Sorry, you guys. I broke the PP. My bad.

[buddtholomew]

It's going to have down days, weeks and months.  But if the upward trend quickly erases all of those small down periods, were they worth getting upset about along the way?  Everyone must answer this question for himself, along with the question of what other strategy is going to provide more satisfaction if the PP isn't meeting his needs.  Are people really going to be happy with 100% t-bills for any extended period if we know that over time they basically provide 0% inflation adjusted returns?

In my experience, the portfolio grinds upward for a period of time and then the gains are quickly erased in a matter of days...

[iwealth]

In my experience, the portfolio grinds upward for a period of time and then the gains are quickly erased in a matter of days...

As long as the net result is positive, does this matter? That's how the stock market tends to behave. Long periods of low volatility upward grinding followed by short periods of high volatility selling panics.

[melveyr]

It's going to have down days, weeks and months.  But if the upward trend quickly erases all of those small down periods, were they worth getting upset about along the way?  Everyone must answer this question for himself, along with the question of what other strategy is going to provide more satisfaction if the PP isn't meeting his needs.  Are people really going to be happy with 100% t-bills for any extended period if we know that over time they basically provide 0% inflation adjusted returns?

In my experience, the portfolio grinds upward for a period of time and then the gains are quickly erased in a matter of days...

You could look at some of your previous posts from way back, and then look at a chart of the PP. I believe you have had this happen before, and everything turned out fine. Money is going to slosh around. If everything is down people are likely moving into T-Bills. They rarely keep that money there for an extended period of time.

[MediumTex]

In my experience, the portfolio grinds upward for a period of time and then the gains are quickly erased in a matter of days...

Is that belief supported by the PP's actual historical performance?

[buddtholomew]

It's going to have down days, weeks and months.  But if the upward trend quickly erases all of those small down periods, were they worth getting upset about along the way?  Everyone must answer this question for himself, along with the question of what other strategy is going to provide more satisfaction if the PP isn't meeting his needs.  Are people really going to be happy with 100% t-bills for any extended period if we know that over time they basically provide 0% inflation adjusted returns?

In my experience, the portfolio grinds upward for a period of time and then the gains are quickly erased in a matter of days...

You could look at some of your previous posts from way back, and then look at a chart of the PP. I believe you have had this happen before, and everything turned out fine. Money is going to slosh around. If everything is down people are likely moving into T-Bills. They rarely keep that money there for an extended period of time.

I learned from the previous cycle to take profits in any of the components when they have a substantial increase and then restore the portfolio back to a 4x25 composition. This strategy may or may not prove beneficial over time, but it minimizes regret when the asset begins to decline (such as what we have experienced with SPY and GLD lately).

[Xan]

I believe HB said there wasn't anything particularly scientific about the 15/35 bands.  It may work better to let a gain ride, and it may work better to lock it in quick.  I don't think there's a thing wrong with rebalancing "constantly" (effectively, 24/26 bands), especially if it reduces your perceived volatility and makes it easier to stick with.  Sometimes that'll be the best strategy, and sometimes it won't, but it's just like any other in that regard.

[buddtholomew]

In my experience, the portfolio grinds upward for a period of time and then the gains are quickly erased in a matter of days...

Is that belief supported by the PP's actual historical performance?

My experience doesn't go back to 1971. Look at a chart over the month of October for an illustration of what I am referring to.

[Pointedstick]

Looks to me as though the PP has beaten the market this October:




Is your goal to never experience any losses, ever? I don't know of any way to entirely avoid real losses without taking at least some kind of risk.

[clacy]

If an asset class is trending it will be better to use the 35/15 bands. If any particular asset class is choppy it will be better to rebalance more frequently. The only way to know for sure which strategy is best would be look back in time

[melveyr]

I learned from the previous cycle to take profits in any of the components when they have a substantial increase and then restore the portfolio back to a 4x25 composition. This strategy may or may not prove beneficial over time, but it minimizes regret when the asset begins to decline (such as what we have experienced with SPY and GLD lately).

I think rebalancing to calm your nerves is a perfectly reasonable idea. I would just be careful to not let a bias about any one asset class influence your decision (for example only aggressively rebalancing when your hated asset class rises, but delaying when your beloved one doesn't).

I sincerely hope the PP can help you find relief at some point. It seems like you have anxious thoughts about your investment portfolio quite often. It's not a fun place to be, I have been there. As frustrating as it sounds, just not looking so much might help you.


EDIT: a 2% loss spread out over  month is like a raindrop in hurricane. Some portfolios lose that much in a single day.

[MediumTex]

I learned from the previous cycle to take profits in any of the components when they have a substantial increase and then restore the portfolio back to a 4x25 composition. This strategy may or may not prove beneficial over time, but it minimizes regret when the asset begins to decline (such as what we have experienced with SPY and GLD lately).

