Gyroscopic Investing

I'm sure some of you have thought about this...

Wouldn't it be fun to set up a mutual fund that gets it right. Most people on this forum would not invest in the current Permanent Portfolio mutual fund because it's positions seem outdated and biased towards inflation. Plus, active management and high fees are going out of style.

It could be the basic

25% Total Stock Market (perhaps do your own sampling to avoid paying an expense ratio, while giving the appearance of doing more work to earn your own expense ratio)
25% Gold
25% 30 year treasuries
25% 1 year treasuries

When I look at the PP most of us use, I see hedge fund like returns that are available to retail investors. The PP gives us those hedge fund returns, but it could totally work under the legal structure of a mutual fund. That's very powerful.

I'm only a sophomore in college, but setting up mutual fund like this sounds like a dream come true. I am disappointed by so much of what the financial industry sells to its clients, but this is something I could really get behind.

I would call it... the Melvey Absolute Return Fund.

I would give Browne props in the prospectus of course

A kid can dream, right?

Here from the prospectus of the current fund is the rub, I believe:

http://www.permanentportfolio.com/pdfs/ ... y-2010.pdf

page 23
Risks of in-kind redemptions — to avoid liability for corporate federal income tax, the Portfolio must, among other things, derive at least 90% of its gross income each taxable year from sources including interest, dividends and gains on sales of securities. Gains on sales of gold and silver by the Portfolio do not qualify as “gains on sales of securities.”? Consequently, profitable sales of gold and silver (as might be required for the Portfolio to adhere to its Target Percentages) could subject the Portfolio to liability for corporate federal income tax. To try to reduce this potential adverse tax result, the Fund may require redeeming shareholders in the Portfolio to accept readily tradable gold or silver bullion or coins from the Portfolio’s holdings in complete or partial payment of redemptions, if it can satisfy a federal tax law provision that permits it to do so without recognizing gain.