Gyroscopic Investing

“Let every man divide his money into three parts, and invest a third in land, a third in business and a third let him keep by him in reserve.”?

If you were to follow this old school version of the Permanent Portfolio, what would be your modern investment choices and rebalancing rules?

My initial stab via ETFs would be VT, VNQ, and BND. With buy the lagging asset during accumulation, sell the leader during drawdown.  In reality, this would probably also include in each bucket respectively individual dividend stocks, rentals/farmland, and gold/silver for me.

For an all-ETF version.

VNQ (land), VTI (business), GLD (reserves).

Accumulation: Add to lagging asset.

Withdrawal:  Draw from largest asset, rebalance annually.

30% VNQ
30% VT
30% BND
10% Gold

Rebalance annually. I think this portfolio would be better than many, maybe even most. But I do see a serious vulnerability to deflation.

Thanks guys for your thoughts. 

A little background into why I am exploring a Talmud portfolio as compared to the PP:  The 25% of the PP in gold, because I am accumulating at a very fast pace, scares me.  It would result in very large gold holdings that introduces risks of storage and large rebalancing sales that outside of my comfort zone.  Plus, the PP never really helps me gauge in a clean way how to balance real estate, like a family farm, against stocks, bonds, and cash.

Bean wrote: Plus, the PP never really helps me gauge in a clean way how to balance real estate, like a family farm, against stocks, bonds, and cash.

An early version of the pp had 15% in "real estate and natural resource stocks." I think that's (real estate + nat.resource) stocks and not (real estate, land) + (nat.res.stocks), i.e. all stocks and not real land. I got this from Craig & J.M's book on the PP. In the kindle version, it's location 7485 of 8914.

Bean wrote: Thanks guys for your thoughts. 

A little background into why I am exploring a Talmud portfolio as compared to the PP:  The 25% of the PP in gold, because I am accumulating at a very fast pace, scares me.  It would result in very large gold holdings that introduces risks of storage and large rebalancing sales that outside of my comfort zone.  Plus, the PP never really helps me gauge in a clean way how to balance real estate, like a family farm, against stocks, bonds, and cash.

bean have you looked at the Perth Mint?

A point about gold storage costs....the more secure your gold the more valuable it is when you need it.

Imagine a scenario where you had to get out of the country with your gold. You will have to take great risks or bribe guards at the border for sure.

The portion of gold you have securely stored overseas will be much more valuable than gold shoved up your........

RyeWhiskey wrote: Casual observation: I believe the Talmud Portfolio is to be taken more literally than most assume when they speak about recreating it with ETFs. And actual Talmud Portfolio would be 1/3 in land which produces returns (such as timber, farmland, rentals, etc...), 1/3 in business (which could be stocks but would generally be an actual business which you own), and 1/3 in reserves (which would be cash, gold, or guaranteed fixed-income).

Totally agree. This "Talmud Portfolio" seems a lot more like a life prescription than an investment portfolio. If so, what it's really saying is, "Own some productive land, run an income-producing business, and save for emergencies and the future." If anything, the "1/3 in reserve" part is the actual investment portfolio.

So if it were me, this is what I would be shooting for:

1/3 land
1/3 owned business
1/3 permanent portfolio

Any rabbis on the forum to clarify this portfolio? Is this something Jews are supposed to follow as a must or it's just a recommendation?

Any other religious books that are recommending some portfolios or only Talmud? It'd be interesting to compare if any.

LazyInvestor wrote: Any rabbis on the forum to clarify this portfolio? Is this something Jews are supposed to follow as a must or it's just a recommendation?

Most Jews alive today have not read one word of the Talmud, which was written by a group of scholars and intellectuals interpreting the holy books. But even if they have read it, it's not a must, like the Torah's injunction against shrimp (Leviticus) which is also ignored by the non-religious.
P.S. Watch out for false Talmud statements proliferating on the web, propagated by people like Jeff Rense and white power groups.

Kshartle wrote:
bean have you looked at the Perth Mint?

I will actually be taking a tour of the Perth Mint in about two weeks, but that is a different story. 

Pointedstick wrote: 1/3 land
1/3 owned business
1/3 permanent portfolio

^ This is what I was thinking and at the end the day will probably be where I settle.  I firmly believe in owning productive land, being an entrepreneur, and the permanent portfolio.  So might as well do all 3.

Bean wrote: “Let every man divide his money into three parts, and invest a third in land, a third in business and a third let him keep by him in reserve.”?

Really interesting.

I wonder how the Bible or Quran portfolio looked like.

[quote=dualstow]P.S. Watch out for false Talmud statements proliferating on the web, propagated by people like Jeff Rense and white power groups.[/quote]

Examples?

There is attributed to Jesus in the  Bible:

"Again I say to you, it is easier for a camel to go through the eye of a needle, than for a rich man to enter the kingdom of God."

That would seem to argue against any kind of asset allocation.

barrett wrote: There is attributed to Jesus in the  Bible:

"Again I say to you, it is easier for a camel to go through the eye of a needle, than for a rich man to enter the kingdom of God."

