Why do you use the PP?

General Discussion on the Permanent Portfolio Strategy

Moderator: Global Moderator

User avatar
Mark Leavy
Executive Member
Executive Member
Posts: 506
Joined: Thu Mar 01, 2012 10:20 pm
Location: US Citizen, Permanent Traveler

Re: Why do you use the PP?

Post by Mark Leavy » Mon Jul 27, 2015 10:08 am

Pointedstick wrote: Mandatory devil's advocacy: the USD price of a good men's suit was $250 in 2000 and $1800 in 2011?
Maybe not an exact correlation, but...

Here's the 15 year chart for Merino wool :

[img width=800]http://i62.tinypic.com/2lncrxl.png[/img]
User avatar
Pointedstick
Executive Member
Executive Member
Posts: 8697
Joined: Tue Apr 17, 2012 9:21 pm
Contact:

Re: Why do you use the PP?

Post by Pointedstick » Mon Jul 27, 2015 10:09 am

Whoa, that is spooky.
Human behavior is economic behavior. The particulars may vary, but competition for limited resources remains a constant.
- CEO Nwabudike Morgan
User avatar
lordmetroid
Executive Member
Executive Member
Posts: 200
Joined: Wed Nov 26, 2014 3:53 pm

Re: Why do you use the PP?

Post by lordmetroid » Tue Jul 28, 2015 3:14 am

Not spooky but an effect of the end of the 15 year commodity super cycle of which Jim Rogers usually speaks of.
Capital has been invested in order to secure commodities. Now this has been achieved and the next phas in the economic cycle can begin.
Last edited by lordmetroid on Tue Jul 28, 2015 3:26 am, edited 1 time in total.
portart
Executive Member
Executive Member
Posts: 278
Joined: Mon Feb 11, 2013 8:20 am

Re: Why do you use the PP?

Post by portart » Wed Jul 29, 2015 9:58 am

I have used PP for ten years. This is the first time I some level of fear with the potential bottom dropping out of gold. I like Pointedstick's idea of a second more aggressive portfolio (same as a pp if you rolled into one with less gold and treasuries changing the percentages so it's how you want to look at it.) Of course trying to time when to sell some gold and move it around is tricky with it close to losing support and having another waterfall drop begin.  It's hard to change your philosphy...
User avatar
Pointedstick
Executive Member
Executive Member
Posts: 8697
Joined: Tue Apr 17, 2012 9:21 pm
Contact:

Re: Why do you use the PP?

Post by Pointedstick » Wed Jul 29, 2015 10:04 am

If there was ever a good time to underweight gold, it was 2 or 3 years ago, not right now. As icky as this drop is, I'm not selling because that would be buying high and selling low. Same reason I'm not loading up on more stocks. I'm just letting the PP do its thing. If the stock market flames out and gold surges, that will be the time to transition into a portfolio with more stocks and less gold if that's what you want.
Human behavior is economic behavior. The particulars may vary, but competition for limited resources remains a constant.
- CEO Nwabudike Morgan
User avatar
buddtholomew
Executive Member
Executive Member
Posts: 2037
Joined: Fri May 21, 2010 4:16 pm

Re: Why do you use the PP?

Post by buddtholomew » Wed Jul 29, 2015 10:17 am

Pointedstick wrote: If there was ever a good time to underweight gold, it was 2 or 3 years ago, not right now. As icky as this drop is, I'm not selling because that would be buying high and selling low. Same reason I'm not loading up on more stocks. I'm just letting the PP do its thing. If the stock market flames out and gold surges, that will be the time to transition into a portfolio with more stocks and less gold if that's what you want.
Trapped in the PP...it's funny how ridiculed I was when I saw this playing out. Stuck in gold until it eventually restores my losses which are now approaching 25%
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.
User avatar
Pointedstick
Executive Member
Executive Member
Posts: 8697
Joined: Tue Apr 17, 2012 9:21 pm
Contact:

Re: Why do you use the PP?

Post by Pointedstick » Wed Jul 29, 2015 10:21 am

buddtholomew wrote:
Pointedstick wrote: If there was ever a good time to underweight gold, it was 2 or 3 years ago, not right now. As icky as this drop is, I'm not selling because that would be buying high and selling low. Same reason I'm not loading up on more stocks. I'm just letting the PP do its thing. If the stock market flames out and gold surges, that will be the time to transition into a portfolio with more stocks and less gold if that's what you want.
Trapped in the PP...it's funny how ridiculed I was when I saw this playing out. Stuck in gold until it eventually restores my losses which are now approaching 25%
The thing is… this is just how the PP is. Something is always gonna be a stinker. It stinks the worst when the stinker is the thing you hate most, and when it starts to stink when you're just starting out.
Human behavior is economic behavior. The particulars may vary, but competition for limited resources remains a constant.
- CEO Nwabudike Morgan
User avatar
buddtholomew
Executive Member
Executive Member
Posts: 2037
Joined: Fri May 21, 2010 4:16 pm

Re: Why do you use the PP?

