Permanent Portfolio in Europe (follow-up)

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mghisla
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Permanent Portfolio in Europe (follow-up)

Post by mghisla » Wed Jul 11, 2012 1:00 am

Dear All,

I am also trying to setup a Permanent Portfolio in the Netherlands (where I work, even if I live in Germany). I am at the point of choosing the most appropriate ETFs to allocate to the portfolio. I am picking from what seems to be available on the Euronext (Amsterdam).

I have read various posts (like this one from a couple of years ago: http://gyroscopicinvesting.com/forum/ht ... ic.php?t=9) as well as Marc De Mesel's blogs (in English and Dutch) in search for recommendations on how to setup such a portfolio.

Here is what I came up with so far:

Stocks:
20% ISHARES EURO STX50 (IE0008471009 EUEA)
5% LYXOR ETF DAX (LU0252633754 DAX)

Gold:
25 % ETFS PHYSICAL GOLD (JE00B1VS3770 PHAU)
alternative: 25% ETFS GOLD TRUST (GB00B15KXX56 BULLP)
alternative: 25% ETFS GOLD BULLION SECURITIES (GB00B00FHZ82 GBS)

Treasury Bonds:
25% LYXOR EUROMTS 15+Y (FR0010481093 MTF)

Cash:
25% on a saving deposit at 2%/year
alternative: 25% LYXOR EUROMTS 1-3Y (FR0010222224 MTA)

QUESTIONS/DOUBTS:
- For the stock part, would you recommend a broader index than the EURO STOXX 50? For example the EURO STOXX 600? I understand that Browne was recommending the broadest possible coverage of the local stock market (S&P 500 for the US and equivalent for Europe). The DAX index has been added according to Marc's recommendations as the STOXX 50 doesn't contain enough German stocks.
- For the gold part, I understand that ideally one should buy and safely store gold bullions, but I am looking at a more practical way which employs ETFs (ETCs). What are the pros/cons of this approach?
- For the bond part, I couldn't (yet) locate the pure German bonds in the Netherlands, so I will go with a mix of European ones, hoping that no included country is ever defaulting... is this the only risk with my choice?
- For the cash part, is it worth to have it invested in short term bonds or should it rather stay on a saving account (around 2% interest/year)?

Thank you very much in advance for your advise and recommendations!

Best Regards,
Marco.
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Re: Permanent Portfolio in Europe (follow-up)

Post by craigr » Fri Jul 13, 2012 4:28 pm

mghisla wrote: Dear All,

I am also trying to setup a Permanent Portfolio in the Netherlands (where I work, even if I live in Germany). I am at the point of choosing the most appropriate ETFs to allocate to the portfolio. I am picking from what seems to be available on the Euronext (Amsterdam).

Here is what I came up with so far:

Stocks:
20% ISHARES EURO STX50 (IE0008471009 EUEA)
5% LYXOR ETF DAX (LU0252633754 DAX)
Vanguard is now offering an MSCI Europe index that is registered in multiple countries. It holds 450 of the largest stocks and you may want to consider that. Also there is the STOXX 600 index and Deutsche Bank db-X Trackers. Unfortunately I think it only tracks about 50 companies. I think the more broadly the stock index you can own, the better.
Gold:
25 % ETFS PHYSICAL GOLD (JE00B1VS3770 PHAU)
alternative: 25% ETFS GOLD TRUST (GB00B15KXX56 BULLP)
alternative: 25% ETFS GOLD BULLION SECURITIES (GB00B00FHZ82 GBS)
Have you considered the Canton Bank of Zurich Gold ETF? Ticker: ZGLD (varies). It is not available to US persons, but is available in many other regions. ETF Securities physical gold ETFS PHAU you list is also a valid choice.

