3:00 pm

Re: No where to hide

Post by DragonJoey3 » Tue Feb 02, 2016 3:07 pm

"Economic Headwinds" does not equate to "Economic Collapse."

I agree that there will be some strain on the economy, but I think Social Security is far from "about to collapse."  A large part of that is due perhaps to the irony that many Baby-Boomers have failed to save for retirement and continue to cling to their jobs.  Thanks to our move to a more service-oriented society many people continue to work into their 60's.

The greatest place the strain will be felt is no doubt the medical system.  But I still see no reason to expect the PP to perform "sub-par" even for years where America is experiencing said "Headwinds."  Though I think in 20 years it will be a great time to be a mortician.
User avatar
MediumTex
Administrator
Administrator
Posts: 9096
Joined: Sun Apr 25, 2010 11:47 pm
Contact:

Re: No where to hide

Post by MediumTex » Tue Feb 02, 2016 3:16 pm

DragonJoey3 wrote: Though I think in 20 years it will be a great time to be a mortician.
If an ambitious young person asked me what to do with his life today, I would confidently advise him to become a funeral director, reality TV star, or corporate lobbyist.

The future is bright!
Q: “Do you have funny shaped balloons?”
A: “Not unless round is funny.”
Reub
Executive Member
Executive Member
Posts: 3158
Joined: Fri Jan 21, 2011 5:44 pm

Re: No where to hide

Post by Reub » Fri Feb 05, 2016 3:23 pm

MediumTex wrote:
DragonJoey3 wrote: Though I think in 20 years it will be a great time to be a mortician.
If an ambitious young person asked me what to do with his life today, I would confidently advise him to become a funeral director, reality TV star, or corporate lobbyist.

The future is bright!
Now there's a better profession for our resident blood drinker!
User avatar
dualstow
Executive Member
Executive Member
Posts: 14232
Joined: Wed Oct 27, 2010 10:18 am
Location: synagogue of Satan
Contact:

Re: No where to hide

Post by dualstow » Fri Feb 05, 2016 4:44 pm

MediumTex wrote: I would confidently advise him to become a funeral director, reality TV star, or corporate lobbyist.
How about a corporeal lobbyist?
Sam Bankman-Fried sentenced to 25 years
User avatar
vnatale
Executive Member
Executive Member
Posts: 9423
Joined: Fri Apr 12, 2019 8:56 pm
Location: Massachusetts
Contact:

Re: No where to hide

Post by vnatale » Thu Jan 23, 2020 9:05 pm

Austen Heller wrote:
Thu May 07, 2015 3:23 am
Desert wrote: That's pretty much what I switched into, about 26 months ago.  I still like the PP, and think it's a great portfolio.  But I prefer something closer to 30% equity, 60% 5-10YT, and 10% gold.  10% gold happens to be about the max I'm comfortable holding in physical form as well, so it's a good match for me personally.  I don't expect any long term real return from gold, so I hold it almost entirely as a sort of disaster insurance.  And it's also very shiny.
Glad that I'm not the only one who chose this deviation from the 4x25.  I still have abundant respect for those who have stayed the course with the 4x25, it's just not for me right now.
dutchtraffic wrote: It's quite funny and sad to see how everybody is scared to hold gold..
It is by F A R the safest asset if you compare it to the other 3. (obviously not in paper form)
Sometimes it is not that a person is scared to hold gold, fearful of price declines.  Rather, as Desert points out, there is the real-world problem of holding large amounts of physical gold bullion.  I have yet to hear of a reasonable solution.  Getting a bunch of safe deposit boxes at banks, getting a heavy home safe, hiding coins in your walls and inside your peanut butter jars and bags of rice, keeping it at the Perth Mint, holding paper ETFs, etc.......I have never gotten comfortable with any of these solutions, so now I just don't have much of a gold allocation, even though I think that gold is probably the most reasonably priced of the 4 PP components.
Tonight finished reading Rickards's End of Money book.

In his concluding chapter he recommended holding 10% to 20% in gold (but no more).

He also recommended holding it in physical form but NOT in banks. He did not get more specific beyond that. No answers to any of the real questions Austen Heller asks above regarding holding gold in physical form.

By the way, he had a long, long chapter about how various entities DO manipulate the price of gold.

