Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 08-03-2008, 06:12 PM   #41
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Mathjak, no idea what that glob of stuff is. The funds returns after taxes and sales of shares averaged 3.42% per year from inception in 1982 through 2002. Including the recent price run up, the shares averaged 4.67% per year for the period 1982-2007.

Did I mention that this fund has a lot of trading costs and is very tax inefficient?

Huskerblue, I know what the marketing literature says and I understand diversifiers. As far as burrs, britches and being against something, perhaps someone can put up a reasonable argument FOR it, as I've asked several times? Once I see some actual data then I can decide if I'm for or against it, whether burrs will come into play and where exactly I'd like the burrs placed.

This fund underperformed three month treasuries for its entire existence and basically flatlined most of the time regardless of economic conditions, losing ground to inflation. What sort of diversification is that? Is that where the term "diworsification" came from? I mean, jeez louise you could have put your money in a federal or treasury money market account back in 1982 and received more than a percent better returns per year. Heck, some tax exempt money market funds were sniffing its tailpipe until 2002.

I thought this was a little less about scientifically interesting concoctions that dont seem to bear fruit when put to the test and a little more about making money or at least not losing money against absolutely safe investments like t-bills and cd's?

Here's my statement of support. If I become bored with cash instruments, domestic and international equities, real estate, domestic and foreign bonds in a huge variety of shades and textures, inflation protected securities, emerging markets, annuities and other insurance instruments and I just get to the point where I want to pay a lot of big fees and enjoy a buttload of taxable events in order to make a pitiful return from a fund that lays claims to performing in a particular manner and then completely fails to respond in the manner described or any predictable way...well...I think I could still find some better options.

Ouch. Is that a frickin burr? I gotta go buy some britches.
Attached Images
File Type: jpg permanent portfolio a third time.JPG (215.3 KB, 21 views)
__________________

__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 08-03-2008, 06:26 PM   #42
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2005
Posts: 5,414
problem was that for quite a while gold was off the radar so part of the portfolio wasnt really helping much. over the last decade gold has joined the ranks of other asset classes as as a viable alternative again and has finally appeared on the radar.. the returns over the last decade have been pretty good compared to equities alone. what will the next decade bring? beats me but the bases are covered
__________________

__________________
mathjak107 is offline   Reply With Quote
Old 08-03-2008, 06:36 PM   #43
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Help me out again, what are the bases and how are they covered? I'm sorry, but this is getting monotonous.

Why was gold off the radar for...umm...35 years? Why is it back on now? What is it that its a viable alternative to and why will it remain a viable alternative?

The returns for the last decade actually were 5 years of returns below t-bills and cd's followed by 5 years of decent returns. The s&p500 had 7 very good years in the last 10.

Not that I find much reason to compare the two investment products.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Old 08-03-2008, 07:00 PM   #44
Recycles dryer sheets
 
Join Date: Jun 2008
Posts: 59
Well, Cuggino has only been at the helm since 1991 so throw out the first 8 years. Also, since you mentioned all of the asset classes that it owns in your diatribe except the metals, my guess is you have a problem with the metals.

Sure hope you're right and 70's to early 80's inflation doesn't come back. I don't want this fund to be the best performer for me === that would be a bad scenario.
__________________
huskerblue is offline   Reply With Quote
Old 08-03-2008, 09:37 PM   #45
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Yep, its a diatribe alright, but it seems you're still missing the target.

I have a problem with an investment being characterized as being nearly as safe as a CD but with better returns, citing consistency and steadiness.

This fund is not as safe as a CD. It has relatively poor returns which are erratic and anything but steady.

Further, while I completely understand in great depth the ideas that Browne put into the permanent portfolio, he based a lot of his criteria on the basis of correlations and causations between various economic conditions and certain asset classes.

This was in the days before the boom and bust cycles, globalized economies, fiat currencies and the ability to buy and sell cheap baskets of investments including commodities with the push of a button. When Harry conceived of the idea of the PP, wealthy people ruled wall street and everyone else did what their advisers and brokers told them was a good idea, all based on well accepted principals of economics.

I'm afraid that those days are gone and the predictability of these cycle/asset correlations hasnt really existed for the last 25 years, as evidenced by the returns of the permanent portfolio.

