Harry Browne Permanent Portfolio Discussion (Cont'd)

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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by willthrill81 »

fredflinstone wrote: Sat Apr 11, 2020 3:56 pm I am more and more of the view that Harry Browne had it right. Still love the Bogleheads, but:

1) real diversification is more than just owning stocks and bonds.
Yes. The start-date sensitivity, the double first cousin to sequence of returns risk, of portfolios comprised of only TSM and TBM has been high relative to almost all other 'expert crafted' portfolios. By comparison, the start-date sensitivity of the PP has been among the lowest of all such portfolios.
fredflinstone wrote: Sat Apr 11, 2020 3:56 pm2) Bogleheads who think they are diversified because they own domestic stocks, international stocks, value stocks, small cap stocks, and a REIT fund are kidding themselves.
There has been some diversification value by owning small, value, and int'l stocks, but for the most part, stocks rise and fall together.
fredflinstone wrote: Sat Apr 11, 2020 3:56 pm3) long-term treasuries are a much better diversifier than other kinds of bonds (they zig when stocks zag but the same cannot be said of TIPS, munis, corporate bonds, short-term treasuries, etc)
Absolutely.
fredflinstone wrote: Sat Apr 11, 2020 3:56 pm4) all the Boglehead hate toward gold just makes me love the yellow metal that much more. No asset category has done better over the last twenty years. It is a beautiful metal and it performs beautifully in my portfolio.
I don't care about gold's beauty, but it's ability over the last half century to help stabilize otherwise turbulent portfolios alone should at least give investors pause to consider a small allocation to it. Far too many have said 'gold's expected real return is zero, so that excludes it for me' is far too glib of a statement. And by that same token, many bonds should be eschewed as well for their expected real return is zero or negative right now.
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by fredflinstone »

Kbg wrote: Sat Apr 11, 2020 8:49 pm Where one can find the true religion. LOL.

https://www.gyroscopicinvesting.com/forum/index.php

On a more serious note, the HBPP has basically done what it's originator said it would do through thick and thin. I'm personally not a big fan of it for younger people in its pure 25/25/25/25 form as it is too conservative and the magic of higher rate compounding will likely be less than what it could be...though Harry Browne would say none of us know the future which is a significant philosophical point of the portfolio. Like most things one can tinker a lot around a core idea and the original PP is certainly something one can tinker with. However, where the brilliance of the PP is is in its asset mix. I believe one misses the most important point if the focus is on the performance of stocks, long term treasuries, gold and cash. The most important part of a mix of assets is a composition whereby some are zigging while others are zagging. The four used in the PP do that very well. If one looks at the long term correlation of the four assets in PV, one finds there isn't any correlation. If there are other assets that could be added that have those characteristics and all perform, add em. Why not?
Agree completely. As for other assets, TIPS would be an obvious possibility. Also, someone at gyroscopic investing proposed a 24/24/24/24/4 portfolio with the 4% in Bitcoin.
Stocks 28 / Gold 23 / Long-term US treasuries 19 / Cash (mainly CDs) 22 / TIPS 8
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by Kevin K »

Seeing this thread get resurrected during times of wild market swings is, I suppose, about as surprising as spring showers.

As others have pointed out, looking at assets in isolation as is the deeply-ingrained Bogleheads habit just leads to the usual gold-bashing and dismissal of the PP as too weird/conservative/defensive. That's unfortunate because there's a significant learning opportunity being missed that's much broader than the PP.

This recent post on the excellent Portfolio Charts site about how a slew of portfolios performed during the worst (so far, anyway) recent market tumult puts the PP in context with the Ray Dalio-inspired All Seasons, Larry Swedroe's approach and a bunch of others:

https://portfoliocharts.com/2020/03/23/ ... ful-month/

I think it's really worthwhile to delve into some of the links there, especially Tyler's commentary on how and why some of these allocations (including the PP and its Golden Butterfly iteration) are constructed, with close attention to not just their performance regardless of start date but to their safe and perpetual withdrawal rates and his wonderful "ulcer index" that so vividly show what it's like to actually live with (and have to stick with) a given allocation.

