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Re: Why 25/25/25/25 in a Permanent Portfolio?

The 25% split is basically what Harry Browne, et. al. found over time just works. There is a real danger in trying to apply too much precision to investing because it's not a science. Rather, it is a big group psychology problem and far too complex to model and pull out precision measurements. The 2...
by craigr
Wed May 14, 2014 10:37 pm
 
Forum: Investing - Theory, News & General
Topic: Why 25/25/25/25 in a Permanent Portfolio?
Replies: 31
Views: 2995

Re: Blog: Harry Browne's Permanent Portfolio

Manipulation is undoubtedly going to be present in all markets at all times, but its effects are going to be hidden in the large and liquid markets like stocks and bonds. I don't maintain the gold market is highly manipulated at all times, but in the past few years, it's hard to overlook some of th...
by craigr
Wed Apr 30, 2014 8:55 pm
 
Forum: Investing - Theory, News & General
Topic: Blog: Harry Browne's Permanent Portfolio
Replies: 49
Views: 5149

Re: Blog: Harry Browne's Permanent Portfolio

See, that is an unsatisfactory response, IMO, which is why I will continue to have such a difficult time envisioning gold in my portfolio. I think the Permanent Portfoliio is an interesting concept, but there are just too many quesitons about the gold market for my liking. I do commend you though f...
by craigr
Wed Apr 30, 2014 7:00 pm
 
Forum: Investing - Theory, News & General
Topic: Blog: Harry Browne's Permanent Portfolio
Replies: 49
Views: 5149

Re: Blog: Harry Browne's Permanent Portfolio

I have the feeling that if you ever needed to collect on "gold held in foreign vaults or buried under the oak tree" insurance that things would be so bad that maybe you should consider an "underground shelter stocked with non-perishable food and guns" insurance policy instead. I...
by craigr
Wed Apr 30, 2014 5:17 pm
 
Forum: Investing - Theory, News & General
Topic: Blog: Harry Browne's Permanent Portfolio
Replies: 49
Views: 5149

Re: Blog: Harry Browne's Permanent Portfolio

Whatever the case might be, I find it hard getting sold on gold when it trades on the futures market. Gold is a safe haven asset, yet it is subject to margin calls...that is just too weird. The margin calls are a part of what happened to gold in 2008. There is a physical gold market as well but it ...
by craigr
Wed Apr 30, 2014 12:04 am
 
Forum: Investing - Theory, News & General
Topic: Blog: Harry Browne's Permanent Portfolio
Replies: 49
Views: 5149

Re: Blog: Harry Browne's Permanent Portfolio

Thanks for the article. It may be worth putting in a link to our book that updated the portfolio idea with modern funds, etc. without turning it into a commercial. The book answers almost every possible question there is about the Permanent Portfolio.
by craigr
Tue Apr 29, 2014 10:10 pm
 
Forum: Investing - Theory, News & General
Topic: Blog: Harry Browne's Permanent Portfolio
Replies: 49
Views: 5149

Re: Gold vs. Bonds as an Asset Allocation Hedge

Craig, Thanks for chiming-in. For the person who wants to hold (say) 10%-15% in gold as a diversifier, what do you feel are the acceptable form(s) for the gold (physical, ETF, CEF, etc)? Perhaps all of the above? It probably is all of the above for various reasons. ETFs are easiest to rebalance/liq...
by craigr
Sun Apr 20, 2014 5:51 pm
 
Forum: Investing - Theory, News & General
Topic: Gold vs. Bonds as an Asset Allocation Hedge
Replies: 24
Views: 2379

Re: Gold vs. Bonds as an Asset Allocation Hedge

The conclusion I've come to over the years is that all portfolios should hold some gold. For the Permanent Portfolio traditionalists it would be 25%, but that is because that portfolio was really made with volatile assets in mind. A traditional stock/bond portfolio I think would do well to also cons...
by craigr
Sun Apr 20, 2014 1:38 am
 
Forum: Investing - Theory, News & General
Topic: Gold vs. Bonds as an Asset Allocation Hedge
Replies: 24
Views: 2379

Re: Tractor for my 12 Acre Horse Farm

My experience is this: Buy a Kubota diesel compact tractor. A BX series with their max horse power option will do all you need. Don't buy a gas tractor. They not only use a lot more fuel, but do not have the low end torque of the diesel that is most used for a farm tractor. The Kubota is also extrem...
by craigr
Mon Nov 18, 2013 10:55 am
 
Forum: Personal Consumer Issues
Topic: Tractor for my 12 Acre Horse Farm
Replies: 28
Views: 2775

Re: Harry Browne Permanent Portfolio question

If cash, then why not actual cash like CDs and such?


