Is this the Permanent Portfolio?

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Is this the Permanent Portfolio?

Postby jaj2276 » Thu Jan 24, 2013 8:34 am

I didn't want to add this to the end of the 50 other PP threads because I know most wouldn't read them (including me) thinking that someone else was just adding a less-than-significant reply to those threads.

http://www.zerohedge.com/news/2013-01-2 ... -hedge-fun

The article/description of the All Weather fund seems SO SIMILAR to the PP, except that cash is replaced with "something else" and I'm not smart enough to decipher what that "something else" is.
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Re: Is this the Permanent Portfolio?

Postby wesleymouch » Thu Jan 24, 2013 8:49 am

The Permanent Portfolio has a similar CAGR and did better (positive return) in 2008. There is a lot of information about it: google crawlingroad
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Re: Is this the Permanent Portfolio?

Postby MrMatt2532 » Thu Jan 24, 2013 8:49 am

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Re: Is this the Permanent Portfolio?

Postby RupertSM » Thu Jan 24, 2013 8:56 am

Ray Dalio on Squawk Box at this moment. Sounds like he just described a permanent portfolio, although he did not use that name nor get specific on holdings. He is speaking about a portfolio that has 1/4 of assets in something that does well in good times, 1/4 in something that does well in inflationary times, 1/4 in something that does well in deflationary times, etc.
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Re: Is this the Permanent Portfolio?

Postby jaj2276 » Thu Jan 24, 2013 9:04 am

MrMatt2532 wrote:No, it's not.

See here:
http://m.seekingalpha.com/article/878251


Thanks for this, a very good read. Although I think your statement of "No, it's not" is a bit definitive considering my original post wasn't definitive (I.e. SO SIMILAR but not IDENTICAL) and I also mentioned how there was no cash in the All Weather.

Reading the Seeking Alpha article, I wonder if the All-Weather is a "PP-like" portfolio that's more palatable for people to hold (i.e. there isn't a huge cash component and you don't have to hold gold).
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Re: Is this the Permanent Portfolio?

Postby MrMatt2532 » Thu Jan 24, 2013 9:25 am

jaj2276 wrote:
MrMatt2532 wrote:Thanks for this, a very good read. Although I think your statement of "No, it's not" is a bit definitive considering my original post wasn't definitive (I.e. SO SIMILAR but not IDENTICAL) and I also mentioned how there was no cash in the All Weather.

Reading the Seeking Alpha article, I wonder if the All-Weather is a "PP-like" portfolio that's more palatable for people to hold (i.e. there isn't a huge cash component and you don't have to hold gold).

Yeah, sorry I was just responding to the subject title.

I would agree it is permanent portfolio-like. The main thing that sets these two apart (from other portfolios) is the significant holdings in commodities/gold.
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Re: Is this the Permanent Portfolio?

Postby Clive » Fri Jan 25, 2013 9:11 pm

wesleymouch wrote:The Permanent Portfolio has a similar CAGR and did better (positive return) in 2008

And less well in 2009. Most investors should consider yearly values as short term and anticipate some volatility.

Comparing the Permanent Portfolio to a 50-50 (with small tilt) for decades 1980's, 1990's, 2000+ (after inflation (real) gains)

Image
Image
Image
Image

75% Wellesley Balanced 25% gold achieves much the same as the Permanent Portfolio. Takes quite a bit of confidence in gold however for someone that might already be holding 100% in Wellesley to sell 25% and use the proceeds to buy gold.

[admin note - original animated gif replaced with individual images]
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Re: Is this the Permanent Portfolio?

