Quiet board - time to buy?

[seajay]

The PP is out of vogue after recent large/fast gains elsewhere - but where the valuations in those alternatives seem high. Perhaps in another year after a major correction the board activity might once again soar. Those that perhaps profit took to start building up PP exposure at recent times might be the ones with the broader smiles. But maybe those that opted for a PP with the LTT element shifted more towards the shorter dated end, 25/25/50 stock/gold/5 year treasury bullet.

??

[mathjak107]

i think at this point in time the pp in it’s original 4x4 looks much much better .

rates are more likely to come down and even if they rise it looks like the big 4- 5% rise that crushed long term bonds has already happened.

while i certainly wouldn’t use it in the accumulation stage , it definitely is looking better in its original form than it has in a long long time .

in my opinion of course

[dualstow]

Always a good time to buy.
That’s part of the beauty of it.

[mathjak107]

absolutely not true as those still licking their wounds in the 50% drop in long term bonds can tell you along with near zero return on the cash portion of the pp for a long long time.

i warned for years about the pp being overly rate sensitive and a poor choice for investing at those ridiculously low rates and it came to fruition.

but with a 5% rise in rates behind us , those dangers have dropped a huge amount.

we are up near historical norms in interest rates on long term bonds

[dualstow]

I wouldn’t expect a market timer to say otherwise.
The pp is not for everyone, and it’s especially not for those timing the market, including interest rates.

[mathjak107]

well the proof is in the pudding .

many abandoned the pp because of it or they are still licking their wounds from long term bonds which are still off 50% from their peak as well as zero returns on cash at a time other assets were doing very well.

on the other hand we retired a decade ago now and our portfolio is up a million dollars from the day we retired despite spending a million from it over the ten years .

and never had more than 50% equities with most years in the 40% range .

so it was. a fabulous ride for us since retiring and part of that success was avoiding being overly rate sensitive at a time that was very poor for rate sensitive asset s

[dualstow]

“I did better than the pp” is not an argument against it, except where it underscores my admission that it’s not for everyone.
But yes, I do remember the PRPFX guy talking about how plenty of investors leave during lean years.

If anyone is worried about getting in (or out of) the pp, they shouldn’t be in anything with the name “permanent” in the first place. They should be in something else. In and out of stocks, I guess.

[boglerdude]

Browne didnt predict QE and the zero lower bound. But like MJ said with rates at 4% its viable again.

[dualstow]

Fine, but is it still a permanent portfolio?
Maybe Harry Browne would have concocted a new portfolio after quantitative easing, but at any point during the run of pp-related books and radio shows did he ask, “Is this a good time to buy long bonds? Is this a good time to buy cash?” Before, the pp, yes. e.g. The Coming Devaluation.
But during? On the contrary. He’d receive calls from people who had let gold fall to 10% and the same for cash. And of course they had their economic reasons. And he’d encourage them to get back to a real pp.

Don’t get me wrong. If you can anticipate rate changes or make sense of current rates and trade on that, then more power to you. I am not that guy from The Stand who refused to smash a window at a bicycle store even though the entire world had broken down because there were rules.

And, I’m old enough to remember that even craigr was taking notice of long bonds nearing 1% instead of just looking at rebalancing bands.

Even on bogleheads, I cringe at topics titled “is this a good time to buy in?” (Stocks). But “Is this a good time to buy the pp” seems even worse. If you’re going to trade in and out of assets, even all four of them at once, there has to be a better portfolio for you. Isn’t there? Why trade in and out of a portfolio that minus the variable portfolio, you’re supposed to be fully invested in?

[yankees60]

Fine, but is it still a permanent portfolio?
Maybe Harry Browne would have concocted a new portfolio after quantitative easing, but at any point during the run of pp-related books and radio shows did he ask, “Is this a good time to buy long bonds? Is this a good time to buy cash?” Before, the pp, yes. e.g. The Coming Devaluation.
But during? On the contrary. He’d receive calls from people who had let gold fall to 10% and the same for cash. And of course they had their economic reasons. And he’d encourage them to get back to a real pp.

Don’t get me wrong. If you can anticipate rate changes or make sense of current rates and trade on that, then more power to you. I am not that guy from The Stand who refused to smash a window at a bicycle store even though the entire world had broken down because there were rules.

