4 ms·

Vanguard (VTI) or S&P500

• dsr_ 9y ago
  As I understand it, 25% of his portfolio would approximate one of those... by being one of them, or a similar all-market fund. The other 75% has no relationship to them at all.
  • marcrosoft 9y ago
    That's right. It's designed that way on purpose. A 30% decline in VTI will likely have no bearing on the other asset classes. Best case: the other asset classes overcompensate in value (see volatility harvesting) offsetting the crash. Worst case: you re-balance with a portion of the 25% cash you have on hand. As a concrete example, look at what this portfolio did in 2008.
    • dsr_ 9y ago
      You miss my point. You can't claim to replicate an index fund by investing 25% in that index fund and then not even attempting to do so with the other 75%. It's a simple false claim.
      • marcrosoft 9y ago
        Oh the similar yield comes from back testing a 30 year period for this portfolio compared to S&P500. Both have roughly the same CAGR yet the permanent portfolio has an amazing Sharpe ratio (risk adjusted return).