Portfolio Charts incorporates a love of data any Boglehead should love with the best of Harry Browne's insights and takes it to a new level with graphics that really do live up to the old saw about a picture being worth a thousand words.
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by technovelist »

fredflinstone wrote: Sun Apr 12, 2020 8:21 am
Kbg wrote: Sat Apr 11, 2020 8:49 pm Where one can find the true religion. LOL.

https://www.gyroscopicinvesting.com/forum/index.php

On a more serious note, the HBPP has basically done what it's originator said it would do through thick and thin. I'm personally not a big fan of it for younger people in its pure 25/25/25/25 form as it is too conservative and the magic of higher rate compounding will likely be less than what it could be...though Harry Browne would say none of us know the future which is a significant philosophical point of the portfolio. Like most things one can tinker a lot around a core idea and the original PP is certainly something one can tinker with. However, where the brilliance of the PP is is in its asset mix. I believe one misses the most important point if the focus is on the performance of stocks, long term treasuries, gold and cash. The most important part of a mix of assets is a composition whereby some are zigging while others are zagging. The four used in the PP do that very well. If one looks at the long term correlation of the four assets in PV, one finds there isn't any correlation. If there are other assets that could be added that have those characteristics and all perform, add em. Why not?
Agree completely. As for other assets, TIPS would be an obvious possibility. Also, someone at gyroscopic investing proposed a 24/24/24/24/4 portfolio with the 4% in Bitcoin.
The three non-cash assets in the PP are all very volatile and non-correlated with one another, so each one is capable of carrying the portfolio's overall return even when the others are dropping. TIPS aren't volatile enough to serve that purpose.
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by fredflinstone »

Kevin K wrote: Sun Apr 12, 2020 12:34 pm Seeing this thread get resurrected during times of wild market swings is, I suppose, about as surprising as spring showers.

As others have pointed out, looking at assets in isolation as is the deeply-ingrained Bogleheads habit just leads to the usual gold-bashing and dismissal of the PP as too weird/conservative/defensive. That's unfortunate because there's a significant learning opportunity being missed that's much broader than the PP.

This recent post on the excellent Portfolio Charts site about how a slew of portfolios performed during the worst (so far, anyway) recent market tumult puts the PP in context with the Ray Dalio-inspired All Seasons, Larry Swedroe's approach and a bunch of others:

https://portfoliocharts.com/2020/03/23/ ... ful-month/

I think it's really worthwhile to delve into some of the links there, especially Tyler's commentary on how and why some of these allocations (including the PP and its Golden Butterfly iteration) are constructed, with close attention to not just their performance regardless of start date but to their safe and perpetual withdrawal rates and his wonderful "ulcer index" that so vividly show what it's like to actually live with (and have to stick with) a given allocation.

Portfolio Charts incorporates a love of data any Boglehead should love with the best of Harry Browne's insights and takes it to a new level with graphics that really do live up to the old saw about a picture being worth a thousand words.
Excellent link. The Boglehead philosophy is great and I have learned so much here. But I do see some problem areas:
- many people greatly overestimate their risk tolerance and encourage others to do so,
- many people invest too heavily in stocks to the detriment of other asset classes,
- many people underinvest in gold or are hostile to it,
- many people underinvest in long-term treasuries, and
- many people think about asset classes in isolation rather than how they interact with each other.
Stocks 28 / Gold 23 / Long-term US treasuries 19 / Cash (mainly CDs) 22 / TIPS 8
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by CULater »

PIMCO did a research study in which they found that Gold returns are inversely correlated to the real interest rates from "risk-free" treasuries. In fact, real rates were the strongest predictor of gold price. Now with the real rate of the 10-year treasury around -0.5% it would seem to be a favorable time to own gold. At least that's what I'm doing.
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by fredflinstone »