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."
User avatar
ochotona
Executive Member
Executive Member
Posts: 3353
Joined: Fri Jan 30, 2015 5:54 am

Re: No where to hide

Post by ochotona » Thu Jan 23, 2020 9:07 pm

Not more than 20%. Interesting.
User avatar
vnatale
Executive Member
Executive Member
Posts: 9423
Joined: Fri Apr 12, 2019 8:56 pm
Location: Massachusetts
Contact:

Re: No where to hide

Post by vnatale » Thu Jan 23, 2020 9:09 pm

Tyler wrote:
Thu May 07, 2015 3:57 pm
We're 100% invested in a 4x25 PP and have been for several years.  My experience has been great -- it has been nice and steady through ups and downs.  I have the benefit of remembering when the PP stood firm while various components tanked (including stocks, which freaked out everyone else) and can compare that to previous experiences before I got into the PP, so I have context to fall back on when it struggles for short periods.  I'll add that in my personal situation the PP is fantastic from a tax and liquidity perspective compared to other investment options which makes it even more appealing.  Right now I can't imagine a better portfolio for my personal needs.  Trust me -- I've looked.  And if one ever comes along, I'll happily share it with everyone here. 

For all the hand-wringing about short-term PP performance compared to whatever is hot at the moment, I have yet to find any better way to invest especially once I balance the life tradeoffs for tinkering all the time.  My eventual choice to follow the PP, walk away with my hands off, and turn my financial attention to minimizing my spending and maximizing my savings rather than stressing over markets I can't control was the best financial decision I've ever made.  The opportunity cost of fancying myself an active investor held me back for years by distracting me from the real financial opportunities in life, and I've watched friends and family repeat the same mistakes over and over.

My best advice: The next time markets let you down, don't ask how you should invest differently.  Stop thinking like a victim or a financial pawn.  Ask whether investments are really your best and only opportunity for securing financial freedom.  Find a reasonable "good enough" investment method you can stick with and largely ignore (PP or not -- it really doesn't matter), and take charge of things you can actually control.  Walk away from the message boards and stock tickers and ask for a raise.  Look at your credit card statement and calculate how much more money you'd have in ten years if you actually learned to cook and stopped eating out every day.  Sell your stupid large house and buy a smaller one closer to work.  Laugh with your wife.  Play with your kids.  There's more to life (and wealth!) than CAGR. 


Another "classic" from Tyler that needs to be resurrected so that it can be reread by some or read for the first time by others.

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."
User avatar
vnatale
Executive Member
Executive Member
Posts: 9423
Joined: Fri Apr 12, 2019 8:56 pm
Location: Massachusetts
Contact:

Re: No where to hide

Post by vnatale » Thu Jan 23, 2020 9:10 pm

Tyler wrote:
Thu May 07, 2015 4:44 pm
My gold allocation is 100% IAU right now.  But I think holding some physical gold is a great idea and I plan to buy some in the future when rebalancing requires it. 

I'm a natural optimizer so I messed around with various funds and vehicles while generally over-thinking things my first year.  Analysis paralysis started to cost me, so settling on a simple VTI/TLT/IAU/SCHO portfolio was my compromise to let myself chill out and not sweat the small stuff.  It's already light years better than how I used to invest, and I have plenty of time to improve on the foundation as I go. 

Never let the search for theoretical long-term perfection block you from a positive tangible near-term improvement. 


How are you currently doing your gold allocation?

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."
User avatar
vnatale
Executive Member
Executive Member
Posts: 9423
Joined: Fri Apr 12, 2019 8:56 pm
Location: Massachusetts
Contact:

Re: No where to hide

Post by vnatale » Thu Jan 23, 2020 9:14 pm

MangoMan wrote:
Mon May 11, 2015 1:35 pm


Our small business liability/fire insurance now includes an optional rider for terrorism coverage, by default. At an additional cost, of course.
I've been seeing those for decades now. And, as much as I can, decline the coverage.

Has anyone EVER read of any policy paying out on a terrorism claim?

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."
User avatar
vnatale
Executive Member
Executive Member
Posts: 9423
Joined: Fri Apr 12, 2019 8:56 pm
Location: Massachusetts
Contact:

Re: No where to hide

Post by vnatale » Thu Jan 23, 2020 9:30 pm

dualstow wrote:
Tue Jun 09, 2015 3:22 pm
LC475 wrote: The Permanent Portfolio is as sound as ever.  Naysayers are always going to neigh. 
You can't always get what you want, but wild horses couldn't drag me away from the P.P.
I see that we have a Rolling Stones fan here!!!!