Also there is the idea that maybe you keep the gold off the continent in case of regional problems. So something like Perth Mint in Australia is something to consider if you meet the requirements they have on their website.
Treasury Bonds:
25% LYXOR EUROMTS 15+Y (FR0010481093 MTF)
I don't know much about this fund. If you could buy the bonds directly that is always best. Again Deutsche Bank offers db-X trackers that follow German and Eurozone bonds. They offer the Sovereign Eurozone 25+ ETF (Ticker: X25E [varies]) as an option. iShares also offers the Capital Euro Government Bond (Ticker: IBCL) that is a eurozone bond fund as well. Maturity of 22 years would be workable. Vanguard offers their own fund, but the maturity is too short. IMO. But could be used in a pinch.
Cash:
25% on a saving deposit at 2%/year
alternative: 25% LYXOR EUROMTS 1-3Y (FR0010222224 MTA)
Again I don't know much about the Lyxor funds. iShares offers Ticker: EUN6 which is 0-1 year euro treasuries which is a good option. They also offer IBCA which is slightly longer maturity. EasyETFs tracks the IBOXX liquid sovereign extra short ETF (Ticker: ISS). IBOXX also has a tracker for German 1-3 year treasuries again also sold as db-X trackers.
QUESTIONS/DOUBTS:
- For the stock part, would you recommend a broader index than the EURO STOXX 50? For example the EURO STOXX 600? I understand that Browne was recommending the broadest possible coverage of the local stock market (S&P 500 for the US and equivalent for Europe). The DAX index has been added according to Marc's recommendations as the STOXX 50 doesn't contain enough German stocks.
Broader the better.
- For the gold part, I understand that ideally one should buy and safely store gold bullions, but I am looking at a more practical way which employs ETFs (ETCs). What are the pros/cons of this approach?
You get the risk of ETFs during a currency emergency. If you woke up tomorrow and found the Euro was breaking up, would you rather own ETFs managed by a third party held at a broker with massive Euro exposure? Or would you rather have gold bullion sitting in a bank in Switzerland/Austria/Perth with your name titled to it directly? ;)
- For the bond part, I couldn't (yet) locate the pure German bonds in the Netherlands, so I will go with a mix of European ones, hoping that no included country is ever defaulting... is this the only risk with my choice?
Again you can diversify across the eurozone, or look for the db-Xtrackers which just hold German bonds.
- For the cash part, is it worth to have it invested in short term bonds or should it rather stay on a saving account (around 2% interest/year)?
The safest cash is always that which is issued by the government. Banking insurance varies radically by region so if you use a bank, make sure you always remain under insurance limits in case it ever fails. Even then, I'd still feel safer holding government treasuries for cash.

Hope that helps. Please understand I'm not an expert in some of these products so do your own due diligence. There are simply too many options on the planet to know about all of them, but if you stick to a well known index provider you'll probably be OK.
Last edited by craigr on Fri Jul 13, 2012 4:35 pm, edited 1 time in total.
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Re: Permanent Portfolio in Europe (follow-up)

Post by tarentola » Sat Aug 25, 2012 11:20 am

Selection of ETFs for a PP in Europe is complicated by the fact that there are several exchanges, including London, Milan, the super-exchange Euronext (including Paris, Amsterdam, Brussels and Lisbon) and Deutsche Borse in Frankfurt. Some German ETFs are available only in Frankfurt for example, so access to more than one exchange may be required for a balanced PP. Mghisla may not be able to find the best PP ETFs on the Amsterdam exchange alone.

With this in mind, here is a quick survey of Euro ETFs for a PP. Some info comes from the two previous threads on European PPs:
http://gyroscopicinvesting.com/forum/ht ... ic.php?t=9
http://gyroscopicinvesting.com/forum/ht ... ic.php?t=8

The UK Morningstar site http://www.morningstar.co.uk lets you see which ETFs are available on which exchanges (quaintly referred to as "Fund Universes" on the initial window).

ADVFN.com provides charts that can be used for comparing ETF perfomances.

The same ETF may be known by different codes, according to the exchange it is traded on. For example, the iShare range of ETFs and the names on each exchange are shown in  http://uk.ishares.com/en/rc/stream/pdf/ ... ist_uk.pdf

Shares
As pointed out by craigr and others, it is better to have a spread of equities wider than single-country. The German Dax, for example, can perform well but is volatile and contains many automobile manufacturers. I used IMEU, but have since found out that ERO and CEU perform better over three years, so I will use one of them for topping up. ERO is the best over 5 years.

Gold
No suggestions to add to craigr’s comment. Gold is essentially independent of currency, so security becomes the important consideration in selecting a gold investment.

Bonds
Here is where it gets complicated. The only 25+year bond ETFs I could find are X25E in Milan (aka DBXG in Frankfurt), which contains German, French and Italian bonds, among others, and X509 (Frankfurt). DBXG is the better performer.

There is also iShares IBGL (Euro 15-30 year bond) and Lyxor MTS (15+ years). The average length of the bonds used by these is well above 15 years so they are probably OK for a PP.

If you want German bonds only, there is EXX6 (10.5+, although again the average length is well above 10 years) and ETF523, aka CBOXGS10 (10+). I could not find a German-only bond 25+year ETF.

