Fail-safe investing? Harry Browne’s permanent portfolio
“The first rule of investing is don’t lose money; the second rule is don’t forget rule number one.” — Warren Buffett
At the end of March, I asked you what topics you’d like to see covered during Financial Literacy Month. I received many great suggestions, and will continue to fulfill requests not just in April, but for months to come. One comment especially caught my eye. Kenneth F. LaVoie III wrote:
Never again will I be in a position to lose 50% of my money. There must be a way to see the Big Picture and lighten up on areas that are over-valued, but still enjoy an average return at least approaching that of the market as a whole…I’d love to hear some simple strategies that require a little thought, and don’t just focus on keeping a lot of money in cash and short term bonds.
It sounds to me as if Ken is asking about defensive investing, which is actually something I’ve been thinking about a lot lately. When I was younger, my investments were mostly speculative. They were gambles. I wanted to earn huge returns — and I wanted them today. Even two years ago, I was investing in Countrywide and The Sharper Image.
But as I’ve built wealth and become better educated about money, I’ve become a defensive investor. I’ve become less interested in quick gains. Last year’s market collapse was another shock to the system, not just for me but for many others. We’ve realized that our risk tolerance isn’t as high as we once thought it was.
Risk tolerance is the degree to which you, as an investor, are willing to accept uncertainty — and possible loss — in the investments that you make. If you have a high risk tolerance, you’re willing to accept large fluctuations in your investment returns in exchange for the possibility of large gains. If you have a low risk tolerance, you’d rather your return was constant.
The Diehards are fans of John Bogle, who founded The Vanguard Group, and who is considered the father of index funds. The Diehards mostly hang out in an internet discussion forum, but from time-to-time they meet in groups around the country to discuss investing.
At the last meeting, we took turns describing our current asset allocations and what we’ve done to respond to the faltering economy. It was no surprise that most people hadn’t done much to change their investing strategies. What was surprising is that although everyone was a fan of John Bogle, I was the only one whose portfolio was composed primarily of index funds.
Each member of the Portland Diehards group has his own approach to investing. Many focus on real estate. But one man’s choice especially appealed to me. Craig told the group that he has based his asset allocation on Harry Browne‘s “Permanent Portfolio”.
Asset allocation is the division of money among different types of investments. The classic example is the basic 60/40 split: 60% invested in stocks and 40% in bonds. “Asset allocation” is just a fancy way of saying “the things in which I’ve invested”.
After listening to Craig’s explanation of the Permanent Portfolio, I picked up Harry Browne’s little book, Fail-Safe Investing. Browne divides investment money into two categories:
- Money you cannot afford to lose.
- Money you can afford to lose.
For the former, Browne recommends investing in a “permanent portfolio” that provides three key features: safety, stability, and simplicity. He argues that your permanent portfolio should protect you against all economic futures while also providing steady performance. It should also be easy to implement. (For the money you can afford to lose, Browne suggests a “variable portfolio”, with which you can do anything you want — even invest in Beanie Babies!)
There are many ways to approach safe, steady investing, but Brown has some specific recommendations for his own Permanent Portfolio:
- 25% in U.S. stocks, to provide a strong return during times of prosperity. For this portion of the portfolio, Browne recommends a basic S&P 500 index fund such as VFINX or FSKMX.
- 25% in long-term U.S. Treasury bonds, which do well during prosperity and during deflation (but which do poorly during other economic cycles).
- 25% in cash in order to hedge against periods of “tight money” or recession. In this case, “cash” means a money-market fund. (Note that our current recession is abnormal because money actually isn’t tight — interest rates are very low.)
- 25% in precious metals (gold, specifically) in order to provide protection during periods of inflation. Browne recommends gold bullion coins.
Because this asset allocation is diversified, the entire portfolio performs well under most circumstances. Browne writes:
The portfolio’s safety is assured by the contrasting qualities of the four investments — which ensure that any event that damages one investment should be good for one or more of the others. And no investment, even at its worst, can devastate the portfolio — no matter what surprises lurk around the corner — because no investment has more than 25% of your capital.
To use the Permanent Portfolio, you simply divide your capital into four equal chunks, one for each asset class. Once each year, you rebalance the portfolio. If any part of the portfolio has dropped to less than 15% or grown to over 35% of the total, then you reset all four segments to 25%. That’s it. That’s all the work involved.
Browne’s Permanent Portfolio is unlike anything I’ve ever considered before, but I have to admit: I like it. A lot. It has a distinct “get rich slowly” feel to it. That is, this portfolio is not designed to earn lots of money; it’s designed to not lose money.
What’s more, the Permanent Portfolio is based on the smart investment behaviors we’ve explored before. It’s a passive strategy built on diversification. It doesn’t use market timing. It’s a defensive investment strategy that also happens to produce a decent return.
Diversification is often mentioned with asset allocation, and for good reason. Diversification is the process of investing in many different things, of not putting all of your eggs in one basket. Studies have shown repeatedly that by investing in different types of assets that aren’t correlated (i.e. do not move the same way at the same time), investors can reduce risk while maintaining (and sometimes increasing) return. This is the power of diversification.
All of this is a long way of saying that, like Kenneth F. LaVoie III, I too am interested in reducing my risk while maintaining a decent return. I understand that, in general, risk and return are intertwined. If you want maximum possible returns, you must accept great risk. If you want no risk, you will receive meager returns. But as William Bernstein demonstrates in The Four Pillars of Investing [my review], diversification can lower risk while increasing return.
To read more about the Permanent Portfolio, check out the following articles:
- Bogleheads/Diehards forum: Updated modification of Harry Browne’s Permanent Portfolio
- My Money Blog: The Permanent Portfolio asset allocation
- Investment U: The Permanent Portfolio Fund
I should also point out that there’s actually a mutual fund built around the concept of the Permanent Portfolio. PRPFX has an impressive record, though one based on less than a decade of data.
Note: Just because I am giving serious consideration to the Permanent Portfolio does not mean that you should do the same. Please base your investment decisions on your personal goals and psychology, not on my personal goals and psychology.
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There are 64 comments to "Fail-safe investing? Harry Browne’s permanent portfolio".
I think one subject that should be explored more is context. I’m sure JD is getting tons of requests about how to invest without losing money right now. Of course he is–the stock market just tanked and lots of people lost lots of money.
But what will happen with these very same people when stocks start to shoot up on the next bubble? Will they remember these lessons or hop on the next trend that comes along, like the Internet, like real estate?