Lots of asset classes tend to suck at the same time these days, its not unusual for sudden and inexplicable rushes into and out of asset classes, and its quite normal to see gold go up or down well out of lockstep with inflation.

As far as "throwing out" the results of a particular manager, thats not really going to wash. The PP is about as much like an index as a managed fund can be, with Brownes blueprint serving as the basis, regularly rebalanced. Theres a little leeway around equities selection but the rest of the portfolio is what it is.

Someone looking for capital preservation in the face of inflation and poor economic times, with a little something extra in the way of dividends and not a lot of tolerance for risk should buy TIPS or an inflation adjusted annuity. Even an annuity gives better returns than this old dog.

But dont take my word for it, take this quote from one of Harry Brownes friends who wrote this shortly after his death:

"But there's a downside: The fund's long-term performance is poor compared to stocks, or even junk bonds. Its average return of 6.38% [before taxes, soft costs and cost of selling shares] is only one percentage point higher than safe T-bills! During the roaring 1990s, the Permanent Portfolio Fund seemed "permanently" in a funk, rising only 1% a year while stocks were exploding at a 20%-30% annual rate."

As far as your final comment, I think I made that point already. I dont think the treasuries or swiss government bond pieces are going to step up and deliver double digit returns. The equities piece is too small and not valued to where its going to step up and be the hero.

So that kinda leaves the dollar losing half its current value and gold heading to 1500-2000. That'd pretty much mean the wheels fell off our economy and the gas tank blew up.

To wrap up my...uh...'diatribe', its a good idea to understand your investments and where the returns will come from, comprehend the risks, and dont just jump on to the current hot thing and expect that its going to just keep on going.

Got any problems with that?
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Old 08-03-2008, 09:51 PM   #46
Recycles dryer sheets
 
Join Date: Jun 2008
Posts: 59
Using "a friend of Browne's" {boy, there's a ringing endorsement, he MUST know all} statement about not participating in the roaring 90's is a total cherry-pick of a single small time frame = one in which impossibly stupid decisions based on the "new paradigm" eventually blew up in most faces. Yet, the fact that the last few years of PP have been relatively good have been derided here as a total cherry-pick. Hypocracy.

I have no idea where the safe as a CD came from. I haven't seen that but I will assume someone said it somewhere. As I stated, this is an absolute return strategy, one where I would look for a long-term 7%. Long-term meaning over about 20 years. Some 2% years, some 12% years.

Honestly, I would prefer that he use indexes but looking at his stock fund, he has performed pretty well there and bonds aren't going to give you much above or below the index return. Thus, you are looking at gold. Well, I for one worry about things enough to add gold and choose to do so through this vehicle that owns the bullion directly.
__________________
huskerblue is offline   Reply With Quote
Old 08-03-2008, 10:05 PM   #47
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
I presumed since he was one of a small number of people who attended Harry's funeral that he had more than a passing relationship, and since the guy I took the quote from is also a noted economist and speaker that he had at least a little credibility.

You oughta read the thread before you get on my case.

Quote:
Originally Posted by BoutDone View Post
All I am saying is that PRPFX is a great alternative to TIPS, CDs, etc for a person seeking moderate returns with very limited risk.
Do you think its a great alternative to TIPS and cd's with very limited risk?

By the way, as I've already mentioned the fund hasnt returned 7% after taxes and sales of shares. Half that much.

...And it seems I've backed into the quarterly gold bug conversation. I've already learned thats a loser.

Good luck with your fund.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Old 08-04-2008, 02:56 AM   #48
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2005
Posts: 5,414
2 conditions havent played out yet in the last 30 years, hyper inflation and deflation. we have only had 2 conditions actually play out recession and prosperity. the portfolio needs strong economic trends in one direction or another ,except for stocks having prosperity there were no strong trends or events in 2 of the areas the portfolio covers yet..yes a weak dollar brought up the price of gold but no where near hyper inflation... .. . since you dont insure your house against only those things that you think may happen again or during a dry spell the portfolio does the same. theres a certain amount of gains you give up for hopefully insuring the future. lets see what the fund does in a deflation or hyper inflationary scenerio and then compare it to your standard portfolios.... of course your going to say well i can buy stock options or invest in those areas that will be more profitable under that scenerio. and im telling you that before you even get the chance and realize whats happening you would miss the boat making the switch,the same as everyone missed the boat getting out of stocks last october.