T-Bills are top of the food chain in the event of a serious economic problem. They are very liquid and easy to trade. They will be paid before any kind of CDs/FDIC funding bill is even discussed in the event of a large banking system problem.
by craigr
Wed Oct 23, 2013 1:49 pm
 
Forum: Investing - Theory, News & General
Topic: Harry Browne Permanent Portfolio question
Replies: 73
Views: 4416

Re: Harry Browne Permanent Portfolio question

Which fund would you be more comfortable owning in the Permanent Portfolio for the 25% Treasury bond section either VSBSX or VFIRX I can choose either of these in my ROTH (can't add ETF's here). I already own about 12% BIL in another tax deferred account so wanted to add one of these. Thanks for th...
by craigr
Wed Oct 23, 2013 12:56 pm
 
Forum: Investing - Theory, News & General
Topic: Harry Browne Permanent Portfolio question
Replies: 73
Views: 4416

Re: Gold and DJIA: What is going on?!

Sorry, but gold is money. It's a stateless money, but it is money none-the-less. I just accept it and move on. If there is another argument against having it in a portfolio that's fine. But saying it's not viewed as a form of money is just not true. There's a reason central banks store tons of gold ...
by craigr
Thu Aug 22, 2013 4:05 pm
 
Forum: Investing - Theory, News & General
Topic: Gold and DJIA: What is going on?!
Replies: 137
Views: 8569

Re: Password Security Part II

Many account compromises are not people cracking passwords directly. The perpetrators are stealing passwords with malware on target machines, bogus sites to phish, capturing passwords in unencrypted network traffic, etc. Cracking passwords on most sites won't work due to lock-out procedures plus it ...
by craigr
Tue Jul 23, 2013 7:08 pm
 
Forum: Personal Consumer Issues
Topic: Password Security Part II
Replies: 49
Views: 3877

Re: Why don't people use the Permanent Portfolio?

The perfect hedge against financial collapse will probably turn out to have one fatal flaw in the end -- everybody else will be trying to take it from you when they realize their mistake in not owning it themselves. There are plenty of cases where currency risk showed up but the zombie apocalypse d...
by craigr
Tue May 14, 2013 1:54 pm
 
Forum: Investing - Theory, News & General
Topic: Why don't people use the Permanent Portfolio?
Replies: 156
Views: 11743

Re: Why don't people use the Permanent Portfolio?

And, as Larry S has already pointed out, the PP does not incorporate major risk dimensions as it is a play on just market risk - or beta. I'd just point out that most market portfolios that incorporate academic perceptions of risk often ignore two of the biggest: Political and currency risk. Those ...
by craigr
Tue May 14, 2013 1:08 pm
 
Forum: Investing - Theory, News & General
Topic: Why don't people use the Permanent Portfolio?
Replies: 156
Views: 11743

Re: Why don't people use the Permanent Portfolio?

I don't disagree with what RodC is saying. I've said it many times myself that a lot of investing advice derives its proof from a very tiny sample set. Historical data can't be used to "prove" anything going forward. It can though be useful to disprove ideas. I am fond of saying: Investing...
by craigr
Tue May 14, 2013 12:07 pm
 
Forum: Investing - Theory, News & General
Topic: Why don't people use the Permanent Portfolio?
Replies: 156
Views: 11743

Re: Why don't people use the Permanent Portfolio?

to craigr What do you think is the best way to rebalance the PP? bands? how big? edited for misspelling Harry Browne advised splitting the assets 25% into each. You would rebalance when one asset fell to 15% or less, or rose to be 35% or more. I find these are reasonable figures to use because: 1) ...
by craigr
Sun May 12, 2013 3:23 pm
 
Forum: Investing - Theory, News & General
Topic: Why don't people use the Permanent Portfolio?
Replies: 156
Views: 11743

Re: Why don't people use the Permanent Portfolio?

