Cash FAQ

Discussion of the Cash portion of the Permanent Portfolio

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craigr
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Cash FAQ

Post by craigr » Mon Apr 26, 2010 1:36 am

The Permanent Portfolio holds 25% of its allocation in Cash. There is no FAQ on it yet, but here's a brief run-down until I get it done:

Q: Why hold cash?

A: Cash provides a buffer during recessions, stability during volatile markets, is a place to park interest, dividends and gains from the other assets and allows investors to ride out tough markets without having to sell down depressed assets.

Q: Where should my cash be invested?

A: The Cash should be in a high-quality US Treasury Money Market Fund.

Q: Why a Treasury Money Market Fund and not something else with better yield?

A: Because you are not looking to take risk with your cash. Treasury Money Market Funds that are properly run are one of the most liquid investments you can own. There are no FDIC limits to worry about, no bank credit worthiness to worry about, and you will always be paid barring some extremely catastrophic event in the country. Chasing yield with your cash means you are taking on more risk and those risks can show up when you least expect (or want) them to.

Q: Doesn't holding so much cash hurt performance?

A: It doesn't in the Permanent Portfolio strategy. Cash is an integral component that works with the other holdings to provide smooth and stable returns. See here:

https://web.archive.org/web/20160324133 ... l-returns/
Last edited by craigr on Mon Apr 26, 2010 1:41 am, edited 1 time in total.
My new company: www.sandflysecurity.com

IMPORTANT NOTE: My old website crawlingroad{dot}com is no longer available or run by me.

All links to the old domain are invalid and you should use www.archive.is or www.archive.org to look up the information referenced at the old domain.
ppbob
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Re: Cash FAQ

Post by ppbob » Mon Sep 05, 2016 12:11 pm

To access the broken link re permanent portfolio returns use:

archive.org Mar. 4, 2016 copy of webpage
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