it would be nice to believe that the world is very different and we ruled out certain events from ever happening but i myself dont believe that, besides in my case only 10% is in the permanent portfolio the rest follows a more normal portfolio structure based on whats happened in the past and that those cycles and trends will be the only ones happening in the future. maybe im wrong about that assumption but human nature being what it is i cant get myself to tie up to much money in a fund that waits for unconventional stuff to happen and i hope thats not a mistake.

the real issue i have is not about putting money into the fund but maybe i dont have enough in the fund.


i show different results too, before taxes i show

Performance as of 08/01/2008-----1 Year*13.99%3 Year*12.78%5 Year*13.01%10 Year* 9.62%Life*6.86%
__________________
mathjak107 is offline   Reply With Quote
Old 08-04-2008, 05:02 AM   #49
Recycles dryer sheets
 
Join Date: Jan 2008
Posts: 159
cute fuzzy bunny,

Looks like you are going to be busy here. Everybody else has positive, correct, opinions of PRPFX. You seem to be the only one against it.

Once again, you do not have to invest in PRPFX if you do not want to! That is your decision. Others may wish to invest in it. Just let them make an objective decision based upon what others have experienced, not just YOUR negatively biased opinion.

Prejudices are what fools use for reason
__________________
BoutDone is offline   Reply With Quote
Old 08-04-2008, 07:46 AM   #50
Moderator
Sarah in SC's Avatar
 
Join Date: Sep 2005
Location: Charleston, SC
Posts: 13,456
CuteFuzzyBunny, I believe it is time to leave the gold bugs--you've done some yeoman's work here, to no avail. But if it makes you feel any better, I got your point. Now go get you some new britches!
__________________
“One day your life will flash before your eyes. Make sure it's worth watching.”
Gerard Arthur Way

Sarah in SC is offline   Reply With Quote
Old 08-04-2008, 08:45 AM   #51
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Yeah, I didnt know this was going to turn into one of THOSE conversations. I figured it for a legitimate discussion where people explain the rationale for making an investment and its explicable benefits and risks.

I oughta know better.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Old 08-04-2008, 10:19 AM   #52
Recycles dryer sheets
 
Join Date: Jun 2008
Posts: 59
*
__________________
huskerblue is offline   Reply With Quote
Old 09-05-2008, 06:03 PM   #53
Confused about dryer sheets
 
Join Date: Sep 2008
Posts: 8
This is my first post here, and I am happy to see PRPFX being discussed.

I think CFB is being too harsh with the PP.

A couple of things to consider:

1. Although PRPFX is similar to Harry Browne's recommended allocation, it is different from HB's 25/25/25/25 recommendation. Although it wouldn't appear that the difference would affect returns much, it does. When you compare the PRPFX returns with the permanent portfolio returns on HB's website, you see that they are the same some years, but significantly different in others. I think it is the light long bond weighting in PRPFX and the presence of the Swiss bonds that accounts for the difference.

2. PRPFX has lost money for very few investors. The opportunity to get a 15% return or better in some years without a similar risk of losing that amount in other years makes it appealing.

3. The recent cut in the fund expense to .95% will juice the returns a little going forward (I believe the expense was 1.11% prior to this year).

4. For someone who simply doesn't want to lose any of their money, this is a good fund.

5. For someone who wants a counterpoint to aggressive equity investments, this is a good fund. I feel more comfortable with speculative plays knowing that PRPFX is likely to maintain its value relatively well.

6. PRPFX has only performed poorly in times of low inflation. If you know this up front, it should bother you too much. As I said above, it's sort of a counterpoint to more speculative investments which would benefit from periods of low inflation.

7. The fund is quite tax efficient. What makes anyone think it's not? Look at its dividend distribution amounts--about 1% or so a year. That's pretty efficient.

8. I'm not a gold bug, but I like gold as part of the PRPFX portfolio.

9. A fixed income fund doesn't help you much in a period of inflation. Thus, I don't think that comparing the fund to a fixed income fund is fair.

