Sunday, April 06, 2008

Permanent Portfolio

Barrons reminded me today of the Permanent Portfolio Fund. I first read about the permanent portfolio concept in Mark Tier's excellent book. The concept is a very diversified portfolio that doesn't need to be changed dramatically with market conditions. After my recent changes to my Mom's portfolio it will have a similar allocation to stocks, bonds, cash, and other. In our case, the other is hedge funds and managed futures, in their case, mostly direct holding of gold and silver. We only have a little gold held by one of our managers. We have 50% of the portfolio allocated to the US Dollar and 50% to other currencies and PRPFX also seems to be doing some currency diversification through investing in the Swiss Franc. Somewhat idiosyncratic. Permanent Portfolio has been in the top 2% of its peer funds on all time horizons. They made money in each of the last ten years (though they didn't beat inflation in every year). Barron's also recommended Aussie bank stocks in this week's issue.

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