Are you buying, holding, or selling the PP?

General Discussion on the Permanent Portfolio Strategy

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Which of these best describes your current asset allocation strategy?

I am continuing to maintain my PP at the 25x4 allocation, within my chosen rebalancing bands
48
50%
I am allowing my PP to drift, with the goal of getting to a new allocation
7
7%
I've changed my investment allocation in order to follow a "modified PP" strategy (e.g. golden butterfly)
17
18%
I've changed my investment allocation to a conventional allocation (e.g. BH 60/40)
5
5%
I want to jump into the PP but I'm hesitant because of recent poor performance compared to conventional portfolios
1
1%
I maintain more than one asset allocation for my core investments, so the PP is only part of my overall strategy.
16
17%
Just lurking and completely confused by the all the differing opinions
2
2%
 
Total votes: 96
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sophie
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Are you buying, holding, or selling the PP?

Post by sophie » Sun Nov 22, 2015 8:23 am

I'm allowing 2 votes per user for this poll because I'm aware that some people use different asset allocations for different pots of money (e.g. PP in taxable, Boglehead for retirement).  Also, I hope that lurkers and potential new forum members will vote.  We want to hear your opinions!
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Re: Are you buying, holding, or selling the PP?

Post by Fred » Sun Nov 22, 2015 10:09 am

I picked choice number 2 but it's not because I have any intentional plans to change my allocations. It's because I'm the ultimate lazy investor and if the portfolio wants to drift between the pure 25% PP and the Golden Butterfly without re-balancing I'm fine with it now that I see that the latter appears to be a safe option and I don't have to worry so much about getting too stock heavy.
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Re: Are you buying, holding, or selling the PP?

Post by finster869 » Sun Nov 22, 2015 10:15 am

Fred wrote: I picked choice number 2 but it's not because I have any intentional plans to change my allocations. It's because I'm the ultimate lazy investor and if the portfolio wants to drift between the pure 25% PP and the Golden Butterfly without re-balancing I'm fine with it now that I see that the latter appears to be a safe option and I don't have to worry so much about getting too stock heavy.
Just some food for thought.  One of the purposes of the 35/15 bands is to force you to sell high and buy low.  If, hypothetically speaking, we are reaching a change in trend where gold starts going up and stocks start dropping, your portfolio would have a far greater return in a scenario where you had rebalanced when hitting the 35/15 bands than if you just let the stock portion drift up to say 40%, then drop back down naturally to 25%. 
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Re: Are you buying, holding, or selling the PP?

Post by drumminj » Sun Nov 22, 2015 10:20 am

I've been 'buying into' the PP from a largely cash position since early February. I continue to do so (especially as I sell off company stock as it vests), buying to roughly maintain 25x4.  Right now about 40% of my net worth is in the PP, the rest in cash and company stock, and the money allocated to the PP is down 1.5% on the year.

I've hit the goal I started with as far as getting to $$$ invested in a PP.  Not 100% sure whether I'll keep adding new investments, or direct new funds to a different strategy.
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Re: Are you buying, holding, or selling the PP?

Post by Fred » Sun Nov 22, 2015 10:49 am

finster869 wrote: Just some food for thought.  One of the purposes of the 35/15 bands is to force you to sell high and buy low.  If, hypothetically speaking, we are reaching a change in trend where gold starts going up and stocks start dropping, your portfolio would have a far greater return in a scenario where you had rebalanced when hitting the 35/15 bands than if you just let the stock portion drift up to say 40%, then drop back down naturally to 25%.
Yes, I realize that, but it's also true if I re-balance at the 35/15 bands and the headwinds continue as they are then I will get a lesser return.

So pick your poison.
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Re: Are you buying, holding, or selling the PP?

Post by buddtholomew » Sun Nov 22, 2015 12:06 pm

If you don't believe in gold (who can?) then the PP is a waste of time. I've said it numerous times, the PP differentiates itself from other portfolios when gold rises or declines. HB diversified away from gold after a long run up, we diversified into gold during a long decline. See the difference. Be prepared for gold to go lower if you are a new PP investor. Don't buy-in trying to time the bottom.
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.
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Re: Are you buying, holding, or selling the PP?

