PP is once again positive YTD

[Tyler]

The psychological drive to go scorched earth on the thing one liked enough to try but found wasn't for them is always fascinating.  Once you find something you're truly comfortable with, the resulting confidence usually takes the edge off. 

Budd, I hope you do very well and find lasting peace with your new choice.  Just try to avoid the emotional highs and lows, man.  The portfolio assets generally aren't the primary issue for people who get so emotionally wrapped up in daily gyrations of their investment accounts.  I've been there.  Focus on why you're so stressed about money in the first place, and you'll probably be a lot happier regardless of your portfolio holdings. 

[Cortopassi]

  Focus on why you're so stressed about money in the first place, and you'll probably be a lot happier regardless of your portfolio holdings.

Amen.  I don't give a crap that gold has lost over 8% in the past week.  Well, maybe a little. 

[MachineGhost]

MT back with his jokes to divert attention away from the poor performance of this portfolio. Wake up people before it's too late. Worst and I mean worst portfolio EVER.

Lose/lose.

What is all the drama over?  Is it the absolute value of the losses?

Date S&P500 Tbond Tbill Gold Total
2010 2,500 2,500 2,500 2,500 10,000 (+12.51%)
2011 2,813 2,813 2,813 2,813 11,251 (+11.37%)
2012 3,133 3,133 3,133 3,133 12,531 (+6.24%)
2013 3,328 3,328 3,328 3,328 13,312 (-2.74%)
2014 3,237 3,237 3,237 3,237 12,947 (+9.97%)
2015 3,560 3,560 3,560 3,560 14,238 (-1.34%)
2015-11-06 3,682 3,477 3,569 3,321 14,048

[mathjak107]

because the only thing that counts is what it means to you . not everyone saw those gains or even owned it during the good years  so all they have is losses or lower returns .

like any portfolio , it is all going to be unique to only you because of different buy points  .  adding money at different times  , selling , rebalancing , etc . no one may get those annual returns over all except in theory . .

i think what may bother some is other strategy's are up ytd  despite the fact at one point they fell more than the pp.  you know the old if you fell 50% you have to gain back 100% routine .

the pp in their mind should  have just  fallen less , needed less gains to get back  and so it should still be a head , but for them it isn't

all i care about is i started with x and ended with y  not what each component did vs something else because nothng is static all year for me . .

[Pointedstick]

Don't you understand, MG? The PP is never supposed to go down even a little bit, and especially not twice in three years (ignore the fact that this year isn't even over yet). It's supposed to be one of those portfolios that only ever goes up. It's supposed to have the upside of stocks and the downside of T-bills, and on a daily basis to boot. If that turns out not to be true, the people who invest using it are just brainwashed fools affected by groupthink. Duh.

[MachineGhost]

Don't you understand, MG? The PP is never supposed to go down even a little bit, and especially not twice in three years (ignore the fact that this year isn't even over yet). It's supposed to be one of those portfolios that only ever goes up. It's supposed to have the upside of stocks and the downside of T-bills, and on a daily basis to boot. If that turns out not to be true, the people who invest using it are just brainwashed fools affected by groupthink. Duh.

That made me smile and I don't know why!

[MediumTex]

MT back with his jokes to divert attention away from the poor performance of this portfolio. Wake up people before it's too late. Worst and I mean worst portfolio EVER.

Lose/lose.

My sense of humor tends to be the same regardless of how the PP is doing.

You talk about the PP like it's an ex-girlfriend--i.e., you want to make sure the world knows that SHE broke YOUR heart...you were innocent and simply wanted to fill the world with love.

I would suggest that a better approach when dealing with jilted portfolios is to ask yourself what caused you to get involved with a portfolio that, in retrospect, was clearly not a good fit for you, and what caused you to stick with it even though it appeared to only make you miserable.

One thing you must understand about me (if you are interested) is that the markets do not affect my emotions in any way.  That's not to say that I don't have periodic emotional ups and downs, anxiety, stress, depression, etc., but the markets are never the cause.  I used to stress about the markets a lot, but as I explored the PP and finally embraced the concept fully, I stopped caring about the markets in an emotional way.  I went from following the markets like a Dallas Cowboys (my team!) game I had a $1,000 bet on to following the markets like a noon game between the Chiefs and the Bills.  I would be interested in the latter in a vague way just because I like football, but the outcome of the game would be meaningless to me.