This is a great time to educate these people, and hopefully when the next hot idea comes along, they’ll remember how they felt when their stocks dropped in 2008.
Reducing risk while maintaining a market return is about as easy as beating the marking while maintaining market risk.
Diversification, asset allocation, and portfolio balancing are about all you can do to avoid overexposure, unless you put half your assets in bonds and cash which will kill your return to about the rate of a decent CD.
I’m not crazy about precious metals.
Something to keep in mind with a portfolio like this is that it is a more conservative portfolio than a 100% equity portfolio (obviously).
This isn’t a bad thing at all, but investors have to remember that when times are good – if the equity markets go up 10% then this portfolio might only go up 5 or 6%.
There is no ‘magic’ portfolio – when you reduce risk you also reduce expected return.
There are a number of “permanent portfolios” floating around the investment world. Search for “couch potato” or “lazy man” porfolios and you will find them. This one from Browne is one of the worst that I have seen for a number of reasons.It is way overweighted in precious metals which have a terrible long term track record. TIPS are a much better inflation fighter. Having 25% in long Treasuries is also a mistake because of interest rate risk. Where are the foreign equities and real estate components? I don’t think Browne carefully studied the concept of investing in non-correlated assets. Take a look at the work of Craig Israelsen on this topic, then consider one of Scott Burns’ couch potato portfolios. I use the 10 Speed portfolio myself. If equities scare you now (and they should), consider Zvi Bodie’s work on non-equity investing for retirement.
I’m not a trinkets (gold, silver) fan. Right now, keeping my money in savings accounts seems like the best plan for me. Since I make so little to begin with (grad student stipend), it makes more sense to try to [i]save[/i] than it does to invest.
Asset allocation via indexed funds is the way to go. It was recommended to me several years ago that I read The Intelligent Asset Allocator by William Bernstein. I read the book and have never looked back.
For my full review, read here: http://www.twentysomethingsense.com/category/book-recomendation
The book defends asset allocation and diversification via indexed funds and even dives into some of the math that supports it. Its a well written book focusing on building a portfolio that you manage for life (re-balancing).
It sounds like the book above is quite similar. The bottom-line is that you must allocate appropriately, you must diversify and you must re-balance!
Low fees are a must. Index funds mixed with US treasuries can provide all the balance needed in a long term portfolio. If you want a safer investment mix up your treasury asset allocation. Buy direct and keep your fees low.
Is it worth adding a 10% “risk” area? I’m thinking that most of us don’t like risk, but do like the possibility of big returns — and think (foolishly or not) that we can achieve them. If you let 10% of that portfolio be ‘play’ money, you can satisfy that need to think you can make it big w/o jeopardizing your whole portfolio. And if you’ve chosen wisely, you’ll have an offensive line in your defensive savings.
25% in precious metals is high. It seems like in an effort to make the system straight forward and simple, the groups were broken into equal quarters, but why? Each of these classes is defensive against a certain risk, but I wouldn’t say each of these risks are equally likely to occur. Put 5% more in each of the first three areas and at most 10% in metals. Or, do as Chelsea at 8 says and let 10% of your money be a risk area (like a sector fund or even individual stocks). Then, the numbers could be 25%, 25%, 25%, 15%, 10%. Allocation is so important, that it is worth making sure the numbers are divided more deliberately than just cutting a pie into 4 pieces.
So basically you have a 50% allocation to fixed income with this portfolio. If you try living off that portfolio in retirement you are very likely to run out of money in the first decade of retirement.
I will be curious to see where your reader’s risk tolerance will be in 3-5 years when the market is going gangbusters. I have found that our risk aversion is directly proportional to the direction of the stock market. That is why most of us suck at investing, we get really risky when the market is up and get really defensive when the market it down. Sounds like little has changed.
P.S.: I love gold as an end-of-the-world hedge, but 25%?? Yikes. What about foreign exposure? The US is not the only stock/bond market in the world.
I like the balanced approach, though I’m surprised he has precious metals at 25%, and in gold bullion. What about funds that invest in precious metals?
I agree that 25% in precious metals seems awfully high. I tend to be a bit of a conservative investor and like to add long-term CDs into my portfolio as a hedge. Yes, they keep my total return rate lower in good times, but keep my return rate much better in bad times. It all depends on your comfort level – or risk tolerance.
The 25% says to me that this is something the author made up, not something based on math and analysis of the markets.
As others have mentioned this portfolio seems very imbalanced, and somewhat arbitrary:
Note that it has no small cap stocks, no foreign stocks, and no real-estate (i.e. REITs), those are some pretty important asset classes to ignore. Putting 25% in gold is VERY high- gold hasn’t historically been a good investment. Other investments can serve as inflation hedges- TIPS, stocks real estate. Finally having only 25% invested in stocks seems VERY conservative to me…Unless I was in my 90’es I would be concerned about outliving my money.
-Rick Francis
one more voice to say 25% in “gold”!?! A very unliquid asset, and kind of if you’re really worried about a situation in which you would need gold to trade with, you might be better off investing in a lot of survival gear.
I absolutely love Harry Browne. Maybe it’s the political party affiliation. I guess I just gave myself away.
However, I do think the gold ratio is quite silly. But maybe I don’t understand it. If the economy collapses, who can afford to buy your gold coins? Or who would want to trade for them? Gold doesn’t feed the kids. Are you not actually buying the coins, but betting on their gain in value?
I wish he was still with us to explain more and talk about the current economy.
At first glance, I hated the PP. However, for those of you who are into the hard numbers, check this out:
http://crawlingroad.com/blog/2008/12/22/permanent-portfolio-historical-returns/
It may make you hate it slightly less. I still would be far more invested in stocks and way less in gold. The PP numbers are impressive, though. Since 1972 it has a 9.7 average return. And it only posted a loss two years (-3.9 and -2.5) That is a pretty good return for such a low volatility.
Defensive investing is not good enough. Remember how everyone believed that diversification and proper asset allocation would be sufficient? That was only one year ago.
The reason people believed those things work is because they work during bull markets.
The best method for controlling risk and GUARANTEEING that your losses are capped (limited) is to HEDGE your investments. And options are just the tools for reducing risk and protecting the value of a stock market portfolio.
Using collars is best for that purpose, but alternatives are available. Options are easy to understand, but too few people understand how to benefit from doing so. that’s a financial tragedy.