But can anyone explain to me the meaning of Trump playing "You Can't Always Get What You Want" at his rallies? In other words, what message is he trying to convey with that song?

I also see dissonance between the messages at the rallies for conservatives and the lyrics of some of the rock songs that they play at them. I always wonder am I the only one who is perplexed how anyone can choose those songs to be played?

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."
User avatar
vnatale
Executive Member
Executive Member
Posts: 9423
Joined: Fri Apr 12, 2019 8:56 pm
Location: Massachusetts
Contact:

Re: No where to hide

Post by vnatale » Thu Jan 23, 2020 9:35 pm

ochotona wrote:
Wed Jun 10, 2015 8:33 am
FLAGATOR wrote: Hello everyone!

I am new here.
I just recently went all in by investing in the PP on 4/22/15.

As of today I am -7.27 on long term treasuries
                        -0.48 on short term treasuries
                        -1.05 stocks
                        -1.27 gold

I have lost 2.52 % of my investment in just a bit over a month.

I feel like there is really no place to hide and all the components are going down simultaneously.

I did not expect this at all. I am not sure what kind of environment we have in the economy because the data provided by govt are very suspicious. I do not know what to do from here on, but I am certainly racking up losses pretty steeply.

Any comments would be appreciated.
Hi FLAGATOR, I feel your pain. Tyler's charts posted elsewhere on this Forum show that the entry year does make a difference sometimes in how the PP performs for a few years post-entry, and if those three years are so painful to the new investor that they bail, then that's not a good thing.

I have advocated being more adaptive as far as getting into the portfolio. This is what I am doing at present. I guess you could say I'm still transitioning in since October 2014.

For better or worse, I follow the opinions of a market watcher who thinks gold will go below $1000 within the next year, then it will stabilize and head higher. Doomer Harry S. Dent thinks gold could go down to $250 by 2020. People who sell gold will always tell you that gold is going to go up starting tomorrow, so you better buy some today! I'm right now at 10.7% gold, my target allocation is 14%, if it goes below $1000 I'm going to my full target, if it drops to $250-$500 then I'm "all in" with a 25% Classic PP allocation.

After getting hammered with everyone else with long bonds since February 1, I hopped out to shorter bond durations. I swapped long Treasuries for SCHZ, the Schwab total bond ETF. It's much less volatile than TLO or TLT. Yes, it has corporate bonds and some high yield, no I don't think all of the issuers are going to default really soon, and it's diversified. My aim is to wait for TLO to go down another 14%-15%, to $58, then re-enter.

Cash? I have the full cash allocation. Ally Bank, 0.99%. Some I-Bonds at 1%. A bit of paper in the safe.

Stocks? Because I am light on gold, my bonds and stocks were both at 32% instead of 25%. I like to keep the ratio 1:1. 25% of my stocks are non-US. Stocks will go down, but I'll see if they grind higher. I don't plan on selling stocks no matter how bad they get in a correction, I kept all my stocks even in 2008-2009, and rebalanced after the blood was flowing in the streets.

So in summary, I am treating gold and long bonds as special cases, because gold has a very volatile recent history (1975-2011) of extreme ups and downs in real terms, and you don't want to overpay for it. Long bonds have just come off the top of a QE policy driven bull market which has no where left to go but down (with volatility), so why stand in the way of the truck while it races towards you? You know it's coming, you hear the engine; stand aside, just for a while. Maybe as short as a few months. But I acknowledge that is not without risks either... long bonds prices could go back up and stay up for years! No one can predict. I'm just sick of the volatility. I'm choosing to take a sedative for a while.

But truly, once I'm "in" the PP, at at least a 14% gold allocation, and my long bonds are restored, I intend to put it to sleep and go on the regular rebalance plan. It's just a matter of easing in, so one don't feel cheated by fate.

My specific advice to you, take it with a grain of salt:

I agree with others who say not to sell your positions, except if you can harvest tax losses to your advantage. If you feel adventurous, trade some of your long bonds for shorter maturities (the very shortest maturity being cash) and wait for long bonds to go on sale... which may not happen for a long time, or it might happen soon.
Can anyone document a Harry Dent prediction becoming true??!!!

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."
User avatar
vnatale
Executive Member
Executive Member
Posts: 9423
Joined: Fri Apr 12, 2019 8:56 pm
Location: Massachusetts
Contact:

Re: No where to hide

Post by vnatale » Thu Jan 23, 2020 9:41 pm

mathjak107 wrote:
Fri Jun 26, 2015 9:44 am
I converted to the PP  on monday. so far  total portfilio lost .85%  .
An historic post from mathjak!