Post by sophie » Sun Nov 22, 2015 12:42 pm

drumminj wrote: I've been 'buying into' the PP from a largely cash position since early February. I continue to do so (especially as I sell off company stock as it vests), buying to roughly maintain 25x4.  Right now about 40% of my net worth is in the PP, the rest in cash and company stock, and the money allocated to the PP is down 1.5% on the year.

I've hit the goal I started with as far as getting to $$$ invested in a PP.  Not 100% sure whether I'll keep adding new investments, or direct new funds to a different strategy.
What information would make a difference in this decision?
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Re: Are you buying, holding, or selling the PP?

Post by dutchtraffic » Sun Nov 22, 2015 1:17 pm

buddtholomew wrote: HB diversified away from gold after a long run up, we diversified into gold during a long decline. See the difference.
No idea what chart you are looking at, but it certainly isn't the gold chart.

Be prepared for gold to go lower if you are a new PP investor.
I suggest you short it, seeing as you are so sure.
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Re: Are you buying, holding, or selling the PP?

Post by fi50@fi2023 » Sun Nov 22, 2015 2:12 pm

I am continuing to invest new money in the PP.  And I am also in the camp that is attracted to the Golden Butterfly portfolio.  If you look at Tyler's excellent charts it is very hard to oppose a drift from PP to GB, whether intentional or passive.

I am blown away at the doom and gloom on this site.  I am so glad that I became a PP investor at a much more positive time.  As a Chapter 11 Bankruptcy Attorney, I remember very well what stock heavy investors went through in 2008/2009. 

I have no way of predicting what any asset will do in the future.  I feel very good about buying all of the PP assets and taking a long, patient view. 
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Re: Are you buying, holding, or selling the PP?

Post by mathjak107 » Sun Nov 22, 2015 2:23 pm

if you remember what  stock heavy portfolio's went went through in 2008 then you remember that the markets recovered fairly well  and pretty quickly once you look at midcaps and small caps in the mix and not just the s&p 500 .  as always investors who do the wrong thing at the wrong time paid the price for their own  bad behavior not the markets results  . .
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Re: Are you buying, holding, or selling the PP?

Post by drumminj » Sun Nov 22, 2015 2:48 pm

sophie wrote: What information would make a difference in this decision?
That's a very good question.

I imagine it'll be a somewhat emotional decision -- eg 'does this portfolio really suit my temperament?'. It has certainly re-enforced that I don't know what direction the markets/economy are headed, so a lazy/diversified portfolio is appropriate for me.  I'm not looking for aggressive growth, but largely looking to preserve purchasing power with a little extra.  I suppose then it will also be a function of evaluating other approaches out there that might be a better fit, though I'm not clear on what criteria I could use for making an objective assessment.  I wouldn't move money out of the PP, but just look for a slightly different approach to complement it.

Honestly, I came across the PP when looking for a way to allocate investments while slowly moving out of cash.  I had been meeting with investment advisors, but couldn't get over the thought of handing over $500k (the min for the types of advisors I was meeting with) and instantly going from cash to invested in stocks+bonds. So my goal was to average out of cash on my own, putting me in a position where I could stomach moving from *some* level of investment into whatever allocation the advisor would go with.

I don't think that approach is still on the table for me, but need to consider that as well.  I figure the holidays are a good time to drink wine and contemplate financial goals :)
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Re: Are you buying, holding, or selling the PP?

Post by buddtholomew » Sun Nov 22, 2015 2:56 pm

dutchtraffic wrote:
buddtholomew wrote: HB diversified away from gold after a long run up, we diversified into gold during a long decline. See the difference.
No idea what chart you are looking at, but it certainly isn't the gold chart.

Be prepared for gold to go lower if you are a new PP investor.
I suggest you short it, seeing as you are so sure.
Looking at 2011 through current dumbass. It's not a prediction, just a forewarning that gold can still go lower than current prices. Not sure if you are just a jackass or don't know how to communicate without berating. Not that I care either way.
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Re: Are you buying, holding, or selling the PP?

Post by dutchtraffic » Sun Nov 22, 2015 3:02 pm

buddtholomew wrote:
dutchtraffic wrote:
buddtholomew wrote: HB diversified away from gold after a long run up, we diversified into gold during a long decline. See the difference.
No idea what chart you are looking at, but it certainly isn't the gold chart.