At any moment, there is some investment somewhere that is going to outperform the Permanent Portfolio. It's like nailing jelly to the wall trying to defend against every possible permutation of things that could do better. But the design of the portfolio is not to chase the latest hot returns. It's ...
by craigr
Sun May 12, 2013 12:55 pm
 
Forum: Investing - Theory, News & General
Topic: Why don't people use the Permanent Portfolio?
Replies: 156
Views: 11743

Re: Why don't people use the Permanent Portfolio?

A few things I would probably point out: 1) The Permanent Portfolio has a much different objective than a lot of stock heavy portfolios. The Permanent Portfolio is designed to grow and protect your life savings at moderate rates, it is not designed to swing for the fences. Harry Browne (and myself),...
by craigr
Sat May 11, 2013 5:29 pm
 
Forum: Investing - Theory, News & General
Topic: Why don't people use the Permanent Portfolio?
Replies: 156
Views: 11743

Re: "Bond Market Bubble?"

I grow more convinced with each thread I read that a lot of people here do not understand why their bonds have been a good investment in the past for reasons that cannot apply to the future. Or the readers have seen situations like Japan happen where LT rates fell even lower. So in the face of unce...
by craigr
Fri Apr 12, 2013 1:46 pm
 
Forum: Investing - Theory, News & General
Topic: "Bond Market Bubble?"
Replies: 52
Views: 4005

Re: "Bond Market Bubble?"

I posted "EDV up 2.01% vs BND up 0.13% 4/12 AM" 4/12 AM - Vanguard extended duration treasury index ETF EDV up 2.01% vs Vanguard total bond market index ETF BND up 0.13% Perhaps it should have been on a thread like this one. Please discuss. The EDV fund is zero coupon long treasuries. It ...
by craigr
Fri Apr 12, 2013 12:55 pm
 
Forum: Investing - Theory, News & General
Topic: "Bond Market Bubble?"
Replies: 52
Views: 4005

Re: "Bond Market Bubble?"

It's interesting that I see so many bond doom threads now while the stock market is at an all time high. In fact, I think I saw a 100% equity thread here recently. Curious...
by craigr
Fri Apr 12, 2013 12:22 pm
 
Forum: Investing - Theory, News & General
Topic: "Bond Market Bubble?"
Replies: 52
Views: 4005

Re: Malkiel & Ellis Inventors of Indexing Warn About Bonds

First we should understand that the system we have today in terms of central bank management is *vastly* different than what we had during WWII. Also during WWII there was rationing, price controls, etc. Comparing these situations is simply not possible. As bad as Treasury bonds could be, I don't se...
by craigr
Wed Apr 10, 2013 8:14 pm
 
Forum: Investing - Theory, News & General
Topic: Malkiel & Ellis Champions of Indexing Warn About Bonds
Replies: 85
Views: 8425

Re: A"Nice Watch" story

Bogleheads: Today's Miami Herald has this story (shortened and underline added): Shaun Rogers, a 34-year-old defensive tackle for the New York Giants, told police Monday that he was in town (Miami Beach) with two friends the previous night. He said he was bejeweled with diamond earrings, two wristw...
by craigr
Thu Mar 28, 2013 12:54 am
 
Forum: Personal Consumer Issues
Topic: Why Can't I Bring Myself to Buy Me a Nice Watch?
Replies: 193
Views: 13948

Re: Why Can't I Bring Myself to Buy Me a Nice Watch?

Who cares what other people think. In my experience, people who wear Rolexes care very much what other people think. That's why they buy a Rolex Or they may simply like the history and look of a mechanical watch. I don't own a Rolex so I don't have a dog in the fight. But I understand why someone m...
by craigr
Tue Mar 26, 2013 11:20 am
 
Forum: Personal Consumer Issues
Topic: Why Can't I Bring Myself to Buy Me a Nice Watch?
Replies: 193
Views: 13948

Re: Why Can't I Bring Myself to Buy Me a Nice Watch?

