No where to hide

General Discussion on the Permanent Portfolio Strategy

Moderator: Global Moderator

User avatar
vnatale
Executive Member
Executive Member
Posts: 1021
Joined: Fri Apr 12, 2019 8:56 pm
Location: Montague, MA
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
"I only regret that I have but one lap to give to my cats."
User avatar
ochotona
Executive Member
Executive Member
Posts: 2929
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: 1021
Joined: Fri Apr 12, 2019 8:56 pm
Location: Montague, MA
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
"I only regret that I have but one lap to give to my cats."
User avatar
vnatale
Executive Member
Executive Member
Posts: 1021
Joined: Fri Apr 12, 2019 8:56 pm
Location: Montague, MA
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
"I only regret that I have but one lap to give to my cats."
User avatar
vnatale
Executive Member
Executive Member
Posts: 1021
Joined: Fri Apr 12, 2019 8:56 pm
Location: Montague, MA
Contact:

Re: No where to hide

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

pugchief 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
"I only regret that I have but one lap to give to my cats."
User avatar
vnatale
Executive Member
Executive Member
Posts: 1021
Joined: Fri Apr 12, 2019 8:56 pm
Location: Montague, MA
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
"I only regret that I have but one lap to give to my cats."
User avatar
vnatale
Executive Member
Executive Member
Posts: 1021
Joined: Fri Apr 12, 2019 8:56 pm
Location: Montague, MA
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
"I only regret that I have but one lap to give to my cats."
User avatar
vnatale
Executive Member
Executive Member
Posts: 1021
Joined: Fri Apr 12, 2019 8:56 pm
Location: Montague, MA
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
"I only regret that I have but one lap to give to my cats."
User avatar
vnatale
Executive Member
Executive Member
Posts: 1021
Joined: Fri Apr 12, 2019 8:56 pm
Location: Montague, MA
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
"I only regret that I have but one lap to give to my cats."
User avatar
vnatale
Executive Member
Executive Member
Posts: 1021
Joined: Fri Apr 12, 2019 8:56 pm
Location: Montague, MA
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
"I only regret that I have but one lap to give to my cats."
User avatar
vnatale
Executive Member
Executive Member
Posts: 1021
Joined: Fri Apr 12, 2019 8:56 pm
Location: Montague, MA
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
"I only regret that I have but one lap to give to my cats."
User avatar
vnatale
Executive Member
Executive Member
Posts: 1021
Joined: Fri Apr 12, 2019 8:56 pm
Location: Montague, MA
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
"I only regret that I have but one lap to give to my cats."
Post Reply