helmuth_hubener
Banned
- Joined
- Nov 28, 2007
- Messages
- 9,484
This year has been super for stocks! Yeehah! So, for portfolio balancing I just sold some and bought some gold. I now keep about 25% of my portfolio in gold. But don't worry, I will still have about 25% in stocks as well, so in case the stock market keeps going up, I will continue to profit from that, as well.
That's part of the beauty of the Permanent Portfolio plan I follow, devised by Harry Browne and some associates back in the late 1970s. You rebalance whenever one of the assets gets to be too high of a percentage of the portfolio. That makes you automatically do the smart thing: sell after something has gone way up, such as the stock market in this case, and by doing that you lock in your profits. And at the same time, it also makes you buy an asset after its price has gone way down, which in this case is gold. Buy low and sell high is, of course, exactly what one wants to do if he wants to make profits. Mathematically, it is very clear and straighforward, but actually doing it in real life turns out to be anything but easy! But lucky for me, the Permanent Portfolio that Harry designed makes it so it is very easy -- it's essentially automatic. Stocks have had a big run-up so that they now consist of more than 35% of the portfolio? You sell, and buy whatever is now below 15%, bringing everything back in line to a four-way 25% split. It's simplicity itself! It's brilliant!
It takes a truly brilliant mind and a deep, focused effort to take something that is highly complex and difficult, like investing or handheld computing, and distill it down to something elegant and simple, like the Permanent Portfolio or the iPhone. Thank you, Mr. Browne, and over the years I'm sure my bottom line will thank you, too.
That's part of the beauty of the Permanent Portfolio plan I follow, devised by Harry Browne and some associates back in the late 1970s. You rebalance whenever one of the assets gets to be too high of a percentage of the portfolio. That makes you automatically do the smart thing: sell after something has gone way up, such as the stock market in this case, and by doing that you lock in your profits. And at the same time, it also makes you buy an asset after its price has gone way down, which in this case is gold. Buy low and sell high is, of course, exactly what one wants to do if he wants to make profits. Mathematically, it is very clear and straighforward, but actually doing it in real life turns out to be anything but easy! But lucky for me, the Permanent Portfolio that Harry designed makes it so it is very easy -- it's essentially automatic. Stocks have had a big run-up so that they now consist of more than 35% of the portfolio? You sell, and buy whatever is now below 15%, bringing everything back in line to a four-way 25% split. It's simplicity itself! It's brilliant!
It takes a truly brilliant mind and a deep, focused effort to take something that is highly complex and difficult, like investing or handheld computing, and distill it down to something elegant and simple, like the Permanent Portfolio or the iPhone. Thank you, Mr. Browne, and over the years I'm sure my bottom line will thank you, too.
