Investing

A poster on the forum was concerned about his portfolio performance short-term. Watching the markets go up and down can get nerve wracking and I understand the concern.

Let me be blunt: You will go nuts if you look at your portfolio each day. You’ll go nuts faster if you look at the assets in isolation and try to guess what they will do or “protect” yourself by collaring them, etc. with options.

Regular readers probably know that I do very little trading or monitoring of my portfolio. But every year I go to my accountant and he remarks that I outperform all the other clients he sees (he sees a ton of portfolios, investments, taxes on investments, etc.). I do this because I don’t go in and mess with the Permanent Portfolio allocation except to rebalance it if needed or possibly some tax loss harvesting. Other than that, I don’t touch it. Seriously.

Further, calls, puts, options, etc, to protect your assets is a primrose path. All these things are products made to be sold and not bought. They have a reason for certain groups to insure themselves. But other than that, they are just expensive and likely contribute very little except to cause more aggravation and muck up an otherwise simple portfolio for the average investor.

Because of the latest worries, I have now looked at YTD numbers again from Morningstar.

The Permanent Portfolio with 25% in stocks, bonds, gold and ST bonds is up +14.49% this year.

A 60/40 total stock market and total bond market portfolio is -0.67% this year.

David Swensen’s Portfolio advocated in his book Unconventional Success is -0.82% this year.

The Permanent Portfolios is up over +14% by doing nothing all year but sitting on our hands. Beat that CNBC!

The portfolio has been positive year over year for the vast majority of its existence. It could do worse next year, but then again so could another strategy. But I don’t see anything right now that offers a better solution so let’s not go changing things.

I have gone over a month now not reading the news (called a “News Fast” – Try it, you’ll like it). Apparently something is going on in Europe and something with the budget in the US. But because I own low risk US Treasury Bonds and Notes I don’t care if the European banks blow up because it’s not going to hurt my cash and bonds. This is because I have no exposure to risky commercial paper and neither should anyone holding Bonds and Cash in the Permanent Portfolio as advised.

If the US Govt. wants to keep fighting over the budget I don’t really care because I have gold to protect me from that.

If the markets turn around by year end I have the stocks.

I continue to sleep like a baby with this portfolio just as I have been doing for years. But I do this because I ignore the financial news (I don’t really read it even when not doing a total news fast). I also ignore all market predictions. But most of all, I ignore the assets in the portfolio and allow them to do their thing. This is what I always recommend investors do: Set your asset allocation and ignore it.

This Thanksgiving I give thanks to the reader of this blog and forum. Thank you for the contributions. I hope the Permanent Portfolio is keeping your money safe so you can focus on the more important things in your own life you are thankful for having.

Happy Thanksgiving!