Just get one. You've been wanting one for 40 years and can afford it. Who cares what other people think.
by craigr
Tue Mar 26, 2013 1:00 am
 
Forum: Personal Consumer Issues
Topic: Why Can't I Bring Myself to Buy Me a Nice Watch?
Replies: 193
Views: 13948

Audio Interview with Tradestreaming.com podcast

Zack Miller of Tradestreaming interviewed me about the Permanent Portfolio and investing strategy in general. In this interview we cover: - My background in investing and entrepreneurship. - The background of Harry Browne and the Permanent Portfolio. - Investing for uncertainty. - Assets of the Perm...
by craigr
Mon Mar 18, 2013 11:48 am
 
Forum: Investing - Theory, News & General
Topic: Audio Interview with Tradestreaming.com podcast
Replies: 0
Views: 129

Re: Is the Gold Rally Over

If someone is comparing gold to the stock market, bond market, etc. they are simply wrong. So, In Larry Swedroes's terms, you think gold is savings (a secure cash equivalent), not an investment (in equities, bonds, etc.)? Keith Pretty much, yes. Gold doesn't produce interest and dividends so it is ...
by craigr
Thu Feb 21, 2013 5:52 pm
 
Forum: Investing - Theory, News & General
Topic: Is the Gold Rally Over
Replies: 160
Views: 7673

Re: Is the Gold Rally Over

And what does the Permanent Portfolio do during that rise? I have no idea. I'm not discussing the Permanent Portfolio in any of my replies. I am simply saying that a stock and bond portfolio should hold some hard assets and a really good hard asset to own to counter currency risk is gold. Also I am...
by craigr
Thu Feb 21, 2013 5:51 pm
 
Forum: Investing - Theory, News & General
Topic: Is the Gold Rally Over
Replies: 160
Views: 7673

Re: Is the Gold Rally Over

The paper is making a strange claim that an investor in Brazil would have been better off holding cruzeiros vs. gold? I don't get what they are saying. Someone holding gold in that situation was tremendously better off vs. someone just holding cruzeiros. See -- that's what I mean about not botherin...
by craigr
Thu Feb 21, 2013 3:34 pm
 
Forum: Investing - Theory, News & General
Topic: Is the Gold Rally Over
Replies: 160
Views: 7673

Re: Is the Gold Rally Over

I can't seem to find the quote that you attribute to Erb & Harvey, since you didn't include a page reference. However, I did find this quote which seems to contradict what you ascribe to them. They don't seem to be saying that the gold stnadard regime in the U.S. produced a zero inflation rate:...
by craigr
Thu Feb 21, 2013 2:22 pm
 
Forum: Investing - Theory, News & General
Topic: Is the Gold Rally Over
Replies: 160
Views: 7673

Re: Is the Gold Rally Over

Here's my summary on this topic in terms of gold, currencies and the duplicity of the arguments against gold as an asset in a diversified portfolio:

Image
by craigr
Wed Feb 20, 2013 4:47 pm
 
Forum: Investing - Theory, News & General
Topic: Is the Gold Rally Over
Replies: 160
Views: 7673

Re: Is the Gold Rally Over

But I thought there were supposed to be fundamental economic arguments for owning gold -- you keep bringing them up. But you punt when it comes to the Erb & Harvey research paper that debunks all these arguments and argue instead that it's the correlations with other assets that really count an...
by craigr
Wed Feb 20, 2013 4:43 pm
 
Forum: Investing - Theory, News & General
Topic: Is the Gold Rally Over
Replies: 160
Views: 7673

Re: Is the Gold Rally Over

Might be a good idea to read the work of Erb & Harvey before deciding to jump onto the gold bandwagen. In a new working paper titled "The Golden Dilemma", the pair take up the key drivers of gold and put them to the test. According to the authors of the paper, some of the most common ...
by craigr
Wed Feb 20, 2013 3:02 pm
 
