Gyroscopic Investing

Harry Browne, who passed away in 2006, was a successful writer, investment analyst, and advocate of liberty. He was the Libertarian Party’s presidential nominee in 1996 and 2000.

Browne’s first major success came in 1970, when he released his book How You Can Profit from the Coming Devaluation. He predicted a devaluation of the U.S. dollar, and his prediction shortly came true.

Later in his career, he released a book called Fail-Safe Investing: Lifelong Financial Security in 30 Minutes.
(I suppose my one quibble with the book is that it probably takes a little bit more than 30 minutes to read the book and understand it — at least for the average person.)

In Fail-Safe Investing, Browne offers common sense rules for governing your money and your investments. While the advice is rather simple, many people could have saved themselves a fortune over the years by following it.

Browne also offers what he calls a permanent portfolio — a simple strategy to protect your investment portfolio from any type of economic environment while still achieving some long-term growth.

While I understand we live in an uncertain world and there are no guarantees in life, Harry Browne’s permanent portfolio strategy is the best I have seen for safety, stability, and growth. I like to call it the “sleep-at-night portfolio,”? as you don’t have to constantly worry about what economic news is on the horizon.

The strategy is simple to implement: You break up your investments into four equal parts, investing 25% in stocks, 25% in long-term U.S. Treasury bonds, 25% in cash (or cash equivalents), and 25% in gold.

If your portfolio becomes unbalanced, you simply rebalance it by selling part of the asset class that has gained and buying the asset class that has lost. (You don’t have to constantly do this, but it is important to rebalance once in a while.)

For example, if you have great growth in stocks and losses in bonds such that stocks now comprise 35% of your portfolio and bonds comprise only 15%, then you should sell stocks and buy bonds to get each back to 25%.

I will now go through each asset class to describe the appropriate investments and the purpose...

Odysseusa wrote: In addition to the permanent portfolio, I would like to add some of my own.

The easiest way to make money is to save money.
The easiest way to make money is to give and we will get back 10 times as much.

Ad Orientem wrote:

Odysseusa wrote: In addition to the permanent portfolio, I would like to add some of my own.

The easiest way to make money is to save money.
The easiest way to make money is to give and we will get back 10 times as much.

+1 to the saving money part. I'm not so sure about the give and get back ten fold thing though. I think the ten fold in large measure comes in the form of non-monetary returns, i.e. personal satisfaction and happiness from helping others.