The Permanent Portfolio

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  • ChesterDog
    ChesterDog Posts: 1,112 Forumite
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    It does have one thing going for it.

    It appears to be pretty much constant in its unsuitability for anyone, at any stage of their life.

    So at least you never have to worry about adjusting it as you go along to maintain its level of suitability for your changing circumstances.

    And if you ARE tempted to do so, you'd have to be pretty clueless to make things any worse.
    I am one of the Dogs of the Index.
  • username12345678
    username12345678 Posts: 282 Forumite
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    Harry Browne's PP is a master-stroke of simplicity with a very long-term performance that I think most of us would jump at if we could time travel.

    Whilst at first glance the asset allocation is horrifying the logic behind the composition is compelling.

    I couldn't do it though and seemingly the biggest problem with the PP isn't during market drawdowns, it is when markets are on a rip and you are sat grinding out a few percent at best.
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
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    Malthusian wrote: »

    It makes literally no sense, and is an illustration of why you shouldn't take investment advice from people writing in a different country 40 years ago.

    This was taken from a UK based article that tried to translate some US oriented lazy portfolios for UK use. Unfortunately the translation has been literal so US domestic equity becomes UK domestic equity - which is stupid. These portfolios have been around for ages and many "Bogleheads" have settled on simple core 3 of 4 fund portfolios. A lot of folks also add small amounts of other sectors in a Fama Franch sliced and dice strategy. If I was in the UK I'd probably just go with 70% Vanguard Global All Cap index and 30% Vanguard Global Bond Index Fund and then sit back and sip a Manhattan.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • Malthusian
    Malthusian Posts: 10,931 Forumite
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    username12345678 wrote: »
    Whilst at first glance the asset allocation is horrifying the logic behind the composition is compelling.

    As compelling as the logic that says a 10kg weight will fall faster than a 5kg weight.
  • username12345678
    username12345678 Posts: 282 Forumite
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    Malthusian wrote: »
    As compelling as the logic that says a 10kg weight will fall faster than a 5kg weight.

    I'm sorry, i'm not sure what you're getting at?
  • dunstonh
    dunstonh Posts: 116,301 Forumite
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    Harry Browne's PP is a master-stroke of simplicity with a very long-term performance that I think most of us would jump at if we could time travel.

    Honestly, it is rubbish. The whole equity content in UK equity and the whole fixed interest sector in UK gilts. No-one in their right mind would invest like that.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • ColdIron
    ColdIron Posts: 9,012 Forumite
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    username12345678 wrote: »
    Harry Browne's PP is a master-stroke of simplicity
    For every complex problem there is an answer that is clear, simple, and wrong - H.L.Mencken ;)
  • username12345678
    username12345678 Posts: 282 Forumite
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    I think perhaps you chaps are judging the PP from a UK perspective rather than from Harry Browne's original thinking.

    I would not try to make a case for it, and nor would I invest that way.

    That said, it has been written off as unsuitable/unworkable/outdated etc for many years and yet has kept working its magic with minimal volatility.
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
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    edited 5 January 2018 at 6:23PM
    dunstonh wrote: »
    Honestly, it is rubbish. The whole equity content in UK equity and the whole fixed interest sector in UK gilts. No-one in their right mind would invest like that.

    A bad translation reflects poorly on the translator, not the original author. That being said the Permanent Portfolio is not one that I would implement. Better lazy portfolios, with a range of styles, can be found here. A good exercise would be to sensibly translate them for a UK investor

    https://www.bogleheads.org/wiki/Lazy_portfolios#Three_fund_lazy_portfolios

    and here

    https://www.marketwatch.com/lazyportfolio
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • k6chris
    k6chris Posts: 738 Forumite
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    So what would a UK 'Lazy' portfolio look like if you were limited to 4 'things', each was 25% and you rebalanced every year??

    25% FTSE 250 (UK based exposure)
    25% Global Equity (non-UK large)
    25% Emerging Market
    25% Cash (for rebalancing in case of pull back)

    Tin hat on, so fire away :)
    "For every complicated problem, there is always a simple, wrong answer"
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