CULater wrote: Mon Apr 13, 2020 10:16 am PIMCO did a research study in which they found that Gold returns are inversely correlated to the real interest rates from "risk-free" treasuries. In fact, real rates were the strongest predictor of gold price. Now with the real rate of the 10-year treasury around -0.5% it would seem to be a favorable time to own gold. At least that's what I'm doing.
Yes, gold seems to perform poorly when real interest rates are high. Makes sense. If real interest rates were 3% or higher right now, I'd sell almost all my gold and buy TIPS.
Stocks 28 / Gold 23 / Long-term US treasuries 19 / Cash (mainly CDs) 22 / TIPS 8
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by Register44 »

What do you think Browne would say about buying LTT's today? I remember a caller in the show didn't want to buy them at 4% and he told the guy that he had to still recommend them because he had seen rates drop to 2% in the past and that it could happen again today. Well he was sure right as always! :)

Yet now here we are today and rates are 1.35%.

Is there still enough upside left if rates go to zero to justify the duration risk at this point? My gut tells me he would say stay the course, but with only so much left before hitting zero, I wonder would reducing duration be something he might consider?
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by technovelist »

Register44 wrote: Wed Apr 15, 2020 1:19 pm What do you think Browne would say about buying LTT's today? I remember a caller in the show didn't want to buy them at 4% and he told the guy that he had to still recommend them because he had seen rates drop to 2% in the past and that it could happen again today. Well he was sure right as always! :)

Yet now here we are today and rates are 1.35%.

Is there still enough upside left if rates go to zero to justify the duration risk at this point? My gut tells me he would say stay the course, but with only so much left before hitting zero, I wonder would reducing duration be something he might consider?
I've been a fan of HB for many years, met him several times, and even did work for him.
Of course that doesn't mean I'm an authority on what he would say in these situations. But I think he would find the risk/reward ratio too high at these very low rates.
Reducing duration doesn't help because the volatility goes down as the duration goes down, and volatility is what he wanted for the non-cash portions of the PP.
There really isn't anything appropriate for that quarter of the PP these days.
I think he would say to divide up that quarter in some way among the other three assets.
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by rmelvey »

If the long end of the curve is too scary, you can still get a PP like portfolio by replacing the cash/LTT with intermediate term bonds. So you would do something like 60% 10 Year Treasury, 20% Gold, 20% Stocks.

Also keep in mind that you can use EE bonds which are essentially a 20 year zero coupon bond. Not liquid, but can form a part of your bond allocation. What the PP is really doing is equal weighted on a risk parity basis between stocks, gold, and interest rate duration. There is a lot of flexibility in terms of how you get that duration especially for a retail investor that can make use of savings bonds and CDs.
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by fredflinstone »

Register44 wrote: Wed Apr 15, 2020 1:19 pm What do you think Browne would say about buying LTT's today? I remember a caller in the show didn't want to buy them at 4% and he told the guy that he had to still recommend them because he had seen rates drop to 2% in the past and that it could happen again today. Well he was sure right as always! :)

Yet now here we are today and rates are 1.35%.

Is there still enough upside left if rates go to zero to justify the duration risk at this point? My gut tells me he would say stay the course, but with only so much left before hitting zero, I wonder would reducing duration be something he might consider?
I used to be one of those people who kept saying "yields can't fall much further from here." But if there is serious deflation, a 1% or even a 0.5% yielding 30-year treasury will be coveted. There is still room for bond prices to go higher.
Stocks 28 / Gold 23 / Long-term US treasuries 19 / Cash (mainly CDs) 22 / TIPS 8
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by raven15 »

siriusblack wrote: Sat Apr 11, 2020 10:04 am Resurrecting this thread ..........

I was reading up this weekend on how the permanent portfolio did recently -- not surprisingly, it has held up extremely well.