10. Where are the low returns since inception coming from? Here's what I've got from the PRPFX website:

1983 - 5.32%
1984 - (13.09%)
1985 - 11.98%
1986 - 13.42%
1987 - 12.94%
1988 - 1.10%
1989 - 6.20%
1990 - (4.01%)
1991 - 8.01%
1992 - 2.46%
1993 - 15.45%
1994 - (2.93)
1995 - 15.40%
1996 - 1.60%
1997 - 5.58%
1998 - 3.39%
1999 - 1.10%
2000 - 5.83%
2001 - 3.76%
2002 - 14.31%
2003 - 20.44%
2004 - 12.04%
2005 - 7.62%
2006 - 13.82%
2007 - 12.43%

Based upon those returns, I get an annual average return over 25 years of 6.97%. Considering that much of that 25 year period had low levels of inflation, I think that's pretty good for a fund tilted toward inflation protection.

Going forward, I think that there is reason to believe that inflation will be a bigger problem than in the past, based upon the level of U.S. debt and the likelihood that high energy costs are going to be with us for a while.

It's not for everyone, but I think it's a good fund and fills a niche that no other fund fills. I would, however, like very much to see a fund set up that literally tracked Harry Browne's 25/25/25/25 allocation and put it together with as much tax efficiency as possible.

One can, of course, just buy an S&P 500 fund, a Treasury money market, TLT and GLD and there you have it, but the income that three of these funds would throw off would make the arrangement very tax inefficient. If you are in an IRA it wouldn't matter, of course.

I'm interested in any more thoughts on PRPFX and Harry Browne's thinking in general. I'll post the returns from the 25/25/25/25 approach later for comparison purposes.
__________________
BigTex is offline   Reply With Quote
Old 09-05-2008, 06:09 PM   #54
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
I wouldnt have bothered, but you did mention me by name.

This fund is doing really well. Since I said I didnt think it was a good investment its set a record for worst 3 month performance since inception. Down more than 6.5%. I'm guessing it has around another 7-10% drop to go before doing absolutely nothing for 10-15 years. Yep, almost as safe as a CD only with better returns. Wait...what?

The problem with the delta in the return numbers is that the ones you've posted dont incorporate expenses, trading costs, taxes and the cost of selling the fund shares. You wouldnt really expect a fund company to give you the actual (lower) numbers, would you? The chart I attached to one of my posts above (#41) is also from the fund company, and includes all costs and taxes.

Did I mention that this fund is very tax inefficient? Did I also mention 'buy low, sell high' lately?
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Old 09-05-2008, 11:11 PM   #55
Confused about dryer sheets
 
Join Date: Sep 2008
Posts: 8
To be fair, why would you include the cost of selling the fund's shares and the capital gains it might trigger if you are not selling it?

The returns I cited were simply the difference between the fund price on the first and last day of the year, plus dividend distributions.

CFB, I understand that you don't like the fund, what I don't understand is why. Is it too conservative? Does it not meet it stated goals? Does it not provide an alternative to just bonds or equities?

How would a bond fund provide the same return in a period of inflation? How would a TIPS fund provide the same return in a period of deflation?

It's the only mutual fund that holds equities that has not had a negative return in any of the past 10 years. Check it out.

It's had a tough quarter, but haven't most equities had a tough quarter?

Does it surprise you that this fund's returns don't follow Harry Browne's 25/25/25/25 mix all that closely? It surprised me.

Tell me again why the fund is not tax efficient? It distributes the absolute minimum in dividends that it is required to. Isn't that the definition of tax efficiency? The figures you are referring to from the website show what your after-tax return would be if you sold your shares. If you're not selling your shares, that information is not relevant.

Generally, do you believe that gold has any place in a portfolio? If so, what percentage do you think is appropriate? If you think that no gold holdings of any kind are appropriate, how does one take advantage of the occasional excellent returns from the PM sector? These periods are not as rare as you suggest. Since going off the gold standard in 1971, there have been two long bull markets for gold--1971-1980 and 2001-present. Thus, out of the last 37 years, gold would have potentially been profitable in your portfolio for 18 of those years. In the 1970s bull market it went from $35 an ounce to $800 an ounce. In the current bull market it has gone from $300 an ounce to $1,000 an ounce.

