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General Discussion on the Permanent Portfolio Strategy

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buddtholomew
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Re: No where to hide

Post by buddtholomew » Sun Jul 05, 2015 2:25 pm

mathjak107 wrote:
MachineGhost wrote:
mathjak107 wrote: now i am not that great at math but  my logic tells me a 6% gain with a pretty good chance of at least  a  40% loss can be a horrible way to kick off retirement. it can take decades for  you to heal if rates head back to their norm over many many years in the 6-7% range.
Bogle isn't an expert at forecasting future returns.  Lets use Hussman's model that indicates 10-year stock returns are now negative including the 2% dividends.

What will you do now, sir?  Still think your 50%/30%/10%/10% is the way to go?

yep , i would certainly sooner go with that mix . not even a doubt in my mind. i would bet that 20 years from now the same results as always will pan out with the pp leaving  hundreds of k on the table.
Yes, but I may need the money next month or next year. You won't get rich and you won't get poor.
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Re: No where to hide

Post by mathjak107 » Sun Jul 05, 2015 2:28 pm

then needing  near the money near  term is poor planning and there is no guarantee even the pp will not be down with all 3 suffering like now.

basing long term investing plans on the fact you may need the money short term is a poor way to plan.
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Re: No where to hide

Post by Pointedstick » Sun Jul 05, 2015 2:28 pm

mathjak107 wrote: well all i can say is look at your returns and if you are happy with them then that is all that matters. the proof is in the pudding as they say.
That doesn't seem like good advice at all. Someone in a stock-heavy portfolio from 1998-2008 would not have liked the returns at all. 2% nominal or worse. That's a decade of lost returns. Should he have bailed?

The real question is, "If the current returns are bad, is this a sign that the portfolio is broken and should be abandoned, or just a rough patch that we should soldier through?"
Last edited by Pointedstick on Sun Jul 05, 2015 2:32 pm, edited 1 time in total.
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Re: No where to hide

Post by mathjak107 » Sun Jul 05, 2015 2:30 pm

key word is always long term ,. if you are not talking 15 to 20 years then all bets are off as far any investments returns. anyone planning on needing the money less than 15 years out needs to make plans for that by using a bucket system at least . no one should go right from equity's to cash .

once again that would be bad planning and execution of the plan .  i know i shifted from my growth model to my pre retirement model 7 years before.

the problem is most folks try to dabble in investing with no help  and they fail at it. that does not make the investment bad , it means the investor did the wrong thing.

most investors can't even get the returns the funds they were in got. look at how badly the small investor does . morningstar tracks the money in and out of the funds and gives two returns. what the fund got and what the small investor money got.

we can all dream up scenario's to support any view , but at the end of the day the numbers tell the  real deal.

so far i am unimpressed by the long term results of the pp over almost every 15 year time frame  perhaps 1 or 2 being the exception.
Last edited by mathjak107 on Sun Jul 05, 2015 2:43 pm, edited 1 time in total.
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Re: No where to hide

Post by Pointedstick » Sun Jul 05, 2015 2:41 pm

Anyone who has the guts to eat 10 years of near-zero returns (including two major market crashes) without bailing or changing their portfolio allocation has a lot more fortitude than most.

Furthermore, what really is a long-term goal vs a short-term one? You alluded to this yourself with the explanation that even upon retirement, most of that money isn't going to be touched for 25 years or more.

I expect to achieve financial independence in 4 years and I currently have most of my money in the PP. That makes sense from the perspective of wanting to hit the "number" with little volatility and avoid large losses. And yet I expect for the money to last me 60 years or more. So is my goal long-term or short-term? If I assume that it's a short-term goal, then I sacrifice the potential long-term performance that a more stock-heavy allocation might yield. But if I assume that it's a long-term goal and pile into stocks, then I run the risk of not reaching my target date due to unexpected portfolio losses from a more volatile allocation.
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Re: No where to hide

Post by mathjak107 » Sun Jul 05, 2015 2:44 pm

yep that money that will not be used to eat is still long term money and stays invested following the plan  just as it did 15 years earlier. , but there are certainly other sources used for short term and intermediate term money based on your own structure.

typically a plan can be 7 years of withdrawals in  safe money  in cash instruments , 7 years in  short to intermediate term bond funds , reit income funds , floating rate funds , income funds

all the rest growing in long term investments.

to date there has never ever been a 15 year  period you could not sell equity's at a profit and refill.

