Gyroscopic Investing

Here is a panel discussion with three veteran money managers about how investors can prepare for the unexpected in a post-crisis world.  Michael Cuggino, manager of the PRPFX Permanent Portfolio fund, is one of the panelists (Harry Browne does not get mentioned).  Viewers get a diversity of opinion about how to deal with black swans.

video: http://www.marketwatch.com/video/asset/ ... B329B46F51

article:  http://www.marketwatch.com/story/diggin ... 2011-05-10

I'm amazed at how much coverage Michael Cuggino's opinions get when he manages a fund with a static allocation that hasn't changed in 30 years.

I guess he's just selling his fund, but I would feel weird offering up all of these opinions as a manager of a fund that doesn't change its allocation; I would worry that someone would finally ask me how I was translating my opinions into my fund's asset allocation, at which point I would have to say that my opinions have almost nothing to do with the way my fund is invested.

MediumTex wrote: I'm amazed at how much coverage Michael Cuggino's opinions get when he manages a fund with a static allocation that hasn't changed in 30 years.

I guess he's just selling his fund, but I would feel weird offering up all of these opinions as a manager of a fund that doesn't change its allocation; I would worry that someone would finally ask me how I was translating my opinions into my fund's asset allocation, at which point I would have to say that my opinions have almost nothing to do with the way my fund is invested.

That is a very good point.  Perhaps all this is known by the interviewers and the fact that the question never arises is all part of the performance.

I think the issue is much simpler than we think.  The PP concept and its components and underlying philosophy are so foreign and counter-intuitive to most people that they don't see its simplicity hiding in plain sight.  The idea of owning ANY Swiss Francs or gold (much less 20%), for instance, is a major hurdle for most Americans since they have been brought up in such a "dollar-centric" world.  The PP philosophy runs counter to so many cognitive biases (recency bias, overconfidence, loss aversion, etc.) that the average viewer and interviewer can't get past the individual components and the "not trying to predict the future" approach to even ask questions about the fund's static allocation. 

Like you, I do wish Cuggino would give Harry Browne some credit.  I guess this stokes his ego.  The funny thing is, sales of his fund would probably increase substantially if more people read HB and understood the reasoning behind it.   I doubt that he (or we) will ever need to worry about too many people adopting (and thus ruining) the PP approach. 

     

MediumTex wrote: I'm amazed at how much coverage Michael Cuggino's opinions get when he manages a fund with a static allocation that hasn't changed in 30 years.

I guess he's just selling his fund, but I would feel weird offering up all of these opinions as a manager of a fund that doesn't change its allocation; I would worry that someone would finally ask me how I was translating my opinions into my fund's asset allocation, at which point I would have to say that my opinions have almost nothing to do with the way my fund is invested.

LOL. 

Makes me want to go out and start my own fund... just to feel important.