Monday, September 19, 2011

Be Your Own Portfolio Manager: The Permanent Portfolio

I have heard comments like these in the last few years:

"Investing is too complicated to do it yourself, best to hire yourself a money manager." 
"Only active traders make money these days."
"Passive investing is dead."

Wait a minute, not so fast. If you are taking money seriously and you are not interested in active investing, take a look at a DIY passive investing strategy called the Permanent Portfolio. It has a long-term track record that even the most successful professional money managers would envy.

Going back to 1972, the Permanent Portfolio boasts an average annual return of nearly 10%. It's biggest down year in the last 40 years is just under 4%. You read that right - the worst year in a very tumultuous 40 years has been a loss of only 4%! Even in the stock market meltdown year of 2008, the Permanent Portfolio posted a positive return. 

The Permanent Portfolio allocation is simple but highly diversified:

25% Stocks (in a broad based index such as the S&P)
25% Long-Term Treasury Bonds
25% Gold Bullion
25% Cash

Want another reason to consider the Permanent Portfolio as your investment strategy? It is easy to implement and even easier to manage once it is setup. There is no forking over a fee to a money manager. 

Solid returns. Minimal drawdowns. Easy to DIY. Why don't more people know about this? Quite simply, there is no money in it for money managers and brokers (no fees nor big commissions). In fact, it is in their best interest to keep the Permanent Portfolio under wraps. Not so for those of us that take our money seriously. 

For a helpful explanation and insights in to the theory and application of the Permanent Portfolio, I would highly recommend visiting

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