that mix actually works out to 50/50 and has a rising equity glide path until refilled again.

that is only 1 example of good planning.

good planning allows for the situations you mention it does not try to rule them out.

ever try a survey here ?

how long in the pp and what was your return and are you happy with it compared to other portfolio's you have watched or had interest in  . ? 
Last edited by mathjak107 on Sun Jul 05, 2015 2:54 pm, edited 1 time in total.
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Re: No where to hide

Post by mathjak107 » Sun Jul 05, 2015 3:09 pm

MachineGhost wrote:
mathjak107 wrote: the model works out to 50% in equities , 30% bonds , 10% gold 10% cash
What will happen to this portfolio when equities correct 50% back to fair value?  A quick backtest of the real returns:

Code: Select all

Year	mathajk	PP
1968	4.01%	4.23%
1969	-11.72%	-12.15%
1970	2.98%	2.50%
1971	8.43%	8.11%
1972	11.92%	16.03%
1973	-6.94%	5.13%
1974	-16.52%	-0.11%
1975	11.88%	-0.79%
1976	11.19%	5.96%
1977	-7.40%	-1.39%
1978	-1.32%	2.81%
1979	11.06%	24.63%
1980	6.75%	0.78%
1981	-10.52%	-14.10%
1982	17.62%	18.63%
1983	7.93%	-0.68%
1984	2.12%	-1.30%
1985	19.63%	16.16%
1986	15.42%	17.71%
1987	1.71%	2.62%
1988	4.40%	-0.68%
1989	15.90%	9.68%
1990	-4.62%	-4.54%
1991	16.48%	8.87%
1992	2.34%	0.49%
1993	7.21%	10.31%
1994	-3.57%	-5.07%
1995	22.23%	17.08%
1996	8.65%	1.77%
1997	15.67%	6.52%
1998	16.27%	11.37%
1999	7.40%	0.58%
2000	-4.27%	-0.45%
2001	-4.42%	-1.34%
2002	-7.10%	0.75%
2003	14.61%	11.44%
2004	3.10%	2.74%
2005	1.09%	4.38%
2006	8.87%	8.87%
2007	5.41%	9.08%
2008	-13.80%	2.88%
2009	11.64%	2.92%
2010	10.61%	11.89%
2011	1.33%	8.13%
2012	7.44%	4.72%
2013	10.59%	-3.93%
2014	6.67%	9.60%
Total	238.36%	222.86%
how could you possibly figure the pp i in the 1960's ,  gold could not be owned .  why not start in 72 where you can track it ?

i know i did from 1987 when i had a choice  and 10k in the pp  is now 67k vs 203k in the conventional  model..
Last edited by mathjak107 on Sun Jul 05, 2015 3:14 pm, edited 1 time in total.
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Re: No where to hide

Post by Pointedstick » Sun Jul 05, 2015 3:16 pm

7 years of cash works out to about 28% of total portfolio value if using a 4% withdrawal rate / 25x yearly expenses. One thing I like about the PP is how it integrates cash into the portfolio, essentially acting as a system that refills a cash bucket that you withdraw from. It sounds like your idea involves that too (28% cash vs the PP's 25%), and I'd definitely like to keep that part in any portfolio I'd jump to.

Seen in this light, the PP's non-cash "portfolio" component is 33% stocks, 33% long bonds, and 33% gold. I can see how that would be too extreme for many. Let's try out some alternatives. You proposed this:
typically a plan can be 7 years of withdrawals in  safe money  in cash instruments , 7 years in  short to intermediate term bond funds , reit income funds , floating rate funds , income funds

all the rest growing in long term investments.
That works out to 46% stocks, 28% cash, and 28% total bond market (simplifying). Let's compare that to the PP. The PP is "Portfolio 1" in blue, and yours is the other one in red:

[img width=700]http://i.imgur.com/NmLV2g4.png[/img]

Oh hey look, the PP beat it, producing a higher CAGR, higher total sum, and with lower drawdowns to boot. :) When you count cash as part of the portfolio as you should, the stock-heavy portfolio doesn't look so much better anymore.
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Re: No where to hide

Post by mathjak107 » Sun Jul 05, 2015 3:22 pm

forcasting like that usually ends up way off. just look at how wellesly with 40% equities
Pointedstick wrote: 7 years of cash works out to about 28% of total portfolio value if using a 4% withdrawal rate / 25x yearly expenses. One thing I like about the PP is how it integrates cash into the portfolio, essentially acting as a system that refills a cash bucket that you withdraw from. It sounds like your idea involves that too (28% cash vs the PP's 25%), and I'd definitely like to keep that part in any portfolio I'd jump to.