I see the responses: ‘all you can do’ etc. JD, you are position to help your readers learn to use options to reduce risk. [Sure options can be used to gamble, but that’s no reason to avoid using options intelligently.
@Weakonomist
> Reducing risk while maintaining a market return is about as easy as
> beating the marking while maintaining market risk.
Harry Browne’s PP is built to protect your buying power during hyperinflation too. Most regular diversified portfolio’s can’t do that.
@Mr. GoTo
> There are a number of “permanent portfolios” floating around the
> investment world. Search for “couch potato” or “lazy man” porfolios
> and you will find them.
There are many “lazy portfolio’s”, but this one currenty does better than all the others in this ongoing comparison:
http://madmoneymachine.com/portfolios/
@joejoeice
> 25% in precious metals is high. It seems like in an effort to make the
> system straight forward and simple, the groups were broken into equal
> quarters, but why? Each of these classes is defensive against a
> certain risk, but I wouldn’t say each of these risks are equally likely to
> occur.
As I understand it, the reason is 1) because nobody knows which of the risks will occur next and 2) if they occur the assets that prosper because of it must be large enough to compensate for losses in the rest of the portfolio. Browne has tried several possibilities but settled on 4 x 25% in the end.
@BloggingBanks
> So basically you have a 50% allocation to fixed income with
> this portfolio. If you try living off that portfolio in retirement
> you are very likely to run out of money in the first decade of
> retirement.
Many people with equity-rich portfolio’s are running out of money right now and will have to return to nonexistant jobs. Meanwhile the PP is surviving quite well. But it’s true that this isn’t the best portfolio for accumulation during a bull market. For capital preservation it’s great on the other hand, and in the current circumstances that’s an interesting feature.
Nice Post Jan! I actually like PRPFX. The buy in is low, the beta is 0.73 relative to the SP500 and SD is 11. Not to mention the returns over the last few years have been great for defense. Coupled with a little more diversity of indexes and you’ve got good blend between passive and active.
The most important thing an investor can do in times like these is stay the course with a portfolio that’s well suited to that investor’s risk tolerance and goals. If you’re feeling the urge to bail out of the stock market right now, maybe you had more money in stocks than you should have based on your own risk tolerance. You can’t control short-term market fluctuations, but you can control your actions in response to them. Markets are crazy and often unsettled, stay calm and trust your approach. If you believed in it when you initially invested, it shouldn’t be wholly different just because you lost a few tics.
Jan says:
Harry Browne’s PP is built to protect your buying power during hyperinflation too. Most regular diversified portfolio’s can’t do that.
Jan, this is not correct. The only portfolio that has a chance (but is not guaranteed) to do well in a hyperinflationary scenario is one that is 100% gold.
This portfolio is only 25% gold so it’s ability to preserve buying power will be fairly limited.
I don’t think there is one portfolio for every situation. As was mentioned a lot of times buy and hold doesn’t mean buy and forget. Buying an index fund or putting money into the treasuries doesn’t mean you should ignore the economy.
Paying attention to the economy doesn’t mean you are engaged in market timing or are trying to catch the exact top or exact bottom. But it could help you identify a bubble and not buy at the top. Sure you could sell to early or buy too late, but it’s better than losing over 50%. For example – if you have bought commodities last summer you’d have lost a lot more than the market. Ditto tech bubble. Even at the height of real estate bubble in 2007, tech prices were still below where they were in 2000.
Buying long term treasuries at the time when the yields are ridiculously low and the treasury prices are up because of “safe haven” buying doesn’t seem reasonable to me. Even if we are in for a period of deflation – not sure how likely given that the government promised us that they’d drop cash from helicopters if necessary to avoid it, the short term rate is already at 0%, it’s not going to drop below 0%. So why lock in this rate for 25 years? Does anybody seriously believe in 25 years of deflation? At the same time, locking up 18% back during Carter time would’ve been very very smart. Buying 25 year treasuries not just for the sake of having 25% of money in treasuries doesn’t make sense to me. It seems like shorter term CDs would be a whole lot better choice now.
Gold isn’t the only hedge against inflation. Commodities and things that people actually need like food is another. As treasuries gold is subject to panic “safe haven” buying, so you may end up buying it for the price that is much higher than what is warranted by fears of inflation. Also as people above said, 25% in commodities seems too risky. Commodities can jump up and down quickly and by a very large amount.
“Diversification, asset allocation, and portfolio balancing are about all you can do to avoid overexposure, unless you put half your assets in bonds and cash which will kill your return to about the rate of a decent CD.”
I agree, but I think we need to re-adjust our allocation occasionally based on what we think about the economy.
Additionally, I think when you and the article talks about bonds you are only talking about government bonds or at best bond funds. Individual municipal and corporate bonds although not as safe can provide better returns, especially now since the fear has created some attractive yields. Just don’t confuse individual bonds with bond funds: individual bonds come with the maturity date, so if the interest rise (or fear) and values of ALL corporate and municipal bonds drops, if you have individual bonds you can just wait to maturity and still get your money. With bond funds you are entirely dependent on market fluctuation. I.e. individual bonds are fixed income investments, bond funds are not. Many people tend to think of a question individual bonds vs bond funds as if it were the same as individual stocks vs stock funds. This is not the same. Individual bonds are fixed income investments, bond funds are not.
@ABCs of Investing says:
The only portfolio that has a chance (but is not guaranteed) to do well in a hyperinflationary scenario is one that is 100% gold.
This portfolio is only 25% gold so it’s ability to preserve buying power will be fairly limited.
Page 29 of the book says:
“During 1973—77, stocks generally lost about 20%, but gold rose by 153%. During 1981—86, gold fell 34%, while stocks rose 80%. During these periods, stocks and gold didn’t cancel each other out; the winner had a bigger impact on the overall outcome than the loser did. The portfolio continued to appreciate in value – no matter what the climate.”
(rebalancing to buy low and sell high during wild swings is part of the PP strategy)
So at least during the high inflation of the seventies, gold saved the PP.
During the crazy inflation in Zimbabwe it might not have had such a good result. Or maybe it would. From page 28: “Once U.S. inflation becomes more than a minor irritant (that is, once inflation reaches 6% or so), gold usually starts moving upward – and when the inflation rate gets into double digits, gold’s rise accelerates. (…) Gold not only does well during times of intense inflation, it does very well”
But going 100% gold (imagine doing that at the top of the previous peak in the early eighties!) requires knowing what the future will bring and that is kind of a problem. 😉
I wouldn’t dare to allocate 25% to gold if it wasn’t compensated by the other parts of the permanent portfolio. And even then, I must admit that it isn’t easy. I wouldn’t dare to go 100% ever, probably.
