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Permanent Portfolio- PRPFX
Old 07-31-2008, 02:10 PM   #1
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Permanent Portfolio- PRPFX

Anyone own this fund?

What are your opinions?

Thanks.
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Old 07-31-2008, 02:18 PM   #2
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YES- I own it in a taxable account.

I like it's risk profile. We use the fund to put mid term expenses (new car, kids education, extra mortgage payments).

My expectation is a yearly return of around 6-7% after taxes.
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Old 07-31-2008, 03:05 PM   #3
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YES- I own it in a taxable account.

I like it's risk profile. We use the fund to put mid term expenses (new car, kids education, extra mortgage payments).

My expectation is a yearly return of around 6-7% after taxes.
You described our exact intent with this fund!

Thanks.
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Old 07-31-2008, 03:41 PM   #4
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I think I adequately described my feelings very well in this thread:

http://www.early-retirement.org/foru...und-29121.html
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Old 07-31-2008, 04:10 PM   #5
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I think I adequately described my feelings very well in this thread:

http://www.early-retirement.org/foru...und-29121.html

Thank you.
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Old 07-31-2008, 04:16 PM   #6
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I think I adequately described my feelings very well in this thread:

http://www.early-retirement.org/foru...und-29121.html
Granted many discussions of managed funds on this board will be "one sided" against said managed funds. I will not try to sway anyone to be for or against this fund or managed funds in general.

What I will ask is could someone show me a portfolio of funds or ETFs which would own:
1) Gold bullion
2) Silver coins
3) swiss francs
4) US bonds
5) energy stocks
6) growth stocks

which I believe are the 6 assets this fund holds.

I opened my first position in this fund in mid feb. I am up around 4% ytd for this fund ( I will need to check a statement to verify this, but that is what my yahoo tracking portfolio is telling me).
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Old 07-31-2008, 05:33 PM   #7
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We own PRPFX as one of our primary long-term holdings. NBGNX is the other but, it is closed to new accounts. We swear by both of them.
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Old 07-31-2008, 05:54 PM   #8
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Gee, and I could have sworn that I owned a bunch of managed fund. Oh look, I do!

Nothing to do with managed funds being bad. Any fund that charges a lot and underperforms is a bad fund.

Right now the vast majority of this funds holdings are in gold, silver, US treasury bonds and swiss government bonds denominated in swiss currency.

As I mentioned in the thread referenced, this fund went absolutely nowhere until precious metals went bazonkas and the dollar dropped.

Since there isnt much reason to expect gold to go a lot higher or the dollar much lower, and it being unlikely that US treasury bonds will leap in value to cover the gap, I'd expect this fund to give up a fair portion of its recent gains when gold trickles back down and the dollar gains strength.

The funds holdings in stocks and other items of interest are extremely small.

So on one hand you have a fund that nobody really wanted to buy when it went sideways for decades, but after its shot its wad everyone wants to get into the action.

Remember that thing about buy low, sell high?
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Old 07-31-2008, 06:36 PM   #9
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Since there isnt much reason to expect gold to go a lot higher or the dollar much lower
Could have fooled me...
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Old 07-31-2008, 06:48 PM   #10
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If they do, owning the 'permanent portfolio' wont help you much.
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Old 08-01-2008, 12:09 AM   #11
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Currency / Gold / Silver have no long-term expected return. With the exception of its temporary blips during crises, that should be obvious by inspecting past returns.
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Old 08-01-2008, 05:48 AM   #12
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Gee, and I could have sworn that I owned a bunch of managed fund. Oh look, I do!

Nothing to do with managed funds being bad. Any fund that charges a lot and underperforms is a bad fund.

Right now the vast majority of this funds holdings are in gold, silver, US treasury bonds and swiss government bonds denominated in swiss currency.

As I mentioned in the thread referenced, this fund went absolutely nowhere until precious metals went bazonkas and the dollar dropped.