Seen in this light, the PP's non-cash "portfolio" component is 33% stocks, 33% long bonds, and 33% gold. I can see how that would be too extreme for many. Let's try out some alternatives. You proposed this:
typically a plan can be 7 years of withdrawals in  safe money  in cash instruments , 7 years in  short to intermediate term bond funds , reit income funds , floating rate funds , income funds

all the rest growing in long term investments.
That works out to 46% stocks, 28% cash, and 28% total bond market (simplifying). Let's compare that to the PP. The PP is "Portfolio 1" in blue, and yours is the other one in red:

[img width=700]http://i.imgur.com/NmLV2g4.png[/img]

Oh hey look, the PP beat it, producing a higher CAGR, higher total sum, and with lower drawdowns to boot. :) When you count cash as part of the portfolio as you should, the stock-heavy portfolio doesn't look so much better anymore.
one major point though !


the difference is my portfolio now is only for  retirement and  spending down . it is not something i would have used for growth  all those years.

success rate through the worst of times is what is important and the pp has zero track record in those time frames. no one can even guess how it would have done.

my model would be quite poor in my opinion as a portfolio for the accumulation stage and i would never recommend to be used as such ..
Last edited by mathjak107 on Sun Jul 05, 2015 3:28 pm, edited 1 time in total.
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Re: No where to hide

Post by MachineGhost » Sun Jul 05, 2015 3:27 pm

mathjak107 wrote: so far i am unimpressed by the long term results of the pp over almost every 15 year time frame  perhaps 1 or 2 being the exception.

Code: Select all

Start	End	mathjak	PP1	PP2	PP3
1928	1942	3.05%	2.96%	2.96%	3.33%
1929	1943	2.13%	2.34%	2.34%	2.70%
1930	1944	2.92%	2.90%	2.90%	3.23%
1931	1945	4.38%	4.85%	4.85%	4.90%
1932	1946	3.71%	4.00%	4.00%	3.96%
1933	1947	2.97%	2.88%	2.88%	2.80%
1934	1948	0.95%	0.54%	0.54%	0.67%
1935	1949	1.76%	0.73%	0.73%	0.90%
1936	1950	1.04%	0.15%	0.15%	0.24%
1937	1951	0.46%	0.11%	0.11%	0.04%
1938	1952	2.37%	1.09%	1.09%	1.00%
1939	1953	1.08%	0.41%	0.41%	0.28%
1940	1954	2.92%	1.71%	1.71%	1.51%
1941	1955	4.40%	2.48%	2.52%	2.26%
1942	1956	5.54%	3.24%	3.30%	2.99%
1943	1957	4.98%	2.76%	2.82%	2.62%
1944	1958	5.70%	3.11%	3.18%	2.93%
1945	1959	5.50%	3.02%	3.13%	2.83%
1946	1960	4.41%	1.62%	1.71%	1.60%
1947	1961	6.72%	3.27%	3.38%	3.31%
1948	1962	6.69%	4.20%	4.32%	4.19%
1949	1963	7.39%	4.82%	4.97%	4.77%
1950	1964	7.24%	4.51%	4.67%	4.47%
1951	1965	6.94%	4.37%	4.54%	4.36%
1952	1966	6.11%	3.92%	4.11%	3.97%
1953	1967	6.21%	4.90%	5.10%	4.69%
1954	1968	6.60%	5.14%	5.37%	4.90%
1955	1969	4.02%	3.27%	3.54%	3.03%
1956	1970	3.15%	2.84%	3.03%	2.61%
1957	1971	3.65%	3.46%	3.63%	3.24%
1958	1972	4.96%	4.80%	5.01%	4.45%
1959	1973	3.14%	4.53%	4.77%	3.93%
1960	1974	1.73%	4.41%	4.60%	3.56%
1961	1975	2.55%	4.19%	4.40%	3.40%
1962	1976	2.45%	3.90%	4.09%	3.25%
1963	1977	2.33%	3.64%	3.86%	2.95%
1964	1978	1.55%	3.37%	3.65%	2.61%
1965	1979	1.71%	4.68%	4.98%	3.46%
1966	1980	1.83%	4.59%	4.91%	3.28%
1967	1981	1.56%	3.96%	4.21%	2.65%
1968	1982	2.09%	4.02%	4.23%	3.13%
1969	1983	2.36%	3.69%	3.94%	2.91%
1970	1984	3.28%	4.41%	4.64%	3.75%
1971	1985	4.39%	5.32%	5.60%	4.83%
1972	1986	4.85%	5.97%	6.22%	5.58%
1973	1987	4.17%	5.07%	5.34%	4.67%
1974	1988	4.93%	4.68%	4.97%	4.71%
1975	1989	7.09%	5.34%	5.62%	5.71%
1976	1990	5.99%	5.09%	5.37%	5.39%
1977	1991	6.34%	5.28%	5.53%	5.57%
1978	1992	6.99%	5.41%	5.62%	5.80%
1979	1993	7.56%	5.91%	6.07%	6.48%
1980	1994	6.59%	3.93%	4.14%	4.93%
1981	1995	7.62%	5.01%	5.18%	6.31%
1982	1996	8.90%	6.07%	6.30%	7.34%
1983	1997	8.77%	5.26%	5.54%	6.54%
1984	1998	9.32%	6.07%	6.27%	7.37%
1985	1999	9.67%	6.19%	6.40%	7.27%
1986	2000	8.08%	5.08%	5.30%	6.12%
1987	2001	6.76%	3.81%	3.99%	4.72%
1988	2002	6.17%	3.69%	3.83%	4.67%
1989	2003	6.85%	4.50%	4.59%	5.31%
1990	2004	6.00%	4.04%	4.18%	4.80%
1991	2005	6.38%	4.63%	4.82%	5.40%
1992	2006	5.87%	4.63%	4.87%	5.24%
1993	2007	6.08%	5.20%	5.39%	5.67%
1994	2008	4.68%	4.71%	4.83%	5.29%
1995	2009	5.69%	5.24%	5.30%	5.57%
1996	2010	4.91%	4.89%	4.98%	5.00%
1997	2011	4.43%	5.32%	5.39%	5.63%
1998	2012	3.88%	5.20%	5.26%	5.32%
1999	2013	3.50%	4.18%	4.27%	4.20%
2000	2014	3.45%	4.78%	4.85%	5.08%
		342.43%	290.27%	301.34%	294.18%
PP1 = 25x4 PP with Silver Pre-1968
PP2 = PP1 with CD ladder and T-Bills Pre-1954
PP3 = PP2 but Risk Parity

