The Permanent Portfolio method by Harry Browne

[joker_josue]

One might think that saving 25% in cash does not make sense because it is stopped and does not yield.
Of course, for most people, they don't have enough money to do that. But for those who have a lot of money it makes sense.

What caused the first economic crisis in the USA was the banks' lack of liquidity. Millions of people wanting to raise the money they had invested at the same time. There was no liquidity.
Having 25% of the wealth in money, allows not to suffer if it happens again. In addition, if all assets collapse, you lose 75% ... but you still have the 25% to try to hold the boat.

This is not a luxury for everyone. But it is a warning, as we must all have some money without being invested.

[1715664583]

1715664583

[oHnK]

I have applied this type of portfolio so far without even looking at the theory developed by Harry.  However, I admit that this theory is quite plausible to make our assets safe and have a fairly good liquidity.  The nature of the assets in the portfolio that Harrh applies is complementary to one another. Gold which has a safer nature but low return is covered by stocks that have a higher return but also a higher risk.

[kaya11]

Cool portfolio but so 1990. Have we not seen enough recessions and market fails? There is a new market fail in the crypto market everyday for fuck sake. We saw what happened to the stocks like GameStop and such.

The idea is cool, simplify your portfolio but fuck gold. It can suck a dirt penis for all I care.

I think the ideal portfolio in 2021 would be to add in either a 5th element for crypto and divide it with a portion of bitcoin/some good DeFis/aspiring NFTs/solid alts like Eth. Spice it up. 

Also, very crucial time for real estate investments. Covid has fucked up the real estate market sooo damn hard. If people can get hands to something good, in the long run it will be :chef's kiss:. 

Nailed it! These guys are forgetting something, we are here on this forum to look for something good aside from those above. Bitcoin is a better option, gold is and old asset, death can get you first before you can double your money. There are good stuffs in here and let's talk about them, not those outdated strategies whose makers are already gone.

[joker_josue]

Nailed it! These guys are forgetting something, we are here on this forum to look for something good aside from those above. Bitcoin is a better option, gold is and old asset, death can get you first before you can double your money. There are good stuffs in here and let's talk about them, not those outdated strategies whose makers are already gone.

In your opinion, how can this strategy adapt to the crypto world?

[Husires]

Bitcoin is suitable for all times and all kinds of economic crises.
The balance existing in the above equation is necessary for those looking to generate money in all cases, which requires that you have the sufficient asset in the sufficient time needed by the market.

Bitcoin may impose a new position as an alternative to gold in the event of inflation or an alternative to bonds in the event of deflation, with their being stocks and money.

[7788bitcoin]

I am hearing about Harry Browne for the first time but i was following similar method all the way, i do have investment in stock and gold but not in bonds instead i am investing in cryptocurrency for the last several years and i do consider that as an ample good way of investment. I have not dived into the world of bonds that well and i am happy with my investment right now as i think it is a good balance.

[DrBeer]

All of these models are aimed at one thing - risk diversification. This principle has been known for a long time, and there are even very old folk proverbs, something like "you can't keep all your eggs in one basket." The only difference is which insurance options investors choose. You can hold a portfolio as above. You can invest in crypto, real estate, corporate shares. It is possible in gold, rare earth metals, earth. It is possible in fiat, dollars, euros, yen ...
In fact, there is no perfect "portfolio", there are portfolios with higher risks and lower risks. It should be understood that not all "portfolios" are actually available to the mass consumer. It is better to study the markets, theory, and only after that, taking into account the risks, invest. Good luck and profit to everyone

[worle1bm]

The main aim is to gain profits in the long run and it does not matter which type of portfolio you are maintaining actually.But one main thing is to have cash or bank saving only upto that amount which fulfill your financial needs because if you are holding too much cash with you it will not give you any return in the long run and on contrary basis it will devaluate over time decreasing your purchasing power in future.Get your portfolio with gold,stocks,crypto which ever you like but it should give your good and satisfactory returns unless it's of no use to carry or sticking to that portfolio.So have advice from others and make combinations of all which best suits you.

[oHnK]

In fact, there is no perfect "portfolio".

I couldn't agree more. No portfolio is perfect. And a good portfolio is a solid and healthy portfolio because with a healthy portfolio every day it will provide a profit or at least break even because if you lose something from the portfolio that is formed and immediately with signs like that, we should improve the proportion of assets that are is in our portfolio.