Hey J.D., this is a long way’s away from a portfolio the magazine would recommend, but I will say this: Any portfolio, no matter how conservative, is FINE as long as you’re willing to save enough to compensate for the return you’re losing.
The portfolio basically has 50% of your money in no-risk investments. Right now, investors are getting paid almost nothing for keeping money in cash or U.S. Treasuries. The 10-year Treasury bond, for example, has a yield of 2.85%. Do you think inflation is going to be less than 3% for 10 years? That said, of course, you can save a ton of money and still do fine with that. Your money just isn’t going to be “working for you” in the same way your other investmnents do.
One point I will just flat out disagree with is the idea of gold as the best inflation hedge. I’d much rather see someone invest in TIPs. Gold is extremely volatile and hard to buy and sell. Unless you’re buying or selling large quantities, the gold dealer is going to take a significant cut. Gold also has few industrial uses, so it’s value is completely due to people’s perception of its value. That’s a dangerous place to be. Gold mining stocks are more liquid but even more volatile than the metal itself. If all your looking for is an inflation hedge, why not just invest in TIPs?
Finally, I’m not sure what Browne meant by saying that Treasuries do well during prosperous times, but I think the opposite is true. When investors are seeking risk-free assets (i.e. bad times), the price of Treasuries goes up and drives interest rates down. Treasuries are basically the only asset class that has performed well during the recession. And they’re likely going to be the last to experience a sudden fall in value once investors start taking risks again. If you plan to hold Treasuries to maturity, that’s another matter (they’re all worth $1,000 each or whatever par value is), but then you have to be careful that when you rebalance your portfolio, you’re counting treasury on a par value basis and not by their market value.
Anyway, that’s just my input.
I have a problem with the statement about classifying your investments as:
“Money you cannot afford to lose.
Money you can afford to lose.”
If you honestly think you have money “you can afford to lose” give it to charity or blow it at Vegas on a good time. Otherwise, the principle is basically going conservative with the bulk of your investment funds and going high risk with some other, unknown, percentage of your money. Isn’t that a form of diversification?
Additionally, with such a basic premise, did the author actually run any numbers over various twenty year or thirty year periods in history to see how this set up would have done historically? It would seem a simple approach to track and demonstrate what historical returns would have been and what such a portfolio would have done between say, 1989 and 2009, or 1965 and 1995, etc. I’d like to see something like that before I’d buy into this system as something I’d want to hang my hat on. Hopefully that info is already out there if folks are interested.
I agree that the 25% allocation to physical gold is daft. On a common sense level I don’t understand the appeal of gold. It is an inert, deadweight lump of capital sitting in your basement. When you invest in stocks, bonds, or real estate, you are turning capital over to working human beings who apply their ingenuity and labor to wringing as much positive economic benefit out of that capital as they can. Call me an optimist, but I have to believe that human ingenuity and labor will beat inert hunks of metal every time.
To be fair, Browne came up with this before there were convenient commoditized inflation hedges. In 2009 we have TIPS bonds and REITs. If you “modernize” the portfolio by swapping the 25% gold for either TIPS or REITs, it looks like a reasonable, conservative income portfolio, though not the one I would choose for myself.
I think Vanguard’s income funds are excellent examples of “get rich slowly” portfolios. Target Retirement Income is about 30% US and Int’l stock, 20% TIPS bonds, 45% nominal bonds, and 5% cash, all indexed. Wellesley Income is 2/3 high quality corporate bonds and 1/3 dividend stocks, actively managed.
@kitty: I see this the other way. Comparing 30-day yields on bond funds, to the yield-to-maturity of individual bonds _at the moment you bought them_, is an apples-to-oranges comparison. A bond fund’s yield is recalculated frequently based on the present market value of all the bonds it holds. The fact is, individual bonds have market values that fluctuate with market conditions too, but it takes some effort to translate that into a yield figure at given moment, so it’s easy to tune it out and forget it exists.
If you buy bond fund shares and hold them longer than the duration of the bonds in the fund (i.e. hold a 10 year fund longer than 10 years), then you get the full coupon and maturity payments for all the bonds in the fund at that moment, exactly the same as if you bought them individually. I think the takeaway is that you should buy bonds with a short enough duration that you will hold them to maturity, whether you buy them individually or in a fund.
I tend to think that this conversation is largely moot from a personal finance perspective. Sure, there are lots of different tweaks and adjustments you can make to a lot of different investment strategies trying to maximize your return, or minimize your risk.
But, if you’re not actually all that interested in this stuff, and all you’re really trying to do is make sure you’ve got enough money stashed away for retirement, the fact that you have a bunch of money in *any* investment is still pretty good. If you retire with $3 million in bonds, or in the stock market, or in real estate or precious metals, does it really make that much difference, as long as it’s enough to live on?
Sure, it makes *some* difference, but I think I’d be pretty OK with it if I retired better off than 90% of people. Sure, if I’d spent more time and energy tweaking my investment strategy, maybe I could have retired better off than 92% of people, but the difference isn’t critical to me.
There’s a focus in this discussion on the value of index funds for asset diversification. Are ETFs even better substitutes and what are their downsides if any?
One thing I hear said very little about investing, that is a big missing piece: Learn about what you are investing in. Study it. If you want average returns, get a high yield savings or money market account. Or maybe some index funds. If you want to make anything better, then pick one or two areas and really, REALLY learn about them. Learn how to tell the real experts from the flashy experts. Learn how to read the trends of that tiny area of the market yourself. Learn what makes your own personal part of the market tick. Real Estate, Tech companies, Auto, Oil, pick one or two. If you really know the market well, then you will do well. And you will not be dependent on any one else’s advice to do so.
Diversification – GOOD!
Index funds – with a little work you can do better than an index fund. If you want to be a mediocre investor and do no work go the index fund route. I’m always surprised that someone will spend hours shopping for clothes/cars/whatever but won’t spend a little bit of time learning how to find good companies to invest in.
I’m one who agrees that the % in Gold is too high. However, I do agree that you should own some Gold. I have a small percentage in a gold ETF and another small percentage in a silver ETF. The silver is used strictly to write covered calls against for income.
