Free eBook: Charles Gave’s Strategy for Optimizing the Permanent Portfolio
Posted: Mon Dec 29, 2025 3:36 am
Hi everyone,
Over the holidays, I came across a short book by Charles Gave, a french economist, that is available online for free: The General Theory of Portfolio Construction (https://web.gavekal.com/books/the-gener ... struction/). I thought it might be of interest to some of you here.
The book focuses on portfolio construction and presents what Gave considers an improved version of the classic Permanent Portfolio. His approach differs from Harry Browne's original concept in two key ways:
-) He adds 20% energy equities (XLE) as a hedge against oil price shocks.
-) Gave only holds Gold or LTTs at a time, never both. The rational behind that is, that LTTs and Gold are meant to protect the portfolio during diametrically opposed economic phases. The choice is determined by a dual momentum strategy.
In my opinion, a 20% allocation to XLE seems excessive. However, the dual momentum idea for Gold and LTTs is very intriguing. This strategy would have protected investors from both the long gold bear market of the 90s and the massive drawdown in LTTs in 2022/23. That said, I'm not a big fan of holding the remaining three asset classes at a fixed 33% each.
Regardless, Gave’s insights are compelling and the book is definitely worth a read.
Enjoy,
Mayday
Over the holidays, I came across a short book by Charles Gave, a french economist, that is available online for free: The General Theory of Portfolio Construction (https://web.gavekal.com/books/the-gener ... struction/). I thought it might be of interest to some of you here.
The book focuses on portfolio construction and presents what Gave considers an improved version of the classic Permanent Portfolio. His approach differs from Harry Browne's original concept in two key ways:
-) He adds 20% energy equities (XLE) as a hedge against oil price shocks.
-) Gave only holds Gold or LTTs at a time, never both. The rational behind that is, that LTTs and Gold are meant to protect the portfolio during diametrically opposed economic phases. The choice is determined by a dual momentum strategy.
In my opinion, a 20% allocation to XLE seems excessive. However, the dual momentum idea for Gold and LTTs is very intriguing. This strategy would have protected investors from both the long gold bear market of the 90s and the massive drawdown in LTTs in 2022/23. That said, I'm not a big fan of holding the remaining three asset classes at a fixed 33% each.
Regardless, Gave’s insights are compelling and the book is definitely worth a read.
Enjoy,
Mayday