Crawling Road
The Permanent Portfolio, Investing, Finance and Random Thoughts.
My Easiest Money Is From Market Timers
0Anyone reading this blog knows I don’t market time because I just don’t think it works. That’s for any asset class. Yet I sometimes see advice from those that would say that stock market timing doesn’t work, but will tell people about bond market timing strategies that supposedly do work. You can’t have it both ways!
Here’s the truth: Bond timing doesn’t work either. If anything, the bond market is likely more efficient than the stock market. Trying to predict future interest rate directions is impossible. Trying to predict future market crises that will make people buy bonds en masse is even more impossible.
Let’s look at two examples. First are Treasury Long Term bonds and Treasury Inflation Protected Securities (TIPS) in 2011. Who predicted these movements?
(Charts courtesy of www.stockcharts.com and include interest and dividends in total returns)
Treasury Long Term Bonds in 2011:
2011 Long Term Treasury ETF Performance
Vanguard Treasury Inflation Protected Bonds in 2011:
Maybe a market timer using moving averages could claim they would have been out of these the first part of the year and only got in towards the mid/end of Q3 before the spike. But the entire time they were out, guys like me were pulling down interest payments! So they still lost in terms of total year’s returns. Easy money!
But hey, someone else may say that moving averages don’t work for bonds. That’s obvious! However shifting around TIPS maturities to time the market does work based on some backtesting.
Well, I don’t own TIPS and don’t recommend them. But many people do like them. Yet this kind of timing is likely a bad idea there, too.
This is a chart comparing the Vanguard TIPS fund vs. the Vanguard Intermediate Treasury Fund from 2000-2012 (Longest it goes back for this charting site and includes all interest and dividends. Both have similar durations.). The person that just bought the intermediate term Treasury fund and did nothing pummeled the TIPS fund alone. However that’s not the real point. The real point is that anyone going in and out of TIPS shifting around maturities likely did worse. They probably missed out on the total gains of the simpler TIPS fund over the entire time. This doesn’t even include possible tax consequences of selling in and out of assets and paying any potential gains.
Market timing doesn’t work. I’ve said it many times. But market timers are my best friends. They are handing me their money going in and out of assets while I sit back and do nothing. It’s the easiest money I make.
A Reminder: Keep up to date on the upcoming Permanent Portfolio book by signing up for the announcement list!
Permanent Portfolio Book – Announcement List
1 month ago
by craigr
in Permanent Portfolio
Those interested in the upcoming book on the Permanent Portfolio can sign up to receive announcements here or with the list box on the navigation bar:
Permanent Portfolio Book Announcement List
We will only use this list to send out announcements relevant to the book. We won’t spam you. We are really excited about this project! Thanks for your interest!
Harry Browne Political Show Archives
1 month ago
A user on the forum reported a couple months back that there has been a problem getting to Harry Browne’s archive of his political show. I had downloaded them some time ago and as a service to those looking for them until they return, I am making an archive available here:
Harry Browne Political Show Archives
There is an compressed archive of all the shows here:
Harry Browne Political Shows Compressed Archive
Details on each show content are available at Harry Browne’s website.
The shows express Harry Browne’s Libertarian political philosophy which is shared by 2012 GOP presidential candidate, Ron Paul.
Gransfors Bruks Forge Photo Tour
1 month ago
by craigr
in Gear Reviews
This summer I was able to travel to Sweden and Norway to see those beautiful countries. Along the way, I was able to visit some of the areas where my favorite outdoor gear is made. One of those places was Bergsjo, Sweden – Home of Gransfors Bruks forge. Gransfors makes a line of axes and other tools that are popular with campers and homeowners alike. They also make axes for throwing just in case you need to do that during a Zombie attack.
Their axes are hand forged and finished and sold for reasonable prices. I have some of them listed in my Amazon store that you can buy:
This album is a collection of photos I took when there. You can also see a video I made of the whole operation here:
I also did a tour of their museum:
The people at Gransfors were all very friendly and blacksmith Tobias Thelin (seen in the photos and stamps his initials “TT” on each axe he makes) is a musician and has a really good video online:
A New Permanent Portfolio Book Is On The Way!
1 month ago
by craigr
in Permanent Portfolio
I am happy to announce that forum co-moderator Medium Tex and I were contacted many months back to write a book updating the Permanent Portfolio strategy by a major publisher. While the strategy itself is simple and timeless, many new investment vehicles to make the portfolio more accessible have opened up over the years since Harry Browne’s passing. Additionally, many changes in US laws have made some of the advice (such as geographic diversification) more difficult for investors.
Sign up to receive an announcement for the book with the form on the navigation bar, or with this link:
Permanent Portfolio Book Announcement List
Medium Tex and I thought that an update would be a good idea and accepted the challenge. The book will be coming out later in the year in both print and electronic form. The manuscript of the book is well under way and we are announcing this book to not only let you know that it is coming, but also to let you give us input on topics you’d like to see specifically covered in the book. The book will address the following topics in detail:
Foreword
Introduction
Chapter – Our Stories
Chapter – 16 Golden Rules of Financial Safety
Chapter – Permanent Portfolio Performance
Chapter – How To Make Money In Investing
Chapter – Investing Based on Economic Conditions
Chapter – Stocks
Chapter – Bonds
Chapter – Cash
Chapter – Gold
Chapter – Implementing the Permanent Portfolio
Chapter – Rebalancing
Chapter – Tax Deferred Accounts and Tax Management
Chapter – Geographic and Institutional Diversification
Chapter – The Variable Portfolio
Chapter – The Permanent Portfolio Fund
Chapter – Appendix and Resources
The book will contain not just updates to Harry Browne’s ideas onto today’s markets. But it will also have detailed and complete reviews of less orthodox but important topics such as geographic diversification techniques for today and more. While we feel that Harry Browne’s previous books stand on their own in detail and clarity. We believe this book will carry on his tradition of sharing information to protect investors in any markets, no matter what the future brings.
Please feel free to offer comments on what you’d like to see covered to make this book something that will help you. I will keep you updated on the publication date and where you can order a copy when it is available. We are excited about this book and hope you will be, too.
Thanks!
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