The Reason to Quit PP

General Discussion on the Permanent Portfolio Strategy

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mathjak107
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Re: The Reason to Quit PP

Post by mathjak107 » Thu Oct 01, 2015 3:53 pm

well the long term numbers say just about any other portfolio did a lot more over the long term . be it that 30-35 year accumulation phase or that 30-35 year retirement phase .

what you bought is some less volatility  ,what you gave up was quite a bit of dough .

the trade off is yours to decide
Last edited by mathjak107 on Thu Oct 01, 2015 4:32 pm, edited 1 time in total.
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Re: The Reason to Quit PP

Post by MachineGhost » Thu Oct 01, 2015 3:54 pm

Cortopassi wrote: I think you answer the question correctly here.  We aren't just hedging for Armageddon, we also hold gold against reckless government policies, be it fiscal, monetary, wars, etc.
Gold would have no use in Armageddeon.  For that you need to look towards your Earthquake Survival Kit or similar.  You do have one, don't you?
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Re: The Reason to Quit PP

Post by MachineGhost » Thu Oct 01, 2015 3:57 pm

mathjak107 wrote: well for 40 years it has been a crappy hedge .  a t-bill performed as a  hedge  better  then gold  .because  if gold tracks inflation which it did then any fund  fees  or storage and insurance fees  would have had  the gold  lagging inflation .  so as a hedge it either had nothing to hedge against over the long term since it returned about 4 .50% cagr  , and as an inflation hedge a rolled over t-bill did better
Gold has acted as a hedge about half the time; typically when T-Bonds don't do the job.  It's the backup to the backup.
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes

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Re: The Reason to Quit PP

Post by MachineGhost » Thu Oct 01, 2015 4:03 pm

Pointedstick wrote: On an emotional level, mathjak likes assets he identifies as "winners" more than the ones he identifies as "losers" owing to his exceptional ambition, prosperity mindset, and not-so-prosperous upbringing. There are always excuses and reasons why you should stick with "winner" assets even through tough times, while those same tough times are used as evidence for why you should ditch "loser" assets. Having identified gold as a loser, mathjak is simply never going to like it very much as an asset. You would have better luck convincing him to ditch his $10,000 Nikon because an iPhone camera is good enough :)
I'd say he suffers from an extreme case of recency bias and a complete ignorance of historical conditions.  The PP is well suited for the oncoming Sovereign Debt crisis.  Are we going to argue after that is over that a 100% gold/100% cash portfolio was better than the PP in hindsight?  ::)

I guess it all comes down to how much faith we have in bureaucrats, politicians and government not to fuck up our financial system.  Today's denizens are not even remotely the same as yesteryear's.  The PP is rather libertarian in that respect.
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Re: The Reason to Quit PP

Post by mathjak107 » Thu Oct 01, 2015 4:04 pm

well i am sure if and when it happens , let us know how it worked out for you .
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Re: The Reason to Quit PP

Post by MachineGhost » Thu Oct 01, 2015 4:04 pm

mathjak107 wrote: i agree , i just do not see in the long term scheme of things at this point a need for gold or as much gold . i much rather try to put that money to better use making it more productive . i know my comfort limits and i try to stay within them leaving lots of slack in the plan . i always have an end game view . not  a year or 5 years or even 10 years .  so far gold has not demonstrated through anything we have been through that at the end of the game  it was worth tying up money in it .  by an end game view i mean at the and of a 30-35 year  accumulation stage or a 30-35 year retirement time frame .
I don't either.  But when gold does bottom, I will load up.  Will you?
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Re: The Reason to Quit PP

Post by mathjak107 » Thu Oct 01, 2015 4:05 pm

MachineGhost wrote:
mathjak107 wrote: well for 40 years it has been a crappy hedge .  a t-bill performed as a  hedge  better  then gold  .because  if gold tracks inflation which it did then any fund  fees  or storage and insurance fees  would have had  the gold  lagging inflation .  so as a hedge it either had nothing to hedge against over the long term since it returned about 4 .50% cagr  , and as an inflation hedge a rolled over t-bill did better
Gold has acted as a hedge about half the time; typically when T-Bonds don't do the job.  It's the backup to the backup.
over those total  long time frames gold averaged out to nothing more than inflation . it hedged nothing that other assets didn't do better .
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Re: The Reason to Quit PP

