The Reason to Quit PP

General Discussion on the Permanent Portfolio Strategy

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Pointedstick
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Re: The Reason to Quit PP

Post by Pointedstick » Thu Oct 01, 2015 1:55 pm

I'm glad my synopsis makes sense to you. I hope you can understand how your background shapes your perception of risk and desire for growth. You see gold as a boat anchor impeding that goal, but someone with a different background might see it as a diversifier that can decrease short-to-medium-term downside volatility. That's not one of your goals, but it's not an illegitimate perspective. It's not that gold is useless, it's that it's not as useful for achieving your goals as other assets. But your goals are your goals. They're not necessarily the same as anyone else's.
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Cortopassi
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Re: The Reason to Quit PP

Post by Cortopassi » Thu Oct 01, 2015 2:04 pm

I'm not here to kiss anyone's ass.  But we've got the picture loud and clear on your feelings towards gold.  It's bad enough I have to see the price every day without hearing it from you too!  ;D

Let's move on to another subject -- why don't you start one and title it "Why rebalancing isn't all it's cracked up to be" or something like that.

I'll start out on rebalancing...

If you run 1975-now, with 35/15 bands, specifically looking at what rebalanced the portfolio (there were 13 rebalances):

**1 time stocks to 15%
**1 time bonds to 15%
**1 time bonds to 35%
**2 times stocks to 35%
**3 times gold to 15%
**5 times gold to 35%

(If someone wants to double check this for me, it is sometimes hard to tell what asset caused a rebalance)

If the PP is looking to capture volatility of the assets, it seems to be doing it very well with gold, which rebalanced the portfolio more often positively, and negatively, than any other asset.

The last rebalance happened on 7/20/2015, and rebalanced significantly out of bonds and S&P into cash and gold.  Pretty darn good timing.

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mathjak107
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Re: The Reason to Quit PP

Post by mathjak107 » Thu Oct 01, 2015 2:17 pm

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 .
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Re: The Reason to Quit PP

Post by koekebakker » Thu Oct 01, 2015 2:43 pm

mathjak107 wrote: not really , iwe can pick out all kinds of spurts for gold the last 40 years but at the end of the day a typical 30 year retirement time frame or 30-40 year accumulation stage has gold averaging out to just the rate of inflation pretty much .  that to me makes it more a shorter term speculation than a womb to the tomb hold .
Well, no one is investing just for retirement. You want your money to be there when you need it, not only when you retire. When the stock market tanks there's a good chance your career takes a hit too. Do you want your investments to be highly correlated to your career prospects? I don't. And so far, for me at least, the correlation has been close to 1.

When I lose my job I dont want my investments to be down 30-50%. Gold and LT bonds reduce that chance considerably. And if all goes well and stocks outperform everything else the next couple of decades there's a good chance my average savingsrate will be pretty high, so there's less need for a high stock allocation.
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Re: The Reason to Quit PP

Post by Cortopassi » Thu Oct 01, 2015 2:45 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 .
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?
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Re: The Reason to Quit PP

Post by MachineGhost » Thu Oct 01, 2015 3:32 pm

mathjak107 wrote: actually you do want to buy once the trend is happening . buy high and sell higher has made far and away more money then trying to fight the trend , catch a falling a knife and buy low and sell high  which rarely ends up working out well .

trying to fight the fed also is a no no .

there is no basis for sinking so much money  money in to an asset so long before it is time . if there is basis for  a trend they run years .  if it is a flash in the pan then be happy you missed it .

unless you think financial Armageddon is right around the corner youare hurting your self more trying to insure against something that may never happen just as it has not happened the last  century .


all this insurance is causing the pp today to get stuck in the mud .  you see it happen now every big equity rally .

market up 200 plus points and pp down .  usual culprit -gold
A new trend that no one pays attention to and signs on the horizon that everyone can see aren't the same thing in my book.  Besides, I thought you didn't believe in trend following?

No argument with the rest, but you're thinking too short-term.  The PP is a long-term wealth preservation vehicle.  A couple of poor years due to the hedges is part of the price to pay for it being so robust.  It just means the market is confused with no sense of direction.
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Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet.  I should not be considered as legally permitted to render such advice!
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Re: The Reason to Quit PP

Post by MachineGhost » Thu Oct 01, 2015 3:52 pm

Jack Jones wrote: Ah yeah, I've been meaning to ask MachineGhost this as well.
Tradition.  What else can they easily hold that's a real asset?  Not that they're great investors or anything; they have the worst track record of all investors as they're all CCCLs (Crony Country Club Lemmings).  I have to make a possible exception for China though as their central bank is allegedly staffed by traders with real world experience, not ivory tower academics.
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes

Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet.  I should not be considered as legally permitted to render such advice!
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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?
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes

Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet.  I should not be considered as legally permitted to render such advice!
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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

Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet.  I should not be considered as legally permitted to render such advice!
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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.
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes

Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet.  I should not be considered as legally permitted to render such advice!
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mathjak107
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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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