This is a modern interpretation of the book Fail-Safe Investing by Harry Browne. It’s the same concept but with modern examples. This is a fantastic book and an investment strategy I use myself. Highly recommended.
25 percent each: stocks, bonds, gold, cash (short-term bonds)The Permanent Portfolio
The Permanent Portfolio is a strategy to embrace uncertainty in the markets. The main goal is to prevent major losses. Surprisingly, backtests also show that
- 25 percent each: stocks, bonds, cash (short-term bonds), gold
- The Permanent Portfolio is a strategy to embrace uncertainty in the markets.
- Investing should be a process of taking part of the earnings from your career and allowing them to grow safely.
- Taking big risks with money you worked hard to earn is literally gambling with years of your life that you can’t get back.
- Don’t use leverage.
- No bank, brokerage, or company lasts forever.
- Speculate only with money you can afford to lose.
- Keep some assets outside the country in which you live.
- If your portfolio doesn’t at least earn the rate of inflation each year you are losing money.
- The Permanent Portfolio depends on volatility in its individual asset classes, and it works as a package.
- Stocks that have been held for many years are just as risky as stocks that were purchased yesterday.
- Only four basic configurations of an economy at any given time, and those are:
- 1. Prosperity
- 2. Deflation
- 3. Recession
- 4. Inflation
- Gold should not necessarily be thought of as a long-term investment, but as a long-term insurance policy protecting against bad economic events.
- You want to own the cheapest and most broadly based stock fund available.
- Total stock market funds also provide slightly better long-term performance.
- Vanguard Total Stock Market is an excellent example of an index fund.
- Only 11 percent of all stock transactions today are individual retail investors.
- Fund managers can’t beat the market. They are the market.
- If you are using ETFs, pool up your money to do a bulk purchase once a quarter or bi-annually from your cash allocation.
- Bond prices move opposite to interest rates.
- For cash, safety should be the first priority.
- Canton Bank of Zürich ETF for gold ETF (Ticker: ZGLD)
- Investors should avoid small gold bullion bars.
- Physically visit the box so they have a record of it.
- The entire portfolio should be rebalanced when any single asset reaches either a high of 35 percent of the total allocation or falls to a low of 15 percent of the total allocation
- The caveat is that the portfolio is designed to work inside of your own country’s economy.
- In Europe it normally makes sense to diversify across the entire Eurozone