Post by mathjak107 » Thu Oct 01, 2015 4:07 pm

MachineGhost wrote:
mathjak107 wrote: i agree , i just do not see in the long term scheme of things at this point a need for gold or as much gold . i much rather try to put that money to better use making it more productive . i know my comfort limits and i try to stay within them leaving lots of slack in the plan . i always have an end game view . not  a year or 5 years or even 10 years .  so far gold has not demonstrated through anything we have been through that at the end of the game  it was worth tying up money in it .  by an end game view i mean at the and of a 30-35 year  accumulation stage or a 30-35 year retirement time frame .
I don't either.  But when gold does bottom, I will load up.  Will you?

maybe , maybe not , depends on what the big picture shows , buying on price may not mean a thing  if conditions never come around for it it . .  i hate being the guy in the bahamas owning a winter coat collection because it was on sale .
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Re: The Reason to Quit PP

Post by MachineGhost » Thu Oct 01, 2015 4:40 pm

mathjak107 wrote: i would think most rebalancing would take money away from stocks and bonds and send it to gold .  i can only imagine how much all that gold money would have grown in stocks and bonds by today .
Paper and electrons are only good for wiping your ass if the government or financial system collapses.  Do you realize how lucky you are and have been being an American in the century that just passed?  That's what I mean by you suffering from a severe recency bias.  You simply lack historical context of how bad it was for others who did not have your luck.  And you're making the most major assumption that the future will be exactly like the past when any reading of the tea leaves will show you that current conditions are far outside any historical norm.

I know Morgan said you can never go broke betting on America, but no empire lasts forever.  And right now we're all at the tail end of its eclipse (we've got 17 years left).  This isn't 1906 or 1987 anymore; its the end of the beginning.

Just trying to broaden your perspective, that's all.
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Re: The Reason to Quit PP

Post by MachineGhost » Thu Oct 01, 2015 4:41 pm

Cortopassi wrote: Did you not see that in the past 40 years the asset most balanced out of for hitting 35% was gold?  Are you choosing to ignore that?
That's just because gold was far more volatility than the others.  The HBPP is not at risk parity.
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Re: The Reason to Quit PP

Post by mathjak107 » Thu Oct 01, 2015 4:43 pm

well then if you think a financial debacle is coming do what you got to do .  but why stop with gold , why not go the route of the doomsday prepers since their vision in their head is as real to them as yours is to you .
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Re: The Reason to Quit PP

Post by MachineGhost » Thu Oct 01, 2015 4:44 pm

mathjak107 wrote: over those total  long time frames gold averaged out to nothing more than inflation . it hedged nothing that other assets didn't do better .
Which is the point when those other assets F-A-I-L.  Recency bias.
Last edited by MachineGhost on Thu Oct 01, 2015 4:46 pm, edited 1 time in total.
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Re: The Reason to Quit PP

Post by MachineGhost » Thu Oct 01, 2015 4:46 pm

mathjak107 wrote: well then if you think a financial debacle is coming do what you got to do .  but why stop with gold , why not go the route of the doomsday prepers since their vision in their head is as real to them as yours is to you .
Because I prefer to be grounded in reality?  We're not going back to the Stone Age or barter.  I don't see any threat on the horizon that would justify becoming one of those Prepper nuts.  You probably should think hard about what threats I do see on the horizon, since they're not a figment of my imagination.  WAKE UP.  Retirement is the worst possible time to be caught unprepared.
Last edited by MachineGhost on Thu Oct 01, 2015 4:50 pm, edited 1 time in total.
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Re: The Reason to Quit PP

Post by Cortopassi » Thu Oct 01, 2015 4:46 pm

I'm getting a bag of popcorn.  MJ vs. MG!!
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Re: The Reason to Quit PP

Post by mathjak107 » Thu Oct 01, 2015 4:50 pm

nah , no one knows what is going to be ,  i grew up in the 1970's when it looked like nothing could get any worse but you know what , we did okay . higher unemploymnt then we just had , soaring inflation , vietnam  a dead stock market , bonds in the toilet , high tax rates , gas lines  and no end in sight
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Re: The Reason to Quit PP

Post by MachineGhost » Thu Oct 01, 2015 4:51 pm

mathjak107 wrote: nah , no one knows what is going to be ,  i grew up in the 1970's when it looked like nothing could get any worse but you know what , we did okay .
Exception to the rule.  Maybe you should look into the experience of other countries during the 1970's where gold would have literally saved your ass.  How do you feel about Iceland a couple of years ago?
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Re: The Reason to Quit PP

Post by mathjak107 » Thu Oct 01, 2015 4:53 pm

we don't know how many were killed or had the gold they tried to use get taken .gold bugs always have that vision of buying their way out . i bet most just had it taken and were killed or robbed of it ..
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Re: The Reason to Quit PP

Post by Jack Jones » Thu Oct 01, 2015 5:00 pm

MachineGhost wrote: Paper and electrons are only good for wiping your ass if the government or financial system collapses.  Do you realize how lucky you are and have been being an American in the century that just passed?  That's what I mean by you suffering from a severe recency bias.  You simply lack historical context of how bad it was for others who did not have your luck.
In 1940, when the Soviet Union occupied Latvia, my grandfather's family was forced out of their homes. I'm not sure what happened to their paper assets during that time, but my guess is that they were worthless. They certainly lost 100% of their real estate assets. Many were deported to Siberia (to die), but fortunately (for my existence) my grandfather made it to Austria.

