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the last 20 years have been very different in a number of different ways .
for one thing , gold , the asset every one loved to hate has become main stream and no longer the asset of choice by gloomers and gold bugs . etf's have made gold as easily accessible and as main stream as stocks . that open it up to investors and institutions like never before .
the same has happened in the bond world where powerful bond etf's have givin easy access with one click the option of adding long term treasuries , which can be more volatile than stocks .
we also went back to national downturns instead of the regional recessions we were getting where first the oils got it in the oil patch , then detroit , then the rust belt , then new england . so markets tended to see recessions in sectors as opposed to an actual down turn cycle .
so i don't find going back more than 20 years representative anymore of the way certain assets behaved in the past .
we also like to bench mark things from their highs .. the reality is we spend 80% of all our investing time in between the last low and last high ..
so here are the last 20 years ... all equities have dividends reinvested .
starting with 10K in each of the us stock market , gold and long term treasuries , this is the results from portfolio visualizer .
------------equities ------gold------long term treasuries
1 year------11,705-------13,09------14.041
3 year ---13,424------14,488---------14,957
5 year---15,151---------13,981------14,905
10 year--31,218-------14,798-------23,660
15 year --32,668-----36,256-------30,204
20 year --30,382----54,412-------48,403
Last edited by mathjak107; 05-23-2020 at 02:26 AM..
how much you have invested over each period is a major consideration .. 25-30 years ago the relative amount of money i had invested compared to day is puny ...
the last 30 years may have had great stock years , but it is todays action that carries the most weight because any action in dollars is on a much larger portfolio ....
the "important time frames for all of us will be different . for many youngins the last couple of years would carry the most weight .
for me , i would say the last 10 years carries the most weight since that is when we put the most dollars in to investments as we sold real estate off ...
so all well and good i was invested from 1987 to 2003 when equities returned almost 14% cagr as it was acting on relatively small amounts of dollars ... today a 7% drop equals a decade of 401k contributions at catch up ... big difference in what happens to our money vs indexes .
You have peaked my interest in the permanent portfolio but my ignorance of bonds still has me wondering about the long term bond portion which I believe is 25% of the portfolio. With interest rates so low would long term bonds really be ideal? Would they not be a drag when rates eventually go up?
You have peaked my interest in the permanent portfolio but my ignorance of bonds still has me wondering about the long term bond portion which I believe is 25% of the portfolio. With interest rates so low would long term bonds really be ideal? Would they not be a drag when rates eventually go up?
they are tempered by the fact you have 25% in very short term treasuries balancing the barbell .. had you put 50% in to intermediate term treasuries you would have the same duration as 25% in each .
if rates go lower or negative the long term treasuries can have powerful gains because they trade like stocks based on fear , greed , and perception . so they can go up more than intermediate term bonds .
by the same token they can go down more if rates rise . but in the mean time here we are and tlt is still hitting record highs and all i have been hearing for decades is "when rates rise "
it has been 40 years and rates are lower than ever .....
they are tempered by the fact you have 25% in very short term treasuries balancing the barbell .. had you put 50% in to intermediate term treasuries you would have the same duration as 25% in each .
if rates go lower or negative the long term treasuries can have powerful gains because they trade like stocks based on fear , greed , and perception . so they can go up more than intermediate term bonds .
by the same token they can go down more if rates rise . but in the mean time here we are and tlt is still hitting record highs and all i have been hearing for decades is "when rates rise "
it has been 40 years and rates are lower than ever .....
Thanks for the reply, this last part is my concern. They are so low now I can't think they'd do anything but go up eventually. As I'm considering this for a portion of my 401 this is a long play for me, how would you anticipate this portfolio doing with a flat stock market and slowly rising interest rates over many years?
Thanks for the reply, this last part is my concern. They are so low now I can't think they'd do anything but go up eventually. As I'm considering this for a portion of my 401 this is a long play for me, how would you anticipate this portfolio doing with a flat stock market and slowly rising interest rates over many years?
No idea ..it all depends on the economic conditions ....all I can say is the model has a 40 year history and has done well . All losses have been few and far between and under 5% drops ....
You can’t predict because it depends more on the inflation out look ....rising rates slow the economy , rising rates lower inflation so long term bonds may like that .. shorter term bonds would react poorly.
On the other hand rising rates with rapidly rising inflation and a weakening dollar could see gold soar.
The assets are made to align with economic outcomes not to each other or just rates or markets.
There was a lot of thought and research that went in to the design and that was 40 years ago
I have to admit I am intrigued. I am learning there is a lot of various opinions on it with gold being the big reason. But at this point in my life I'm interested in safer options that can weather any storm.
I have to admit I am intrigued. I am learning there is a lot of various opinions on it with gold being the big reason. But at this point in my life I'm interested in safer options that can weather any storm.
Thanks as always.
looks like today i may sell some equities which had a pretty good run up and add to my gold position which is the lower of the 4 assets . i don't have to rebalance if i don't want to , but i think it is a good idea ...
looks like today i may sell some equities which had a pretty good run up and add to my gold position which is the lower of the 4 assets . .
Don't try to time the markets. No one is ever right. A broken clock is right twice a day. You should try my insight model. It is always up and never down. Good market bad market doesn't matter. Wanna see a screenshot of my portfolio?
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