Читать книгу Investing in Gold & Silver For Dummies - Paul Mladjenovic, Paul Mladjenovic, Ted Sudol - Страница 38

In early 2006, Harry Browne died. I thought it was a great loss to the investment and political world. (He ran for president on the Libertarian platform in 1996 and 2000.) His claim to fame is that he was very successful in anticipating the extreme market condition of the 1970s and profiting from it. He wrote several bestselling investment books, and my favorite aspect of his writings was his insights on practical economics, which can be very useful when making investment decisions.

One of the last books he wrote was a short book that was a concise, true gem of financial wisdom called Fail-Safe Investing: Lifelong Financial Security in 30 Minutes (St. Martin’s Griffin). In it, he detailed a model portfolio that was easily constructed by the average investor, and it had performed very well in a variety of economic conditions. It consisted of 25 percent each of cash, stocks, bonds, and … gold. He suggested that you rebalance it each year to keep the 25 percent allocation.

In other words, if one asset class performed very well and ended up being much higher than 25 percent at the end of the year, then you’d sell a portion of that part of your portfolio and distribute that amount to other parts so that at the start of the following year, you were at 25 percent in each. You would then repeat that process at the end of that subsequent year.

In any given year, one (or more) of the categories would perform well. Of course, performance of different parts of the portfolio changed as the economic conditions changed year in and year out.

Mr. Browne constructed this portfolio because he was keenly aware of the dangers of inflation, recession, and other systemic problems that occur because of political and government mismanagement (such as through inflation, taxes, and regulation). He recognized that gold, meanwhile, was not easily produced and manipulated by the government.

When you do your research online for the Permanent Portfolio, you’ll see that other investors did their variation on it. You should consider doing your own variation, but the Permanent Portfolio is a great starting point as you develop an approach that works for your personal needs.