Page 2 of 106
Posted: Tue Aug 02, 2011 2:59 am
If it keeps going down, I think it is really attractive. I like the dividend in the 4% range, it hasn't been there in the last year or two I think. I have read another article that had the value in the low 40s. I haven't run the numbers in a few months, but last time I did I had them around 38 to 40.
No problem, I love the idea of this thread. Right now I get most of my investing ideas and analysis from some blogs (including yours, so thanks!!). It will be interesting to hear commentary from some other EREs ( and those striving for ERE, like me).
Posted: Tue Aug 02, 2011 9:58 pm
@dragoncar - No. PRPFX is not a substitute for cash---it has lost money in some years (about a handful). It's intended for people who don't want to or don't have enough money to run build their own (the expense ratio is nasty). With ETFs there are no minimum investment amounts (like there is with mutual funds), so it's pretty much only useful if you don't want to run it yourself.
On a related note, the PP has won me over and but this is partially for the reason that I have enough money to [almost] live on the yield of it. The yield is pretty low so you'd need almost 750 times your monthly expenses, much more than the usual 300-400. I bought $20k of GLD for my IRA a couple of weeks ago. I have pretty much vowed to stop buying stocks (yeah right, let's see how long that lasts
) until I reach a 25/25/25/25 allocation.
Posted: Tue Aug 02, 2011 10:16 pm
My PP allocation (rebalanced in March) is currently yielding 2.7% annually in interest and dividends... Mine is that high because I have decent cash options. In my retirement there is a cash option paying 3% and I still have a couple rewards checking accts paying decent rates.
My preference is also to hold some non-US currency (30% of the cash component) which pays higher interest... Days like today I'm happy to be a PP holder (SP500 -2.5%).
Posted: Tue Aug 02, 2011 10:20 pm
Does that cash option (money market fund?) have a name?
Posted: Tue Aug 02, 2011 10:34 pm
Key Guaranteed Portfolio Fund: current yield 2.90%. Unfortunately, I think it's only for Great-West retirement acct holders...
Yield keeps coming down, however. Much like rewards checking accts, which seem to be on the path to extinction.
Posted: Wed Aug 03, 2011 12:09 am
Jacob, you don't think gold will come down, or you don't care because you'll be hedged?
Posted: Wed Aug 03, 2011 1:31 am
I wish I had some capital for the market free fall today. Hopefully equities stay depressed for the next few days until I receive my commission check this Thursday.
There is a lot of blue chips on sale right now. PEP is down 10% over the last 30 days. PG also looks attractive.
I don't know about anyone else, but I'm a bit surprised the market was as chaotic as it was today with the debt deal getting done. There is still a lot of uncertainty, but no surprises. Our AAA credit rating still stands, so the market may rebound tomorrow.
I'm definitely going to stock up on a blue chip later this week, especially if the DOW stays below 12k.
Posted: Wed Aug 03, 2011 1:59 am
@dragoncar - Gold IS my hedge. Just look at what happened today.
I don't think the stock market will go up beyond the 12000 range. The earnings aren't there and I don't see where they would come from. The only way would be to increase the P/E multiple that investors are willing to accept---how's your future optimism? So people won't sell gold to buy stocks.
I don't think the government is likely to raise interest rates voluntarily. A lot of money is going into the system to prevent deflation. The money velocity is low because people aren't spending as they're busy trying to get rid off all their debt, so to prevent deflation, the government can only respond with more money. (I suppose this is the theory that you can put out a fire with gasoline if you pour fast enough.)
All this is good for gold.
Posted: Wed Aug 03, 2011 2:08 am
gold, gold, gold!
Posted: Wed Aug 03, 2011 2:18 am
@Dividendguy - The budget and debt ceiling was the excuse the market needed to finally pay attention to flat jobs report and stagnating growth and the first time that consumers have reduced spending in 20 months. It's not clear right now where future profit growth will come from. I think you've got time to pick and choose your stocks for at least a week or two.
Fully agree that PEP and PG look like good value right now compared to their historical yield.