As pointed out by craigr and in a previous thread, it is best to buy the bonds directly such as German 3.25% 2042 DE 000 11 35 432.

Cash
Cash or near-cash could be held as either MM ETFs or short-term bond ETFs. Some ETFs pay out the interest and some accumulate it.

MM ETFs are mostly Eonia 3-month cash and include PEU (Frankfurt) , XEO, C3M (Euronext).

Very short bond ETFs include EUN6 (Frankfurt: 0-1 years as mentioned by craigr) and IEGE (0-1); There is a wider choice of 1-3 year maturities: MTA, DBXP, ISS, IBGS, C13. [Note added 15/10/2012 - ISS is the best performer]. For German Govt bonds 1-3, there is EXHB (1.5-2.5).

The 1-3y funds can fluctuate relative to cash. ISS accumulates interest and is my personal preference for at least some cash. The MM ETFs provide very low returns so I would probably stay partly liquid.

I set up a Euro PP in February 2012 with the following ETFs:
IT:IMEU      iShares MSCI Europe
DE:DBXG Db X Trackers Ii Iboxx Euro Sovereigns Euro Zone 25+ Tr Inde
IT:PHAU     ETFS Physical Gold Fund
FR:C3M Amundi Etf Emts 3m

The choice of options was discussed in thread 1348. The PP is up just over 3%. For comparison, PERM is up 1.2% and PRPFX is down 2.1% (both in dollars) in the same period, so the Euro PP did relatively well, even taking into account a drop in the Euro of about 6% in the same period.
Last edited by tarentola on Mon Oct 15, 2012 10:17 am, edited 1 time in total.
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Re: Permanent Portfolio in Europe (follow-up)

Post by spark » Tue Sep 04, 2012 9:42 am

Hi Tarentola


I did read few of your posts and did some research about the Eurozone PP. I am also trying to set up one. I try to concentrate on the same market place (as you stated there are many in the EMU). Having the etfs on the same exchange give all the assets of the PP the same trade fees. About the etfs, i tried some simulations with :

Long Bonds
iShares eb.rexx Government Germany 10.5+ (DE) DE000A0D8Q31-EXX6-XETRA

Short bonds
iShares eb.rexx Government Germany 1.5-2.5 (DE) DE0006289473-EXHB-XETRA

Gold 
ETFS Physical Gold VZLD-XETRA (More liquid than PHAU and equivalent perf)

Stocks
iShares EURO STOXX 50 IE0008471009-EUN2-XETRA
ETFlab DAX (distribution) DE000ETFL060-EL4F-XETRA

I am not yet fixed between Dax etf or Eurostoxx 50 etf. The lyxor etf msci emu quotes also in Germany but has no volume.
All selected etfs give dividends and have relatively low costs. They also all quote in germany so it is simple to compute your
trade costs for each asset.

I also tried to select the most liquid etfs that respond to HBPP but it is difficult to have it all. Concerning the cash I also have the
option of a 1.60% save account.

With these etfs i made some simulation with the 6 month price history available on the financial time but 6 month is too little.
The data was from April 2012 to September.

The PP using the DAX etf is up 1.47% but had a max drawdown of -4.171. It was little bit less with the Eurostoxx 50 ETF but at the end period, the eurostoxx etf perfomed little bit less than the dax. It seems there has been a drop in money market during the period. I could see it on other short term bonds etfs graphs.

I avoided other etfs such as eurostoxx 600 as it contains ex-EMU stocks (more than 25 % UK) then for me, it doesn't feet in a eurozone PP. The main actual problem is an eventual meltdown of the euro currency. In this case, it is possible that Germany could be a refuge for other eurozone investors. Having a EMU PP centered on Germany make sense in the actual situation.


Sincerely
Gil - Spain/France
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Re: Permanent Portfolio in Europe (follow-up)

Post by clacy » Tue Sep 04, 2012 3:43 pm

If I were an non-US citizen, I would probably be tempted to us US Long Term treasuries for that portion of my portfolio, with the thinking that long-dated US treasuries are still considered the safe haven that people from all over the globe flock to when their is economic turbulence or a threat of deflation.
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Re: Permanent Portfolio in Europe (follow-up)

Post by Arturo » Tue Sep 11, 2012 1:33 pm

Hi Spark,

have you ever considered the option of brokerages like Internaxx (Based on Luxembourg) or SwissQuote (based on Switzerland)? they are brokerages that can give you access to american ETFs, like VTI,VXUS,TLT, SGOL and SHV, the Harry Browne’s Permanent Portfolio compound.

