mathjak107
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Jul 27, 2005
- Messages
- 6,208
See?! You couldn't "stay the course" either!
It would be interesting to see a FIRECalc-type run of the "classic" 4 assett Harry Browne portfolio vs a more conventional 60S-40B portfolio with 3% to 4% withdrawals and the long historical data set (i.e. not starting in the 1970s). How would median available spending rates compare over 30 year timeframes using the "4% of year end portfolio value" withdrawal method? While gold has sometimes "comes through" to help portfolio values, it doesn't always do it at the right time, and overall it is a considerable drag on overall performance (when compared to the stocks it displaces--those dividends can be darn handy and gold ain't paying any).
IMO, the strongest case for the PP is in a real disaster (international depression, bank system failure, loss in confidence in the currency, hyperinflation, etc). A real "black swan" in the classic sense--an event that most people agree is impossible/extremely unlikely. And even Harry Browne's classic portfolio assumes US Treasuries will stay "solid", something that the more hard-core "financial preppers" would not agree with today. Harry liked Swiss instruments back in the day--I wonder what he'd think of the more recent Swiss proclivity to link/delink their currency with the euro. And why exactly 25% to each "pot"--seems suspiciously like TLAR*. Maybe 10% - 15% gold is enough to cover contingencies--where did 25% come from? Or maybe Harry was just being honest: TLAR is the best any of us can do, implying more precision in our AA given the real data set and huge assumptions may be just kidding ourselves.
Protecting against "black swans" may reduce a portfolio's ability to perform well in normal circumstances--the ones most likely to happen.
*TLAR: That Looks About Right
i did it for about 10 years but being in my prime investing years i wanted more gusto.