I think rebalancing to calm your nerves is a perfectly reasonable idea. I would just be careful to not let a bias about any one asset class influence your decision (for example only aggressively rebalancing when your hated asset class rises, but delaying when your beloved one doesn't).

I sincerely hope the PP can help you find relief at some point. It seems like you have anxious thoughts about your investment portfolio quite often. It's not a fun place to be, I have been there. As frustrating as it sounds, just not looking so much might help you.

EDIT: a 2% loss spread out over  month is like a raindrop in hurricane. Some portfolios lose that much in a single day.

Once you have faith in the strategy, it is immensely easier to just never look at it.  I used to look at mine every day and it never did anything except distract me. 

Now I almost never look at it and the performance hasn't been affected at all, but my nerves are in much better shape.  I look at a model of the portfolio, but I rarely look at my actual accounts.

There are better things to do with the gift of life than watch tiny fluctuations in your portfolio.

[buddtholomew]

I learned from the previous cycle to take profits in any of the components when they have a substantial increase and then restore the portfolio back to a 4x25 composition. This strategy may or may not prove beneficial over time, but it minimizes regret when the asset begins to decline (such as what we have experienced with SPY and GLD lately).

could you define what 'substantial' means to you?

Sure. Anywhere in the realm of 20-25% in an individual asset would prompt me to consider rebalancing. I have a small portion of the PP in tax deferred that I prefer to rebalance in to avoid taxes, but will sell in taxable if held for longer than 1 year. Just seems the prudent thing for me to do to avoid regret.

[dragoncar]

In my experience, the portfolio grinds upward for a period of time and then the gains are quickly erased in a matter of days...

Is that belief supported by the PP's actual historical performance?

My experience doesn't go back to 1971. Look at a chart over the month of October for an illustration of what I am referring to.

I have the same experience over the past year.  There are more up days, but the down days have more magnitude.  I'd be interested to see the actual numbers to confirm my gut, though.

[MediumTex]

Is that belief supported by the PP's actual historical performance?

My experience doesn't go back to 1971. Look at a chart over the month of October for an illustration of what I am referring to.

I have the same experience over the past year.  There are more up days, but the down days have more magnitude.  I'd be interested to see the actual numbers to confirm my gut, though.

Do you mean the magnitude of daily movements or the overall returns over the last 12 months?

I would say that the down days are probably larger than the up days, but since there are fewer down days than up days the whole portfolio goes up.

I believe it's up a little over 6% in the last 12 months.

[AgAuMoney]

There are more up days, but the down days have more magnitude.  I'd be interested to see the actual numbers to confirm my gut, though.

That could be perception differences.  Actual numbers would be interesting.

There are a lot of studies that show people feel negatives more strongly than positives.  Specific to investing, a $1000 loss hurts more than a $1000 gain feels good.

[dragoncar]

Do you mean the magnitude of daily movements or the overall returns over the last 12 months?

...

I believe it's up a little over 6% in the last 12 months.

Seems like you answered your question 

[MediumTex]

Do you mean the magnitude of daily movements or the overall returns over the last 12 months?

...

I believe it's up a little over 6% in the last 12 months.

Seems like you answered your question 

I sometimes feel like I imagine a hospital chaplain might feel who also knew a little bit about medicine.

[buddtholomew]

My experience doesn't go back to 1971. Look at a chart over the month of October for an illustration of what I am referring to.

I have the same experience over the past year.  There are more up days, but the down days have more magnitude.  I'd be interested to see the actual numbers to confirm my gut, though.

Do you mean the magnitude of daily movements or the overall returns over the last 12 months?

I would say that the down days are probably larger than the up days, but since there are fewer down days than up days the whole portfolio goes up.

I believe it's up a little over 6% in the last 12 months.

Case in point, my PP was up a whopping .12% today.

[Pointedstick]

Why did you check it today? Seems like it might be better for your blood pressure to look at it less frequently. 

[buddtholomew]

Why did you check it today? Seems like it might be better for your blood pressure to look at it less frequently. 

I am not fond of surprises ;-)

[Odysseusa]

Case in point, my PP was up a whopping .12% today.

Take it easy and relax. You are working too hard regarding the Permanent Portfolio.

[MachineGhost]

I am not fond of surprises ;-)

So what are you gonna do when the entire portfolio is down -25% again?  It is going to happen and worrying about it day by day isn't going to prevent it, just strecth out the agony.

[murphy_p_t]

So what are you gonna do when the entire portfolio is down -25% again? 

When did this happen? If this were to occur, I'd be looking at going 3x33% or something else...

[MediumTex]

It appears that the tortoise has returned to the track.

[dualstow]

It appears that the tortoise has returned to the track.

hahaha (sound of applause)