I would never buy gold bullion – this always surprises me when people do this. As one poster said the costs are prohibitive for most people and managing the actual coins is a hassle. Instead buy a gold ETF like GLD. It tracks exactly to the price of gold but you can buy and sell as needed with no hassle and the cost is whatever the trade fee is with your broker (hopefully you use a discount broker).
What about international investing? Does he ever mention it?
“Risk tolerance is the degree to which you, as an investor, are willing to accept uncertainty – and possible loss – in the investments that you make. If you have a high risk tolerance, you’re willing to accept large fluctuations in your investment returns in exchange for the possibility of large gains. If you have a low risk tolerance, you’d rather your return was constant.”
This is more confusion of risk and volatility. They aren’t the same thing.
Risk is when you lose part of your investment. Volatility is the ups and downs of the market.
Your tolerance for risk should depend on the consequences of losing your investment or a portion of your investment. If the money is going to be needed to buy your groceries or pay the rent, then your risk tolerance ought to be pretty low.
Your tolerance for volatility is determined by the time frame of your investments. It is only an issue of risk when you buy or sell.
The difference between risk and volatility is not academic. To deal with risk, people diversify their investments and develop a mixture of assets that match the risk they think is appropriate given how they plan to use the money.
Volatility is managed by diversifying over time. Dollar cost averaging is the tool people use to deal with volatility when they are buying. As people get closer to selling, they move assets over time into a mixture with less volatile investments. By making changes over time, they capture the market average rather than take the risk of hitting a peak or valley.
Anyone who is buying an individual company’s stock is speculating. They may have better odds than buying a lottery ticket, but its really just gambling.
“Index funds – with a little work you can do better than an index fund.”
Or you can do a lot worse. Virtually every study shows managed funds do worse than average. And those are run by pros. An individual investor isn’t going to beat the rest of the market based on anything other than blind luck.
Please note that PRPFX is based on the CONCEPT, and the concept ONLY, of Browne’s actual permanent portfolio. He did not endorse it, and it has strayed a long way from his basic idea.
Thanks for the interesting post, I’m always interested in asset allocation and different investing styles, even though I find this particular portfolio way too conservative.
To the comments that said they would just put their money into a savings account – keep in mind that there is a risk to that too. You’re losing several percent a year due to inflation (which changes based on whatever the current rate is), even though the balance hasn’t dropped. You’d be far better off using a money market fund or any of the other methods mentioned by other posters.
I think a lot of people who are down on the idea of putting 25% of their portfolio into gold are a little short-sighted. A few points:
1) Harry Browne said, “The best kept secret in the investing world: Almost nothing turns out as expected.” Most investors’ asset allocations are predicated on the idea that the United States will remain a free, mostly capitalist nation indefinitely. There is no guarantee of this. War, violent regime change, governmental collapse and other ‘unthinkable’ events are the norm in human history, not the exception. Gold serves as a hedge against political risk.
2) There have been several times in history where gold has sky-rocketed while other assets have plummeted. When used in the context rebalancing, this can increase returns even if you don’t expect a real (above-inflation) return from the lump of metal.
3) Gold is far more positively volatile than other inflation hedges. TIPS, REITS, and CCFs don’t show evidence of the ability to soar in times of sharp inflation or political risk. Gold has a proven history of behaving in a way that helps reverse losses in the rest of your portfolio.
Having a significant gold position and rebalancing with it has been proven to be effective. The Permanent Portfolio (with a 25% gold position) has annual returns from 1972 to the present that are comparable with other balanced portfolios with FAR less volatility.
For those who think that we are in a bubble for gold prices or long term bonds, again, “The best kept secret in the investing world: Almost nothing turns out as expected.” Interest rates could drop lower, we could experience prolonged deflation, hyperinflation could kick in at any moment, we may start on a smooth path of economic recovery. No one knows. When you stop pretending to be able to predict the future and plan your portfolio accordingly, the day-to-day news is much more bearable.
Thanks for posting this nice write-up. I run the Crawling Road blog that you mentioned. Let me address a few concerns of people:
1) Yes I thought the same thing that many others have about the portfolio being crazy at first. As I researched it though, it became obvious that it’s crazy like a fox and very well thought out. It is not arbitrary at all.
2) Yes it holds gold. Most investment advisors hate gold. I used to hate gold, but SOMETIMES it’s the only asset that will work in a very bad market that is undergoing severe inflation pressure. It is a fact that the best performing asset the last 10 years has been gold. As part of a diversified portfolio, gold can work. It should not be 100% of a portfolio, just as no asset should be 100% of a portfolio. But used in balance with stocks, bonds and cash it does work and history has shown it to be true for almost 40 years now.
3) The portfolio idea was first presented in the late 1970’s and then refined to its final form by 1987. It has almost 30 years of empirical data supporting it working through a variety of very bad and very good markets. It is not a back tested simulation, but actually put into use by many people.
4) Yes, it will lag when the markets are doing well, however the overall performance is virtually identical to a 100% stock portfolio with a fraction of the volatility over the past 40 years.
5) It is widely diversified based on economic cycles of prosperity, inflation, recession and deflation. It is unlikely that someone following the strategy will suffer a major loss in any particular year.
6) The worse loss the strategy has had was in the 4-6% range in 1981. It had a couple other losing years in the 1-3% range, but that’s it.
7) For preserving and conservatively growing wealth it’s a solid strategy if you stick to the rebalancing bands and don’t try to time the markets.
8 ) You get very little diversification from owning multiple stock asset classes (as 2008 has shown). Your major diversification benefit occurs from holding assets that have fundamental economic drivers behind them. Those classes are stocks, bonds, cash and hard assets. That’s why the Permanent Portfolio doesn’t worry about things like REITs, small cap stocks, etc. The major benefit is in the very wide diversification of the major assets.
9) Bonds – As a US investor, you should really only be buying US Treasury bonds and US Treasury Money Market funds for your bond and cash holdings. Bonds are for safety and not speculation. US Treasury bonds are they safest type of fixed income assets to own. Yes, you get a lower yield. However, the safety and capital appreciation during times of market stress offset the lower yields. In 2008 while most corporate and junk bond funds were negative for the year, US Treasury long term bonds were up 30-40% which almost completely offset the stock market losses that year. Only US Treasury issues have the safety the Permanent Portfolio requires.
10) Sometimes return of capital is more important than return on capital. The Permanent Portfolio has conservative foundations, but because it is conservative, it is able to provide above average returns as it is less likely to be abandoned due to roller coaster volatility.