I'm not a gold bug, I just see the value of having a little in my portfolio. PRPFX is 20% gold and 5% silver. That might be a little heavy, but I don't think it's crazy.
__________________
BigTex is offline   Reply With Quote
Old 09-06-2008, 12:30 AM   #56
Thinks s/he gets paid by the post
 
Join Date: Nov 2005
Location: North of Montana
Posts: 2,753
Quote:
Originally Posted by cute fuzzy bunny View Post
I'm guessing it has around another 7-10% drop to go before doing absolutely nothing for 10-15 years. Yep, almost as safe as a CD only with better returns. Wait...what?
Not that I know guess care what it does in the next 10 - 15 years, what does the bunny say will do well?
__________________
There are two kinds of people in the world: those who can extrapolate conclusions from insufficient data and ..
kumquat is offline   Reply With Quote
Old 09-06-2008, 09:56 AM   #57
Confused about dryer sheets
 
Join Date: Sep 2008
Posts: 8
Quote:
Originally Posted by kumquat View Post
Not that I know guess care what it does in the next 10 - 15 years, what does the bunny say will do well?
I think that there is about equal risk of an ugly inflation scenario as there is an ugly deflation scenario, ala Japan.

For these reasons, I think you have to have gold exposure for inflation and long bond exposure for deflation. Of course, you want to have good equity exposure (energy services is my favorite) as well. Add some cash and you're back at Harry Browne's permanent portfolio.

There is an excellent discussion of the true "permanent portfolio" as conceived by Harry Browne over on the bogleheads forum (this portfolio averages over 9% when tested back to the early 1970s).

For those who are unfamiliar with Harry Browne's investment thinking, I suggest you check out "Fail Safe Investing" (available for download for about $10 from his website) or "Why the Best Laid Investment Plans Usually Go Wrong", which is out of print, but can be picked up used for almost nothing on Amazon. The latter book is a much more exhaustive discussion of the permanent portfolio strategy.

I am a big Harry Browne fan. I don't think it's different this time. Money moves around like a nervous locust swarm. The four asset classes of the permanent portfolio capture the gains from its movement in an elegant manner over time.

If "minimizing future regret" is one of your investment goals, the permanent portfolio strategy is an appealing option. As I mentioned above, however, the PRPFX fund does NOT really track Harry Browne's strategy that closely.

PRPFX is broken down as follows:

20% gold
5% silver
15% aggressive growth stocks
15% natural resource and real estate stocks
10% Swiss franc short term bonds
35% treasury instruments (of which about 20% are short term and about 15% long term)

As you can see, this portfolio is tilted more toward inflation protection than deflation protection, and it was the brainchild of Terry Coxon, a Harry Browne protege, but not nearly as bright a light IMHO.

If I were putting together a similar fund, I would do it this way:

20% gold
25% 30 year treasuries
20% short term treasuries
20% energy (no majors, just independents and service companies)
15% S&P 500

The only future assumption on which this portfolio is based is that energy infrastructure will require a greater chunk of world wealth to maintain, and that fiat currencies will be more volatile than in the past. Other than that, I am assuming the future will be similar to the past (which is an assumption on which the permanent portfolio is based).
__________________
BigTex is offline   Reply With Quote
Old 09-06-2008, 10:25 AM   #58
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Wow, so taxes and costs associated with ownership and sales of funds dont matter if you dont plan to sell? Then the investment has no value and any changes to the valuation dont matter either. How magnificent to measure only the benefits and none of the expenses of an investment!

I already well covered why I dont think this fund is a good investment: it lost money to inflation for 20-something years and then had a run-up only when gold and oil shot through the roof due to speculative pressures and are now headed back down. And so is the fund. Much further down. Its an expensive fund that has underperformed for most of its history, has not been positively or negatively correlated to inflation or deflation, has had a speculative run up, and is going to go down. Down, down, down.

Gold hasnt reacted as a positive or negative correlation to inflation in 28 years, so unless you're prepared to produce a chart showing data to the contrary, can we discontinue the 1930's mantras about gold and inflation? Any movements in gold are purely speculative.

As far as using the long bond against deflation, we havent seen serious deflation in almost a hundred years, and at the current rates, they wouldnt be very helpful in that unlikely scenario. With the small spread between long and short bonds, they're a lousy investment. And you're going to get killed when rates rise, as they most certainly will.

"It" is different this time. "It" has been changing constantly and its going to change more.