I would say that I have cultivated a zen outlook on the markets, except I have always thought that true zen was not self-conscious, so the moment I said it I would no longer be experiencing it, so I won't say it (but you get the idea).

The thing that we all should remember is that there is more to life than the markets and money.  We should all try to protect and grow whatever money we have in the way we each think is most appropriate, but once we decide on that approach, I think that it's wise to move on to other things that bring us more peace and satisfaction than endlessly stressing over money and investments.

Maybe I'm reading you wrong, but you sound more unhappy now that you've left the PP than you did when you were using the strategy.  I would think that you would be so happy with your new strategy that you wouldn't give the PP a second thought.

[MediumTex]

The psychological drive to go scorched earth on the thing one liked enough to try but found wasn't for them is always fascinating. 

Isn't it the subject matter of countless country songs?

Here is the MediumTex adaptation of He Stopped Loving Her Today prepared just for my friend buddtholomew:

Budd said: "I'll love you till I die",
The PP told him: "Just wait till you lose a dime"
As the years went slowly by,
The PP still preyed upon his mind

He kept Harry Browne's picture on his wall,
Went half-crazy now and then
He still loved the PP through it all,
Hoping those 4% real returns would come back again

Kept some investment newsletters by his bed
Dated nineteen eighty-two
He had underlined in red
Every single "You can get these returns too!!!"

He stopped by the forum from time-to-time
Aww, and we all wondered why he would
And it kept runnin' through our minds:
"Hopefully his griping is over for good"

He stopped loving the PP today
They placed a wreath upon his door
And soon they'll carry him away
He stopped loving the PP today

I went to see him just today,
Oh but I didn't see no tears
All dressed up to go away,
First time I'd seen him smile in years

He stopped loving the PP today
They placed a wreath upon his door
And soon they'll carry him away
He stopped loving the PP today

[drumminj]

The thing that we all should remember is that there is more to life than the markets and money.  We should all try to protect and grow whatever money we have in the way we each think is most appropriate, but once we decide on that approach, I think that it's wise to move on to other things that bring us more peace and satisfaction than endlessly stressing over money and investments.

Agree with this sentiment in many ways -- there definitely is more to life than money and one should pick their head up out of the spreadsheet and try to enjoy it.  But I do think that it's also good to ensure that whatever way you've put your money to work is continuing to work for you.

That shouldn't require looking at the markets on a daily basis. But perhaps once every three to six months, on the off chance the approach isn't meeting your goals or behaving as expected.

All that said, I've been slowly 'averaging in' to a PP this calendar year and update my spreadsheet every few days as I evaluate whether this approach really is right for me in practice (vs theory).  It helps that I work for (and hold quite a bit of stock in) a highly successful tech company with a very volatile stock -- I've had hundreds of thousands of dollars of paper wealth go "poof" overnight (and also manifest overnight) such that a few % point shifts in the PP feels like a nice vacation on the beach

[Lonestar]

The psychological drive to go scorched earth on the thing one liked enough to try but found wasn't for them is always fascinating. 

Isn't it the subject matter of countless country songs?

Here is the MediumTex adaptation of He Stopped Loving Her Today prepared just for my friend buddtholomew:

Budd said: "I'll love you till I die",
The PP told him: "Just wait till you lose a dime"
As the years went slowly by,
The PP still preyed upon his mind

He kept Harry Browne's picture on his wall,
Went half-crazy now and then
He still loved the PP through it all,
Hoping those 4% real returns would come back again

Kept some investment newsletters by his bed
Dated nineteen eighty-two
He had underlined in red
Every single "You can get these returns too!!!"

He stopped by the forum from time-to-time
Aww, and we all wondered why he would
And it kept runnin' through our minds:
"Hopefully his griping is over for good"

He stopped loving the PP today
They placed a wreath upon his door
And soon they'll carry him away
He stopped loving the PP today

I went to see him just today,
Oh but I didn't see no tears
All dressed up to go away,
First time I'd seen him smile in years

He stopped loving the PP today
They placed a wreath upon his door
And soon they'll carry him away
He stopped loving the PP today

Are you sure it's not committing sacrilege to mess with the greatest George Jones song of all time?  You rendition is hilarious.  Mr. Jones would have approved.

