Gyroscopic Investing

I've noticed several forum members mention tweaks to the standard 4x25 Permenent Portfolio that they've made. I thought I'd start a thread allowing members to post their own PP holdings and allow others to critique those holdings. We can all agree that not everyone's financial situation or tolerance for risk is the same and would be interesting to see how people have made accomodations.

I feel the Canadian stock market is not well diversified within the various sectors being heavily weighted in financials, and commodities. To deal with this, I have added a US (S&P500) and Emerging Market component to the Equity portion. I also feel the Cash component is a stabilizer intended to lower risk but for someone in their late 20's who can ride out some downside risk, doesn't offer too much as an investment.  I try to stay in index funds due to frequent contributions.

Equity (40%)
15% TDB216 - Canadian (S&P/TSX) Index Fund (0.88% mer)
15% TDB661 - US (S&P500) Index Fund (0.54% mer)
10% CIB519 - Emerging Markets (S.Korea, Taiwan, BRIC, Mexico) Index Fund (1.39% mer)

Bonds (25%)
15% XLB - iShares Gov't Long Bonds ETF (41% 25+yr, 41% 15-25yr), (0.35% mer)
10% XBB - iShares Bond Universe ETF (70% Gov't Bonds, 14% 25+yr, 17% 10-25yr, 69% <10yr), (0.33% mer)

Gold (25%)
25% Physical Gold Coins

Cash (10%)
10% Savings Account

I think most would consider this more PP inspired than true PP..... Of course, I'd call mine PP inspired as well....  (All percentages rough; in IRA; All Vanguard except for metals; I couldn't give up the slice and dice; I'm less then 6 months in anything PPish....)

Stocks (40% ; ~30% intl, Value, & Small)
  TSM: 16% (VTSAX)
  SV:    6% (VBR)
  IV:      6% (VTRIX)
  ISB:    6% (VSS)
  REIT:  6% (VGSIX)
Bond (20%)
  VUSTX (12%)
  EDV (8%)
Metals (20%)
  IAU: 17%
  SIVR: 3% (just couldn't jump all in to gold....)
"Cash" (20%)
  VBIRX: 20% (ST Bond, yeah, not PP approved: only 70% gvt, 60% with <= 3yr duration...)
 
And I'm thinking of LTT / Gold down to 16% (getting their on its own...)  Yes, um, tactical timing....

Edit : corrected stock percentages.

Dieter wrote: And I'm thinking of LTT / Gold down to 16% (getting their on its own...)  Yes, um, tactical timing...

Yeah, PP inspired is a good way to put it.
I think we all tweak to some extent...I think I read Craig R. In a bond thread say he avoids 0 coupon LTT where HB would have liked the higher volatility. As long as we are preparing for various market conditions and not market timing, I think we will do just fine.

Shifting gold to LTT? Are you anticipating deflation?

I am constricted by my 401k account, which is only suitable for stocks and cash.  Also, the majority of my retirement savings goes into my 401k each year.  Because of this, and the fact that I want to take some interest rate risk with the cash (only one bond choice), I have set my PP up the following way:

Stocks:
25% VG S&P 500 (0.05% ER)

Cash:
25% VG Total Bond Market (0.1% ER)

Bonds:
25% 30 yr Treasuries held directly (0% ER)

Gold:
25% GTU (0.33% ER)

Total ER: 0.12%

Right now, I'm able to roughly balance everything, but if I get to a point where my 401k is too big, I'll simply maintain a 50/50 S&P 500/TBM split within it and a 50/50 split of LTTs and gold across my other accounts.

Another change I could make is on the stock side.  I could split it such that I have 20% S&P 500 and 5% VG Smallcap.  Or I could go even further with 16% S&P500, 4% VG Smallcap, and 5% VG Total International.  I decided though that for now, the S&P 500 is simplest for me.

Stunt: I'm thinking both LTT and Gold to 16%, not from Gold to LTT.... Although being a home "owner", I think I have more inflation protection than deflation protection overall (I also think REIT helps a bit with inflation.)

Rymenocerous - do you max the company match in 401(k) and then contribute to a Roth IRA to have space outside 401(k)?

Stunt wrote: 10% CIB519 - Emerging Markets (S.Korea, Taiwan, BRIC, Mexico) Index Fund (1.39% mer)

I'd break that further down into 5% Frontier and 5% Emerging.  The Frontier of yesterday, is Emerging of today.  Emerging of today is unlikely to repeat the Frontier of yesterday's performance.

I'm unclear why the equity is at 40% though.  You will need more LT exposure to make up for that increased risk and I do not see such compensation.

MachineGhost wrote:

Stunt wrote: 10% CIB519 - Emerging Markets (S.Korea, Taiwan, BRIC, Mexico) Index Fund (1.39% mer)

I'd break that further down into 5% Frontier and 5% Emerging.  The Frontier of yesterday, is Emerging of today.  Emerging of today is unlikely to repeat the Frontier of yesterday's performance.

I'm unclear why the equity is at 40% though.  You will need more LT exposure to make up for that increased risk and I do not see such compensation.

Frontier being like Africa and SE Asia?