The only issue i still haven't research are the costs (comissions, taxes, etc), that are definitely, one of the most important factor in PP.

Hope to read you again here.

Regards
spark wrote: Hi Tarentola


I did read few of your posts and did some research about the Eurozone PP. I am also trying to set up one. I try to concentrate on the same market place (as you stated there are many in the EMU). Having the etfs on the same exchange give all the assets of the PP the same trade fees. About the etfs, i tried some simulations with :

Long Bonds
iShares eb.rexx Government Germany 10.5+ (DE) DE000A0D8Q31-EXX6-XETRA

Short bonds
iShares eb.rexx Government Germany 1.5-2.5 (DE) DE0006289473-EXHB-XETRA

Gold 
ETFS Physical Gold VZLD-XETRA (More liquid than PHAU and equivalent perf)

Stocks
iShares EURO STOXX 50 IE0008471009-EUN2-XETRA
ETFlab DAX (distribution) DE000ETFL060-EL4F-XETRA

I am not yet fixed between Dax etf or Eurostoxx 50 etf. The lyxor etf msci emu quotes also in Germany but has no volume.
All selected etfs give dividends and have relatively low costs. They also all quote in germany so it is simple to compute your
trade costs for each asset.

I also tried to select the most liquid etfs that respond to HBPP but it is difficult to have it all. Concerning the cash I also have the
option of a 1.60% save account.

With these etfs i made some simulation with the 6 month price history available on the financial time but 6 month is too little.
The data was from April 2012 to September.

The PP using the DAX etf is up 1.47% but had a max drawdown of -4.171. It was little bit less with the Eurostoxx 50 ETF but at the end period, the eurostoxx etf perfomed little bit less than the dax. It seems there has been a drop in money market during the period. I could see it on other short term bonds etfs graphs.

I avoided other etfs such as eurostoxx 600 as it contains ex-EMU stocks (more than 25 % UK) then for me, it doesn't feet in a eurozone PP. The main actual problem is an eventual meltdown of the euro currency. In this case, it is possible that Germany could be a refuge for other eurozone investors. Having a EMU PP centered on Germany make sense in the actual situation.


Sincerely
Gil - Spain/France
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Re: Permanent Portfolio in Europe (follow-up)

Post by mghisla » Tue Oct 16, 2012 4:38 am

Hi,

As I recently received some requests via PM, I would like to give you all an update on the final composition of my European Permanent Portfolio. The portfolio is completely built on ETF/ETCs (except for the cash part) and looks like this:

GOLD (25%)
25% on db Physical Gold Euro Hedged ETC (DE000A1EK0G3)

EQUITY (25%)
10% on Lyxor ETF DAX (LU0252633754)
15% on iShares DJ EURO STOXX 50 (DE0005933956)

BOND (25%)
25% on Lyxor ETF EUROMTS 15+Y (LU0252633754)

CASH (25%)
25% on a saving account at 2% nominal annual return

Thank you to all who answered my original question and provided advice! :)

Kind Regards,
M.
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Re: Permanent Portfolio in Europe (follow-up)

Post by Arturo » Sat Oct 20, 2012 7:07 pm

  • craigr wrote: Hope that helps. Please understand I'm not an expert in some of these products so do your own due diligence. There are simply too many options on the planet to know about all of them, but if you stick to a well known index provider you'll probably be OK.
    Hi Craigr,

    the biggest issue here in Europe about PP is that our market is not as developed as in US, is fragmented (not fiscal and monetary union), and also there are not enough products to stick to the fundamentals of PP.

    In the US you have your tipical VXUS,VTI,SGOL,SHV and TLT ETFs that makes PP really easy to follow. You just buy this products, and wait for your 8% annual average income. They all provide the characteristics a PP investors need. VTI the best 3.000 US companies. TLT more than 25 years maturity US bonds. SHV up to 1 year maturity short bonds. etc.

