New to Permanent Portfolio

General Discussion on the Permanent Portfolio Strategy

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eufo
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Re: New to Permanent Portfolio

Post by eufo » Thu Dec 08, 2016 9:00 pm

Wow! Thanks everyone for the responses! I especially enjoyed the link to PortfolioCharts.com. The Golden Butterfly allocation is VERY alluring. I may slowly morph into that, though the timing seems awful to buy more equities... VERY slowly morph into that.

I'm really glad I stumbled onto this site!
Don't agree with me too strongly or I'm going to change my mind
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Re: New to Permanent Portfolio

Post by tarentola » Fri Dec 09, 2016 3:12 am

buddtholomew wrote: I personally would not rebalance if the transaction resulted in any taxes. Some investors have tighter rebalance bands and others don't rebalance at all.
Thanks budd. I will probably avoid taxes by not selling anything as you suggest, and try to pluck up the courage to buy bonds with remaining cash, as discussed in another thread (http://www.gyroscopicinvesting.com/foru ... &start=204). But would welcome any other opinions on whether or not a "new" PP should start well balanced at 25x4.

To encourage the PP doubters: have a look at this thread "Is the successful salaried retail investor a myth?" which is unfortunately a bit hidden in the Other Discussions forum: see http://www.gyroscopicinvesting.com/foru ... 7&start=12. This is one of the most reassuring threads I have read about the PP. Start about halfway down page 2. Maybe the thread, or some of it, should be made more visible: moved to Permanent Portfolio Discussion, retitled and made a sticky, for example. A quote from Tyler, in the thread:
The average "Tyler" SWR for the PP historically is a pretty amazing 5.3%. The best year to retire was 1978, where one could have supported a ridiculous 7.7%WR for ten years without depleting capital at all. The worst year to retire was 1987 where the max WR was still a healthy 3.8%. I haven't run a full analysis of a 50/50 BH portfolio yet, but I can tell you that using the same methodology the max SWR is -2.5% if you retired in 1972. That's not a typo -- if you didn't add at least 2.5% to your portfolio every year, you would have lost value ten years later. That's why long-term SWR discussions for stock/bond mixes usually center around very conservative numbers.

Frankly (assuming I haven't screwed up somewhere, of course) I find this astonishing and very reassuring. Basically, from what I can tell the conservative SWR for the Permanent Portfolio to last indefinitely is right around 4%. And an older retiree with less worry about maintaining principal could easily push to 5% without much argument from me. Compare this to most SWR calculations for "traditional" portfolios (where 4% may only sustain you for 30 years before you're broke), and the PP is one great retirement portfolio.
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ochotona
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Re: New to Permanent Portfolio

Post by ochotona » Fri Dec 09, 2016 6:24 am

The PP really would be a good retirement portfolio. CAGR and low volatility both contribute to SWR.
Alanw
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Re: New to Permanent Portfolio

Post by Alanw » Fri Dec 09, 2016 3:12 pm

Have been checking the forum the past couple of weeks and noticed a number of posts regarding PP being down quite a bit from the years high and also noticed my PP was down too. I started the PP in early 2011. Actually my portfolio consists of around 60 - 70% HBPP and 20 - 30% VWINX with a little extra cash. I had noticed in the past that my portfolio balance wasn't changing much so I thought I had better check to see where I was compared to previous years. This Dec. I am up 1% from the beginning of the year, up 1% from the beginning of 2013 and down about 1% from early 2011. Basically no change in portfolio balance while withdrawing 4 - 5% in retirement. I am quite happy with the results especially the low volatility. If only I would have heard about the PP 25 years ago. The one thing that Harry Browne wrote about that many of us fail to adhere to is "Only look at your portfolio once a year and rebalance if necessary". That one rule would make life a lot easier for most of us.
Keep up the great posts on this forum and enjoy the Holidays.
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I Shrugged
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Re: New to Permanent Portfolio