Since there isnt much reason to expect gold to go a lot higher or the dollar much lower, and it being unlikely that US treasury bonds will leap in value to cover the gap, I'd expect this fund to give up a fair portion of its recent gains when gold trickles back down and the dollar gains strength.

The funds holdings in stocks and other items of interest are extremely small.

So on one hand you have a fund that nobody really wanted to buy when it went sideways for decades, but after its shot its wad everyone wants to get into the action.

Remember that thing about buy low, sell high?
Looks to me like PRPFX has done pretty good for the last 7 years.



What else has had this kind of steady, non-volatile return during the same period?
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Old 08-01-2008, 08:22 AM   #13
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Its really only been in the last 5 years that the fund did well. The nasdaq did pretty good for about 5 years back in the 90's. Hope you didnt grab that tiger by the tail in 2001...

What else would have worked? You could have bought equal amounts of vanguards energy, reit, health care, precious metals and emerging markets and seen a far better return, not a lot of net volatility, and actually owned asset classes that move for reasons people can explain. And the expenses would have been less than a third of what you'd have to pay for prpfx.

I'm far less concerned with what this fund has done in the last 7 years than with what it didnt do for 20 years before that, which is make money. Sat there and lost ground to inflation is what it did.

Should gold and the dollar revert to the mean...and they will...you could easily lose 30% in this fund and then go sideways for another 20 years with it.

I know, this fund pushes all the "GOLD!" and "Wow, these are funny asset classes I dont own!" buttons. Theres no way to deal with those sorts of rationalizations.

A fund like this would have made good sense were we still on a gold backed monetary system, coupled with good old switzerlands tendency to never get involved in wars, and with US treasury debt being what everyone in the world wanted to own as the standard in safety.

But its not the early to mid 1900's anymore.
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Old 08-01-2008, 08:37 AM   #14
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Its really only been in the last 5 years that the fund did well. The nasdaq did pretty good for about 5 years back in the 90's. Hope you didnt grab that tiger by the tail in 2001...

What else would have worked? You could have bought equal amounts of vanguards energy, reit, health care, precious metals and emerging markets and seen a far better return, not a lot of net volatility, and actually owned asset classes that move for reasons people can explain. And the expenses would have been less than a third of what you'd have to pay for prpfx.

I'm far less concerned with what this fund has done in the last 7 years than with what it didnt do for 20 years before that, which is make money. Sat there and lost ground to inflation is what it did.

Should gold and the dollar revert to the mean...and they will...you could easily lose 30% in this fund and then go sideways for another 20 years with it.

I know, this fund pushes all the "GOLD!" and "Wow, these are funny asset classes I dont own!" buttons. Theres no way to deal with those sorts of rationalizations.

A fund like this would have made good sense were we still on a gold backed monetary system, coupled with good old switzerlands tendency to never get involved in wars, and with US treasury debt being what everyone in the world wanted to own as the standard in safety.

But its not the early to mid 1900's anymore.
Okay! Okay! So don't invest in PRPFX already! Mr. millenium investor.

Go and invest in CD's then. They brought in 15%+ back in the days you seem to base your investment opinion on. Or, maybe penny stocks. They were big in the 80's too.

PRPFX is up 4.33% YTD, has a 5 year annual return of 12.91% and has had only 3 negative quarters since 2002. That is not too bad at all by anyones standards.
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Old 08-01-2008, 08:52 AM   #15
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Its never fun to tell someone that their dog's ugly.

Lets look at a pretty picture of the five funds I mentioned, and remember that the average expense ratio you'd pay for this is ~.25% instead of .95%+

Couple of steady performers, couple of rockets. One or two showing a little volatility at any given time but bought and viewed as a package, very little volatility. Far better returns, weighing in at about 16.5% annualized. The permanent portfolio is that black line down near the bottom that seems to be doing nothing very interesting.

And as a package they've always been good performers. Not just for the last 5 years.

Oh, and once again "buy low, sell high"...

Perhaps it'd be more constructive if you described why you'd expect the fund to do as well over the next 5 years as it has over the last 5, or maybe even explained why its done well over the last 5?