[Greg]

Lonestar,

Were they referencing you in this clip?

https://www.youtube.com/watch?v=FcArnepkhv0 <-- Spaceballs, Jammed!

[MachineGhost]

RIP John Candy.

[Reub]

There may be more to life than just money but is there more to the Permanent Portfolio than just an underperforming financial strategy?

[koekebakker]

A couple of years of underperformance is all it takes...

[finster869]

When I backtest to 1975, I only see 3 losing years in 40:  1981, 1994 and 2013.  I come up with the same result regardless of whether I have it rebalance annually or if I use 35/15 bands.  Personally, even if the strategy lost 3 years in a row, I would stay the course.  It is not much different than a boglehead portfolio, except we have substituted gold for part of the equity allocation.  With gold having peaked in 2011 and dropped dramatically since then while stocks have gone straight up, it is easy to second guess the portfolio's choice of substituting gold for part of the stock allocation.  However, all cycles turn, and at some point gold will shine again, and this portfolio will go up when many others that are heavy equities may not do as well. That is the beauty of Harry's strategy......it gives you added diversification and takes market timing out of the equation.

[dragoncar]

When I backtest to 1975, I only see 3 losing years in 40:  1981, 1994 and 2013.  I come up with the same result regardless of whether I have it rebalance annually or if I use 35/15 bands.  Personally, even if the strategy lost 3 years in a row, I would stay the course.  It is not much different than a boglehead portfolio, except we have substituted gold for part of the equity allocation.  With gold having peaked in 2011 and dropped dramatically since then while stocks have gone straight up, it is easy to second guess the portfolio's choice of substituting gold for part of the stock allocation.  However, all cycles turn, and at some point gold will shine again, and this portfolio will go up when many others that are heavy equities may not do as well. That is the beauty of Harry's strategy......it gives you added diversification and takes market timing out of the equation.

*puts on wizard robe and hat* don't forget 2015

I've decided my issues with PP performance are mostly based on the fact that I keep investing new money into it.  If I was retiring on this portfolio, I wouldn't be happy per se, but I'd be far less pissed

[finster869]

*puts on wizard robe and hat* don't forget 2015

I've decided my issues with PP performance are mostly based on the fact that I keep investing new money into it.  If I was retiring on this portfolio, I wouldn't be happy per se, but I'd be far less pissed

Well, it is down 2% YTD, after having been up as recently as a few weeks back.  With 6 weeks until year end, it could certainly turn positive again before then.

How are you investing your new money:  equally across all classes; buying the trailing asset; or in the same percentage as your current allocation at the time the new money is added?

[mathjak107]

Bottom line is you need to meet your goals. While folks say they don't want to devote much energy to thinking about money the fact is lack of enough of  it can be pretty miserable .

Not having choices in life can be a horrible way to have to live.

Having grown up in a nyc housing project  and never wanting to end up living there again made me set savings and investing goals early on .

I learned as much as i could from those a lot smarter and more succesful then me  and spent a lifetime doing so .

Our modest incomes were never going to accumulate enough by themselves without maximizing growth over the decades.

So i found strategy's i could live with that produced the  results i needed.
Sure i would have loved nothing more than low volatility to get there but without being wealthy without investing aggressively  that wasn't going to work .

So now that we reached retirement  with no pensions to cover daily life i have to say the thinking about money and markets still never ends for me.

It is no different then thinking about work during your working years since now your income is not dependent on a job but on the returns you manage to get.

There are very few of us who get to the gates of retirement and don't wish they accumulated more . Especially when you retire pre medicare.

Our health insurance and ltc insurance alone run 18k in after tax dollars alone.

That is an insane amount of income to need just for one retirement expense and it is still growing.

Throw  in the loss now from maximizing ss benefits from file and suspend and restricted application and you have even more of a financial weight to carry on your own .