Post by I Shrugged » Fri Dec 09, 2016 6:33 pm

I think I have been in the PP for 7+ years. So I have gains in all classes. Over the long run it looks good. I am sure there will be better allocations going forward, but I don't know how to find them. :)
barrett
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Re: New to Permanent Portfolio

Post by barrett » Sat Dec 10, 2016 6:32 am

Alanw wrote:Have been checking the forum the past couple of weeks and noticed a number of posts regarding PP being down quite a bit from the years high and also noticed my PP was down too. I started the PP in early 2011. Actually my portfolio consists of around 60 - 70% HBPP and 20 - 30% VWINX with a little extra cash. I had noticed in the past that my portfolio balance wasn't changing much so I thought I had better check to see where I was compared to previous years. This Dec. I am up 1% from the beginning of the year, up 1% from the beginning of 2013 and down about 1% from early 2011. Basically no change in portfolio balance while withdrawing 4 - 5% in retirement. I am quite happy with the results especially the low volatility. If only I would have heard about the PP 25 years ago. The one thing that Harry Browne wrote about that many of us fail to adhere to is "Only look at your portfolio once a year and rebalance if necessary". That one rule would make life a lot easier for most of us.
Keep up the great posts on this forum and enjoy the Holidays.
Thanks for checking in, Alanw. We don't hear much from the satisfied PP users! How did you decided on adding the 20-30% VWINX? Just looking for a bit more income overall?
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Re: New to Permanent Portfolio

Post by curlew » Sat Dec 10, 2016 10:26 am

Alanw wrote: Actually my portfolio consists of around 60 - 70% HBPP and 20 - 30% VWINX with a little extra cash.
I had about the same mix up until the end of last year, funding my Roth IRA's exclusively with VWINX and calling it my VP. In January I read about the Golden Butterfly and switched out the VWINX for Small Cap Value. Turned out to be a good year for SCV so I'm happy with the results so far.
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Re: New to Permanent Portfolio

Post by Alanw » Sat Dec 10, 2016 12:59 pm

barrett, Income was part of the reason plus wanting some exposure to corporate bonds, which Wellesley has and not wanting to put all eggs in one basket. It's a very conservative portfolio but suits me well in retirement. Of course the first half of the year when the PP was on a tear, I wished all assets were in the PP. The last several months not so much. I think the main thing is staying with the allocation and not looking at the portfolio so often which I am guilty of.
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Re: New to Permanent Portfolio

Post by tarentola » Sun Dec 11, 2016 8:43 am

barrett wrote:Thanks for checking in, Alanw. We don't hear much from the satisfied PP users! How did you decided on adding the 20-30% VWINX? Just looking for a bit more income overall?
Yes it would be great to hear from other satisfied (or even unsatisfied) users, particularly those who have an long-established PP. How do you manage your PP in terms of adding and withdrawing funds, in combination or not with other investments?
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Re: New to Permanent Portfolio

Post by Alanw » Sun Dec 11, 2016 1:25 pm

My own personal PP is completely separate from VWINX and outside cash. It is held in both IRA, one other brokerage account and savings account. I rebalance using 30 - 20 bands. I know that 35 - 25 bands may produce a slightly higher CAGR but my primary interest is portfolio stability with nominal after inflation returns. So far, so good.
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Re: New to Permanent Portfolio

Post by sophie » Mon Dec 12, 2016 8:24 am

Welcome, tarentola. And, thanks for linking to that thread (discussing safe withdrawal rates). I second the vote to sticky it.
tarentola
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Re: New to Permanent Portfolio

Post by tarentola » Mon Dec 12, 2016 1:25 pm

Thank you for the welcome, Sophie.

On withdrawal rates: "it is reasonable to expect a Permanent Portfolio to earn, over a period of years, an average yearly return of at least 5% above the inflation rate", Harry Browne wrote in Why the Best-Laid Investment Plans Usually Go Wrong. In a footnote, he added: "For the 1970-1987 period, the average growth rate in the hypothetical portfolio was 12.0%, or 5.2% above the inflation rate." Very close to Tyler's calculated 5.3% SWR.
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