Conclusion: Tough to beat a 50% allocation to equities.
Last edited by MachineGhost on Sun Jul 05, 2015 3:37 pm, edited 1 time in total.
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Re: No where to hide

Post by Pointedstick » Sun Jul 05, 2015 3:27 pm

We're not forecasting, we're backtesting. Accurately forecasting is almost impossible.

Let's try another alternative: something that might be more conventional and more palatable to PP refugees.

25% of the total portfolio value is cash, as per the PP model of withdrawing from cash and not having a separate cash emergency fund, and of the remaining 75% that feeds it, here's the breakdown:

20% gold (15% of total portfolio value)
20% long treasuries (15% of total portfolio value)
30% small-cap value usa stocks (22.5% of total portfolio value)
30% total world stocks (22.% of total portfolio value)

Blue is conventional PP, red is a cashless 60/40 portfolio, and orange is the portfolio I've just spelled out above:

[img width=600]http://i.imgur.com/cv0KIM4.png[/img]
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Re: No where to hide

Post by mathjak107 » Sun Jul 05, 2015 3:30 pm

that would likely do better  going forward. i would even give it a thumbs up but still a bit to interest rate heavy for this point in  time for my taste.

i would accept just about any portfolio going forward except one making a big bet with long bonds that act leveraged when rates move and such a small equity position. i could be wrong but this is no time to be making heavy bets on interest rates. 

i think if stocks are risky now ,interest rates are in bubble land for the long bond.
Last edited by mathjak107 on Sun Jul 05, 2015 3:34 pm, edited 1 time in total.
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Re: No where to hide

Post by mathjak107 » Sun Jul 05, 2015 3:37 pm

okay now that i put some life back in to the forums i think i will switch back to the pp    ha ha ha
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Re: No where to hide