Forum: Investing - Theory, News & General
Topic: Is the Gold Rally Over
Replies: 160
Views: 7673

Re: Is the Gold Rally Over

Unfortunately, I think you would agree, most investors don't act that way. The real benefit if there is one from gold is from rebalancing. I agree that a lot of investors can't rebalance rationally. Emotions run high when you are expected to buy into a sinking asset when your others are high flyers...
by craigr
Wed Feb 20, 2013 2:52 pm
 
Forum: Investing - Theory, News & General
Topic: Is the Gold Rally Over
Replies: 160
Views: 7673

Re: Is the Gold Rally Over

There’s a reason every major central bank on the planet holds it and it isn’t because they have nothing better to do with their vault space. I’ve asked this question about why central banks hold gold when it is supposedly worthless as an inflation hedge and I usually get either no response, or some...
by craigr
Wed Feb 20, 2013 1:46 pm
 
Forum: Investing - Theory, News & General
Topic: Is the Gold Rally Over
Replies: 160
Views: 7673

Re: Is the Gold Rally Over

Gold is an insurance asset. It’s not perfect (what is?), but when currencies are having a problem people want gold. It’s interesting because some often describe the use of gold as the mythical ‘long time horizon’, but the actuality is much different. The lifespan of paper currencies is short and bru...
by craigr
Wed Feb 20, 2013 12:32 pm
 
Forum: Investing - Theory, News & General
Topic: Is the Gold Rally Over
Replies: 160
Views: 7673

Re: Is gold the best inflation-fighting asset? Maybe not.

Craig, obviously you've never heard of TIPSs . The government has promised us a positive real return, so we have nothing to worry about. Everyone's views on this particular subject are heavily influenced by their own life's experiences. In the U.S. we have not had seriously bad inflation for at lea...
by craigr
Thu Feb 07, 2013 5:47 pm
 
Forum: Investing - Theory, News & General
Topic: Is gold the best inflation-fighting asset? Maybe not.
Replies: 36
Views: 1988

Re: Is gold the best inflation-fighting asset? Maybe not.

Andrew Ang - 'Real' Assets, September 29, 2012, Columbia Business School Research Paper Gold, surprisingly, has been a poor inflation hedge. That paper has some problems in his assumptions and data. For example: Erb and Harvey (2012), however, document that over the extremely long run, gold may be ...
by craigr
Thu Feb 07, 2013 2:40 pm
 
Forum: Investing - Theory, News & General
Topic: Is gold the best inflation-fighting asset? Maybe not.
Replies: 36
Views: 1988

Re: "The Permanent Portfolio" - questions & observations

Why 25% gold? Why not 10% or 50%? I'm not here to argue with Excel Solver and endless backtests of arbitrary dates and asset percentages selected to make a specific point. Finding what did best in a portfolio backtest is easy and there are infinite combinations. But you know people point out these ...
by craigr
Wed Jan 09, 2013 5:38 pm
 
Forum: Investing - Theory, News & General
Topic: "The Permanent Portfolio" - questions & observations
Replies: 32
Views: 3735

Re: "The Permanent Portfolio" - questions & observations

That's the point Craig. Low cost, tax efficient, diverse. Which is not a constant choice, it will vary from year to year. It is not possible to model the complexity of taxes on a portfolio as it would apply to each person. It is not possible to even guess what the tax impacts will be going forward ...
by craigr
Wed Jan 09, 2013 3:26 pm
 
Forum: Investing - Theory, News & General
Topic: "The Permanent Portfolio" - questions & observations
Replies: 32
Views: 3735

Re: "The Permanent Portfolio" - questions & observations

Were these expenses considered when calculating the hypothetical Perm Portfolio return? No they weren't because nobody else applies those expenses to their portfolio testing either. Not everyone just looks at gross nominal. Net real is something that should be more widely adopted IMO - even if thos...
by craigr
Wed Jan 09, 2013 2:28 pm
 
Forum: Investing - Theory, News & General
Topic: "The Permanent Portfolio" - questions & observations
Replies: 32
Views: 3735