I was thinking about a variation on the PP using NTSX (to sort of replace the stock component) and SWAN (to sort of replace the LTT component). (And VTIP instead of cash.) In portfolio visualizer this did extremely well since beginning of 2019:

https://www.portfoliovisualizer.com/bac ... tion4_1=25

Anyone using PP or similar variations?
I should note that these additions go against the Permanent Portfolio ethos. The PP is intended to minimize counter-party and systemic risk as much as possible while providing returns sufficient to meet the cost of living. Products which use leverage or options, or other "paper" products, are strongly discouraged. Purchasing treasury bonds directly rather than through a fund is often preferred, as well as holding physical gold in a secure location instead of an ETF. For the truly risk adverse, a rolling ladder of marketable T-bills is recommended over holding cash in banks which can unilaterally set their own conditions. If you read the book, mutual funds are still recommended for stocks, but preferably as "vanilla" as possible and split between two fund providers and brokers.
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by technovelist »

raven15 wrote: Wed Apr 15, 2020 3:25 pm
siriusblack wrote: Sat Apr 11, 2020 10:04 am Resurrecting this thread ..........

I was reading up this weekend on how the permanent portfolio did recently -- not surprisingly, it has held up extremely well.

I was thinking about a variation on the PP using NTSX (to sort of replace the stock component) and SWAN (to sort of replace the LTT component). (And VTIP instead of cash.) In portfolio visualizer this did extremely well since beginning of 2019:

https://www.portfoliovisualizer.com/bac ... tion4_1=25

Anyone using PP or similar variations?
I should note that these additions go against the Permanent Portfolio ethos. The PP is intended to minimize counter-party and systemic risk as much as possible while providing returns sufficient to meet the cost of living. Products which use leverage or options, or other "paper" products, are strongly discouraged. Purchasing treasury bonds directly rather than through a fund is often preferred, as well as holding physical gold in a secure location instead of an ETF. For the truly risk adverse, a rolling ladder of marketable T-bills is recommended over holding cash in banks which can unilaterally set their own conditions. If you read the book, mutual funds are still recommended for stocks, but preferably as "vanilla" as possible and split between two fund providers and brokers.
Yes, the ethos includes simplicity and as few intermediaries between you and your wealth as possible.
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by Register44 »

Thank you very much for the input from everyone regarding the LTT's. It is very confounding to me. I like the idea of the "permanent" portfolio being never changing. Yet I know Browne advocated the LTT's not for yield, but for return, and at some point that return cannot exceed a certain level.

Based on VGLT's duration and yield if rates dropped to zero the gain would be 24%. So while there is profit still possible, the other side if rates go back to 5% would be a 67% loss.

So we could accept losing out on that last 24% of LLT gain left from the 30 year bull run on LTT's and move to something else for the time being. Maybe even CD's that pay a matching yield to LTT's, but without the downside risk?

The only problem is when do we switch back to LTT's? At 3%,4%,%,6% ect? I know we don't want to market time.

But hypothetically let's say rates do drop to 0% and we were still holding our LTT's. Would we still want them with no expected return other than if rates go negative, or would be bail at that point?

Since stocks and gold have a theoretically unlimited upside we don't have that worry there, but the LTT's do have a cap. I feel the LTT is the weakest component of PP at this point and as stated before, I don't know what can really replace it.
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by grog »

Register44 wrote: Wed Apr 15, 2020 1:19 pm What do you think Browne would say about buying LTT's today? I remember a caller in the show didn't want to buy them at 4% and he told the guy that he had to still recommend them because he had seen rates drop to 2% in the past and that it could happen again today. Well he was sure right as always! :)

Yet now here we are today and rates are 1.35%.

Is there still enough upside left if rates go to zero to justify the duration risk at this point? My gut tells me he would say stay the course, but with only so much left before hitting zero, I wonder would reducing duration be something he might consider?
There's still a surprising amount of potential upside, even at 1.35%. As yields drop, the duration and convexity also increase. For a 30 year T-bond, if the yield were to drop 100 bp to 0.35%, the price would go up by around 28%. If the yield dropped to 0.10%, it would go up almost 37%.
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by siriusblack »