Postby Browser » Fri Jan 25, 2013 10:57 pm

Bridgewater's analysis does suggest that TIPS might be substituted for Cash in the PP: making the allocation 25% stocks, 25% long Treasury, 25% Gold/Commodities, 25% TIPS.
Using Simba's spreadsheet, which incorporates estimated TIPS returns prior to 2001, the returns and volatility from 1972-2011 are very similar for the PP with cash and the PP with TIPs. Actually, the data slightly favor the PP with TIPS: same annualized volatility but the CAGR is about 1/2% higher ( Sharpe = .59 vs. .52). This results in a total return that nearly 25% greater at the end of this 40-year period.
If we have data, let’s look at data. If all we have are opinions, let’s go with mine. – Jim Barksdale
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Re: Is this the Permanent Portfolio?

Postby MediumTex » Sat Jan 26, 2013 1:55 pm

Over at gyroscopicinvesting we've often talked about the way Ray Dalio and other money managers will take Harry Browne's PP ideas and pass them off as their own.

Most of the financial media are so gullible about what these celebrity money managers say that they would probably never do the five minutes of research that it would take to realize that Dalio was talking about someone else's strategy.

When you read Dalio's "Manifesto" it's very obvious that he was heavily influenced by the 1970s-era libertarian thinkers like Harry Browne. If I was Dalio I would have a hard time founding a hedge fund and writing a manifesto based on Harry Browne's ideas without ever mentioning where the ideas came from that I based my whole life and career on.
"Early in life I noticed that no event is ever correctly reported in a newspaper." | -George Orwell
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Re: Is this the Permanent Portfolio?

Postby Call_Me_Op » Sat Jan 26, 2013 2:03 pm

MediumTex wrote:Over at gyroscopicinvesting we've often talked about the way Ray Dalio and other money managers will take Harry Browne's PP ideas and pass them off as their own.

Most of the financial media are so gullible about what these celebrity money managers say that they would probably never do the five minutes of research that it would take to realize that Dalio was talking about someone else's strategy.

When you read Dalio's "Manifesto" it's very obvious that he was heavily influenced by the 1970s-era libertarian thinkers like Harry Browne. If I was Dalio I would have a hard time founding a hedge fund and writing a manifesto based on Harry Browne's ideas without ever mentioning where the ideas came from that I based my whole life and career on.


Yes, I have been blown-away that Browne is never mentioned.

There are very few original thinkers, and Harry Browne was among them.
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Re: Is this the Permanent Portfolio?

Postby Browser » Sat Jan 26, 2013 5:49 pm

MediumTex wrote:Over at gyroscopicinvesting we've often talked about the way Ray Dalio and other money managers will take Harry Browne's PP ideas and pass them off as their own.

Most of the financial media are so gullible about what these celebrity money managers say that they would probably never do the five minutes of research that it would take to realize that Dalio was talking about someone else's strategy.

When you read Dalio's "Manifesto" it's very obvious that he was heavily influenced by the 1970s-era libertarian thinkers like Harry Browne. If I was Dalio I would have a hard time founding a hedge fund and writing a manifesto based on Harry Browne's ideas without ever mentioning where the ideas came from that I based my whole life and career on.

Did Harry Browne talk about "risk parity?"
If we have data, let’s look at data. If all we have are opinions, let’s go with mine. – Jim Barksdale
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Re: Is this the Permanent Portfolio?

Postby MediumTex » Sat Jan 26, 2013 8:10 pm

Browser wrote:
MediumTex wrote:Over at gyroscopicinvesting we've often talked about the way Ray Dalio and other money managers will take Harry Browne's PP ideas and pass them off as their own.

Most of the financial media are so gullible about what these celebrity money managers say that they would probably never do the five minutes of research that it would take to realize that Dalio was talking about someone else's strategy.

When you read Dalio's "Manifesto" it's very obvious that he was heavily influenced by the 1970s-era libertarian thinkers like Harry Browne. If I was Dalio I would have a hard time founding a hedge fund and writing a manifesto based on Harry Browne's ideas without ever mentioning where the ideas came from that I based my whole life and career on.

Did Harry Browne talk about "risk parity?"


I don't recall Harry Browne using the term "risk parity", but he seems to have been ahead of a lot of people when it came to the concept of risk parity.
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