As far as minimizing future regret, if you'll be happy with your investments losing money and then losing ground to inflation when you could have done better with TIPS, then you'll be free of regret with this fund.

In the meanwhile, it seems the proponents of these investments either have a poor grasp of how they work, their risk levels, and unreasonable expectations for their returns, or they express talking points about the investments that arent borne out with actual data.

Perhaps you can go back to the beginning of the thread, look at the charts, data and trends that I posted that show that most of the platitudes surrounding these investments arent demonstrated in the real world, and produce some contrary data?

Maybe I'll change my mind.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Old 09-06-2008, 10:33 AM   #59
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Just in case the 'vs tips' point wasnt well taken, see below where a regular tips fund trounces PRPFX for the last 8 years , excepting the year and a half when gold shot up and the dollar dropped...but in the end the tips fund caught up. BTW, this is a period when PRPFX actually performed well...I wish there were TIPS-like results going back to the 80's because in that instance TIPS would have pounded PRPFX.

By buying and holding the TIPS directly, you'd have picked up an extra .5% in expenses you didnt need to pay to a fund.

Before anyone says "yahbut, this other fund does more than inflation protection", lets observe that it hasnt reliably done that over its history. The stated intent of the fund is to preserve the value of the principal and in some cases, improve the value. TIPS does that very reliably.

Also very tax efficient.
Attached Images
File Type: jpg prpfx vs tips.JPG (95.5 KB, 8 views)
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Old 09-06-2008, 03:09 PM   #60
Confused about dryer sheets
 
Join Date: Sep 2008
Posts: 8
Quote:
Originally Posted by cute fuzzy bunny View Post
Wow, so taxes and costs associated with ownership and sales of funds dont matter if you dont plan to sell? Then the investment has no value and any changes to the valuation dont matter either. How magnificent to measure only the benefits and none of the expenses of an investment!
I think you misunderstood me. What I meant was that I would prefer to have this fund's 1% dividend and more capital gain than the typical 3-4% in dividends a less tax efficient fund would throw off annually. For someone who wants to own it for a long time in a taxable account, I view this as a plus.

Quote:
I already well covered why I dont think this fund is a good investment: it lost money to inflation for 20-something years and then had a run-up only when gold and oil shot through the roof due to speculative pressures and are now headed back down. And so is the fund. Much further down. Its an expensive fund that has underperformed for most of its history, has not been positively or negatively correlated to inflation or deflation, has had a speculative run up, and is going to go down. Down, down, down.
Oil shot through the roof. Gold followed it. Short term there has been speculative pressure on oil, but long term I think we will see a new floor around $100 per barrel, rather than $10 a barrel that we saw only a few years ago. Time will tell.

Quote:
Gold hasnt reacted as a positive or negative correlation to inflation in 28 years, so unless you're prepared to produce a chart showing data to the contrary, can we discontinue the 1930's mantras about gold and inflation? Any movements in gold are purely speculative.
What is your definition of "speculative"? If an asset goes up in value consistently for several years, I don't know why you wouldn't want to capture some of those gains.

Quote:
As far as using the long bond against deflation, we havent seen serious deflation in almost a hundred years, and at the current rates, they wouldnt be very helpful in that unlikely scenario. With the small spread between long and short bonds, they're a lousy investment. And you're going to get killed when rates rise, as they most certainly will.
I'm sure that the Japanese would have had similar disdain for a deflation argument 20 years ago when the Nikkei was at 35,000.

Quote:
"It" is different this time. "It" has been changing constantly and its going to change more.
Inflation or deflation and recession or expansion are the only options. It can't be different.

Interesting discussion, though.
__________________

__________________
BigTex is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Anyone Familiar with Permanent Portfolio (PRPFX) Fund? Achiever51 FIRE and Money 25 04-01-2011 05:53 PM
Roth 401k made permanent wildcat FIRE and Money 0 02-16-2007 11:23 AM
harry brownes permanent portfolio mathjak107 FIRE and Money 5 10-29-2006 07:08 AM
Looking for low permanent CC transfer rates BigMoneyJim FIRE and Money 8 09-24-2006 03:08 AM
What Countries Would Have Us As Permanent Guests? Danny Other topics 38 03-09-2006 04:15 AM

 

 
All times are GMT -6. The time now is 02:51 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.