I wonder the same thing-- I'm feeling nervous about anything in my portfolio with LTT exposure. I haven't heard any really good commentary (from someone like Browne, Swedroe etc.) on whether LTT still fits.
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by technovelist »

siriusblack wrote: Wed Apr 15, 2020 8:40 pm I wonder the same thing-- I'm feeling nervous about anything in my portfolio with LTT exposure. I haven't heard any really good commentary (from someone like Browne, Swedroe etc.) on whether LTT still fits.
I too would be very interested in what Browne had to say, but unfortunately he is no longer available for comment.
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by willthrill81 »

Register44 wrote: Wed Apr 15, 2020 4:26 pm Thank you very much for the input from everyone regarding the LTT's. It is very confounding to me. I like the idea of the "permanent" portfolio being never changing. Yet I know Browne advocated the LTT's not for yield, but for return, and at some point that return cannot exceed a certain level.

Based on VGLT's duration and yield if rates dropped to zero the gain would be 24%. So while there is profit still possible, the other side if rates go back to 5% would be a 67% loss.

So we could accept losing out on that last 24% of LLT gain left from the 30 year bull run on LTT's and move to something else for the time being. Maybe even CD's that pay a matching yield to LTT's, but without the downside risk?

The only problem is when do we switch back to LTT's? At 3%,4%,%,6% ect? I know we don't want to market time.

But hypothetically let's say rates do drop to 0% and we were still holding our LTT's. Would we still want them with no expected return other than if rates go negative, or would be bail at that point?

Since stocks and gold have a theoretically unlimited upside we don't have that worry there, but the LTT's do have a cap. I feel the LTT is the weakest component of PP at this point and as stated before, I don't know what can really replace it.
The issue, which some view as a feature and others as a bug, is that non-volatile assets like CDs aren't going to suddenly spike in value when your stocks tank. LTT have done that often since the Volcker era, most recently in the current downturn. Substituting an asset with moderately high volatility like LTT with something less volatile may actually increase the volatility of your entire portfolio.

Also, LTT would fare better than CDs in a deflationary period, which is part of the reason Browne included them in the portfolio.

If you're considering excluding LTT on the basis of their current yield and potentially switching back to them if/when yields improve, then you are, by definition, market timing on some level. That's not necessarily bad, especially in this context, but let's not beat around the bush either.
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by Tyler9000 »

siriusblack wrote: Wed Apr 15, 2020 8:40 pm I wonder the same thing-- I'm feeling nervous about anything in my portfolio with LTT exposure. I haven't heard any really good commentary (from someone like Browne, Swedroe etc.) on whether LTT still fits.
I'm no Harry Browne, but to me long term treasuries are as effective as ever in the Permanent Portfolio because of how bond convexity affects returns at low rates. If you have a few minutes, here's a longer explanation I wrote on bond convexity including a few notes on how it affects different types of portfolios.

Long story short, bond convexity increases bond volatility at low rates and the effect is more pronounced the longer the maturity. That may be a negative in some portfolios, but in an asset allocation like the PP built on the balance of volatile uncorrelated assets the increased volatility is arguably a good thing. Stating Willthrill's point another way -- while steady short term bonds simply dampen the gyrations of stocks, volatile long term treasuries help to actively cancel them.
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by Register44 »

Tyler9000 wrote: Wed Apr 15, 2020 10:24 pm
siriusblack wrote: Wed Apr 15, 2020 8:40 pm I wonder the same thing-- I'm feeling nervous about anything in my portfolio with LTT exposure. I haven't heard any really good commentary (from someone like Browne, Swedroe etc.) on whether LTT still fits.
I'm no Harry Browne, but to me long term treasuries are as effective as ever in the Permanent Portfolio because of how bond convexity affects returns at low rates. If you have a few minutes, here's a longer explanation I wrote on bond convexity including a few notes on how it affects different types of portfolios.

Long story short, bond convexity increases bond volatility at low rates and the effect on long term bonds is even more pronounced. And in an asset allocation like the PP built on the balance of volatile uncorrelated assets, the increased volatility of LTTs today is arguably a good thing. Stating Willthrill's point another way -- while steady short term bonds simply dampen the gyrations of stocks, volatile long term treasuries help to actively cancel them.
Tyler I actually had just found your article from another forum and was just about to write back to the board here that I now realize we still do want the LTT's afterall. Thank you for such an incredibly well written and mind blowing article! As you mentioned in it, I thought I knew the basics that bonds have yield and a return based on duration, but that is not the full picture at all.