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."
User avatar
vnatale
Executive Member
Executive Member
Posts: 9423
Joined: Fri Apr 12, 2019 8:56 pm
Location: Massachusetts
Contact:

Re: No where to hide

Post by vnatale » Thu Jan 23, 2020 9:43 pm

mathjak107 wrote:
Fri Jun 26, 2015 12:03 pm
it counts heavily on trends . gold has been a loser , bonds a loser and stocks treading water,.  the other conservative model i used  was up 1.10% this year  and was a heavy bet on good times and low rates,

i swapped it this week for the permanent portfolio and put over 7 figures in.  i think it is a safer bet since once we get something negative happening the pp can make some money
mathjak,

You came in with optimisim!

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."
User avatar
vnatale
Executive Member
Executive Member
Posts: 9423
Joined: Fri Apr 12, 2019 8:56 pm
Location: Massachusetts
Contact:

Re: No where to hide

Post by vnatale » Thu Jan 23, 2020 10:04 pm

dragoncar wrote:
Sat Jun 27, 2015 12:04 am
iwealth wrote:
Tyler wrote: That in a nutshell is why you're driving yourself crazy.  It's also why you are perfectly happy with the PP when your other portfolio struggles.  At some point you need to let go and just be satisfied with your choices.  Otherwise you're going to be perpetually unhappy one way or another. 

On a side note, I know from other posts you already have a very sizable portfolio.  Small fluctuations should not really affect you at all in real life.  Why does money cause so much stress, and what are all the ways (not simply portfolio choice) you can constructively address that? You don't necessarily need to answer here.  Just take some time to think about it.
Not to speak for Budd here as I'm sure his portfolio is more sizable than mine, not to mention he's still working and replacing lost investment money, but anyway..

Large portfolios + frugality lends itself to an interesting mix of emotions. 1% on a $2 mil portfolio is $20k. Some guys can shrug that off like it's no big deal, just a rounding error. A frugal guy may look at that as having lost an entire year's+ worth of rent. Or groceries for the next 3 years. The family entertainment budget for 5 years, poof, gone with one bad market day. And I'm guessing that only gets worse as the portfolio grows. Or in the case of the PP keeps falling forever  ;D
This is it for me.  I'm trying to retire early... I'm at the grocery store trying to save a few dollars here, a few dollars there.  To, at the same time, shrug off a daily loss in the thousands, instigates a kind of cognitive dissonance and causes me stress.
This is the first time I've read what I experience at times.

I can be Mr. Frugal to the utmost and, then, when I look at how much I make or lose in a day in my investments, which absolutely pale next to what I save on purchases (e.g., buying the grocery store house brand rather than the name brand, only trying to buy certain items on the grocery when they are on sale and doing without when they are not) I always ask myself how do those two things fit together?

The only answers I ever come up with is 1) wanting the best value is part of my DNA and 2) #1 is one of the major reasons why I experience such large gains or losses. If I'd not been so careful and frugal with my money (in other words, NOT a spendthrift) I've never have got to the position of having so many large daily gains and losses.

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."
User avatar
vnatale
Executive Member
Executive Member
Posts: 9423
Joined: Fri Apr 12, 2019 8:56 pm
Location: Massachusetts
Contact:

Re: No where to hide

Post by vnatale » Thu Jan 23, 2020 10:12 pm

I Shrugged wrote:
Sun Jun 28, 2015 9:14 pm
Some of the comments hit home for me.  I have a good sized nest egg.  I couldn't quote you a daily variation, but it's not uncommon to check the balance and have it be up or down $100-200K from the last time. 

The funny thing is, that doesn't bother me.  But if I stop at Subway for a sandwich and can't find the coupon I thought I had in my wallet, I'll be pissed.

I guess the reason for the different reactions is that I trust the PP to keep on keeping on.  But $2 off a sandwich, well, that's $2 I should not have to pay!

added:  OK I just checked.  I'm down about $90K give or take from probably a couple of weeks ago or so.  What am I supposed to do about that exactly?  Is there some change I should be thinking about?  Anyway, I've got Subway coupons to clip before the wife throws the Sunday paper out.
This one was GREAT! A classic!

