The Permanent Portfolio: Harry Browne's Long-Term Investment Strategy

I purchased this book on the recommendation of Tyler, author of the portfoliocharts website. His palette of professional portfolios includes the Permanent Portfolio as well as several others that springboard off its principles. I found the book to be an easy read and after poring though it twice I went online to find critiques of the Perfect Portfolio, for counterpoint. The critiques I located only substantiated what the authors (and Mr. Browne) state is the foundation of the model: it's conservative. For those looking to score big in the market, this book isn't for you - although you'll likely modify your strategy after reading it. For those that are looking for capital preservation combined with low-risk, stress-free growth, give the book a chance to help you see your financial future through "new eyes"!

First the obligatory disclaimers... I was already familiar with and sold on the Permanent Portfolio strategy before reading the book. Secondly I have had the honor of corresponding with both of the authors and am a semi-regular contributor at Craig Rowland's online discussion forum for the Permanent Portfolio.Now for the book (this is for the book version). I found the work to be well written with concise and cogent arguments backed by a level of data and empirical evidence that makes a compelling case for the late Harry Browne's Permanent Portfolio approach to investing. Even for those who may not be ready to buy into the actual 4x25% asset allocations I believe the book makes an overwhelming case for a passive approach to investing, and broad diversification across differing asset classes. The former point will be appealing to indexers and bogleheads. But the second point is just as critical. Because the future is unpredictable and having a portfolio that can withstand the shock of unexpected events is imperative to peace of mind and financial security.There are so many sound pieces of advice and good axioms for investing that I would still be typing come Christmas were I to list them all. But I wish to draw particular attention to the chapters that deal with the subjects of investing in gold and geographic diversification of assets. Gold is a controversial subject that tends to produce heated opinions with few people taking a neutral approach. The authors however approach gold in a thorough but dispassionate manner, making a strong case for why it works as part of a diversified portfolio even as they avoid any emotional attachment to it. Gold as they explain, is just an asset class which protects you in a specific set of conditions, most importantly inflation. But they also point out why you need to hold gold, or pick your least favorite asset class (Bonds, Cash Equities?) even when it smells like last week's trash left to ferment in 90 degree heat. And that is because the future is not predicable (a major underlying theme of the book) and what stinks today could be your financial life jacket tomorrow.The chapter on geographic diversification is also a great addition to the foundation laid by the late and much missed Harry Browne. Far too many people have an almost blind faith in their government and country which is, from an historical perspective, rarely justified. The chapters on gold and geo-diversification provide excellent background and practical guidance for two important, but often ignored areas of investing.In fact the entire book is really an updated users guide for Harry Browne's Permanent Portfolio. What Harry did was provide the concept and the framework. But his books, as good as they were, did tend to be a bit light in the nuts and bolts of putting it all together. And of course times have changed since Harry's untimely death. What the authors have done is to fill in those gaps with loads of timely practical advice on how to implement a Permanent Portfolio, what traps and pitfalls to avoid and of course to present an easy to read and at times witty apologia for the strategy itself.Is the Permanent Portfolio for everyone? No. But the basic underlying themes, the unpredictability of the future, passive investing beats active management and radical diversification as the only path to financial safety, are. And for those who by choice or necessity are conservative investors I submit that I have yet to find a portfolio that is likely to provide a better combination of safety and reasonable long term returns. Forty years of back tested data are provided to back up that claim.In summary the "The Permanent Portfolio" is an outstanding addition to the foundations laid by Harry Browne. I unreservedly and enthusiastically recommend it as one of the no more than two or three books I would hand to a novice investor seeking advice or to an experienced hand looking for a way to safeguard a lifetime's worth of accumulated wealth.

