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Permanent Portfolio Message Board

  • sophiesurprise80 sophiesurprise80 Feb 23, 2012 9:58 AM Flag


    Good morning.I need some help on this. My daughter,age 50,is finally able to fund a conventionalIRA anticipates a 20 year window and will be funding the maximum allowed each year.Is PRPFX appropriate to hold asthe ONLY stock in her IRA .All suggestions and comments are welcome and I thank you for your help.

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    • If she wants to keep it simple, have her determine how much PM (Precious Metal- gold & silver) she wants. For example, I want 5%. So since the PRPFX fund is 25% PM, I make it 20% of my retirement funds to get 5% total PM exposure. Then she can put the rest of her retirement fund into an appropriate Target Date fund.

    • "Permanent Fund" is definitely not suitable as an "only" investment. Unless you believe that the price of price of gold, and of a mutual fund, can rise forever, Permanent is actually a risky fund. If the markets continue to stabilize, this fund could under-perform, returning less than the Dow Jones or S&P market averages. Its assets are over-priced or fairly valued and are not poised to "grow" with an improving economy. As a result, "Permanent" is best viewed as a "hedge" against turbulent markets, such as those we experienced 2008-2009. You'd be better advised to put your primary savings in a fund structured to mirror the markets and the economy. Vanguard has many such funds--and at fees considerably less than Permanent's.

      Aside from Vanguard's index funds, I could sleep reasonably well with all of my assets in any of the the following 3 funds:

      1. PRBLX, or Parnassus Fund, doesn't follow the crowd into tech, energy, financial stocks, usually at a loss to the investor. Instead they look for undervalued stocks that are understandable and financially sound. The fund has been my best performing investment, beating the market averages handily.

      2. YAFFX, or Yachtman Fund, is somewhat the same, except that Donald Yachtman plays it a bit "safer" than Parnassus. Whereas Parnassus will occasionally buy a tech stock like Google, Yachtman buys only stocks that are stable and that he understands. Pepsi Cola is 10% of the portfolio. Over the longer term, the fund usually ranks in the top 5 or 10 mutual funds out of the thousand or more out there.

      3. Finally, BRK.B, or Berkshire Hathaway, is the fund run by the world's most admired and successful investor, Warren Buffett. You buy it on the exchange like a stock, but it's actually a fund made up of stable blue chip companies like General Electric and Kraft foods. Buffett himself warns that he can't repeat his enormous success of the past, but I'd be more comfortable with him as the only manager of my savings than anybody else.

    • 2 suggestions:

      1. - keep some cash. if market crumps (it will - just cannot easily know when or how much), you'll be able to BUY LOW and your cash will help to protect the portfolio a bit from nominal losses during the crump. Yes, cash looses value during periods of negative real interest rates - as we have now - but you have to have some.

      2. - PASDX. This is an "all-asset fund" run by Rob Arnott. Have a look. Stellar track record. Conservative. Intelligent.

      Combine these with PRPFX and you're looking good - IMHO.

      cheers and best wishes to your daughter.

    • It's mainly gold, treasurys and other precious metals. Not at all diversified. See today, where it dropped 1.5% because gold cratered.

    • I held PRPFX for almost a decade before selling earlier this year. At the time, it made up 25% of my IRA. I had no particular reason to sell, other than I believe gold and silver, which make up a large portion of the portfolio (You DID read the prospectus, didn't you?) have run their course for now.

      Having said that, I don't think you could really get hurt if you want to hold on to this fund. It is unbelievably boring, which is a good thing. I would consider diversifying more, though.

      BERIX for income. FPACX for balance. YACKX for large cap growth. Splitting an IRA portfolio among those 4 funds would give you good domestic diversity with upside movement in step with the market.

      More importantly, you would tend to have a softer landing in a bear market. You could sleep well with a portfolio structured this way.

      • 1 Reply to dukfeetus
      • PRPFX is an excellent fund run by an excellent manager. The fund is divesified and the manager doesn't tempt himself with crystal ball predictions. He maintains the allocations through thick and thin.

        But as a solo fund, I think it has too much metal. Today is a perfect example of the volatility potential.

        I would never recommend a single fund portfolio but if that's your goal I'd go with Vanguard Wellesley (VWINX). It's a conservative fund comprised of stocks and bonds, and has a track record of literally decades.

        If you'd consider a mix of conservative funds, I'd be tempted to go with 1/3 allocations to PRPFX, VWINX and BERIX (the latter is my biggest holding and I think it's a superb fund).

    • the fund is designed for long term hold. As the hold gets into 15 of the 20 year stage one may want to move some to cash

    • That would be okay for a while, but in general, even with PRPFX, it's said to not be a good idea to have all monies in one mutual fund. If you and your daughter can study things over time, you can learn when you should divide up the portfolio and how. I've had good experiences with GLRBX and EXDAX. They are traditional conservative allocation funds and so are different from PRPFX, but they have worked well for me. I have sold the GLRBX but am still holding EXDAX. There are other conservative allocation funds you could consider. There are also ways to diversify using ETFs and so on, as the size of the portfolio grows. But for a couple of years or maybe more, depending on funding, using just PRPFX is an okay idea.

    • If you wanted to have an explicit gold position, I'd add some PHYS to the mix.

    • In addition to PRPFX, I would suggest holding some short to medium term high quality commercial bonds (or bond funds), and some high quality dividend paying stocks, or the equivalent etf.

      An example (you tailor the percentages):

      10% VCIT
      20% VCSH
      40% PRPFX
      30% VYM or VIG

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