Most Fiat Fantasy asset classes are standard. One exception would be the "Professional Allocators" class. It's in the mix because I know there are people who do this for a living and I'm willing to give professional management a shot. With some, not all, of my money. Actually, the idea stems from looking for investments that held up "well" in the down market that began in 2007 and stumbling across the Permanent Portfolio (PRPFX) mutual fund. Why I hadn't discovered it earlier is odd because it's a takeoff on an older idea of Harry Browne's. In fact, I believe I watched Harry Browne on Lou Rukeyser's Wall Street Week television show. PRPFX invests in six asset classes: gold; silver; Swiss franc assets; stocks of US and foreign real estate and natural resource companies; aggressive growth stocks; and US treasury bills, bonds & other dollar assets. Here is a five year chart of PRPFX versus the S&P 500.
I wanted to make an investment in PRPFX, but had no applicable asset class. I fudged "Professional Allocators" to find a home for PRPFX. Professional Allocators is reserved for professionally managed investment vehicles that include investments in addition to traditional equities and bonds. A buddy at work many years ago told me that his father's last words were "Don't ever sell the gold stocks". And boy, was gold in the dumper then. If my kids bench me for squandering their meager inheritance through rotten investment decisions, I would gasp "Don't ever sell PRPFX". Well, at least not until we are rid of paper debt money.
2 comments:
enid, glad you enabled comments; and let me be the first. Like you, I like the Permanent Portfolio (PP) idea and have a few shares of PRPFX. However, like most people, I suspect, I also have pieces of the PP in the remainder of my portfolio and want to be able to adjust the allocations to my liking. Here is an Investopedia link (http://tinyurl.com/2cmlm9d) that recreates the PP with ETFs. Varying the amounts of the ETFs recommended allows the individual to build a PP with his own preferred allocations.
Thanks J. Glad you added the idea of building your own PP using ETFs. The PRPFX equity portion is not indexed and depends on the fund manager's performance. I see that as the main difference between the two approaches.
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