Gyroscopic Investing

It will be interesting to see how PRPFX does today compared to a 4x25% permanent portfolio.

MT, why do you always have to accentuate the negative?

Sorry.

I think it is very helpful to people who are trying to understand the PP concept more fully to understand the differences between PRPFX and Harry Browne's permanent portfolio design.  Days like today help in that pursuit.

Many people refer to the two strategies as if they were the same, but they are not.  PRPFX is a riskier approach with higher management fees.  Lately, this risk has worked in investors' favor; today, the increased risk did not.

For those looking to buy some PRPFX, however, today is probably a great day.

***

It looks like the HB PP was down .35% today.

Adam,

I'm pretty sure due to PRPFX's heavy gold/silver holdings and light Long-Term Treasury holdings.  When there are strong actions in those assets, especially silver as PP doesn't even carry that, it tends to outline the differences between the fund and the actual PP.

Whoa, only down .40%.

I'm impressed.

How much was the HBPP down today?

Reub wrote: How much was the HBPP down today?

.35%

Would have thought it would do worse than it did because of SLV

I thought I read somewhere on this forum that someone thought it takes a few days for PRPFX to calculate and register its gains/losses. Either way, one would hope that PRPFX has enough balance to counteract a drop in Silver.

I enjoy the forum, and am a fan of easily implemented, systematic strategies.  So I’ve been following various HB Permanent portfolios for quite some time.

I thought I’d submit something that I just stumbled upon recently in looking at Larry Swedroe’s fat tail minimizing portfolio which consists of 15% emerging market stocks, 15% small cap value, 35% tips and 35% cash.  I noticed that if you want replicate PRPFX all you have to do is swap the 35% tips for GLD.

since 7/31/00 here are the numbers-
            portfolio PRPFX
cmpd. return 11.59% 11.56%
vol             10.23% 10.17%
maxdd             22.69% 27.16%
correlation 0.843 (since '04 the correlation is .88)

It looks like some of yesterday's declines are showing up in today's PRPFX price.

The HB PP was down .08% today, while PRPFX was down .99%.

MediumTex wrote: It looks like some of yesterday's declines are showing up in today's PRPFX price.

The HB PP was down .08% today, while PRPFX was down .99%.

Wow, was it just .08%? I didn't check the exact damage for my HBPP holdings, but having EDV has helped.

HB PP down .43% today, PRPFX down 1.04%.

I won't do this every day, but I think we are seeing a great illustration of the differences between PRPFX and the Harry Browne permanent portfolio.

Thanks MediunTex.  It's good to have that comparison to consider.  I started my PP years ago with prpfx but haven't added to that position. I think I am about 12% prpfx with the balance a HB PP.  I expect to change over the next few months.

smurff wrote: Thanks MediunTex.  It's good to have that comparison to consider. 

Ditto.  I use PRPFX to set aside money for my son for when he gets older (it's easier to contribute small amounts of money regularly that DIY), so it's nice to see how the two compare when weird stuff happens to silver or swiss francs etc.

moda0306 wrote: Adam,

I'm pretty sure due to PRPFX's heavy gold/silver holdings and light Long-Term Treasury holdings.  When there are strong actions in those assets, especially silver as PP doesn't even carry that, it tends to outline the differences between the fund and the actual PP.

Today will probably be the first day I see the value of my D.I.Y. holdings pass the mutual fund. This is due in part to timing (unintential timing, i.e. the day I bought in), but that should eventually smooth out over the years. I agree that it has to do with owning no silver and with having a full share of long-term treasuries right now.

Today I am REALLY curious to see what PRPFX does.

MediumTex wrote: Today I am REALLY curious to see what PRPFX does.

I capitulated this afternoon after watching Silver and Gold correct. I now no longer have a position in PRPFX.

buddtholomew wrote:

MediumTex wrote: Today I am REALLY curious to see what PRPFX does.

I capitulated this afternoon after watching Silver and Gold correct. I now no longer have a position in PRPFX.

What did you move into?

buddtholomew wrote:

MediumTex wrote: Today I am REALLY curious to see what PRPFX does.

I capitulated this afternoon after watching Silver and Gold correct. I now no longer have a position in PRPFX.

Why?

HB PP down .69% today, PRPFX down 1.11%.

MediumTex wrote: HB PP down .69% today, PRPFX down 1.11%.

There's your answer MediumTex. I am not comfortable holding an investment in a taxable account with this degree of volatility. I asked myself whether I was committed to holding the fund if GLD had a similar correction to what SLV has experienced lately. The answer was no. I have no plan at this point and feel quite lost.

Budd

buddtholomew wrote:

MediumTex wrote: HB PP down .69% today, PRPFX down 1.11%.

There's your answer MediumTex. I am not comfortable holding an investment in a taxable account with this degree of volatility. I asked myself whether I was committed to holding the fund if GLD had a similar correction to what SLV has experienced lately. The answer was no. I have no plan at this point and feel quite lost.

Budd

Why not just do a HB PP allocation?

Less volatility, less expense, and similar long term return to PRPFX.

MediumTex wrote:

buddtholomew wrote:

MediumTex wrote: HB PP down .69% today, PRPFX down 1.11%.

There's your answer MediumTex. I am not comfortable holding an investment in a taxable account with this degree of volatility. I asked myself whether I was committed to holding the fund if GLD had a similar correction to what SLV has experienced lately. The answer was no. I have no plan at this point and feel quite lost.

Budd

Why not just do a HB PP allocation?

Less volatility, less expense, and similar long term return to PRPFX.

I've sort of learned the hard way...PRPFX was fun while it lasted, but the last few days have been agonizing. The good news is that I did profit from the investment.

buddtholomew wrote:
I have no plan at this point and feel quite lost.

Budd

Budd--

Why don't you re-read Fail Safe Investing? 

It sounds to me like you may not understand the fundamental macroeconomic ideas on which the portfolio is based. 

Once you understand the big picture idea behind everything, it's much easier (even fun) to hold the portfolio when things get bumpy.