10) Harry Browne was well aware of TIPS. The problem with TIPS is they are denominated in the currency you’re seeking protection from during high inflation (dollars). Gold is not tied to any currency and since inflation is a currency problem (over printing of money), you don’t want your high inflation protection paying you in the same money being wrecked by inflation. Gold is the only asset that reacts strongly enough to offset high inflation that is ravaging the other parts of the portfolio. TIPS cannot move as far or as fast to protect against inflation. The best you can expect is the TIPS inflation adjustment + the real return percentage. This is not nearly good enough to offset high inflation like we saw in the 1970s from destroying the other parts of your portfolio.
Thanks again for the write-up, JD.
this is a little crazy of an asset location. as others pointed out, if you are aiming to build a retirement portfolio on this, good luck.
this might sound crazy given the current cause of the economy, but gold long-term is a very poor “investment”; it in reality has a negative return given storage costs, etc and is a straight inflation hedge.
either using a balanced real estate index fund (i know, but keep reading) will, over the long-haul, provide steady dividends as well as a hedge against inflation; as the $ rises, so to will the underlying property value.
investing in something along the lines of 20% TIPS bonds, 25% S&P/broad market, 20% in a small cap/russell 2000 fund, 15% in real estate and 10% in a corporate bond fund:
1) will prove to be just as stable and as much of an inflation hedge against the “Permanent Portfolio” and
2) will provide much more steady returns than his proposed portfolio
i’m not sure how much up-to-date browne’s investment book really is…
MT says:
“…will provide much more steady returns than his proposed portfolio”
Have you even looked at the volatility and returns of the Permanent Portfolio as opposed to your recommendation? The Permanent Portfolio is made up of volatile elements, but it constructed in such a way that the portfolio as a whole is REMARKABLY non-volatile. It’s worst year saw a loss of around 4%. This year saw your suggestion lose around 30%.
Read the research before you dismiss the concept.
As a newbie to the site, I appreciate the comments that have been posted, very good stuff. Thanks folks for being out there in internet land for the folks who need to learn that which we learned in our own ways and continuing to learn in our own ways year after year.
@Ryan (#40)
we may be talking apples and oranges here. my viewpoint is skewered a little since i’m probably a lot younger than you and am in prime years to take a little risk (plus, i am a finance grad, so i think his suggested allocation is horribly conservative). the allocation i propose is pretty well balanced overall and would be a good portfolio that all financial planners would put a gold star on(i would be curious to see your ‘30% loss’ math for the year…).
my whole point is that the proposed “permanent” portfolio is mainly a misnomer. call it a “capital preservation strategy”, call it a “defensive, buy canned food and learn how to hunt” portfolio; either way, my point is his portfolio won’t grow your retirement savings enough to allow you to retire.
now, if you are 65 and want to rest easy at night, this might be the portfolio for you. but if you are more than 5 years away from retirement, ignore browne’s portfolio suggestion.
if your main worry is asset allocation plus simplicity, take the easy way out (not the best way, but better) and put your money in a targeted date retirement fund.
MT,
The Permanent Portfolio portfolio has had a CAGR growth of 9-10% since the early 1970’s. It is on par with a much heavier stock allocation with significantly less risk. It not only can and does grow retirement savings, but it also preserves capital during very bad markets. The past 10 years through 2008 has seen a 100% stock portfolio with a CAGR of about 1.3%, a 50/50 stock/bond portfolio of 4.1% and the Permanent Portfolio 4×25 allocation with 6.3% annualized returns.
Over the past 20 years, a 100% stock portfolio has returned 8.6% CAGR with a standard deviation of over 19%. Where as the Permanent Portfolio allocation has turned in a CAGR of 7.1% and a standard deviation of just 5.6%. So the Permanent Portfolio has had slightly lower returns but only 1/4th the gut wrenching volatility of the much riskier 100% stock portfolio. Since psychology plays such an important role in how people stick to an investment strategy, it may be worth it for many people to give up the 1% or so in annual return the past 20 years if they knew they were getting a good night’s rest and not abandon their investment goals. Certainly over the past 10 years an investor in the Permanent Portfolio strategy is well ahead of the stock investor.
In fact, if you look at the rolling 10 year returns of the Permanent Portfolio going back to the early 1970’s you will find it has consistently turned in 3-5% real after inflation returns over all time periods. That’s something that can’t be said for stock/bond only portfolios which experienced negative after-inflation returns over several periods (especially during the bad inflation of the 1970s).
As you probably know, a 50% loss requires a 100% return to get back to where you started. So shooting for maximum theoretical returns is not only very dangerous, but unlikely to work out in the long run if and when you hit a very bad bear market. Most investor’s time horizon is about 30 years before looking at retirement. Taking a severe loss during that time frame could make it impossible to retire. This is why it’s important to have strategies in place to not only grow money, but also protect the money you can’t go back and re-earn as you grow older.
While stocks are certainly a better opportunity today than they were a year ago, the historical record shows that stock heavy portfolio allocations may not give the highest returns in actual application. In fact, stocks can have many years of dismal and devastating losses lasting a decade or more at a time. It is during these periods that you better have a portfolio that is diversified with enough assets to overcome the stock performance or you may find your portfolio isn’t growing at all and can in fact be losing real after-inflation value.
MT,
According to my data, the portfolio allocation you suggested returned -23.65% in 2008, -26.47% after inflation.
2008 returns for the asset classes suggested are as follows:
Large Cap Blend (S&P 500 equivalent): -37.04%
Small Cap Blend: -36.07%
Real Estate Investment Trusts (REITs): -37.05%
TIPS: -2.85%
Vanguard Total Bond Index: +5.05%
Harry Browne died in 2006. With all the turmil, don’t you wonder what his PP would look like today?
@craigr
You raise some valid points, but I do have to fact-check your statement that “Harry Browne was well aware of TIPS.” US TIPS were first issued in 1997, and you say “The portfolio idea was first presented in the late 1970’s and then refined to its final form by 1987.” It’s plain that Browne couldn’t have considered TIPS as an alternative to gold in the Permanent Portfolio.
“Harry Browne died in 2006. With all the turmil, don’t you wonder what his PP would look like today?”
I’ve spoken with a very close associate of his that is still alive today. He remains convinced that if Harry Browne were alive today the portfolio would remain unchanged. After all, it works so why change it? In 2008 the portfolio turned a slight profit of 1-2%. It worked exactly as designed in the worst market in a generation.