    In Europe:


    1.- Long Bonds.

    a. You advice to acquire the longest bonds of the largest economy of Europe directly (France or Germany goverment). But from the perspective of a citizen (not expert), living abroad of this two countries, and trying to create a easy portfolio to follow and rebalance, is really difficult this way. We do know how long bonds and economy evolve in the 4 stages of economy since 1972 in a country like US where you have fiscal, political and monetary union. In Europe, we do not have a central bank that issues long bonds, or euro fiscal union, so purchasing this products is more like a scientific experiment than a solid foundation.

    b. db x-trackers II iBoxx® Euro Sovereigns Eurozone 25+ TR Index ETF (X25E.DE). (http://www.etf.db.com/DE/EN/showpage.as ... 8&pketf=43)
    If you see the holding basket, its built from 4 countries: Italy, Netherlands, Spain and France. Do you think is a good ETF that follows an index that contains Spain or Italy? Is it broad enough?

    c. iShares Barclays Capital Euro Government Bond 15-30 (IBGL). (http://de.ishares.com/en/rc/products/IBGL)
    Again, if we look at it holding basket, only 32% of them are coming from German bonds, and 23% from France bonds. Only a total of 55% are coming from the strongest economies of Europe right now. And the question is that if Spain or Italy where also "strong" economies only 5 years ago, and nowdays are near of being Greece category, who knows what will happend with France and Germany? The other members are Italy, Spain and Netherlands. This fund was awesome 5 years ago, when nobody was thinking about Europe hiden issues, and the basket was built with the 5 strongest economies of Europe (more than 1 trillion GDP each one).

    d. iShares eb.rexx® Government Germany 10.5+ (EXX6.DE). (http://de.ishares.com/en/rc/products/EXX6/performance)
    offers exposure to Euro denominated German government bonds traded on the Eurex Bonds® platform with a minimum remaining time to maturity of 10.5 years. The best option right now, since it holds only German bonds. The issue here is the maturity of this bonds. If you look at the holding basket, only around 42% has a maturiry of more than 25 years.

    e. So we return to the point of your book where you writte "German bonds are perceived to be the safest European bonds". But the only way to do that is buying them directly to the goverment, and are not easy to trade like if you were buying ETFs. Imagine the hell of rebalancing. Is there any 'safe' option for long bonds?


    2.- Stocks.

    a. Third EMU stage countries. Countries that share the same currency (for instance, UK or Sweeden would be out of this index). We can include indexes like:

    - Dow Jones EURO STOXX 50 Index. (https://www.spdrs.com/product/fund.seam?ticker=FEU) 50 best blue chips. this index focuses almost 45% of its holdings in Germany and France
    - MSCI Europe EMU Index: 250 holdings (http://us.ishares.com/product_info/fund ... ew/EZU.htm)

    Nothing to do with VTI (3.000). are not broad enough.

    b. Euro Monetary Union countries (EMU). Here we include countries like UK or Sweeden for instance, that are not sharing the same currency. Follow indexes like:

    - STOXX 600 index,
    - S&P Europe 350 (http://us.ishares.com/product_info/fund ... rue&qt=IEV)
    - Vanguard MSCI Europe. (https://personal.vanguard.com/us/funds/ ... st=tab%3A0)

    c. Here we compare three stock indexes.As you can see, the best performance comes from Stoxx 50, and not from MSCI Europe index. but,

    c1. can we conclude something from an index that started only in 2003 (Stoxx50)?
    c2. didn't we conclude that the broader the better?
    c3. why then stoxx 50 is performing better than MSCI?[/li]
Image

[source: http://www.etfdigest.com/commentary/Top ... -2536.html]


3.- Cash.

a. iShares eb.rexx® Money Market (DE) (EXVM) (http://de.ishares.com/en/rc/products/EXVM/holdings)
It only holds short german bonds of a max maturity of 1 year.

b. iShares eb.rexx® Government Germany 1.5-2.5 (DE) (EXHB) (http://de.ishares.com/en/rc/products/EXHB)
offers exposure to Euro denominated German government bonds traded on the Eurex Bonds® platform with a remaining time to maturity between 1.5 and 2.5 years.

c. iShares Barclays Capital Euro Treasury Bond 0-1 (EUN6) (http://de.ishares.com/en/rc/products/EUN6/holdings)
Here the characteristics changes. We have diversification, short maturities (less than 1 year), and "quality". Now we face the same issue than with long bonds. What we considered in the past as security and safety because we were including Spain, Italy and Ireland in the holding basket (the strongest economies in Europe with a GDP more than 1 trillion each one), now changed dramatically. According to S&P, Spain calification is BBB-, Italy BBB+, Irland BBB+, Greece CCC.

d. The big question. Like happens with long bonds,

d1. diversification or historical security (Germany short bonds)?
d2. Didn't we conclude that diversification was better?