This little bit of family history helps me appreciate the importance of:

1. Holding a portable store of value as part of my asset allocation
2. Keeping some of it outside the country
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Re: The Reason to Quit PP

Post by mathjak107 » Thu Oct 01, 2015 5:03 pm

there are always storys out there about those that bought their way out  but there are far more stories of folks who were robbed or killed for it .  in these cases guns and bullets are far better ,.


i think we beat this to death enough  with the what if's . you like gold , buy gold . it is your choice .
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Re: The Reason to Quit PP

Post by mathjak107 » Thu Oct 01, 2015 5:15 pm

i will just say this , before you worry about having gold to insure your survival , what have you done to protect  the real possibility's in life like long term care protection or even insuring your income flow when you retire if things do not go well with markets and rates ?

while wasting time talking about the remote flyers most foljks have zero plans in place for protecting against the very possible events in life .
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Re: The Reason to Quit PP

Post by MachineGhost » Thu Oct 01, 2015 5:21 pm

mathjak107 wrote: i will just say this , before you worry about having gold to insure your survival , what have you done to protect  the real possibility's in life like long term care protection or even insuring your income flow when you retire if things do not go well with markets and rates ?

while wasting time talking about the remote flyers most foljks have zero plans in place for protecting against the very possible events in life .
I hate to break it to you, but not everyone is superrich like you.  So we do what we can to mitigate all possibilities that we can actually do.
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Re: The Reason to Quit PP

Post by mathjak107 » Thu Oct 01, 2015 5:36 pm

i wish i was super rich . we are retired in nyc where a middle class lifestyle takes  low 6 figures in comparison to those city's down south or out west .

but don't you think you should be  adding whatever insurances you feel are important by likely hood of playing out ?  to me protecting from such things as needing extended  long term care  and protecting the stay at home spouse  is far more important than buying gold to protect a remote financial calamity if you are telling me gold is an insurance and not an investment . .

get my point ?  if you are claiming gold is insurance to buy freedom , there are a lot more logical things in life that need better protecting because odds are if you are a couple one of you will need care .
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Re: The Reason to Quit PP

Post by MachineGhost » Thu Oct 01, 2015 6:07 pm

mathjak107 wrote: get my point ?  if you are claiming gold is insurance to buy freedom , there are a lot more logical things in life that need better protecting because odds are if you are a couple one of you will need care .
I get your point, but gold is the insurance against those insurance contracts, the paper asset based financial system aka FIRE economy.  When people lose confidence in FIRE (or government), it is like a little boy plugging a hole in the leaky dyke with his thumb.  It won't work for long.  It doesn't do anyone any good to be all layered up in expensive paper without insurance against its failure.
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Re: The Reason to Quit PP

Post by mathjak107 » Thu Oct 01, 2015 6:11 pm

all well and good but  one needs to rethink the insurances they lack that are far more likely outcomes before going farther out on the fringe . not having some sort of real workable plan in place for ltc can leave a spouse impoverished . even long term disability insurance would be at the top of the list before  other less likely outcomes .

the way i like to look at a comprehensive financial plan is to have at the base of the pyramid the various insurances i feel are important to protect and mitigate catastrophic damage to the the assets above it .

then use a  bit of the return to pay for that insurance . so step 1 is really to make sure you have the insurances all covered in order of likely hood that you feel are important .

personally i would not put a dime in gold until i had some sort of plan in place for LTC  if gold was my insurance  against other things ..  especially because my dad spent 6 years in a home and it was a horror for his wife .

so if gold is insurance then you have to treat it like you would any of your insurances and the odds of events  happening are important in  the comparison to other things as far as what to insure against if you can't do everything you feel is  risk ..

if it is an investment then you have to grade it as such which long term has been quite poor , so you have to rethink it if that is your goal .
that to me is far more real then buying my way to china

just some food for thought if you are considering the pp not an investment but a comprehensive protection package .
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Re: The Reason to Quit PP

Post by frugal » Sat Oct 03, 2015 4:01 am

Hello,

what type of value ( apart from gold and cash ) can we keep at home as safety?

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