I had no idea how convexity works, and even more impressive how the returns are slightly better to the upside than downside. I liken this to going to the roulette wheel and placing a bet on red and the casino is feeling generous to pay you out on the green spots as well.

I highly recommend everyone read this article from the discussion we were having today about it. I feel convinced now to keep the LTT's going and not get into that market timing on rates I was suggesting earlier.

Tyler you rock! :sharebeer
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by Forester »

When in history, have long term bonds and gold been expensive at the same time?
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by Register44 »

Forester wrote: Thu Apr 16, 2020 1:38 am When in history, have long term bonds and gold been expensive at the same time?
Considering the amount of stimulus and the Fed balance sheet Gold could still be undervalued. But I'm not skilled in knowing how to value it. Just wanted to make the consideration.
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by siriusblack »

Tyler9000 wrote: Wed Apr 15, 2020 10:24 pm If you have a few minutes, here's a longer explanation I wrote on bond convexity including a few notes on how it affects different types of portfolios.
WOW, great article-- thanks!! Actually, possibly the best bond article I've ever read-- going in my bookmarks folder.
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by Register44 »

I did have another observation after looking at that bond convexity chart. As we were discussing before Tylers article we thought Browne might feel different about the LTT's with these low rates. I felt better with that article that they still serve their purpose, but what if they are perhaps over serving now?

For instance when a 25 yr bond is at 5% on the chart its upside is about 20% and downside -10% on a +-1% rate change. As it stands now we are looking at around +25% and -18% from current rates. Not a huge change, but as we get closer to zero this widens further. I noticed that the 20 year at today's rates exhibits closer to what the 25 yr did back at 5% for the upside, but the downside the 10 year is a better fit.

So I am conflicted thinking that maybe Browne would have advocated to decrease the maturity of the holdings? Or simply not advise people to sell their bond at 20 years, but rather hold it a little longer before selling if rates are as low as they are now. Just some rambling thoughts.
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by willthrill81 »

Forester wrote: Thu Apr 16, 2020 1:38 am When in history, have long term bonds and gold been expensive at the same time?
Do you believe gold to be expensive now? If so, on what basis?
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by Forester »

willthrill81 wrote: Thu Apr 16, 2020 10:12 pm
Forester wrote: Thu Apr 16, 2020 1:38 am When in history, have long term bonds and gold been expensive at the same time?
Do you believe gold to be expensive now? If so, on what basis?
The Claude Erb/Cam Harvey paper on gold would put gold now at around $1,000 an ounce if I recall. I think that if we consider 1) global stocks, 2) gold, 3) global bonds, then they are in that order of cheapness. If somehow gold and bonds were both richly valued then stocks should be cheap if for no reason other than, money/sentiment tends to herd. This makes the permanent portfolio resilient.
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by willthrill81 »

Forester wrote: Thu Apr 16, 2020 11:16 pm
willthrill81 wrote: Thu Apr 16, 2020 10:12 pm
Forester wrote: Thu Apr 16, 2020 1:38 am When in history, have long term bonds and gold been expensive at the same time?
Do you believe gold to be expensive now? If so, on what basis?
The Claude Erb/Cam Harvey paper on gold would put gold now at around $1,000 an ounce if I recall. I think that if we consider 1) global stocks, 2) gold, 3) global bonds, then they are in that order of cheapness. If somehow gold and bonds were both richly valued then stocks should be cheap if for no reason other than, money/sentiment tends to herd. This makes the permanent portfolio resilient.
I'm not familiar with those authors or their work. Considering that the real return of gold since 1980 (right after gold's big spike in the 1970s) has been -.4%, I have a hard time seeing it as expensive right now.
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by market timer »