Post by buddtholomew » Wed Jul 29, 2015 10:30 am

Pointedstick wrote:
buddtholomew wrote:
Pointedstick wrote: If there was ever a good time to underweight gold, it was 2 or 3 years ago, not right now. As icky as this drop is, I'm not selling because that would be buying high and selling low. Same reason I'm not loading up on more stocks. I'm just letting the PP do its thing. If the stock market flames out and gold surges, that will be the time to transition into a portfolio with more stocks and less gold if that's what you want.
Trapped in the PP...it's funny how ridiculed I was when I saw this playing out. Stuck in gold until it eventually restores my losses which are now approaching 25%
The thing is… this is just how the PP is. Something is always gonna be a stinker. It stinks the worst when the stinker is the thing you hate most, and when it starts to stink when you're just starting out.
So true...
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.
User avatar
Cortopassi
Executive Member
Executive Member
Posts: 1513
Joined: Mon Feb 24, 2014 2:28 pm
Location: Illinois

Re: Why do you use the PP?

Post by Cortopassi » Wed Aug 19, 2015 3:15 pm

Why do I use the PP...  1 month chart below.  Gold is not $650 yet, bonds are still kicking and stocks have dropped.  And I don't care!

Boy, it's been nice to be diversified for the past year and a half.

Image
But what do I know?
User avatar
blackomen
Executive Member
Executive Member
Posts: 200
Joined: Wed Nov 23, 2011 5:41 pm
Location: Dallas
Contact:

Re: Why do you use the PP?

Post by blackomen » Tue Aug 25, 2015 9:54 am

IMO, the PP is the closest allocation I've seen to casting a completely neutral view on the economy. 

It sounds counter-intuitive but even going 100%, which seems like the default state for many people, is NOT a neutral view.  In that case, you're betting that your cash will outperform all assets and inflation.  Next time you panic sell a stock or index, ask yourself if you honestly believe cash will outperform what you just sold at the bottom.

Whether or not you choose to consciously invest, you're participating in the financial markets by virtue of earning money, depositing it in a bank, and using it to put a roof over your head and food on the table.

No matter how great you are at economic forecasting, there will always be times when your forecasts will be off.  And with the way the markets work, you're very likely to lose a ton of money if you made the wrong bet (i.e. stocks in 2008, gold in 2013, etc.)  It's hard to explain why in a short post but assets tend to exacerbate its losses when tons of investors end up fleeing it in a short period of time like in those two years.  And it only takes a bad year or two to effectively erase all of the gains you've worked so hard for and spent so many sleepless nights hoping for in the past.  So why not do it the easy way and take a neutral position instead of speculating?
User avatar
vnatale
Executive Member
Executive Member
Posts: 1014
Joined: Fri Apr 12, 2019 8:56 pm
Location: Montague, MA
Contact:

Re: Why do you use the PP?

Post by vnatale » Sat Jan 18, 2020 9:08 pm

mathjak107 wrote:
Mon Jul 13, 2015 7:04 pm
barrett wrote: I have mathjak on the ropes! Almost ten minutes have passed since my last post. I can smell victory! :)
you already know my feeling . the pp will not be a pleasant place to be if rates continue to rise  as that leveraged bond position will always be behind the curve by a lot no matter how much you rebalance for years after rates stop rising.    that can easily over power the rest unless a strong trend develops and even then it can be painful.

you are playing with fire but time will tell.  personally I think the bond position carry's to much weight at these levels along with to much dead money in gold .

can we make this prediction a sticky ?
4 1/2 years later.....the VERDICT on this prediction?

Vinny
"I only regret that I have but one lap to give to my cats."
User avatar
vnatale
Executive Member
Executive Member
Posts: 1014
Joined: Fri Apr 12, 2019 8:56 pm
Location: Montague, MA
Contact:

Re: Why do you use the PP?

Post by vnatale » Sat Jan 18, 2020 9:14 pm

ochotona wrote:
Tue Jul 14, 2015 10:45 am
Having a PP and a VP is like being a devout Christian with a mistress on the side!!!  ;D

FYI, the fall in long term bonds and risk of further declines, and the astounding deadness of gold, has stopped me out of the HBPP totally. When gold was non-responsive to Grexit, I knew all of the goldbuggery was false and a lie. I'm in the same camp as mathjak107.  I'm now in a 60% / 20% intermediate bonds / 20% cash portfolio with 11 years left to go to retirement. I am waiting until this old bull runs out of steam and falls over, then I will redeploy the piles of cash, like I did in the 2009 slump. Also will put aside some funds to buy gold when it's 20-50% off from where it is now.

I put a reminder event to remind myself to look on 1/1/2020 to see how the past five years have been for the HBPP. I'll be that much closer to retiring, I will re-consider it as a distribution-stage allocation.

mathjak107 wrote: your best bet is to do exactly what pointed stick did if you run a variable.

no matter how you try to disguise your re-weighting things with a vp and calling it a separate portfolio your money has no memory as to  which gang it belongs too.

it is like buying a target fund then buying all kinds of other investments  un-doing what the target fund is trying to do .

if you have a vp look at it all together or you are fooling yourself but not your money .

as a true pp'er you have to live with the thought any moment can be the moment you have been waiting for , ( otherwise why hold so much gold  when conditions are so far off for it ?) and to be weighted the wrong way can undo years of waiting for this moment .

so you should look at your total portfolio as just that instead of a part time pp'er with a side bet . . .
And??????????????????

Vinny
"I only regret that I have but one lap to give to my cats."
Post Reply