[fiulpro]

I do think this would differ from person to person. For most people cash would be more than 50% and in more conservative households, 80% , now I do think this might be interesting but for me I would go for :
Property instead of Stocks
Plus I would like to swap Bitcoins and other cryptocurrencies in long term bonds.
Gold is more is so more expensive but I really want to know if anyone did succeed following this and how did it go ? Did it produce good results, because I think depending on the economic situation of every country this would be highly variable and then comes the personal aspect. Therefore I would not advice anyone to go and blindly follow it , but rather take an example and make something like that suiting your personal situation.

[Fortify]

I've never heard the name Harry Browne before, he could be a high flyer or he could be a nobody. While it is nice to have a baseline idea, it is always worth constructing your own formulation of assets instead of trying to match some arbitrary figures that worked for somebody else. For instance in the last year we have seen bond yields plunge to record lows and you really needed to be in equities to get a decent return. Obviously bonds are meant to be lower risk, lower return but if they cannot even keep up with inflation then your money is losing value every year. Same with cash, in some places around the world we are starting to see banks charge customers (usually with large amounts) for holding their money, so you end up with a negative interest rate - not only is your cash losing value to inflation, but you are getting charged for that privilege too. The governments out there want people spending that cash and that is the lever that is becoming increasingly common. Altogether I think that Peter Lynch and Warren Buffett are the well known master investors who would advise you to have the vast majority of money in productive company shares - whether through an index fund or individual purchases. It makes sense to have a small emergency cash fund, but that's all.

[jostorres]

One might think that saving 25% in cash does not make sense because it is stopped and does not yield.
Of course, for most people, they don't have enough money to do that. But for those who have a lot of money it makes sense.

What caused the first economic crisis in the USA was the banks' lack of liquidity. Millions of people wanting to raise the money they had invested at the same time. There was no liquidity.
Having 25% of the wealth in money, allows not to suffer if it happens again. In addition, if all assets collapse, you lose 75% ... but you still have the 25% to try to hold the boat.

This is not a luxury for everyone. But it is a warning, as we must all have some money without being invested.

I do agree that 25% in cash is the worst part in this, I do not agree that anyone should have 25% in cash because that's not a good idea. And gold could be a bit more less risky thing but long term bonds are less risky anyway. This is why I am all in crypto and basically do this in crypto but differently.

For example, I have 30% in bitcoin, that's the cash part for me because I believe bitcoin is as good as cash and will make me profit anyway, I have 20% in ETH and that's my "stocks" part if you ask me, and that's bringing me good profit. I have 20% in BNB which is about long term bonds as it gets and the rest are in small time stuff which is why I do not have gold but I have many different valuable gems let's say. There are people who have NFT as well so that's kinda like investing into art which could be done, if you know what you are doing of course.

[Febo]

The basis:
- There are 4 basic scenarios: prosperity, inflation, recession or deflation. You would need assets that do well in each of these to keep a good balance.
- In Prosperity - stocks, to provide a strong return. Bonds will do well as well.
- In Inflation - Gold is the choice (not the only possibility though).
- In Recession - Cash or cash equivalents do well, due to low liquidity in recessions.
- In deflation - Bonds will do great.

We live in a different times as when he lived. I simply dont trust cash that much to have 1/4 of my wealth stored in cash. Maybe few %, but 25% seems like calling bad luck upon yourself. We will enter hyperinflation sooner or latter.

[joker_josue]

For example, I have 30% in bitcoin, that's the cash part for me because I believe bitcoin is as good as cash and will make me profit anyway, I have 20% in ETH and that's my "stocks" part if you ask me, and that's bringing me good profit. I have 20% in BNB which is about long term bonds as it gets and the rest are in small time stuff which is why I do not have gold but I have many different valuable gems let's say. There are people who have NFT as well so that's kinda like investing into art which could be done, if you know what you are doing of course.

An interesting strategy. If this is working great. It continues with good investments.
We must always look for solutions that are within our reach and that in the medium / long term bring some benefit.

[Wawa2013]

I admit that the portfolio method by Harry Browne is very good at making our wealth safe and growing. But the problem is not suitable for everyone,
it is only  suitable for use by the rich. Because the portfolio method requires a lot of money. But I thank you for the opening post for sharing some
interesting information. Even though I can't run it for now, but it makes my insights increase. So if my finances are ready, I will definitely carry out
this portfolio method by Harry Browne. I admit it is quite simple, beautiful and easy to understand.

[verita1]

Thanks for sharing this thread. Simplicity is the solution to many things. I've never heard of this "Harry Browne Permanent Portfolio" investment model. Coincidentally, I manage my finances with little cash as the chart recommends. I have decided it that way by intuition thinking that it is the best for me due to the inflation that dominates to the economy in the country where I live.