Forester wrote: Thu Apr 16, 2020 11:16 pm
willthrill81 wrote: Thu Apr 16, 2020 10:12 pm
Forester wrote: Thu Apr 16, 2020 1:38 am When in history, have long term bonds and gold been expensive at the same time?
Do you believe gold to be expensive now? If so, on what basis?
The Claude Erb/Cam Harvey paper on gold would put gold now at around $1,000 an ounce if I recall. I think that if we consider 1) global stocks, 2) gold, 3) global bonds, then they are in that order of cheapness. If somehow gold and bonds were both richly valued then stocks should be cheap if for no reason other than, money/sentiment tends to herd. This makes the permanent portfolio resilient.
Looks like you are referring to this paper: https://papers.ssrn.com/sol3/papers.cfm ... id=2639284

Given the strong dependence of gold on long term real interest rates, I find it surprising that the authors did not include interest rates in their model. Yes, gold is above its long run average real price, just like bonds have yields below average. You can't assess the relative value of gold without considering the opportunity cost of holding the metal.
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by CobraKai »

technovelist wrote: Wed Apr 15, 2020 8:44 pm
siriusblack wrote: Wed Apr 15, 2020 8:40 pm I wonder the same thing-- I'm feeling nervous about anything in my portfolio with LTT exposure. I haven't heard any really good commentary (from someone like Browne, Swedroe etc.) on whether LTT still fits.
I too would be very interested in what Browne had to say, but unfortunately he is no longer available for comment.
How about John Chandler?

He was one of Browne's partners when the Permanent Portfolio was created, and continued Browne's financial podcast for awhile after his passing.
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by Register44 »

CobraKai wrote: Mon Apr 20, 2020 11:43 am
technovelist wrote: Wed Apr 15, 2020 8:44 pm
siriusblack wrote: Wed Apr 15, 2020 8:40 pm I wonder the same thing-- I'm feeling nervous about anything in my portfolio with LTT exposure. I haven't heard any really good commentary (from someone like Browne, Swedroe etc.) on whether LTT still fits.
I too would be very interested in what Browne had to say, but unfortunately he is no longer available for comment.
How about John Chandler?

He was one of Browne's partners when the Permanent Portfolio was created, and continued Browne's financial podcast for awhile after his passing.
He also had Terry Coxon on the show. I'm not sure if I spelled that right. But would be great if we could hear from either of them.
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by technovelist »

Register44 wrote: Mon Apr 20, 2020 11:47 pm
CobraKai wrote: Mon Apr 20, 2020 11:43 am
technovelist wrote: Wed Apr 15, 2020 8:44 pm
siriusblack wrote: Wed Apr 15, 2020 8:40 pm I wonder the same thing-- I'm feeling nervous about anything in my portfolio with LTT exposure. I haven't heard any really good commentary (from someone like Browne, Swedroe etc.) on whether LTT still fits.
I too would be very interested in what Browne had to say, but unfortunately he is no longer available for comment.
How about John Chandler?

He was one of Browne's partners when the Permanent Portfolio was created, and continued Browne's financial podcast for awhile after his passing.
He also had Terry Coxon on the show. I'm not sure if I spelled that right. But would be great if we could hear from either of them.

"Terry Coxon is the author of Keep What You Earn and Using Warrants and the co-author (with Harry Browne) of Inflation-Proofing Your Investments. He edited Harry Browne's Special Reports for its 23 years of publication and all of Harry Browne's investment books since 1974.

Terry was the founder and for 22 years the president of the Permanent Portfolio Fund, a mutual fund that invests in precious metals as well as stocks and bonds. He is currently the president of Passport Financial, Inc., a specialty financial publishing company."

(from https://safehaven.com/contributors/terry-coxon)

So I suspect he might have some comments about this topic. :mrgreen:
In theory, theory and practice are identical. In practice, they often differ.
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by Register44 »

technovelist wrote: Tue Apr 21, 2020 2:41 am
"Terry Coxon is the author of Keep What You Earn and Using Warrants and the co-author (with Harry Browne) of Inflation-Proofing Your Investments. He edited Harry Browne's Special Reports for its 23 years of publication and all of Harry Browne's investment books since 1974.

