Gyroscopic Investing

http://kiszamolo.hu/a-negyven-eve-mukod ... portfolio/
It's in Hungarian, just see the graphs
Vs.
https://web.archive.org/web/20160324133 ... l-returns/
Quite a difference. Just one year difference: 1974-2011 vs 1975-2012 and it makes up twice the difference in the results? Strange.

However Kiszamolo.hu did not really disclose what instruments he used for his calculations. So I translate the color coding under the graphs on the Kiszamolo blog post - not to be confusing about the colors I list them in the order they appear under the charts:

• Green - "American stocks index" - literally. Undisclosed which one.
• Lilac - Gold price index
• Yellow - American long term bonds (Undisclosed)
• Pink - American T-Bill index
• Red - Permanent portfolio

What is your take? Have you found a difference so big on other calculations as well or Hungarian guy discovered something about the Permanent Portfolio no one on the whole Internet found before? Unlikely - in my opinion.

Craig addresses exactly this point in the Crawlingroad link you provide.  The results are still quite good. 

One should compare portfolios and not simply starting years.  I could move the start date in absolutely any investment portfolio to pick a set of dates that over- or under-performs another.  It's how they perform relative to each other that counts.  The PP has similar performance to the overall stock market even after you crop the early run-up gold years.

Also, running the article through Google Translate, the author appears to not understand rebalancing bands.  He argues that taxes will be too high because you'll have to rebalance at least quarterly to maintain the 4x25 balance.  So his charts may be similarly off.

Finally, one should look at real returns and not simply overall returns.  I used to be concerned that the PP returns trail off the shorter the duration you look back (pointing towards the early 70's being a misleading period).  But when I looked at real returns, I saw the PP has been remarkably stable over all timeframes with volatility shrinking over time.  Basically, the 70's also had crazy-high inflation that skews all investment averages unless you focus on real returns.