Post by MachineGhost » Sun Jul 05, 2015 3:41 pm

Pointedstick wrote: 30% small-cap value usa stocks (22.5% of total portfolio value)
That's a speculative tilt on small and value.  If it underperforms as it has in the past, it will kill your compounding.  The proper way to go is to be market cap agnostic so that all sizes, value and growth are included.
Last edited by MachineGhost on Sun Jul 05, 2015 3:44 pm, edited 1 time in total.
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Re: No where to hide

Post by mathjak107 » Sun Jul 05, 2015 3:44 pm

it is kind of in line with larry sweedroe's thinking.  historically every single time the s&p 500 are the only game in town  like last year the unwinding to that fact has always been 5 years of under performance.


midcaps and small caps are where the biggest share of equity money should go .  i know i would if i was still in my growth stage.
Last edited by mathjak107 on Sun Jul 05, 2015 3:46 pm, edited 1 time in total.
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Re: No where to hide

Post by MachineGhost » Sun Jul 05, 2015 3:45 pm

mathjak107 wrote: it is kind of in line with larry sweedroe's thinking.
Yeah, but he pushes higher fee DFA funds which persist in spite of academic evidence to the contrary that tilting is investable by funds.  He likes to showcase DFA funds against bad examples to make the DFA look better.  Larry's a strange creature of being publically anti-Wall Street yet practices the same message he attacks.  I have to grit my teeth on every damn article he writes, even if he is technically correct.
Last edited by MachineGhost on Sun Jul 05, 2015 3:49 pm, edited 1 time in total.
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Re: No where to hide

Post by mathjak107 » Sun Jul 05, 2015 3:47 pm

my feelings about larry too.
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Re: No where to hide

Post by mathjak107 » Sun Jul 05, 2015 3:51 pm

MachineGhost wrote:
mathjak107 wrote: so far i am unimpressed by the long term results of the pp over almost every 15 year time frame  perhaps 1 or 2 being the exception.