Harry Browne understood history and certainly financial history. Both he and Terry Coxon (who co-created the portfolio with Browne), were very well versed in economics and its impact on investments. When the portfolio was created they took decades worth of data to prove out the concept (this was in the 1970s). Further, Browne had a healthy respect for the unpredictability of the world. He came full circle as a hard asset investor of the 1970s to one who admitted that investing involves a lot of luck so you need to remain diversified to protect your assets no matter what happens.
Many people may be interested in listening to a couple of his investing radio shows to get his perspective directly:
http://crawlingroad.com/blog/harry-browne-permanent-portfolio-archives/
Harry Browne’s advice and writing is not old or out of date. It was just conservative and time tested information. The reality is that many of the things going on today have happened in the past in one form or another. Heck, I read a quote from 1837 about banks, credit and real estate that could have been written today. Browne was just pragmatic about the reality of the investing world and that it frequently doesn’t work out as nicely as many in the industry would suggest.
“t’s plain that Browne couldn’t have considered TIPS as an alternative to gold in the Permanent Portfolio.”
No he did know about TIPS. I’m certain of it. He even answers questions about them in his investing radio shows about TIPS vs. Gold. He was adamant about not using TIPS for gold in the portfolio. He talks about gold, commodities, inflation indexed bonds, etc. in this show:
http://www.crawlingroad.com/finance/harrybrowne/radio/04-10-24.mp3
I don’t have the room to discuss this topic here, but it’s critical to remember that high inflation is a currency crisis. It’s not that prices are “going up” but the dollar is “going down”. An ounce of gold, a bushel of wheat, a barrel of oil are the same today as they were 100 years ago. The only thing that has changed are how many pieces of green paper money it takes to buy them.
So if the dollar is under inflation pressure and falling in value you simply don’t want your inflation protection paying you in dollars that are also depreciating. More importantly, gold is the second most popular form of money on the planet. It is recognized around the world as wealth in many cultures and religions. When the dollar is in trouble (the #1 most used form of money on the planet), people will flock to #2 (gold) for protection. Since the gold supply is much smaller than the number of dollars in circulation you can see a rapid and dramatic rise in price during these times.
You will not see this reaction from TIPS. Once TIPS are bid up in price they will hit a negative yield. In essence, they have a price ceiling that gold doesn’t have.
This is not to say that TIPS don’t serve in other strategies and I’m not here to discuss those approaches. I’m just saying for the Permanent Portfolio strategy you should be using gold as your inflation hedge and not TIPS.
How exactly did he factor TIPS into a plan developed in the 1970s when they weren’t invented until the 1990s?
I’m not trying to provoke a flamewar or anything, but I don’t see how that could possibly be the case.
Kevin,
“How exactly did he factor TIPS into a plan developed in the 1970s when they weren’t invented until the 1990s?”
Inflation indexed bonds have existed in other countries well before 1997. The British offered them in 1981 onward for instance (maybe earlier??). The earliest example was in 1780 in Massachusetts according to one source I found. So the idea has existed for quite some time.
As for factoring them in, Browne always re-evaluated his advice. He was famous for admitting when he made a mistake because most investment advisors never do that. If he thought that TIPS would work better than hard assets (gold) for inflation protection he would have told people to use them.
Also consider that Browne knew what governments have done in the past with respect to seizing assets, destroying currencies, etc. In his view, gold was an asset of last resort. It was not a paper promise, but could be stored somewhere secure (even out of the country) so it couldn’t be easily grabbed or de-based with out of control printing of money.
Browne was an Austrian economist and was acutely aware of the monetary cycle of central banks. He was also acutely aware of the horrible history of fiat paper money (like the dollar). He felt strongly that having some gold as part of your diversification strategy was a very good idea based on the lessons of history. He never would have advocated keeping all of your wealth in paper assets, and certainly not denominated in a single currency. I am fairly certain of that based on my discussions with others who knew him for decades.
You may find listening to his investing radio shows linked above of interest. He goes into detail on many of the things you are asking and his reasons for doing so.
P.S. Don’t worry about provoking a flamewar. I like talking about these issues and look for people to challenge assumptions and poke holes in investment ideas.
” MT says:
20 April 2009 at 8:15 pm
@Ryan (#40)
we may be talking apples and oranges here. my viewpoint is skewered a little since i’m probably a lot younger than you and am in prime years to take a little risk (plus, i am a finance grad, so i think his suggested allocation is horribly conservative). the allocation i propose is pretty well balanced overall and would be a good portfolio that all financial planners would put a gold star on(i would be curious to see your ‘30% loss’ math for the year…).”
Interesting, I am 28 years and I’ve been investing Browne-style for a while now with 90% of my savings in the PP, and the other 10% in some risky assets.
I’m a bit surprised that you think of Browne’s allocation as horribly conservative, probably because of only 25% is invested in stocks.
Historically though, it seems that the “traditional” (90’s bullmarket-influenced) 70/30 stocks/bonds is recklessly aggresive and leaves you AND your retirement extremely vulnerable to extreme and unexpected events (which are the norm in history!)
As a history grad I always wonder how so many people in finance have so much faith in paper money, and usually don’t even own a small amount of hard assets ‘because they don’t have a real return’.
But then again, I’m a history grad and I’m from Europe ;).
“Please note that PRPFX is based on the CONCEPT, and the concept ONLY, of Browne’s actual permanent portfolio. He did not endorse it, and it has strayed a long way from his basic idea.”
This is mixed up. Browne was involved in creating the fund and certainly endorsed it (as a second choice – better to manage the portfolio yourself). The 4×25 allocation is a later (1987) simplification of the original allocation used by the fund. The fund remains on the original allocation.
@Kevin W says:
How exactly did he factor TIPS into a plan developed in the 1970s when they weren’t invented until the 1990s?
Browne’s final book about the portfolio (“Fail-safe investing”) was published in 2001.
He has always kept critically re-evaluating his ideas, so if TIPS would have seemed a good fit with the rest of the portfolio, he’d have added it. But he didn’t.
That doesn’t mean that TIPS are bad. They just don’t fit into the concept of the PP.
Yeah, I gotta agree with people here. A blanket 25% in each is kinda scary, especially 25% in gold. Gold is insurance – when the dollar drops, you’ve still got the same value in what you can buy. And given our current printing, the dollar will be dropping. But 10% or so for something that doesn’t pay interest or dividends is plenty!
“And no investment, even at its worst, can devastate the portfolio – no matter what surprises lurk around the corner – because no investment has more than 25% of your capital.”