Posted: Wed Aug 03, 2011 3:17 am
Jacob, interesting outlook. I've asked you before why stocks are expensive and you pointed to the shiller pe chat for s&p. Have you looked at an inflation adjusted graph of gold prices recently? A bit deja vu. http://inflationdata.com/inflation/imag ... _chart.htm
Bonds are expensive too, right? And cash? Ugh.
Nevertheless, I too am interested in the pp, but the tax issues and execution strategies are daunting... There are so many variants out there! Even prpfx is really just pp inspired, not a 25-25-25-25.
Can I do this with three etfs and cash? Do I put the gold in my tax deferred accounts? Maybe a separate thread (or I could spend months reading other forums!)
Posted: Wed Aug 03, 2011 1:30 pm
With gold quadrupling within 6 years, I have a hard time considering it or PP with 25% gold a safe long term investment. While gold may continue on up to 3000, I wouldn't bet my retirement on it.
I did add to my position in WM yesterday as I consider landfills/recycling centers, etc to be the goldmines of the 21st century.
Posted: Wed Aug 03, 2011 3:08 pm
@Dragoncar/jerry: Yes, my personal bias is that 3/4 components of the PP are not things I want to be in right now... But I've done much better with the PP than I have trading my attempts at fundamental analysis. I can't find anything that has done as well over the last 40 years, while avoiding large draw-downs.
That's the beauty of the PP, you don't have to bet your retirement. It is much less volatile than any of the components are individually... Even if gold plummets 50% to $835, and none of the other components rise (very unlikely), you'd still have 87.5% of your portfolio left.
I would advocate ETFs, rather than PRPFX. CrawlingRoad has details; TLT (4% div) for long term bonds, VTI/SPY (2.5% div) for market. I use a mix of 35% foreign equities which have good dividends...
Posted: Thu Aug 04, 2011 10:28 pm
Sold all my stocks at the close today. Just kidding, but I sure wish I had converted to PP like I was planning yesterday. DividendGuy thought there were some good deals a few days ago, so now it should be very attractive. Still, this is one of those head scratchers for me. Given the news of the day, why did the market drop so much? This blows up many efficient market theories.
Posted: Thu Aug 04, 2011 10:30 pm
Dow down 500; what a day! The interesting thing was the increased intensity mid day and again at the end.
I've been looking for a place to buy back in, but I didn't do it today. There was too much downward pressure at closing for me to be comfortable. I guess we'll have to wait and see if it was a good buying opportunity or if we've got some more moves down coming up. Either way, lots of action and excitement.
Anyone make any trades or gambles today?
Posted: Thu Aug 04, 2011 10:46 pm
I'm close to pulling the trigger on Ford. PG and JPM are also coming very close to my buy criteria.
BofA meets my criteria now but I HATE that company so I just can't do it. I'd rather own JPM in that sector.
Posted: Thu Aug 04, 2011 10:53 pm
Pretty happy with my timing on converting to PP within the last couple weeks. Today S&P down almost 5%, PRPFX up 0.53%
Edit -- ugh, it's down 2%
I've been watching the daily variation of PRPFX compared to VTI, TLT, SHY, and IAU. There were PRPFX didn't follow the average of those 4 as closely as I'd like to see it. I don't know if this is because of the different allocation PRPFX uses, or if it's that I'm looking at too short of a timeline (?)
Posted: Thu Aug 04, 2011 11:25 pm
@dragoncar - Margin calls/covering.
Posted: Thu Aug 04, 2011 11:41 pm
You read my mind. Today is extremely attractive. I hope that my investment views are seen with the caveat that I'm extremely long-term (40 years out).
I bought into the oil sell-off too early in the day and added to my holdings with Chevron. I wish I would have waited until later in the day, but I bought when it was already down quite a bit. I didn't think we'd experience the biggest drop in three years today. I just happened to receive my commission check today on the big drop. Great timing on the part of my job, but bad timing on the part of myself unfortunately.
Blue chips like PEP and PG are phenomenal buys right now. Even Coke dropped quite a bit. International companies like TEVA and TEF are great buys.
I hope it continues to drop. Great buying opportunities.
Posted: Fri Aug 05, 2011 5:40 am
See this thread: http://gyroscopicinvesting.com/forum/in ... pic=1257.0
PRPFX's bond allocation is smaller than 25%, and bonds have been the winner for the last few days.