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> Rule #11: Create a bulletproof portfolio for protection. > The portfolio should assure that your wealth will survive any event — including an event that woul
by jordanlev 9y ago
> Rule #11: Create a bulletproof portfolio for protection.
> The portfolio should assure that your wealth will survive any event — including an event that would be devastating to any individual element within the portfolio. In other words, this portfolio should protect you no matter what the future brings.
> It isn't difficult or complicated to have such a portfolio this safe. You can achieve a great deal of diversification with a surprisingly simple portfolio.
What could such a portfolio be? Cash in a savings account? (Genuine question from an investment novice -- I always thought any investment was risky to some extent).
- snikeris 9y agoHarry advocated a portfolio of: 25% Stocks 25% 30 year treasury bonds 25% Cash 25% Gold His book on the subject: https://www.amazon.com/Fail-Safe-Investing-Lifelong-Financial-Security/dp/031226321X https://www.amazon.com/Fail-Safe-Investing-Lifelong-Financia... A more recent book: https://www.amazon.com/Permanent-Portfolio-Long-Term-Investment-Strategy/dp/1118288254 https://www.amazon.com/Permanent-Portfolio-Long-Term-Investm...
- schmidty 9y agoHB's Permanent Portfolio consists of 25% each cash/gold/stocks/long term bonds 25% stocks (index fund) Stocks – for profit during periods of general prosperity and/or declining inflation. 25% Gold – for profit during periods of bad inflation; during inflationary episodes gold bullion provides protection against a falling currency and other potential problems. 25% Long Term Bonds (30 year) – for profit during periods of declining interest rates; and especially during a deflation. Bonds also do reasonably well during prosperity. 25% Cash – During a recession, no particular asset class is going to do well. The cash in a Treasury Money Market Fund offers stability when portfolio asset classes fall in price. It also protects purchasing power during a deflation.
- snikeris 9y agoI would add that gold is an asset that does well when people lose faith in the dollar. It's insurance against the unthinkable.
- baby 9y agoyeah but there, other currencies make more sense.
- snikeris 9y agoThis is also intended to be a simple portfolio that your grandma can operate.
- clamprecht 9y agoFor example?
- baby 9y agoeuro, pound, yuan, yen
- Shivetya 9y agowell is this advice of 25% applicable in this day and age, have we moved past precious metals occupying such a large percentage?
- shoover 9y agoThat percentage has been and will be debated forever, even by proponents of the Browne PP model, but 4x25 has done well as recently as the past two decades. Also the exact number is not all that critical. Earlier versions of Browne’s portfolio were more complicated and he simplified it to 4x25 later on, still allowing that people could tweak it if they must. But 4x25 is simple and works.
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