– I really don’t like this – it implies that losing 25% is acceptable! I’d combine this with Trailing Stops, maybe 20% or so, so that you’ll really have to deal with a 5% drawdown ever, even if an asset class tanks.
I mean, imagine if you had been about 60% in various equity assets (stocks, foreign stocks, REITs, etc) at the beginning of this ‘recession’. Everything there is down about 50%, but your stops had cut you out at a 20% drop. 20% of that 60% means you lost 12% of your money (well, this has been an extreme market!),and you’ve been sitting on the side with pretty much all of your money in cash or bonds since then.
Keep in mind that rebalancing over the last two years would have you throwing more money to the stock market since it’s under-represented in your portfolio!
“A gold miner is nothing more than a liar standing next to a hole in the ground.” – Mark Twain
I love PMs, don’t get me wrong, but how do you effectively reallocate bullion? The problem with bullion is you get eaten alive by the dealer’s commissions. You think the mutual fund industry has high fees, try looking at the bullion dealer’s price over spot.. Ridiculous.
I think the easy way to handle gold is to keep 80% of it in bullion form and 20% of it in the form of an ETF (like GLD) for easy rebalancing. While I may not trust a gold ETF to perform as it should under all circumstances (and thus wouldn’t hold 100% of my gold in electronic form), I think it is reliable enough to hold a smaller gold position to make portfolio maintenance easier (and cheaper).
Ryan’s last post about balancing is a good point.
Craigr, I’ve seen the great thread on the PP at bogleheads. God love you, you have patience. Why people get so freaked about 25% gold is beyond me- it must be viewed in the context of the portfolio, and the 35 year history of the PP is pretty darn impressive. People who experienced the 80’s and 90’s but not much else really have a weird view of the markets, talk about the Whig view of history.
Jork,
“People who experienced the 80’s and 90’s but not much else really have a weird view of the markets, ”
Indeed. The 80s and 90s were the longest stock bull market in US history. It really distorts a lot of the historical data people use. In the 1970s for instance a typical stock and bond portfolio had negative after-inflation growth for the entire decade (the 2000s are repeating that feat so far as of 2009). Yet a portfolio that held hard assets like gold in sufficient quantity profited.
In fact, the period from about the late-60s to the early 80s was basically flat for stock owners after inflation! That’s roughly 15 years of dismal returns for stock/bond portfolios. Couple that with the past 10 years of bad returns in the 2000s and you’re talking about 25 of the past 45 years have been bad for stock owners.
So there is this myth propagated by the investing world that “stocks always win” but the reality is that stocks don’t always win. In fact, they can be losers for very long stretches of time in one’s investment horizon.
A point I brought up over at the Diehards is I didn’t find a significant period of time (like a few years to a decade) where the Permanent Portfolio ever had a negative after-inflation return. It usually falls in the 3-5% real return range with very low volatility. Someone else then went and looked at the data and found the same thing. Over the rolling 10 year periods since the early 1970’s the Permanent Portfolio always had a positive after-inflation return. Stock and bond portfolios of various allocations never did this and had decade long periods of negative after-inflation returns.
So when people criticize the gold allocation, all I can say is: “Wait until bad inflation returns and come talk to me about owning gold.” Inflation is dastardly and I don’t think that assets like TIPS stand a chance of rescuing an entire portfolio being ravaged by bad inflation.
With a knowledge of this history it’s more important than ever for people to realize that you had better have a diversified portfolio. Not just a portfolio that’s stocks and bonds (or even TIPS). But one that has stocks, bonds, cash and hard assets like gold because the markets are not predictable and anything can happen.
At first the permanent portfolio worried me because of the high allocation to gold. I thought gold’s long term return is 0%, basically only offsetting inflation. But when one looks at its returns since 1972, it is over 11%!
With that in mind, plus the fact that this portfolio has had a roughly 10% nominal return since that time, I am very happy with it, because despite the inflation insurance of gold, the total portfolio return has been great and the volatility very low.
This thread has demonstrated a microcosm of my experience as an investor. People who defend the PP and Harry Browne’s theory generally seem to be self educated through personal experience and have spent years patiently educating the rest of us to protect ourselves from the unknown. If you have any real experience with socking wealth away, protecting it in some form or helping others to do so, you will be profoundly happy with a 9.7% average return over a long period of time. In fact, if you have the foresight to do so starting at a young age, the steady growth will probably allow you to take on substantially greater risk in later years because you have plenty of assets to take care of more than your generation’s needs. It might not be the 12-15% pie in the sky return enjoyed by small cap stuff, but if I’m not mistaken, Browne was using this for the money he absolutely could not afford to lose. If you are of the mindset that you want your children’s children to come from money earned in your generation, safe normally means low yield and heavy taxation, except when you use the PP.
Ask yourself if your investment scheme is about protecting the spending power of your wealth or about growing it to the point where it creates your wealth a la Richest Man in Babylon. Browne’s theory is meant for the coins in your storage that cannot really be risked, while looking for real investment opportunities to place superfluous coins at both substantial risk and maximum potential proffit. For the business owner who takes a substantial level of risk in his or her daily cash flow system(butcher, baker, candlestick maker or trained forex currency trader ) the PP is a place to stash wealth for use at a time when he is no longer able to work. The permanent portfolio allows him to rest assured that above and beyond his business, he has properly invested cash reserves for any potential storms including but not limited to Inflation, HyperInflation, Fiat Debauchery, Deflation and regular growth markets.
Running out of money after one is no longer able to work but before one dies destroys the intergenerational chain of proper fiscal understanding.
Very fascinating discussion. I’m in a position where it would be very difficult to hold “hard assets” (gold). What is the next best option for the gold allocation and why is it inferior to holding the actual gold? Thank you.
Yes, very interesting discussion (and shorter than the one on the Bogleheads forum!).
Like a lot of people I reflexively shudder when seeing the 25% gold allocation. But then, when looking at the historic returns (for example using Simba’s spreadsheet (see Bogleheads)), the steady returns are quite impressive.
Similar to what Glenn asked above, how would you invest in gold in an IRA? I’m thinking GLD etf?
Could this be the most ideal portfolio in this crazy environment?
Wow, I’ve read lots of personal finance books, some that I highly recommend, and not one of them mentions the permanent portfolio. I can’t believe I’m just hearing about this.
A permanent portfolio is definitely going to warrant some consideration for my investments. Thanks!