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."
User avatar
vnatale
Executive Member
Executive Member
Posts: 9423
Joined: Fri Apr 12, 2019 8:56 pm
Location: Massachusetts
Contact:

Re: No where to hide

Post by vnatale » Thu Jan 23, 2020 10:24 pm

mathjak107 wrote:
Wed Jul 01, 2015 2:42 pm
I am actually having 2nd thoughts about it.  while initially it looked like a good idea I think in the scheme of things today and turning that 40 year corner it may not be the best idea.

I think a 10% stake in gold and utilizing a much less interest rate sensitive mix may be the  wiser choice.

I have been tracking a model I was thinking of using the last few weeks and it has stood up much better as well as not counting on disaster to do its catching up . I will be happy to post it if anyone would like to see  it.

I have loved the concept of the pp for decades  so I am a little bummed out by my gut feeling about it at this point in the big picture of things.

I think it may have been great in its day but like all things nothing holds true for ever.

I kind of feel like when you try to duplicate a time back in history when you hook up with old friends and it just doesn't go as you expected 40 years later


mathjak,

It looks like after being in the Permanent Portfolio for barely two weeks you starting doubting it?

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."
User avatar
vnatale
Executive Member
Executive Member
Posts: 9423
Joined: Fri Apr 12, 2019 8:56 pm
Location: Massachusetts
Contact:

Re: No where to hide

Post by vnatale » Thu Jan 23, 2020 10:26 pm

mathjak107 wrote:
Wed Jul 01, 2015 3:11 pm
stuper1 wrote: Mathjak107,

I would like to see your model.
so the final version i decided on is a mix of active and etf .

the version as it stands now :


fidelity growth and income fund FDGRX - had this and blue chip growth for many many years.

fidelity blue chip growth FBGRX

vanguard total market index vti

vanguard veu all world index etf

vanguard vig dividend achievers etf

that is the equity side.

the bond side uses

vanguard admiral total bond fund (now only 10% of the portfolio)

fidelity floating rate high yield

vanguard bsv short term bond

vanguard vtip short term inflation proof bond etf

10% GLD GOLD ETF

10% CASH which represents 2 years of retirement withdrawals and some emergency money.

i toyed and toyed with so many different models until i came up with a mix of what i thought would cover the areas i wanted to cover with as little interest rate sensitivity as i could which is why i left reits out of the portfolio at this stage.

if inflation picks up i will swap total bond for a real return fund like fidelity strategic real return FSRRX . that carrys to much weight in areas geared for higher inflation to be used at this stage in my opinion.

the model works out to 50% in equities , 30% bonds , 10% gold 10% cash

And, how has the above evolved over nearly five years?

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."
User avatar
vnatale
Executive Member
Executive Member
Posts: 9423
Joined: Fri Apr 12, 2019 8:56 pm
Location: Massachusetts
Contact:

Re: No where to hide

Post by vnatale » Thu Jan 23, 2020 10:31 pm

mathjak107 wrote:
Thu Jul 02, 2015 8:56 am
barrett wrote: mathjak, Are you unwinding your PP then? Just curious. You seemed to like it a couple of weeks ago.

Have enjoyed many of your posts on here.
yes ,  I did it today.

I made the change before I got to far behind.  I think for being as close to retirement as I am it was bad timing trying the pp.

I think pp may work and I could be wrong but I wasn't happy the way the current environment was interacting at this point in time .

to close for comfort . but I still enjoy  talking about the pp and I think I will always have a certain fondness for it.
mathak,

Your official confirming pronouncement that you were leaving the Permanent Portfolio...

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."
User avatar
vnatale
Executive Member
Executive Member
Posts: 9423
Joined: Fri Apr 12, 2019 8:56 pm
Location: Massachusetts
Contact:

Re: No where to hide

Post by vnatale » Thu Jan 23, 2020 10:45 pm

mathjak107 wrote:
Fri Jul 03, 2015 3:42 am
MachineGhost wrote:
MediumTex wrote: i really abandoned the pp because after watching the bond action i did not want to place such a big bet on rates at this point with the bond  market yield s trend being up lately for months  and stock market gains just squeaking out .
Earlier I did some volatility checking of bonds from 1925 to date and various subsets, especially the bond bear from 1946 to 1981 which had low rates at the outset comparable to today.  Unfortunately, it seems that monthly data really masks the volatility one would experience on a daily basis as I was getting low volatility values not in any way comparable to 1977 to date (13.09%).  Isn't it normal to annualize by multiplying the square root of a value by the standard deviation of the returns representing the sampled temporal interval?  i.e. 12 for monthly data?