And, I’m old enough to remember that even craigr was taking notice of long bonds nearing 1% instead of just looking at rebalancing bands.

Even on bogleheads, I cringe at topics titled “is this a good time to buy in?” (Stocks). But “Is this a good time to buy the pp” seems even worse. If you’re going to trade in and out of assets, even all four of them at once, there has to be a better portfolio for you. Isn’t there? Why trade in and out of a portfolio that minus the variable portfolio, you’re supposed to be fully invested in?

"And, I’m old enough to remember that even craigr was taking notice of long bonds nearing 1% instead of just looking at rebalancing bands."

You don't have to even be that old. I'm guessing it was 4, 5 years ago. Easy to find as it was one of his last posts. He essentially stated that once the interest rates reached such a low point he'd be hesitant to be buying long-term bonds.

[mathjak107]

there are times you don’t need to be a great predictor or market timer to know it’s not a great idea loading up on certain assets at certain times , and long term bonds were certainly that asset at such low rates.

they are still at a loss the last ten years and the 15 year for tlt is 1.68% cagr

[Jack Jones]

there are times you don’t need to be a great predictor or market timer to know it’s not a great idea loading up on certain assets at certain times , and long term bonds were certainly that asset at such low rates.

they are still at a loss the last ten years and the 15 year for tlt is 1.68% cagr

Yawn, some things never change. "Oh look, a new thread. Let me see how I can use it to feed my ego."

[dualstow]

"And, I’m old enough to remember that even craigr was taking notice of long bonds nearing 1% instead of just looking at rebalancing bands."

You don't have to even be that old. I'm guessing it was 4, 5 years ago. Easy to find as it was one of his last posts. He essentially stated that once the interest rates reached such a low point he'd be hesitant to be buying long-term bonds.

You are correct, Vinny. It wasn’t that long ago. There’s this annoying trend of young people appropriating the phrase, saying “I’m old enough to remember (x)” where x is something from a short while ago, even last year. The only way I can cure myself of curmudgeonry about it is to participate.

[mathjak107]

there are times you don’t need to be a great predictor or market timer to know it’s not a great idea loading up on certain assets at certain times , and long term bonds were certainly that asset at such low rates.

they are still at a loss the last ten years and the 15 year for tlt is 1.68% cagr

Yawn, some things never change. "Oh look, a new thread. Let me see how I can use it to feed my ego."

nope. but it is to make a point , a pretty obvious point

[yankees60]

"And, I’m old enough to remember that even craigr was taking notice of long bonds nearing 1% instead of just looking at rebalancing bands."

You don't have to even be that old. I'm guessing it was 4, 5 years ago. Easy to find as it was one of his last posts. He essentially stated that once the interest rates reached such a low point he'd be hesitant to be buying long-term bonds.

You are correct, Vinny. It wasn’t that long ago. There’s this annoying trend of young people appropriating the phrase, saying “I’m old enough to remember (x)” where x is something from a short while ago, even last year. The only way I can cure myself of curmudgeonry about it is to participate.

Oh, I forgot there is the sarcastic way of using that phrase.

[coasting]

Always a good time to buy.
That’s part of the beauty of it.

Is it always a good time to buy? What about in 2020? The last day of July 2020 would have been a particularly rotten time to buy into TLT, what with the 30 year yield hovering around 1%:

2020-AugustYieldCurveByDate.PNG (154.91 KiB) Viewed 380 times

So if one bought equal portions of SPY/TLT/GLD/cash at that time, how has the PP done so far from August 2020 through the end of July 2025?
Here's the backtest for that time period. For comparison is 100% TLT and also a vanilla S&P500/TotalBond with the equities at 25% to match the PP:

BacktestSettings.PNG (45.91 KiB) Viewed 380 times

BacktestPortfolios.PNG (49.35 KiB) Viewed 380 times

Yep, even with dividends reinvested TLT resulted in a -10.2% CAGR over the period. But the PP delivered a 5.7% CAGR, well ahead of the 25/75 stock/bond portfolio's 3.5 CAGR%:

BacktestPerformance.PNG (31.45 KiB) Viewed 380 times

We can list lots of portfolios that had a much better return over the same 5 year timeframe. But for someone who put "the money that was precious to them" into the PP in August of 2020, the portfolio has done okay. In my opinion it was still a good time to buy, despite being a particulary bad time to acquire long term treasurys.