That would seem to argue against any kind of asset allocation.

Fortunately the complete context is:

Matthew 19 24-26 wrote:And again I say unto you, It is easier for a camel to go through the eye of a needle, than for a rich man to enter into the kingdom of God. When his disciples heard it, they were exceedingly amazed, saying, Who then can be saved? But Jesus beheld them, and said unto them, With men this is impossible; but with God all things are possible.

WildAboutHarry wrote:

dualstow wrote:P.S. Watch out for false Talmud statements proliferating on the web, propagated by people like Jeff Rense and white power groups.

Examples?

Oh, that it's ok to lie to/ cheat / kill gentiles. Things like that. You can start at note#99 on the wikipedia Talmud entry, but it's very searchable. You could try stormfront via google, if you dare.

RyeWhiskey wrote: Casual observation: I believe the Talmud Portfolio is to be taken more literally than most assume when they speak about recreating it with ETFs. And actual Talmud Portfolio would be 1/3 in land which produces returns (such as timber, farmland, rentals, etc...), 1/3 in business (which could be stocks but would generally be an actual business which you own), and 1/3 in reserves (which would be cash, gold, or guaranteed fixed-income).

To modify this into 1/3 TSM, 1/3 REITs, 1/3 bonds is to turn it into a 2/3 equity, 1/3 fixed-income portfolio which is a far cry from what was conceived of in the time of the actual scripture. That said, I think any simple and commonsense plan which is employed at low-cost will probably serve the average person best. If you can stick with it then go for it.

I don't necessarily agree with this.  There is no right answer as we are all different and have different skill sets, but actual business ownership is not for everyone.  Not everyone makes a great entrepreneur and for those that aren't capable of successfully running a business, it certainly makes sense to me that it's more beneficial to farm that portion out to those that are (or have the desire, etc).  So for most, IMO stocks represent a better chance of being successful at that part of the Talmud portfolio.

(Keep in mind, I am a business owner/operator, so I have a lot of experience with running a successful business).

Same for the real estate portion.  Not everyone has the desire or skill sets to be a land lord.  I personally have been a land lord and realized that I didn't want to get phone calls in the middle of the night or have to try to "fix" plumbing issues, etc.  Why not let those that are more proficient, or can more easily reduce costs by "scaling up" take care of that part of the portfolio?

RyeWhiskey wrote: My point was simply that the Talmud portfolio, as outlined as briefly as it was when it was recorded, was mostly likely not referring to such a setup and was much more likely to be referencing a 'hard asset' allocation involving actual productive land, a business, and cash reserves.

But only because that's all there was back then, right? That's all that existed.

barrett wrote: There is attributed to Jesus in the  Bible:

"Again I say to you, it is easier for a camel to go through the eye of a needle, than for a rich man to enter the kingdom of God."

That would seem to argue against any kind of asset allocation.

There was a Harvard Lampoon parody of Time Magazine many (many) years ago that included a parody article describing (as I recall through the cobwebs of many decades) how the rich had begun hiring people to bludgeon camels so the camels could pass through the eye of a needle

Heh heh. There's always a loophole.

As for me, that would be :

• land : rental real estate, farms, etc. directly owned
• businesses : dividend-producing foreign stocks directly owned
• reserves : 50% gold, 50% local currency (saving accounts, very short term bonds, actual cash, ...)

That would mean 50% physical 50% financial, but also 50% local 50% foreign.

I'm more and more thinking about implementing such a thing for myself, to overcome what I consider (minor) defaults of the PP for a non-US citizen (mainly, the fact that bonds can't be printed out by the nation to pay national debt here, and the fact that a collapse of my money value doesn't imply an equivalent surge in gold prices).

“Let every man divide his money into three parts, and invest a third in land, a third in business and a third let him keep by him in reserve.”?

Really interesting.

I wonder how the Bible or Quran portfolio looked like.

"Give a portion to seven, or even to eight, for you know not what disaster may happen on earth"
Ecclesiates 11:2

Pointedstick wrote:

RyeWhiskey wrote: Casual observation: I believe the Talmud Portfolio is to be taken more literally than most assume when they speak about recreating it with ETFs. And actual Talmud Portfolio would be 1/3 in land which produces returns (such as timber, farmland, rentals, etc...), 1/3 in business (which could be stocks but would generally be an actual business which you own), and 1/3 in reserves (which would be cash, gold, or guaranteed fixed-income).

Totally agree. This "Talmud Portfolio" seems a lot more like a life prescription than an investment portfolio. If so, what it's really saying is, "Own some productive land, run an income-producing business, and save for emergencies and the future." If anything, the "1/3 in reserve" part is the actual investment portfolio.

So if it were me, this is what I would be shooting for:

1/3 land
1/3 owned business
1/3 permanent portfolio

totally agree

regards!

What are the rebalance bands on the Talmud portfolio? 

What are the rebalance bands on the Talmud portfolio?

If your land goes up in value, you simply sell off a few shrubberies.