Terry was the founder and for 22 years the president of the Permanent Portfolio Fund, a mutual fund that invests in precious metals as well as stocks and bonds. He is currently the president of Passport Financial, Inc., a specialty financial publishing company."

(from https://safehaven.com/contributors/terry-coxon)

So I suspect he might have some comments about this topic. :mrgreen:
Right on. Also Craig R wrote a book on PP. I think he has posted here in the past actually as well. I wonder if he has any thoughts from his research about this.
Mafiapt
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by Mafiapt »

Hello, how can i access the Harry Browne's investment radio shows? I can't find it anywhere.
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by thisisallen »

NunoSousa
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by NunoSousa »

Hi guys,

Im new here. Im from Europe and Im trying to build a PP. I've read that the fundamentals of HB PP doesn't work on Europe.
I want to build it with accumulating ETFs. 25/25/25/25.
And after that I want to focus on VP.

Any advice on which ETFs to pick for cash ?
Because right now, I easly understand the long term bonds, stocks and gold. But with this low interest rates, I really don't know what to think about the cash allocation.

Thanks for the help
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by Kevin K »

NunoSousa wrote: Fri Jun 19, 2020 2:42 pm Hi guys,

Im new here. Im from Europe and Im trying to build a PP. I've read that the fundamentals of HB PP doesn't work on Europe.
I want to build it with accumulating ETFs. 25/25/25/25.
And after that I want to focus on VP.

Any advice on which ETFs to pick for cash ?
Because right now, I easly understand the long term bonds, stocks and gold. But with this low interest rates, I really don't know what to think about the cash allocation.

Thanks for the help
I recommend asking your questions on this forum that's entirely focused on the PP:

https://www.gyroscopicinvesting.com/forum/index.php
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by technovelist »

Kevin K wrote: Fri Jun 19, 2020 5:11 pm
NunoSousa wrote: Fri Jun 19, 2020 2:42 pm Hi guys,

Im new here. Im from Europe and Im trying to build a PP. I've read that the fundamentals of HB PP doesn't work on Europe.
I want to build it with accumulating ETFs. 25/25/25/25.
And after that I want to focus on VP.

Any advice on which ETFs to pick for cash ?
Because right now, I easly understand the long term bonds, stocks and gold. But with this low interest rates, I really don't know what to think about the cash allocation.

Thanks for the help
I recommend asking your questions on this forum that's entirely focused on the PP:

https://www.gyroscopicinvesting.com/forum/index.php
Well, it discusses other topics too, but that is its primary investing focus.
In theory, theory and practice are identical. In practice, they often differ.
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by Register44 »

I posted a new topic looking into funds that are similar to prpfx. Since PERM closed I don't know of any alternatives.
I did find one RPAR that is similar, but includes TIPS, uses futures for long term bonds, and includes energy and mining stocks as well. This is not all that different than how prpfx deviates from the 4x25 pure form with its resource / real estate stocks and swiss francs.

Just curious what anyone thinks about RPAR. With an expense of just over .5% it is not outrageously expensive for an all in one stop. A good .3% cheaper than prpfx.
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by tj »

Register44 wrote: Sat Oct 17, 2020 6:01 pm I posted a new topic looking into funds that are similar to prpfx. Since PERM closed I don't know of any alternatives.
I did find one RPAR that is similar, but includes TIPS, uses futures for long term bonds, and includes energy and mining stocks as well. This is not all that different than how prpfx deviates from the 4x25 pure form with its resource / real estate stocks and swiss francs.

Just curious what anyone thinks about RPAR. With an expense of just over .5% it is not outrageously expensive for an all in one stop. A good .3% cheaper than prpfx.
The ETF doesn't have a lot of volume. Wouldn't it be more efficient to just make a pie in M1 Finance with the ETF's that you want to use?
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Re: Harry Browne Permanent Portfolio Discussion (Cont'd)

Post by GaryA505 »

I don't think RPAR replicates or imitates the Harry Browne permanent portfolio.
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