Note, this backtest followed the 15/35 rebalance rules and triggered a PP rebalance July 2023 due to stocks exceeding 35%. Long term treasurys were close to 15% threshold at that time, too:

BacktestRebalanceEvent.PNG (16.06 KiB) Viewed 380 times

If anyone is worried about getting in (or out of) the pp, they shouldn’t be in anything with the name “permanent” in the first place.

I've come to really appreciate the name that Harry Browne selected for the portfolio: Permanent
People often ask on this board - should we reconsider the allocation of one of the assets because of something or other? Harry always said no - if you don't possess the 4 assets within the balance bands, then you don't have a Permanent Portfolio. I believe he would still hold firm. And that's why he named it Permanent.
The Permanent name is complementary to several Golden Rules of Financial Safety:
#4 - No one can predict the future.
#5 - No one can move you into and out of investments consistently with precise and profitable timing.
#6 - No trading system will work as well in the future as it did in the past.

And for money that is not precious to you, feel free to adopt a Variable Portfolio and market time or whatever:
#14 - Speculate only with money you can afford to lose.

[mathjak107]

however for someone in their accumulation stage a simple s&p fund averaged almost 16% cagr over the same time .
that is an incredible return. vs the pp at not even 6%.

you could lose half that today and still be way ahead of the pp.

so one better have a boat load of money to compensate for those much lower returns if in the accumulation stage

[boglerdude]

Highest yielding emergency fund. Was in it in case I have to liquidate for cancer treatment or something, but hyperinflation/civil unrest is something I'd have a better chance of buying my way out of.

[seajay]

many abandoned the pp because of it or they are still licking their wounds from long term bonds which are still off 50% from their peak as well as zero returns on cash at a time other assets were doing very well.

In purchase power terms, cash and gold had a good year in 2022 when both yielded near 0% but where stocks and LTT declined. Both bought around 20% more stock shares than at the start of the year, 43% more LTT. What the PP lost in 2022 (a historic exceptional year for the PP) it recouped in 2023.

Didn't Harry not intend the PP to be a safer alternative to cash deposits. My parents were a generation set that didn't do stocks, instead they held bank (cash) deposit books and earned interest on their deposits. Maybe different here in the UK where many are content to buy their own home (pay off mortgage) save into cash deposits, and later retire where healthcare is free at the point of use and the state pension covers basic living expenses and savings are used for other things. Are disinterested in that they might have had so much more if they'd invested in stocks, are content with what 'safe' savings they had put aside.

you could lose half that today and still be way ahead of the pp.

The same might be said for the PP compared to cash deposits. Dipped in 2022 from being considerably ahead of cash deposits, to recover/rebound again in 2023

[dualstow]

Always a good time to buy.
That’s part of the beauty of it.

Is it always a good time to buy? What about in 2020? The last day of July 2020 would have been a particularly rotten time to buy into TLT, what with the 30 year yield hovering around 1%:
…
Here's the backtest

I can’t argue with backtesting. In the rear view mirror, some times are better than others.
Going forward, it’s always a good time to buy.

[dualstow]

however for someone in their accumulation stage a simple s&p fund averaged almost 16% cagr over the same time .
that is an incredible return. vs the pp at not even 6%.
…

Didn't Harry not intend the PP to be a safer alternative to cash deposits.

I think that’s a good point. if I could start all over again, I would go back to the point where I was all in stocks and ignore my Dad when he said, “You really should have some bonds.” Maybe keep 10% in cash like Warren Buffett advised.

But “money you can’t afford to lose” is still the perspective, the big picture. I don’t disagree with mathjak, technically. But it’s like you (mathjak) keep comparing a safe, boxy Volvo to a Ferrari and you keep pretending the Volvo claimed faster speeds. It never did.

In other words, the pp never claimed it would outperform stocks year over year (or ever).

[mathjak107]

It doesn’t have to claim to beat stocks

It’s a tool

But the problem is most people use the wrong tool for the job

Many who want to do what’s comfortable can’t afford to so they are using the wrong tool at the wrong time in their life

And it hurts them and they ended up giving up more money then they would ever lose


So at this point in our lives we grew our money

We could sit in the pp now that rates are up forever

But in our accumulation stage no way as that would be the wrong tool for the job

[flyingpylon]

What is the job?

Any chance there could be more than one?

