The Permanent Portfolio, Investing, Finance and Random Thoughts.
Archive for March, 2010
Central Banks Doth Protest Too Much…
An interesting article considering the past two years I’ve heard pundits largely talking about how much gold banks were selling. The IMF announced big sales last year and the gold market didn’t budge. Other central banks snapped it right up at market prices:
Central Banks Stashing Away Gold at Brisk Pace
Central banks around the world added 425.4 metric tons of gold to their reserves last year, the biggest increase since 1964, according to the World Gold Council.
That represents a 1.4 percent gain to put their holdings at 30,116.9 tons in total. The increase was the first since 1988.
A 1.4 percent gain isn’t what I’d call Earth shattering. Yet, when I hear these central banks out pronouncing their faith in the US Dollar it makes me wonder if they really believe it themselves. They’ve got their frontman talking about the dollar being a great reserve currency, yet they’re wheeling gold bars out the back door into their vaults to diversify.
Actually that’s not bad advice. Maybe they’ve been listening to Harry Browne’s shows?
Is this actionable information? No. The Permanent Portfolio holds enough gold that I would just keep things as is. This is more of a piece of knowledge that confirms what many of us probably suspected already with respect to gold and central banks being large buyers.
Safe. Stable. Simple.
1 year ago
Safe. Stable. Simple. These are the words Harry Browne used to describe his investment philosophy in his October 10, 2004 radio show. He pretty much nails it.
October 10, 2004 Investing Radio Show
Safe
A portfolio that is safe is one that is invested conservatively but also with strong diversification in case things don’t go according to plan. People work hard for their life savings. Why gamble those savings on some get-rich-quick investing scheme that can cost a big chunk of it if things go wrong? A portfolio that is safe does not mean tucking the money under the mattress. What it means is that investors buy things only that they fully understand for a very specific reason. Risks are taken where they should be and avoided where they add nothing to the bottom line. A portfolio invested this way can hold assets that are “risky” but own them in a way where the risks wash out over the long run and produce actually safer and more consistent returns through diversification. Safety also means following some basic rules of investing that will make it much harder to fall into many common investment traps.
Stable
A portfolio that is stable allows an investor to not panic when the markets are in serious turmoil. Stability doesn’t mean investors won’t ever take a loss. What it means is that the losses will be dampened so that the pain is tolerable and not driving the investor to waking up in a cold sweat. These situations, if they occur, can cause investors to make bad decisions about their money usually at the worst possible time. Stability in a portfolio means that investors can focus on their work and savings which is really driving most portfolio returns (especially early on).
A portfolio that is stable also means it is giving out reasonable market returns. A consistent return over the years can grow a portfolio greatly due to compounding. There is no need to reach for the brass ring for double-digit growth because that always means higher risks. Higher risks means less stability and a potential for doing much worse in the markets than what an investor is expecting. On the other hand, a more consistent growth can prove incredibly powerful if just left alone and a stable portfolio means investors will leave it alone. Since long term investment success is related to the ability to stay the course and not try to time the markets, stability in the portfolio is an important ingredient because it helps keep emotions in check no matter what the markets are doing.
Simple
I love simplicity, especially for investing. Complicated investing strategies and products can conceal many risky moving parts underneath. Many times these risks will not be discovered until it’s too late. Not just this, but often financial advisors will sell complicated strategies because it makes sure you keep them around to manage it all for a hefty fee. Investing does not need to be, nor should it be, complicated. There is a strong relationship between complicated investment approaches, lower performance and higher risks – All things you don’t want. Portfolios that are simple have lower management fees, lower taxes, lower chances of hidden risks, and can be managed without the use of a financial advisor with very little time commitment on the part of the investor. All of these attributes ensure a greater chance of long-term investment success.
There you have it. Safe. Stable. Simple. The three words that define the Permanent Portfolio. If you’ve never heard this radio show, you’ll enjoy it. Harry Browne discusses these and other important topics that are the foundation for growing and protecting wealth.
Podcast: Play in new window | Download
Gear Test – Camouflage Test ASAT vs. MARPAT vs. British DPM vs. ASAT Leafy 3D Suit
1 year ago
Loading ...Camo
Like most hunters, I wear camouflage because it may give a slight edge under some circumstances. Yet it seems many of the hunting patterns out now are really more for attracting hunters to the clothing racks than concealing. Is it really necessary for all these new camo patterns to come out each year or is it just to sell new clothes? Do you really need camouflage underwear that matches your camouflage pattern on your jacket? Hmm…Methinks that marketers are designing this stuff and not hunters.
Observations on Camouflage
When looking at this issue in my engineering way, I noticed that bigger open patterns tended to work well at breaking up the human outline (a forest green wool plaid shirt still works for instance). On the other hand, fancy prints with lots of detail of trees, etc. and false depth of field added actually had worse performance at distance from my own observing. I’ve noticed these things a number of times at archery shoots where you get to see many people traipsing through the woods wearing all sorts of camo patterns.
In short, the patterns that looked like nothing always seemed to do the best when the randomly changing backgrounds of the woods was taken into consideration. Patterns that looked like trees and leaves sometimes worked OK if the tree you were next to matched it, but didn’t work especially well for ground blinds or if you have to move and get away from the trees. In areas with limited concealment, complex patterns tended to be too dark and in the bright sun they really stood out as the darker colors they used didn’t reflect light the way surrounding vegetation did.
Is Simple Camouflage the Best?
Simplicity usually trumps complicated. Game animals in the wild are largely just variations of tan, black and brown. Simple. Yet, they are very hard to see when in concealment or even in the open. Their fur diffuses light and the color scheme is so neutral that it tends to look dark when in shadows and lightens up when in the sun. The color works regardless of the conditions or time of the year. Most hunters will tell you that game animals are incredibly hard to see (especially when they aren’t moving). So why aren’t these animals covered in barks, twigs, acorns, and leaves like the camouflage we see in the stores?
Is There an All Season Camouflage?
No, there isn’t. Most camo will need to be designed for the expected operating environment to work best. But some designs have made a good attempt at trying to work adequately in a variety of situations. One such design came out in the 1980s as a camo pattern called ASAT. ASAT is short for All Season All Terrain. It has since developed a legendary status among people who need to get really close to game animals to get a shot off: bowhunters. It’s a tan base color and just has some brown and black in it as a breakup pattern.
The ASAT company sells generic printed garments, but also offers an overall 3D “Leafy” version of their camo that adds an effect of blowing leaves. The suit is very lightweight and pulls over your clothes and can cover up just about anything you have on. It also isn’t so bulky that it gets in the way of running your bow or other hunting gear.
(more…)
California Bonds Banner Ads
Obviously, my site features some banner ads from Google. These ads bring in enough revenue to cover the costs of the web hosting (if that). Well lately I’ve been seeing ads encouraging people to buy California Bonds at this site:
I’ve never seen a state so aggressively advertising their bonds in banner ads. I can’t say it would put my mind at ease if I owned California Munis to see this.
EDIT: I’m not the only one who noticed this:
EDIT #2: Here’s the ad that just showed up on my site:
Oh! The offer ends March 10th! Better hurry! I’m sure they’re selling like hotcakes so don’t miss out!