I don't know what the answer to the bond conundrum is, but I do know one thing.  The 1970's is no longer representative because it was high rates increasing higher (minimal duration).  We're at 1940's low rates that are going to increase higher (maximum duration).  If anyone is not scared, they should be.

yep , unless we have some extended calamity betting to heavy on rates now can be betting against the house , fighting the fed and forgetting the trend is your friend.

these sayings are there for a reason.

in the financial world not making the money you could is akin to losing that money .

getting overly defensive and leaving a pile of money on the table just for the fear of fear is in effect losing that much.

don't forget this important fact.

you only get one shot at building up everything you need  for retirement .  to leave money on the table because of fear of some calamity you come up with in your head that may never come to be and likely won't  may be very dangerous to your wealth .


the accumulation stage is the time to try to go for that pedal to the metal approach . after all even 2008 recovered in 5 years.  trying to overly protect against the outside chance everything goes to crap can cost you dearly and odds are Armageddon isn't around the corner.

just something to think about if you are still years from retirement ..

the most important thing financial  i learned , i learned from jason zweig . (his dad was marty zweig -famed wall street week elf ) .

jason's book your money your brain taught me our brains are geared to sabotage us .

the brain hates losing money and when it stresses over real money it even uses different sections for reasoning  then it does when you hypothetically think about doing something .

so your brain will get you to take the safest path and throw reason after reason at you as to why you should not take  that more volatile path.

when i was debating buying in to that real estate venture which would cost more money than i even owned and had no guarantees , i was up night after night as my brain pounded me with every reason as to why i should not do this.

but reading jasons book i knew i was not being handed a rational decision.

so i bit the bullet , did the deal , borrowed more money than i ever dreamed i would and it was the best thing i ever did. 

it was a calculated risk but a risk. the first lease buy out of a tenant fetched 7 figures for the apartment and our share paid off the loans.  we still had 7 more apartments left and a 10% stake in the commercial lease rights to the building .

those lease rights were sold last year for the whopper of an amount , 18 million dollars .  we got 16 million cash and they are paying us out the other 2 million over 4 years .  we held a 10% stake in this deal.

this deal which cost us all of 500k to buy in turned out to be amazing.

but if i listened to my brain i never would have done it.

here is the story of our lease right sale if anyone cares to read it.



.
http://therealdeal.com/blog/2014/01/29/ ... r-for-18m/
mathjak's real estate sale!

mathjak. Are you named in that article?

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."
User avatar
vnatale
Executive Member
Executive Member
Posts: 9423
Joined: Fri Apr 12, 2019 8:56 pm
Location: Massachusetts
Contact:

Re: No where to hide

Post by vnatale » Thu Jan 23, 2020 10:47 pm

mathjak107 wrote:
Fri Jul 03, 2015 4:23 am
another point i want to bring up .

i told you i could talk about this stuff all day  ha ha ha  .

be careful when looking at all these charts and comparisons.

like comparing indexing to managed investing they are all strawman results that no one gets.

we all have different buy in points , sell points , rebalance points , we add money at different times and some even dollar cost average in.

few ever get anything resembling a posted year over year return.

even how you tax structure can wipe away any advantage's  lower expenses can have.

i am often reminded when i see charts and figures , of  grandma and her car buying days.

you have mr savvy investor  going in to buy a car.

he beats the  salesman into submission getting the lowest price he could . then he pounds the loan officer for the lowest possible financing.

3 years later he comes back and trades the car back in wholesale to the dealer.

on the other hand grandma walks in , pays top dollar for the car , gets a higher rate but sells the car privately for far more money.

grandma wins.


the fact is until all the pieces are figured in how something does in a chart has little bearing on what you did .


our models we used in the fidelity insight newsletter were not always funds that beat their index's . but by using funds through their sweet spots and trading them for better suited funds when the big picture changes  the funds working together beat their index's most of the time while individually they did not.


how you are doing is only unique to your own situation and not comparable to anyone else or anyone's charts and figures ..

you can have slightly more expensive funds , not the best allocations , or even have funds under perform a bit but a better retirement tax plan that allows you to draw a 6 figure income at near zero tax beats any boglehead any day.


i have a lot to say about retirement tax planning too but i will spare you all. 

remember too , i am not in the business , i am not a pro and these are just the opinions i have .

the funny thing is i have been quoted more times in the wall street journal than most people in the business and what the heck do i know.  lol
mathjak!!!!

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."
Post Reply