Be prepared for gold to go lower if you are a new PP investor.
I suggest you short it, seeing as you are so sure.
Looking at 2011 through current dumbass. It's not a prediction, just a forewarning that gold can still go lower than current prices. Not sure if you are just a jackass or don't know how to communicate without berating. Not that I care either way.
Dumbass, jackass?

Why don't you go sit in a corner and panic about your 0.000002% drawdown instead of acting like a 11 year old over here.
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Re: Are you buying, holding, or selling the PP?

Post by fi50@fi2023 » Sun Nov 22, 2015 3:16 pm

Unbelievable how a bunch of abundantly blessed investors can be so childish and rude to each other.  This site is such an embarassment for newcomers.
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Re: Are you buying, holding, or selling the PP?

Post by ochotona » Sun Nov 22, 2015 3:19 pm

fi50@fi2023 wrote: Unbelievable how a bunch of abundantly blessed investors can be so childish and rude to each other.  This site is such an embarassment for newcomers.
+1
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Re: Are you buying, holding, or selling the PP?

Post by dualstow » Sun Nov 22, 2015 3:26 pm

It was a lot more peaceful a couple of years ago...when the pp was going up. I suppose this is a natural process following a less than stellar couple of years. Actually, that many people will abandon the pp is a natural process, but I agree, the hanging around bickering must be something of a turn-off.  (Not directed at anyone in particular).

Anyway, Sophie, I cannot wait to plow more money into the pp this January, including gold.
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Re: Are you buying, holding, or selling the PP?

Post by fi50@fi2023 » Sun Nov 22, 2015 3:37 pm

I guess the strange part for me is that the PP is supposed to be a strategy you can stick to so that you don't have to have a 2008/2009 panic and abandon it.  Unfortunely, we are having a mad rush for the exit doors on a couple of down but not terrible years.  I too am calculating my end of year gold purchase.
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Re: Are you buying, holding, or selling the PP?

Post by fi50@fi2023 » Sun Nov 22, 2015 3:42 pm

Bloomberg 2/15 - "Governments added 477.2 metric tons to their reserves, the second-biggest increase in 50 years and 17 percent more than a year earlier".
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Re: Are you buying, holding, or selling the PP?

Post by dragoncar » Sun Nov 22, 2015 3:52 pm

I chose #1 since I haven't hit traditional rebalancing bands, but I'm seriously considering #2

I suspect, however, that any time period that naturally transforms pp into golden butterfly is also probably the worst time to switch to golden butterfly.  Wonder if anyone has the data to confirm or refute this
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Re: Are you buying, holding, or selling the PP?

Post by mathjak107 » Sun Nov 22, 2015 4:07 pm

fi50@fi2023 wrote: I guess the strange part for me is that the PP is supposed to be a strategy you can stick to so that you don't have to have a 2008/2009 panic and abandon it.  Unfortunely, we are having a mad rush for the exit doors on a couple of down but not terrible years.  I too am calculating my end of year gold purchase.
for some it isn't just about what they are down , it can be that plus what they are not up ,  combined .

if they had entertained other portfolio's and track them  the dollars given up can be quite large . of course switching at this point does not mean they will be ahead of the pp  going forward but it can get them thinking about continuing  or not ..


since i am not a pp user but do track it over on my thread i was asked to post the weekly results . the dollars difference between the pp and the models i post is over 100k  on the money i have invested .

that is with the pp being down 2% and my model being up 1.70%  . not a great difference , but depending on the stage of life you are in and if your  portfolio is at maximum dollars  the differences can be huge .

that is true on the way down as well .
Last edited by mathjak107 on Sun Nov 22, 2015 4:12 pm, edited 1 time in total.
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Re: Are you buying, holding, or selling the PP?

Post by dualstow » Sun Nov 22, 2015 4:27 pm

fi50@fi2023 wrote: I guess the strange part for me is that the PP is supposed to be a strategy you can stick to so that you don't have to have a 2008/2009 panic and abandon it.  Unfortunely, we are having a mad rush for the exit doors on a couple of down but not terrible years.  I too am calculating my end of year gold purchase.
I will begrudgingly admit that mathjak has a point here. I don't think pp apostates panic. They get greedy. They see their friends with stock-heavy portfolios bragging about success when stocks are up. Or even sans bragging, they see the S&P climb. I get that. I was stock-heavy right up until 2010. 