Without a healthy dose of pension the demands on your own portfolio keep growing and coupled with lower rates and high stock valuations
there is not a lot of slack in the plan for stress free investing for most of
us.

That does not mean you need to stare at markets all the time or even act
on your strategy. But it does not mean that things do not  require monitoring and steering to keep things on course if goals are not being met.

[dragoncar]

*puts on wizard robe and hat* don't forget 2015

I've decided my issues with PP performance are mostly based on the fact that I keep investing new money into it.  If I was retiring on this portfolio, I wouldn't be happy per se, but I'd be far less pissed

Well, it is down 2% YTD, after having been up as recently as a few weeks back.  With 6 weeks until year end, it could certainly turn positive again before then.

How are you investing your new money:  equally across all classes; buying the trailing asset; or in the same percentage as your current allocation at the time the new money is added?

I buy the trailing asset for tax efficiency in accumulation.  Given my investment timing (which is not based on market timing, but when I happen to have excess income which tends to max out around FEB as I'm finalizing all my tax deferred accounts, bonuses, etc.) I'm down about 7% this year

[MediumTex]

Bottom line is you need to meet your goals. While folks say they don't want to devote much energy to thinking about money the fact is lack of enough of  it can be pretty miserable .

***

That does not mean you need to stare at markets all the time or even act on your strategy. But it does not mean that things do not require monitoring and steering to keep things on course if goals are not being met.

I think that I'm the one who said that there is more to life than money and the markets, which is totally different than saying that I "don't want to devote much energy to thinking about money."

With a 300+ page book and 8,000+ posts on this forum under my belt, I've devoted plenty of energy to thinking about money.

There is a point at which market watching becomes pathological, and that is the sort of thing that I was trying to point out.

Contrary to the discontent among some in the PP camp and the belief among some that the PP's assumptions have been invalidated, the PP's recent returns IMHO really don't support those positions.  The portfolio had a few years of above average returns, and it has now had a few years of below average returns.  Overall, though, its trendline is still pretty much intact.

If you want to see a period when the PP seemed completely broken, look at the early 1980s--"The PP can't handle staglation!  Run!" is what I can imagine people were saying.  That was horrible for the PP, but in retrospect it was just a blip.

[barrett]

I buy the trailing asset for tax efficiency in accumulation.  Given my investment timing (which is not based on market timing, but when I happen to have excess income which tends to max out around FEB as I'm finalizing all my tax deferred accounts, bonuses, etc.) I'm down about 7% this year

You mean you're down 7% from the 2/2/15 high, correct? The PP peaked at exactly the wrong time for people trying to get in their IRA contributions for 2014. If you are really down 7%, that's a rough year considering that the portfolio hasn't lost that much since 1/1/15.

[mathjak107]

I showed pp down 2% as of friday with a bit more today. That is assuming at least 1% on cash

[Cortopassi]

My numbers show my PP down ~2.5% since Jan 1.

Hey, not the greatest, but not the worst.

I only looked at my portfolio 2x today, so that number at least, is going in the right direction (down).  I'll retire with what I retire with.  Me fretting about it and massaging it will only make things worse, guaranteed!

[barrett]

I only looked at my portfolio 2x today, so that number at least, is going in the right direction (down).

I only check mine when the portfolio has had a few good days! It should go on another tear right before I'm able to set up my IRA contributions for 2015. I'll try to post my intended timeline so that everyone else can make a few bucks.

[dragoncar]

I buy the trailing asset for tax efficiency in accumulation.  Given my investment timing (which is not based on market timing, but when I happen to have excess income which tends to max out around FEB as I'm finalizing all my tax deferred accounts, bonuses, etc.) I'm down about 7% this year

You mean you're down 7% from the 2/2/15 high, correct? The PP peaked at exactly the wrong time for people trying to get in their IRA contributions for 2014. If you are really down 7%, that's a rough year considering that the portfolio hasn't lost that much since 1/1/15.

Yeah it basically went straight down after I made large contributions.  I've got like a 1.4% overall gain since 2011.  The CAGR is higher, of course, because I started with a lot less money.  But my my portfolio has spent a lot more dollar-hours in decline than growth because I had more dollars invested this year.