[dualstow]

But how many people even know about the pp, let alone use it? Like 1%?

[seajay]

If you inspect the yearly gains of each stock in a general stock index and sort those from worst to best then typically the left tail (quarter) is often down, the right tail up, the middle 50% section relatively flat, often not dissimilar to cash.

You might emulate that, a form of synthetic stock index, using 50% cash (anticipated middle section) and two other volatile assets with a tendency to have broadly positive overall reward expectations, but inverse correlations, such as stocks and gold

25% stock, 50% 10 year Treasury (or 25% each in STT/LTT barbell), 25% gold

To recent

1 year changes of Dow components as of 15th August 2025

Code: Select all

Dow Inc (DOW)	-57.50%
UnitedHealth Group Inc (UNH)	-56.70%
Merck & Co Inc (MRK)	-30.50%
Amgen Inc (AMGN)	-13.40%
Procter & Gamble Co (PG)	-13.00%
Salesforce Inc (CRM)	-6.10%
Nike Inc Cl B (NKE)	-4.10%
Coca Cola Co (KO)	-1.40%
Verizon Communications Inc (VZ)	-0.60%
Johnson & Johnson (JNJ)	3.20%
McDonald's Corp (MCD)	3.20%
Apple Inc (AAPL)	4.10%
Home Depot Inc (HD)	6.60%
Honeywell International Inc (HON)	7.80%
Travelers Companies Inc (TRV)	10.80%
Chevron Corp (CVX)	12.60%
International Business Machines Corp (IBM)	14.40%
Intel Corp (INTC)	14.90%
Visa Inc Class A (V)	17.60%
3M Co (MMM)	21.20%
American Express Co (AXP)	23.30%
Caterpillar Inc (CAT)	24.20%
Microsoft Corp (MSFT)	28.10%
Walt Disney Co (DIS)	28.80%
Walmart Inc (WMT)	31.70%
Walgreens Boots Alliance Inc (WBA)1.	33.90%
JPMorgan Chase & Co (JPM)	42.60%
Boeing Co (BA)	44.40%
Cisco Systems Inc (CSCO)	46.30%
Goldman Sachs Group Inc (GS)	59.20%

Average of bottom quartile -26%
Average of top quartile 41%
Average of 50% mid section 12%
Collective average 9.75%

PP assets synthetic stock index where often the 25% allocation to a stock index fund will be the top quartile, 25% allocation to gold the bottom quartile, or vice-versa as it was in this example case, 10 year treasury bullet (STT/LTT barbell) the mid 'flat average' 50% section

Over a similar period (month end data pulled from PortfolioVisualizer)

Stock 16%
10yr Treasury 2%
Gold 36%
Collective top quartile, mid 50%, bottom quartile average 14%

So comparatively Dow 9.75% versus PP 13.5%, on average measures, actual outcomes were more like 12.5% for stock, 16% for the PP.

Whilst the PP was designed with being a better than cash deposit alternative in mind, where individual assets were distinctly selected for different economic cycles, the assets are also somewhat like a synthetic stock index.

If you seek higher rewards then that is inclined to come with higher volatility. Long term for instance 25/50/25 3x stock/cash/gold did a reasonable job of comparing to 100% S&P500 (since the early 1950's using synthetic 3x stock data until actual 3x ETF's became available to retail investors).

Here's a example for since 2016 data https://www.portfoliovisualizer.com/bac ... AqEbOQUgDJ

Code: Select all

Portfolio           CAGR    Stdev   BestYr  WorstYr  MaxDD    Sharpe Ratio
12.5/12.5/50/25
TQQQ/SPXL/SHY/Gold  15.71%  13.55%  39.19%  -18.78%  -21.54% 	1.00
Vanguard 500        14.37%  15.41%  31.33%  -18.23%  -23.95% 	0.82

That's for once/year rebalanced, which also has the effect of capping the maximum loss that holding 3x's can endure in that single year.

Accumulators that might otherwise opt for all-stock could still adopt the PP, but where the 25% stock allocation were instead invested in 3x leveraged stock funds. And then at retirement/transition to drawdown the 3x stock holdings might be replaced with a non leveraged stock fund to make the portfolio more 'safe cash' like.

This is for additional synthetic 3x stock data going back to 1872



Somewhat like a PP with a additional 50% long stock added on top as well as a additional 50% of borrowing (leverage) costs.