why you would replace actual inflation data with TIP values
To provide a more direct graphical comparison
Similar real gain progressions can equally be seen when substituting inflation with T-Bill or Short Term Treasury or 5 year Treasury or 5 year treasury ladder or STT/LTT barbell ...etc. i.e. actuals (non-synthetic).
Well - call me skeptical of the "technique." I guess that is what makes a forum. Are we not concerned with real gain over inflation and not returns of an asset that is a large chunck of the portfolio.
I wonder what the graph would look like if we called real gain progression by substituting inflation with the returns from gold. I am not sure why we would do this but I suspect someone would note gold is expected to have zero real return (i.e. inflation). I could then claim that PP is more consistent with a GOLD+type investment. I would be skeptical of this technique as well.
Nit picking comment I know - I suspect a graph getting real returns with actual inflation would be roughly similar with differences somewhat muted and smaller differences in Sortino Ratio. Bottom line, over the period, CAGR is higher with FTM (by a full percentage point), but Sortino is higher with PP in nominal terms.
Several critiques of both models. As various assets become easier to invest in 1) Corrleations are likely to be larger 2) Return over TSM are likely to be smaller (gold, Emerging Markets, SCV).
If you knew the highest two returning asset classes over the next 40 years and could only put 30% in them in total ... that would probably be the way to go.