The Permanent Portfolio That Defies Speculation

Here’s an investment strategy that always looks foolish, regardless of market conditions.

But ironically, it has always worked.

I wrote this article for the Globe and Mail.

 





Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (2nd Ed. Wiley 2017) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I’m happy to comment on your questions. However, please read the Terms of Use, Privacy Policy and the Comments Policy.

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9 Responses

  1. Jeff says:

    Hi Andrew

    As usual another excellent read. Your articles continue to stimulate and educate.

    What’s not to like about a strategy that returns 9.5% from 1972 – 2012 with only 4 losing years? By comparison my Couch Potato Strategy, from info I could find online, returned 11.8% from 1976 – 2006 so I would hazard a guess it has returned close to the same over a similar period of time (when you throw 2008 in there)

    My wife and I both converted to the Couch Potato Strategy a year ago for our RRSP accounts. Keeping with your strategy of diversification I want to go in a different direction for our TFSA’s. I was thinking about purchasing the dividend fund CDZ for our TFSA but now I am wondering if employing the Permanent Fund might be a better idea? If we did would you split the strategy between the 2 accounts or do each with all 4?
    I look forward to your opinion. Keep up the great work

    Jeff

  2. ssssgibbs says:

    Excellent article Andrew.

  3. Ryan says:

    Hi Andrew,

    What advantages and/or disadvantages can you see with putting your money into PRPFX , which is based off of these exact principals, vs. creating your own portfolio?

    • Hi Ryan,

      It would be great if that fund followed the exact same premise, but it doesn’t. As a result, it hasn’t performed nearly as well as someone following the Permanent Portfolio with ETFs, and sticking strictly to the methodology that Harry Browne originally devised.

      Cheers,

      Andrew

  4. Lydia Watters says:

    Hi, I am wondering if you could give me some insight. I am 24 years old, in the U.S. military (just 1 year in), recently debt free, and I am wondering what investment strategy I should take. I currently have a Roth Thrift Savings Plan, and I am wondering how I can apply your principles to my investments, as it is a little bit different from the Vanguard account I think. I know very little about investing, but I am currently over halfway through your book and I understand the basics. Another thing I wanted to ask. I have read Dave Ramsey’s “Total Money Makeover” and he recommends 60% for the Common stock index, 20% for the international index, and 20% for the small cap index (for the Roth TSP). He doesn’t include bonds, which I understand are very important from reading your book. What do you think about these percentages? What does the small cap index do (or not do)? I am just curious. Thanks!

    • Hi Lydia,

      A total stock market index has a small cap component built in. Small caps are small stocks. The S&P 500 index is comprised of large stocks (large caps) and the total stock index is comprised of large, middle and small caps. It’s an easy one stop shop. Not including bonds is silly. As good as Dave Ramsey is at encouraging debt reduction, his investing strategies are known to be very weak among financial journalists. If you go online, you will see such criticisms.
      The Thrift savings plan, from what I understand, is very low cost. That’s good. Costs are generally the enemy, but the U.S. government is looking after its own in this department. I think you can feel quite good about that.

      Cheers,
      Andrew

  5. Ryan says:

    Why not simplify a portfolio by only using 2 very broad etfs – VT for stocks and BDNX for bonds?

    In your opinion, how to you feel this portfolio would perform (pros & cons)?

  6. Brendan Miller says:

    Hi Andrew,
    If someone was wanting to replicate this portfolio, which gold bullion fund should you buy if you were not a Canadian or does it not matter?
    Brendan

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