I have been following the general principles of this book (published in 2012) for more than 30 years. The general principles, first identified by Harry Brown decades ago, helped me retire early and live (cheaply) for more than two decades without working. (I used those two decades to write two books,  The Aristotle Adventure: A Guide to the Greek, Arabic, & Latin Scholars Who Transmitted Aristotle's Logic to the Renaissance  and  The Power and the Glory: The Key Ideas and Crusading Lives of Eight Debaters of Reason vs. Faith .)The principles in this book work. The authors present the principles, explain them, and then tell readers how to turn those abstractions into particular investments that are suitable for particular people.One example general principle is the idea that (1) the main _source_ of wealth for most of us should be our careers, and (2) the main purpose of investment should be to _protect_ what we have earned in our careers. We live in a financially uncertain world. The Permanent Portfolio approach engages in investor's jujitsu: The Permanent Portfolio takes advantage of the volatility in all markets that long-term investors know from painful experience. So, rather than fear uncertainty or be dismayed by tomorrow's headlines, a Permanent Portfolio investor can relax and let his portfolio stay safe and grow modestly over the long-term.Sentence by sentence, the book is very easy to read. That does not, however, mean that the book is a quick read. To the contrary, even though I have long been familiar with the basic principles, I needed to ration my reading, to make sure I understood each point that applied to me. I read one chapter or less per day. This approach is not a burden, as much of the book contains graphs and other visuals that require little attention. Their purpose is to emphasize a point.Do not be overwhelmed by the length of the book, at 330 pages. The authors, like Harry Browne himself, excel at telling readers what each type of investor can skip over or skim versus what needs close attention. For example, I have no interest in the Variable Portfolio, which is based on the notion of speculating rather than following a simple, long-term ("Permanent") plan. Consequently, I could skip Ch. 16 ("The Variable Portfolio") entirely. The authors take the same approach within other chapters. The authors are adept at identifying different actions for different sorts of investors. Beginners can focus on the "Level 1" type of strategy, and more advanced investors (or rather, those with huge portfolios) can focus on higher level strategies. In other words, the authors identify every fork in the road and mark each branch with a sign to guide the reader.The only problem I had in reading the book was interpreting some of the charts. They are printed in black ink, of course. Sometimes distinguishing a black line from a dark gray line from a medium gray line was difficult. Nevertheless the point of the chart was almost always clear.If you are new to the idea of a Permanent Portfolio, then you should expect to "invest" some time into understanding the principles. Once you have done that, implementation (following the authors' guidelines) is relatively easy. In the years ahead, you could manage your investments in less than an hour per year. I know that for a fact.Here is proof that this book has value, even to long-term followers of these basic principles: As a result of reading the book carefully, I will be making a series of tweaks to my own portfolio. They do not represent changes in principle, but, rather, better applications of the principles. Browne created the principles; the authors of this book have mastered the art of applying those principles.I highly recommend this book for investors who are rational, want safety (with modest returns), do not want to spend a lot of time (beyond the initial reading) monitoring investments, and need to sleep well no matter what the headlines of the day are screaming.