Code: Select all

Start	End	mathjak	PP1	PP2	PP3
1928	1942	3.05%	2.96%	2.96%	3.33%
1929	1943	2.13%	2.34%	2.34%	2.70%
1930	1944	2.92%	2.90%	2.90%	3.23%
1931	1945	4.38%	4.85%	4.85%	4.90%
1932	1946	3.71%	4.00%	4.00%	3.96%
1933	1947	2.97%	2.88%	2.88%	2.80%
1934	1948	0.95%	0.54%	0.54%	0.67%
1935	1949	1.76%	0.73%	0.73%	0.90%
1936	1950	1.04%	0.15%	0.15%	0.24%
1937	1951	0.46%	0.11%	0.11%	0.04%
1938	1952	2.37%	1.09%	1.09%	1.00%
1939	1953	1.08%	0.41%	0.41%	0.28%
1940	1954	2.92%	1.71%	1.71%	1.51%
1941	1955	4.40%	2.48%	2.52%	2.26%
1942	1956	5.54%	3.24%	3.30%	2.99%
1943	1957	4.98%	2.76%	2.82%	2.62%
1944	1958	5.70%	3.11%	3.18%	2.93%
1945	1959	5.50%	3.02%	3.13%	2.83%
1946	1960	4.41%	1.62%	1.71%	1.60%
1947	1961	6.72%	3.27%	3.38%	3.31%
1948	1962	6.69%	4.20%	4.32%	4.19%
1949	1963	7.39%	4.82%	4.97%	4.77%
1950	1964	7.24%	4.51%	4.67%	4.47%
1951	1965	6.94%	4.37%	4.54%	4.36%
1952	1966	6.11%	3.92%	4.11%	3.97%
1953	1967	6.21%	4.90%	5.10%	4.69%
1954	1968	6.60%	5.14%	5.37%	4.90%
1955	1969	4.02%	3.27%	3.54%	3.03%
1956	1970	3.15%	2.84%	3.03%	2.61%
1957	1971	3.65%	3.46%	3.63%	3.24%
1958	1972	4.96%	4.80%	5.01%	4.45%
1959	1973	3.14%	4.53%	4.77%	3.93%
1960	1974	1.73%	4.41%	4.60%	3.56%
1961	1975	2.55%	4.19%	4.40%	3.40%
1962	1976	2.45%	3.90%	4.09%	3.25%
1963	1977	2.33%	3.64%	3.86%	2.95%
1964	1978	1.55%	3.37%	3.65%	2.61%
1965	1979	1.71%	4.68%	4.98%	3.46%
1966	1980	1.83%	4.59%	4.91%	3.28%
1967	1981	1.56%	3.96%	4.21%	2.65%
1968	1982	2.09%	4.02%	4.23%	3.13%
1969	1983	2.36%	3.69%	3.94%	2.91%
1970	1984	3.28%	4.41%	4.64%	3.75%
1971	1985	4.39%	5.32%	5.60%	4.83%
1972	1986	4.85%	5.97%	6.22%	5.58%
1973	1987	4.17%	5.07%	5.34%	4.67%
1974	1988	4.93%	4.68%	4.97%	4.71%
1975	1989	7.09%	5.34%	5.62%	5.71%
1976	1990	5.99%	5.09%	5.37%	5.39%
1977	1991	6.34%	5.28%	5.53%	5.57%
1978	1992	6.99%	5.41%	5.62%	5.80%
1979	1993	7.56%	5.91%	6.07%	6.48%
1980	1994	6.59%	3.93%	4.14%	4.93%
1981	1995	7.62%	5.01%	5.18%	6.31%
1982	1996	8.90%	6.07%	6.30%	7.34%
1983	1997	8.77%	5.26%	5.54%	6.54%
1984	1998	9.32%	6.07%	6.27%	7.37%
1985	1999	9.67%	6.19%	6.40%	7.27%
1986	2000	8.08%	5.08%	5.30%	6.12%
1987	2001	6.76%	3.81%	3.99%	4.72%
1988	2002	6.17%	3.69%	3.83%	4.67%
1989	2003	6.85%	4.50%	4.59%	5.31%
1990	2004	6.00%	4.04%	4.18%	4.80%
1991	2005	6.38%	4.63%	4.82%	5.40%
1992	2006	5.87%	4.63%	4.87%	5.24%
1993	2007	6.08%	5.20%	5.39%	5.67%
1994	2008	4.68%	4.71%	4.83%	5.29%
1995	2009	5.69%	5.24%	5.30%	5.57%
1996	2010	4.91%	4.89%	4.98%	5.00%
1997	2011	4.43%	5.32%	5.39%	5.63%
1998	2012	3.88%	5.20%	5.26%	5.32%
1999	2013	3.50%	4.18%	4.27%	4.20%
2000	2014	3.45%	4.78%	4.85%	5.08%
		342.43%	290.27%	301.34%	294.18%
PP1 = 25x4 PP with Silver Pre-1968
PP2 = PP1 with CD ladder and T-Bills Pre-1954
PP3 = PP2 but Risk Parity

Conclusion: Tough to beat a 50% allocation to equities.

you really can't use silver . it is not predictable enough . 2008 saw silver plunge with all the other commodities , while gold rose.

you really can't back test the pp in those worst case scenario years with any kind of real accuracy.
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Re: No where to hide

Post by mathjak107 » Sun Jul 05, 2015 3:53 pm

Desert wrote:
MachineGhost wrote:
Pointedstick wrote: 30% small-cap value usa stocks (22.5% of total portfolio value)
That's a speculative tilt on small and value.  If it underperforms as it has in the past, it will kill your compounding.  The proper way to go is to be market cap agnostic so that all sizes, value and growth are included.
Value has outperformed growth pretty consistently over the past 100 years.  It may not continue, but I like its chances, given human nature's desire to find the next Apple, not the next distressed small company nobody has heard of.  I do agree that the mere presence of small cap value funds, along with Fama and French's well publicized factor analyses will make it a bit less likely to persist.  But I am willing to bet a third of my equity portfolio on small cap value. 

And Wellesley is essentially a large cap value fund, along with corporate bonds.  It's done very well, for a long time.

if it wasn't for the fact i want flexibility going forward  in my bond holdings and allocations i would put every penny in wellesely and call it a day .
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Re: No where to hide

Post by MachineGhost » Sun Jul 05, 2015 4:07 pm

Desert wrote: Value has outperformed growth pretty consistently over the past 100 years.  It may not continue, but I like its chances, given human nature's desire to find the next Apple, not the next distressed small company nobody has heard of.  I do agree that the mere presence of small cap value funds, along with Fama and French's well publicized factor analyses will make it a bit less likely to persist.  But I am willing to bet a third of my equity portfolio on small cap value. 

And Wellesley is essentially a large cap value fund, along with corporate bonds.  It's done very well, for a long time.
Small cap value has no small cap per se, only value.  The size effect doesn't exist anymore and it is not investable for what does still exist.

