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The US Stock Market and a Weak Dollar...Is it time to own PRPFX?

beebee
edited October 14 in Fund Discussions
Billionaire bond guru Jeff Gundlach seems to be worried about the US Stock market over the next 18 months:
‘Within 18 months, it’s going to crack pretty hard. I think that you want to be avoiding it for the time being. When the next big meltdown happens, I think the U.S. is going to be the worst performing market, actually, and that’ll have a lot to do with the dollar weakening.’
He suggests 25% Gold and 25% Cash...hmmm sounds like PRPFX or your home made EFT version (Cash,GLD,VTI & BND) might get he's nod as well.

heres-what-one-billionaire-says-investors-should-do-to-prepare

Comments

  • edited October 14
    I will pass. 2020 performance of Doublelune funds should tell you that he is no better than you and I when it comes to predict the future market, except he gets paid millions$.

    A small allocation to Permanent Portfolio is probably ok for gold and stable currency such as Swiss Franc.
  • edited October 14
    NO. Please don’t “time“ my fund (PRPFX). “Hot money“ moving in and out harms us longer term investors. And the fund wasn’t designed for short term investing anyway. I don’t own Hussman. You can time him if you want. His HSTRX also holds gold and has ridden the surge in price. In addition, it was mentioned favorably in the latest edition of Mutual Fund Observer.
    :)

    (Above offered-up “tongue-in-cheek“)

    Re PRPFX - I honestly think the word “permanent” in the name is important. The fund’s a hodgepodge of seemingly miscast (sometimes divergent) investments, designed with the idea that “every dog will have its day”. Held for decades, that tends to be true. Generally the fund exhibits “Steady-Eddy“ performance, except that due to the extreme volatility of precious metals it gets jerked around by that asset more than I would wish when gold and silver are overperforming or underperforming. In a gold bear market you can’t give this fund away. Seems like it’s hated by all. But after a couple years of rising metals prices (as we’ve had now) it looks alluring again. I shouldn’t gripe. I’ve played other funds for short term speculative purposes myself. So I’m being somewhat hypocritical here. But I really think many investors misunderstand PRPFX. Many leave unhappy after a bad experience - usually related to a downturn in the value of gold and silver.

    Remarks not aimed at anyone in particular. Just for the benefit of those unfamiliar with the fund.

    FWIW

  • edited October 14
    An article from Barron to diversify international stocks when USD weaken,
    Investors should check whether an international fund is hedged against currency fluctuations or not. The hedged funds can protect returns when the dollar strengthens but will underperform when a cheaper dollar gives international assets an extra lift. While hedged and unhedged funds generate similar returns over the long run, in the short term, there can be big differences. Over the past three months, for example, the $49 billion iShares MSCI EAFE exchange-traded fund (EFA) gained 16.2%, while the $2.3 billion iShares Currency Hedged MSCI EAFE ETF (HEFA) returned just 9.9%. “If the dollar continues to weaken, the unhedged funds should do better than the hedged funds,” says Morningstar ETF specialist Alex Bryan.
    https://barrons.com/articles/how-to-prepare-your-portfolio-for-a-weaker-dollar-51598009400

    May need to see if one can get behind the paywall.
  • I prefer unhedged international stock funds.
    As the article excerpt mentions, hedged/unhedged funds should generate similar long-term returns.
    Although hedging costs have declined over the years, they still are a drag on performance.
    The dollar has generally been strong vs. other major currencies in recent years.
    However, this relationship is cyclical and will change sometime in the future.
  • I too prefer unhedged international funds. Currency hedging reduces short term volatility that many investors likes. Over the long term the difference in return disappear.

    For example, Tweedy Browne created a second non-hedged global bond fund, TBCUX. FMI also offers an unhedged international fund, FMIFX.

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