4. Conclusions.

Craig, as you can see, because of the particular political, fiscal and monetary composition of Europe, its a special economy that can not be treated like US, Canada, Australia or Japan, in terms of PP creation. Its a nightmare, because you are not sure in what you have to 'trust', once you don't have a political head that leads the economy, for bad (inflation, recession or deflation) or for good (grouth).

After studying this situation, sometimes you really doubt if you want to build up an European PP, or try a US-PP, hoping in the future to get a ' time window' where the exchange USD-EUR don't risk the investment.

which are your thoughts?

thanks in advance!

PD: by the way, excellent chart comparator:
http://tools.ishares.wallst.com/ishares ... Country=US
Last edited by Arturo on Sat Oct 20, 2012 7:10 pm, edited 1 time in total.
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Re: Permanent Portfolio in Europe (follow-up)

Post by stone » Sun Oct 21, 2012 3:01 am

Arturo
d. iShares eb.rexx® Government Germany 10.5+ (EXX6.DE). (http://de.ishares.com/en/rc/products/EXX6/performance)
offers exposure to Euro denominated German government bonds traded on the Eurex Bonds® platform with a minimum remaining time to maturity of 10.5 years. The best option right now, since it holds only German bonds. The issue here is the maturity of this bonds. If you look at the holding basket, only around 42% has a maturiry of more than 25 years.

e. So we return to the point of your book where you writte "German bonds are perceived to be the safest European bonds". But the only way to do that is buying them directly to the goverment, and are not easy to trade like if you were buying ETFs. Imagine the hell of rebalancing. Is there any 'safe' option for long bonds?
I'm UK based so I don't have direct experience of the Euro situation but are you sure that it is so awkward to buy bonds directly? In the UK it is exactly as easy to buy and sell UK treasury bonds as to buy an ETF. It is simply a mouse click to buy or sell bonds just as with an ETF. I wouldn't hold a mix of German and Spanish/Italian bonds. I think they are likely to be moving in opposit directions and so the mixed ETF would be a useless asset ??? I would just hold the German bonds as they are the flight to safety asset and that is what the bond component of the HBPP should be. If the bond duration available is too short (eg 10 years rather than 30years) then just include more of it at the expense of cash- So hold 50% 10year bonds and no cash instead of 25% cash and 25% 30year bonds.
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Re: Permanent Portfolio in Europe (follow-up)

Post by Ad Orientem » Sun Oct 21, 2012 12:24 pm

One major issue with a Euro zone PP is that government bonds are not backed by the printing press. This adds a level of risk that doesn't exist in the US Japan or the UK. I am not sure how to compensate for that.
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Re: Permanent Portfolio in Europe (follow-up)

Post by Arturo » Sun Oct 21, 2012 3:37 pm

Ad Orientem wrote: One major issue with a Euro zone PP is that government bonds are not backed by the printing press. This adds a level of risk that doesn't exist in the US Japan or the UK. I am not sure how to compensate for that.
you pointed out the core of Europe problem, and the biggest fear for an european PP investor. country bonds are not backed up by BCE.

So from this perspective, you really do not know if you should buy only long german bonds, because is the strongest economy in Europe, or you should buy a basket of weighted countries to invest in a diversified product.

Its not about how EU-PP performed until now, but how it could performed in the uncertain future under conditions that are different than the ones Harry Browne used to design Permanent Portfolio.
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Re: Permanent Portfolio in Europe (follow-up)

Post by Ad Orientem » Sun Oct 21, 2012 3:50 pm

Arturo wrote:
Ad Orientem wrote: One major issue with a Euro zone PP is that government bonds are not backed by the printing press. This adds a level of risk that doesn't exist in the US Japan or the UK. I am not sure how to compensate for that.
you pointed out the core of Europe problem, and the biggest fear for an european PP investor. country bonds are not backed up by BCE.

So from this perspective, you really do not know if you should buy only long german bonds, because is the strongest economy in Europe, or you should buy a basket of weighted countries to invest in a diversified product.

Its not about how EU-PP performed until now, but how it could performed in the uncertain future under conditions that are different than the ones Harry Browne used to design Permanent Portfolio.
I don't think there is an ideal solution here. But if I were in Europe trying to do a PP I might consider going with long term Swiss Gov't bonds. The Fanc is currently pegged to the Euro and they own their own currency. Also Switzerland is in MUCH better shape than the rest of Europe debt wise.

But there are risks there too. What is pegged today can be unpegged tomorrow. Still I would say they are probably the safest bonds in Europe at the moment.
Ceterum censeo Trump delendum esse.

"Suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself." M.Twain
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