So, value and momentum should be market cap agnostic.  Why limit yourself?

Didn't know that about Wellesley.  Where can I get information on their exact stock picking methodology?
"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: No where to hide

Post by mathjak107 » Sun Jul 05, 2015 4:30 pm

Desert wrote:
mathjak107 wrote: if it wasn't for the fact i want flexibility going forward  in my bond holdings and allocations i would put every penny in wellesely and call it a day .
I have thought about doing that myself, many times.  I've told my wife that if I get run over by a bus, she should put everything in that fund.

ooooh man  i did the same ,  too funny.
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Re: No where to hide

Post by mathjak107 » Sun Jul 05, 2015 4:31 pm

MachineGhost wrote:
Desert wrote: Value has outperformed growth pretty consistently over the past 100 years.  It may not continue, but I like its chances, given human nature's desire to find the next Apple, not the next distressed small company nobody has heard of.  I do agree that the mere presence of small cap value funds, along with Fama and French's well publicized factor analyses will make it a bit less likely to persist.  But I am willing to bet a third of my equity portfolio on small cap value. 

And Wellesley is essentially a large cap value fund, along with corporate bonds.  It's done very well, for a long time.
Small cap value has no small cap per se, only value.  The size effect doesn't exist anymore and it is not investable for what does still exist.

So, value and momentum should be market cap agnostic.  Why limit yourself?

Didn't know that about Wellesley.  Where can I get information on their exact stock picking methodology?

wellesley is the most popular fund for retirees . it has been a favorite ever since i can remember.
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Re: No where to hide

Post by mathjak107 » Sun Jul 05, 2015 4:41 pm

actually you brought up a major point.  our wives.



as if we didn't know it ,women are different creatures than men. they think different ,have different needs ,wants and requirements.

any good financial planner will tell you:

men are more interested in growing wealth , they care about allocations ,investments , getting the biggest bang for the buck ( no pun intended),beating indexes , etc .

women clients are different as far as what brought them to that planners office and it is nothing like the mans reason. a mans reason is usually facts and figures , a womens reason is she has a story to tell. ( don't they always? ha ha ha


women have very different concerns and it is usually centered around the fact they have visions of being alone eventually and being the proverbial bag lady under the bridge after they out lived their money.

women want security , I know that because when I approach women in clubs they usually call out security ,security, ha ha ha

women live longer than men , a big point when planning but more important while 80% of all men die married ,80% of all women die alone.

I think that sentence requires reading a 2nd time as there is a huge difference in situation for a woman.

women usually don't like to take on much volatility,especially a widow who just lost a social security check or someone alone..

so planning for our wives later on can take some very different twists.


my wife was widowed once before and she knows how scarey being left a pile of investments can be .

there may come a time i lock in our basic bills with an spia so she can just have a pay check  every month that is isolated from markets and rates.

we may simplify the portfolio down to wellesley as well as maybe add the single  premium life insurance pilicy so she can have tax free money.

still a lot to look in to on that front.  but this is an area few men consider .
Last edited by mathjak107 on Sun Jul 05, 2015 4:44 pm, edited 1 time in total.
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Re: No where to hide

Post by screwtape » Sun Jul 05, 2015 5:15 pm

mathjak107 wrote: actually you brought up a major point.  our wives.
My wife asked me last year when I was re-balancing to teach her how to do it. My response was let's not even go there right now. She's a lot younger than I am and I intend to simplify things before we get to the point where she'll have to start thinking about these things on her own. Right now it's extremely complicated. The PP is a simple strategy, but how to make it work across more than a dozen accounts with varying investment options and tax implications gets pretty complicated. I wrote a computer program to help me and I don't think I could even explain how I do it.

But we're just generalizing about women here and that's probably very unfair, if not insulting, to someone like Sophie (the only female member of the forum I'm aware of).

And also, what do you have against capital letters?
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Re: No where to hide

Post by mathjak107 » Sun Jul 05, 2015 5:22 pm

glad you asked .  i am left handed and have diabetic neuropathy in my finger tips and toes . so i type with just one finger . the others are to sensitive to use for as much as i type. so all you see  i post is typed with just one finger.

the good news is i have the diabetes under control with no meds . just diet , weight lifting and running 4 miles every other day non stop .

at 62 this just aint fun  .    lol 
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