I hope that this book is as good as the five stars I have awarded it given that I am now adopting its approach for my SIPP! It proposes a simple but not simplistic approach to long-term investing.The approach is to allocate your assets 25% stocks, 25% long term treasuries, 25% cash and 25% gold on the basis that during prosperity stocks perform well, during prosperity and deflation long-term treasuries perform well, cash performs well during periods of `tight' monetary policy (anyone remember those?) and gold as the ultimate protection against inflation, local currency devaluation and financial chaos. At the end of each year you re-balance the fund, effectively forcing you to sell high and buy low across the respective asset classes. The premise of the approach is that no one can predict the future (especially in the long-term) then by adopting this approach you should have some asset that will perform and hopefully compensate for those that don't.Although the book presents US-orientated analysis I have replicated for the UK using Barclays' Equity Gilt study 1899 to 2007 and this approach yield an average real return of 4% on an average 20-year rolling period (my timeframe for retirement). An equity only strategy only beat this approach when looking at 1980-2007 (which is a somewhat unfair comparison from depth to peak). Gold is an interesting, sometimes government regulated asset which didn't move from 1899-1919 and 1940-49 but offered significant gains in 1973-74 and 1980 when everything else was getting hammered.In addition to the strategy, the book advises how to diversify your holdings across different institutions (i.e. don't keep all in one SIPP, e.g. Equity Life, one bank e.g. Northern Rock) or even in one country (anyone remember exchange controls?).Very clearly written book but although outside of US is covered would appreciate more depth for my home market, the UK.Update – have changed original review to include performance to-date info:Assets classes (show real returns i.e. as deflated by % RPI)EQUITY: HSBC FTSE 250 Index TrackerBONDS: Treasury 4¼ 2046GOLD: ETFS Metal Securities Ltd Physical Gold (GBP) EQUITY BONDS GOLD CASH (i.e. RPI inflation) OVERALL2014 5.5% 24.0% 1.0% (-1.6%) 7.3%2015 10.4% (-1.4%) (-8.7%) (-1.2%) (0.2%)2016 4.7% 14.8% 13.0% (-2.5%) 7.5%2017 13.7% 3.4% (-0.8%) (-2.4%) 3.4%2018 (-4.3%) (-1.6%) (-2.2%) (-2.7%) (2.7%)2019 27.0% 7.6% 12.3% (-2.2%) 11.2%1Jul20 (-23.2%) 7.6% 39.0% n/a 5.9% nominal ytd.2016 - Brexit led to volatility where my holdings in gold broke through the 30% limit and in June I sold gold (& cash) and increased my holdings in equity and long-term bonds. Rebalancing enhanced these returns.On an average basis for years 2014-2019, my portfolio had generated a 4.4% Real Return below.A big factor diluting returns is the level of cash holdings, I am tempted in an era of low-interest rates (remember a 5,500 year low, no my finger has not got stuck on the “0” key) to scale down to 10%. A 30/30/30/10 portfolio would have generated a 7.0% real return during 2014-2019. Another adjustment I am looking to make is rather than invest in an equity tracker, whereby by default one is investing “blind” into those companies that get hyped into the FTSE 250, I am considering investing in selected shares. I do follow Harry Browne’s advice of investing 10% in shares to show that you are not as clever as you think you are, however, my individual share picking has outperformed the Index over a reasonable period and I will be gradually moving in that direction.I still think is a good philosophy but needs to be adapted to this low-interest rate era, as 1st July 2020, (coming out of UK lock-down) it provides me a comfort blanket when I see a heavily overvalued equity market, public borrowing levels that could frighten the bond markets, European Target2 balances at higher levels than during the Greek Crisis (can the Euro really continue?), an election year in the US where the choice is between an idiot and someone who is senile and, and, andI wish I had invested more than the £2,000 into Microsoft in 5th May 2011 ~ real return 28%, I would be retired now!

If you're looking for investment advice this is a good book to add to your collection.First of all let me tell you what is wrong with this book - although it has a chapter on how to follow the advice given in countries other than the USA, it is really targeted at an American audience and if you find references to 'Treasury Bonds' and 'T-Bills' annoying you will end up tearing this book apart with your bare hands. Hence I have given the book four stars - if you can stand the American slant it is probably worth five.This book isn't about making fast profits. It is about having a truly diversified portfolio which doesn't require continuous monitoring and will profit under any economic conditions. This is done by holding tracker funds for stocks/shares, long dated government bonds, very short dated government debt (cash) and gold. Even if you ultimately disagree with the strategy the arguments made are compelling and worth a read. The arguments made for holding each asset class are well made and might help you see flaws in other people's sales pitches. Unlike a lot of investment books the authors and the originator of the permanent portfolio strategy don't appear to be selling anything (other than books), which some other investment books seem keen to do, and the book is complete in itself.Recommended.

Easy to read and understand, well written and in depth. The International chapter is a welcome addition, I also particularly like the simple rules that allow you to sell high and buy low without trying to predict the markets.I now have a strategy for my SIPP which mirrors the Permenant Portfolio as far as practical. Unfortunately some of the investments are quite tough to achieve within the UK SIPP structure but there are ways around it using Gold ETF’s and using slightly shorter duration gilts.Unfortunately without the benefit of time I cannot comment on how successful my new strategy will be.

An excellent book and full of sound theories. I first heard of Harry Browne in1971 and made astonishing profits in silver and gold.I was not aware of his later writings and while it is late in my life, I now think I have found a way for my heirs and successors to build a profitable portfolio to be handed on generation after generation with additions being made during their working lives and a stable income in retirement, the stable income being a distribution of not more than 3% of the current income among those entitled to draw on it.

I knew about the idea of the permanent portfolio so was hesitant that this book would just restate the basics. It goes a lot further, really lifting the lid on why it works and how to implement it. It's given me lots of ideas about how I could go about following this strategy.