It can be tricky for some of us to maintain faith while stocks are rising. With the other assets, I don't think it'd be an issue. I don't think very many people are clamoring for an all-gold portfolio, even when gold is US$1800/oz.

I guess it's all about discipline.
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Re: Are you buying, holding, or selling the PP?

Post by Fred » Sun Nov 22, 2015 4:52 pm

dualstow wrote: I will begrudgingly admit that mathjak has a point here. I don't think pp apostates panic. They get greedy.
I get mathjak's point too, especially as I have learned more about his own personal situation.

If retirement is a long way off or you have a very large nest egg then this affords you the luxury of taking an abstract view of the current economic climate. But mathjak has just retired and now the rubber is meeting the road. I think he may have gone a little overboard in inserting his negativity about the PP into the forum but I think I can see where his head is at. And I don't think words like "apostate", "panic", and "greedy" are very helpful.
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Re: Are you buying, holding, or selling the PP?

Post by drumminj » Sun Nov 22, 2015 5:38 pm

mathjak107 wrote: that is with the pp being down 2% and my model being up 1.70%  . not a great difference , but depending on the stage of life you are in and if your  portfolio is at maximum dollars  the differences can be huge .

that is true on the way down as well .
I think this is a key point. Yes, tracking error, when you're lagging to the upside, can make one wish they'd taken a different path. But that error can work in both directions.  I think the trick is one needs to make a conscious decision and 'own' it, knowing why they made the choice they did, and recognizing when the trade-offs you decided upon in theory play out in practice.
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Re: Are you buying, holding, or selling the PP?

Post by mathjak107 » Sun Nov 22, 2015 5:41 pm

i mentioned it in another thread but in bernsteins recent book deep risk  the problem he realized with the pp is the PP's 4 x 25% allocation attempts to insure equally against economic conditions that are anything but equally likely to occur.

so when thinking about what to do you really have to take in to consideration very carefully just what you said "  I think the trick is one needs to make a conscious decision and 'own' it, knowing why they made the choice they did, and recognizing when the trade-offs you decided upon in theory play out in practice. "

leaving to much money on the table  not taken  for whatever reasons can be just as bad as losing it  in a sense  .  in my case i can lose 110k tomorrow  and be at the point i would have been if i stayed in the pp.

the saying in the financial world is if you are not making the money you could have but didn't you  are losing the money .

while that statement is kind of a vague saying i do understand what it is trying to say .

like you have folks who sit in cd's there entire  life because they are afraid to lose money  but could have been to a point where they could lose 60-80% of what they gained had they simply done some investing  and still have more than they do after the loss . .


so yes , you have to weigh out not just your loss potential but what is the gain potential you may be giving up too , and is it a situation where the loss potential gets compounded and added to the gains you are not getting  making the difference even larger then you thought .  that 2% loss on the pp isn't much , but when it gets added to the fact you are not up  the difference grows .

the reverse is true as well if my models are down 5% and the pp is up 5% i am really out a 10% difference .  that is 2x what the actual numbers show because of opportunity cost .
Last edited by mathjak107 on Sun Nov 22, 2015 6:05 pm, edited 1 time in total.
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Re: Are you buying, holding, or selling the PP?

Post by ochotona » Sun Nov 22, 2015 5:59 pm

mathjak107 wrote: i mentioned it in another thread but in bernsteins recent book deep risk  the problem he realized with the pp is the PP's 4 x 25% allocation attempts to insure equally against economic conditions that are anything but equally likely to occur.
There's nothing wrong with wanting the insurance of gold, so long as you don't over-insure, and you don't pay too much per unit of insurance. That's I think what you are trying to get to; buy the appropriate amount of insurance for the amount of risk you expect to be present, and maybe it's not 25% of your portfolio. The difficulty is that some people think the sky is falling (permabears, doomers, gold dealers), others whistle past the graveyard (permabulls, financial industry talking heads, goverment officials).
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