Re: "The Permanent Portfolio" - questions & observations

Were these expenses considered when calculating the hypothetical Perm Portfolio return? No they weren't because nobody else applies those expenses to their portfolio testing either. As a matter of course, so to keep the benchmark consistent, we don't apply expenses as they are too variable. We disc...
by craigr
Tue Jan 08, 2013 2:39 pm
 
Forum: Investing - Theory, News & General
Topic: "The Permanent Portfolio" - questions & observations
Replies: 32
Views: 3735

Re: "The Permanent Portfolio" - questions & observations

I’ve just finished reading “The Permanent Portfolio”, and I have a few questions and observations: Thanks for reading the book [disclosure: I'm one of the authors] 1. On page 25 the returns of a 60/40 portfolio are compared to the Permanent Portfolio. Was the 60/40 portfolio rebalanced over the tim...
by craigr
Tue Jan 08, 2013 12:42 am
 
Forum: Investing - Theory, News & General
Topic: "The Permanent Portfolio" - questions & observations
Replies: 32
Views: 3735

Re: The Permanent Portfolio is the Best Portfolio

Optimizing based on past data is fraught with peril. Even doing volatility weighting has big problems because volatility is radically different over the time chosen. A couple things: 1) The barbell of cash/bonds is deliberately there because the cash is very stable in value no matter what the market...
by craigr
Wed Jan 02, 2013 8:12 pm
 
Forum: Investing - Help with Personal Investments
Topic: The Permanent Portfolio is the Best Portfolio
Replies: 73
Views: 8299

Re: The Permanent Portfolio is the Best Portfolio

Despite all the arguments in favor of owning gold, none of them to my knowledge have established that one-fourth of your wealth should be invested in it. The argument is really simple. You want to own enough of an asset to help you when you need it to, but not enough to blow things up when it's hav...
by craigr
Mon Dec 31, 2012 6:10 pm
 
Forum: Investing - Help with Personal Investments
Topic: The Permanent Portfolio is the Best Portfolio
Replies: 73
Views: 8299

Re: The Permanent Portfolio is the Best Portfolio

I would say why go back only 130 years.. I believe he said that gold bought roughly the same amount of wheat in ancient Assyria that it does today. ( Of course, my memory may be wrong and I will have to defer to anyone that has a copy of the books.) His disciples now seem to sing a different tune t...
by craigr
Mon Dec 31, 2012 5:25 pm
 
Forum: Investing - Help with Personal Investments
Topic: The Permanent Portfolio is the Best Portfolio
Replies: 73
Views: 8299

Re: The Permanent Portfolio is the Best Portfolio

Tax question: If we put together a PP, isn't the gold taxed at a higher "Collectable" rate? Gold is taxed at a collectibles rate, or your marginal rate, whichever is lower. Most people are not likely to pay the full collectibles rate on gold, and even then you rarely need to rebalance it....
by craigr
Mon Dec 31, 2012 2:35 pm
 
Forum: Investing - Help with Personal Investments
Topic: The Permanent Portfolio is the Best Portfolio
Replies: 73
Views: 8299

Re: The Permanent Portfolio is the Best Portfolio

Let me start by saying I'm not sure the Permanent Portfolio is really the best portfolio, but I'm going to start with that opinion and see if I can be convinced otherwise by other on this forum who are much more experienced and well versed investors than I. Well I'm pretty big on the portfolio (I c...
by craigr
Mon Dec 31, 2012 1:40 pm
 
Forum: Investing - Help with Personal Investments
Topic: The Permanent Portfolio is the Best Portfolio
Replies: 73
Views: 8299

Re: Permanent Portfolio w/ Gold Miners (?)

Thanks Craig - I read many of you other postings . Many miners have large gold price exposures in a variety of currencies. I think economics justifies some correlation between expected gold prices and miners performance. The correlation may not always hold though ... thus I view your comments on th...
by craigr
Thu Dec 27, 2012 11:06 pm
 
Forum: Investing - Help with Personal Investments
Topic: Permanent Portfolio w/ Gold Miners (?)
Replies: 6
Views: 504
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