Get this portfolio here: https://optimizedportfolio.com/go/permanent-23

The Harry Browne Permanent Portfolio is a simple, straightforward lazy portfolio consisting of 4 equally-weighted assets. In this video we’ll look at its components, historical performance, and the best ETFs to use in its implementation.

// TIMESTAMPS:

00:00 - Intro
00:13 - What Is the Permanent Portfolio?
01:10 - Permanent Portfolio Review
05:30 - Performance
06:16 - Permanent Portfolio vs. Golden Butterfly Portfolio
07:47 - Permanent Portfolio vs. All Weather Portfolio
08:47 - ETFs
09:22 - Taking the Permanent Portfolio Global
09:51 - Conclusion
10:38 - Outro

// SUMMARY:

The Permanent Portfolio is a simple 4-slice lazy portfolio created by investment advisor Harry Browne in the 1980’s and presented in his book Fail-Safe Investing in 2001. It looks like this:

25% Total US Stock Market
25% Long-Term Bonds
25% Cash
25% Gold

Not unlike the All Weather Portfolio, the Permanent Portfolio was designed to be a simple, diversified portfolio that could perform well in all economic conditions. Browne called it the Permanent Portfolio because, in his words, “once you set it up, you never need to rearrange the investment mix — even if your outlook for the future changes.”

Having only 4 assets at equal weights, it is easily accessible and understandable. Those 4 assets’ expected behaviors correspond to 4 economic climates as follows:

Stocks – economic expansion
Bonds – deflation
Cash – economic recession
Gold – inflation

Browne’s naive equal weighting of these assets doesn’t make much sense intuitively and is almost certainly suboptimal. This becomes even more obvious when we consider the fact that the four aforementioned environments do not have the same probability of occurrence. Severe, protracted deflation, for example, is extremely unlikely. Browne makes the mistake I see far too often of viewing each asset in isolation instead of looking at the portfolio holistically.

The Permanent Portfolio is basically a good introductory lesson on asset class diversification in my opinion. And props to Harry Browne for making the concept more mainstream. The Permanent Portfolio does a pretty good job of mitigating volatility and drawdowns, but in practice I’d be more likely to use the All Weather Portfolio or the Golden Butterfly Portfolio to achieve that goal. They seem demonstrably superior, as the Permanent Portfolio’s simplicity is ironically also its weakness in my opinion.

Permanent Portfolio ETF pie for M1 Finance: https://optimizedportfolio.com/go/permanent-23

Permanent Portfolio Global Stocks ETF pie for M1 Finance: https://optimizedportfolio.com/go/pp-global-23

Read the blog post here: https://www.optimizedportfolio.com/permanent-portfolio/

#investing #lazyportfolio #lazyportfolios #etfs #stocks #stockmarket

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