I'm also guessing that with 37% turnover per year, PRPFX isnt a lot of fun to hold in a taxable account.
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Old 08-01-2008, 09:03 AM   #16
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Its never fun to tell someone that their dog's ugly.
Now I see why you are so grumpy and why you feel the need to go waaaaaaay back.

VEIEX -15.37 YTD
VGENX - 2.45% YTD and they are in energy!
VGHCX -4.76% YTD
VGPMX -1.09% YTD
VGSIX -0.33% YTD This has the best YTD performance. Was -16.5% in 2007.

Good luck to you sir.
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Old 08-01-2008, 09:16 AM   #17
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I see the issue. Performance of one fund only within a 5 year period is the most important thing. Performance of a different set of funds is only interesting for the last six months. Any term comparisons or observation of the funds performance outside of the range that gives the answer you want is not desirable.

Good luck to YOU, sir.

And for what its worth, I dont currently own any of these funds.

However if I did, in the last ten years every 10k I had invested in this fund set would have turned into about 47k. So I dont think I'd be too pissed about being down an average of under 5% ytd.

Still waiting on the explanation as to why you think PRPFX performed the way it did over the last 5 years or why you think it'll repeat the same performance over the next 5.
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Old 08-01-2008, 09:23 AM   #18
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And for what its worth, I dont currently own any of these funds.

Still waiting on the explanation as to why you think PRPFX performed the way it did over the last 5 years or why you think it'll repeat the same performance over the next 5.
Why are you promoting funds you don't even own? Any arm-chair expert can go back and pick a set of funds that have HAD good performance. Put your money where your mouth is.

And as for PRPFX's next 5 years - I will leave that up to the expert fund managers that have steered PRPFX to flawless performance for many years.
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Old 08-01-2008, 09:23 AM   #19
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It's probably best to buy PRPFX within a VA so you get the tax-deferred growth.

This thing is going to the moon.
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Old 08-01-2008, 09:39 AM   #20
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Why are you promoting funds you don't even own?
Two reasons. One is that I have owned them, and two is BECAUSE YOU ASKED ME TO!

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What else has had this kind of steady, non-volatile return during the same period?
Not really "promoting" anything. Seems one of the reasons why someone might become interested in this fund is for diversification purposes...at least thats what several supporters have made note of. The five fund selection I mentioned are very typical diversifiers that actually have good long term records and in combination with traditional domestic and foreign equities and bonds make for a pretty good portfolio.

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Any arm-chair expert can go back and pick a set of funds that have HAD good performance.
Indeed. Seems you've picked one fund thats HAD good performance and cant explain why its performed well or should perform well going forward.

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And as for PRPFX's next 5 years - I will leave that up to the expert fund managers that have steered PRPFX to flawless performance for many years.
Uh oh, you just opened that "many years" can of worms again.

The fund managers havent done anything new or special or unique. In fact the idea of the permanent portfolio is to hold principally four asset classes in roughly equal amounts because historically at least one always did well when the others didnt.

All thats happened is that several of those asset classes all went up at the same time, unfortunately nobody can adequately explain or could have predicted those rises. Within the constraints of the whole idea of the permanent portfolio, I think that the creator might agree that if a bunch went up at once (breaking the historic correlative factors) that it is quite reasonable to expect that they'd all go down at once.

The point I was making is that the rationale for choosing the four primary asset classes doesnt really apply anymore. Gold is not a "store of value", an offset to inflation, or any of the things it was a hundred years ago. Switzerlands neutrality doesnt really mean anything anymore. Yada yada yada.

By the way, a fund that goes up sharply over a 5 year period is demonstrating extreme volatility...just the kind that people like...until the oscillator turns the other way.

At least understand your investments, why you own them, and ideally make sure that your investment choices actually are what you think they are. Oh and its nice if they regularly make money.

Yeah, I know. Its got GOLD! in it. GOLD!
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