Expats In Norway: Build A Stronger Portfolio With Norwegian Stocks

Investors in Norwegian stocks keep getting dumped from a chair lift.

Over the past three years, they have risen, fallen, risen and fallen again. Since January, Norwegian stocks have fallen nearly 10 percent. Since November 2010, when GlobalXFunds created an ETF to track the Norwegian market, Norwegian stocks have gained just 2.03 percent.

In contrast, the average global stock is up more than 23 percent.

Should you give up on Norwegian stocks?  Certainly not.  

Instead, consider using Harry Browne’s Permanent Portfolio concept.

Chances are, you’ve probably never heard of the Permanent Portfolio.  

As an investment strategy, it has averaged about 9.3 percent annually since 1971.  During the past 43 years, it has dropped only four times. Its biggest slide was in 1981 when it fell just 4.1 percent.  In 2008, when global stocks fell through the ice, the Permanent Portfolio lost less than 1 percent.

The strategy combines gold, stocks, long-term bonds and cash in equal proportions.

The mix never varies.  It takes less than an hour a year to maintain the portfolio.  The investor’s only responsibility is to buy or sell once a year, as needed, to maintain the target allocation.  Best of all, you never have to watch the economy or guess where stocks are headed.

 It works because asset classes often move in different directions.  Sometimes gold is a winner.  Other times, bonds earn the best returns.  Occasionally, the winner is cash. Likewise, different stock markets have their days in the sun.  Next year, it could be U.S. stocks, British stocks, or Norwegian stocks.  

Because nobody knows which markets or asset classes will outperform, it’s best to own them all.

• Put a quarter of your portfolio’s value in stocks, split between the Global X MSCI Norway ETF and Vanguard’s FTSE All World UCITS ETF.
• The second quarter of your portfolio would be allocated to gold.  The iShares Physical Shares Gold ETC would do the trick.
• For the bond allocation, put your next 25 percent into the iShares European Government Bond 7-10 years ETF. 
• And keep the final quarter of your portfolio in cash.

Once a year, rebalance your portfolio back to the original allocation.  

By doing so, you’ll mechanically follow Warren Buffett’s motto:  Being greedy when others are fearful and fearful when others are greedy.  The portfolio has proven to be stable and profitable. 

So your days of falling from the investment chair lift could be over.

Andrew Hallam is the author of The Global Expatriate’s Guide To Investing. It’s available on Amazon USA and Amazon UK.

This was originally written for a Norweigian expat publication. It assumes the expat would like global and Norwegian stock exposure

  Image courtesy of pixabay.com