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The Permanent Portfolio: Harry Browne's Long-Term Investment Strategy
An up close look at an investment strategy that can handle today's uncertain financial environmentMarket uncertainty cannot be eliminated. So rather than attempt to do away with it, why not embrace it? That is what this book is designed to do. "The Permanent Portfolio" takes you through Harry Browne's Permanent Portfolio approach--which can weather a wide range of economic conditions from inflation and deflation to recession--and reveals how it can help investors protect and grow their money.
Written by Craig Rowland and Mike Lawson, this reliable resource demonstrates everything from a straightforward four-asset Exchange Traded Fund (ETF) version of the strategy all the way up to a sophisticated approach using Swiss bank storage of selected assets for geographic and political diversification. In all cases, the authors provide step-by-step guidance based upon personal experience.This timeless strategy is supported by more than three decades of empirical evidenceThe authors skillfully explain how to incorporate the ideas of the Permanent Portfolio into your financial endeavors in order to maintain, protect, and grow your moneyIncludes select updates of Harry Browne's Permanent Portfolio approach, which reflect our changing times
"The Permanent Portfolio" is an essential guide for investors who are serious about building a better portfolio.
Written by Craig Rowland and Mike Lawson, this reliable resource demonstrates everything from a straightforward four-asset Exchange Traded Fund (ETF) version of the strategy all the way up to a sophisticated approach using Swiss bank storage of selected assets for geographic and political diversification. In all cases, the authors provide step-by-step guidance based upon personal experience.This timeless strategy is supported by more than three decades of empirical evidenceThe authors skillfully explain how to incorporate the ideas of the Permanent Portfolio into your financial endeavors in order to maintain, protect, and grow your moneyIncludes select updates of Harry Browne's Permanent Portfolio approach, which reflect our changing times
"The Permanent Portfolio" is an essential guide for investors who are serious about building a better portfolio.
352 pages, Hardcover
First published January 1, 2012
39 people are currently reading
571 people want to read
About the author
Craig Rowland
4 books16 followersI am a computer security software entrepreneur and have made my career working for and running high-tech start-ups. Some of these companies have been acquired by Cisco Systems, Inc. and 3Com Corp. My work included being paid to break into computer networks for a living, designing network attack tools, designing intrusion detection and response systems, and working on other interesting research. I hold several patents in the field.
My computer security background, combined with entrepreneurial experience, gives me a unique insight into risks that you won't see in typical investment advice. If you ever wanted to know what a computer hacker would invest like, you've come to the right place. My view on portfolio risk and protecting what you've earned is much different from what you're going to find on Wall St. (and much more likely to see you to your goals).
Thanks for stopping by.
My computer security background, combined with entrepreneurial experience, gives me a unique insight into risks that you won't see in typical investment advice. If you ever wanted to know what a computer hacker would invest like, you've come to the right place. My view on portfolio risk and protecting what you've earned is much different from what you're going to find on Wall St. (and much more likely to see you to your goals).
Thanks for stopping by.
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Displaying 1 - 27 of 27 reviews
November 19, 2017
This book is probably the most important investing book I've ever read. It details how one can build an all-weather investment portfolio that can survive whatever the economy throws your way: prosperity, recession, inflation and deflation.
The portfolio is composed of only four assets: stocks, bonds, cash and gold.
You put 25% of your portfolio into each one. Rebalancing occurs annually or when the allocations exceeds certain boundaries. Without too much thought or expense, your portfolio takes advantage of differing correlations between these assets to buy low and sell high.
Here's how it works:
1.Prosperity - good for stocks and bonds.
2.Recession - good for cash.
3.Deflation - good for bonds and cash.
4.Inflation - good for gold.
The major appeal of this approach is equity like returns but with much less volatility.
According to the PP calculator:
https://www.peaktotrough.com/hbpp.cgi
Over the period from 1970 through today (Nov 17 2017), the permanent porfolio achieved an annual return of 8.79% with a max drawn down of 19.79% (in 1980)
An all stock portfolio achieved an annual return of 9.49% with a max drawn down of 54.75% (2007-2009) and many other significant drawn downs.
So you achieve very little additional benefit with an all equity approach for taking on significant added volatility and worry.
The best part about the permanent portfolio approach is that if you're not interested in the stock market, you can turn off CNBC, throw out the business section and stop wasting time listening to the pundits with their predictions and nonsense. You can leave financial worries behind and just enjoy your life knowing your investments are safe.
The portfolio is composed of only four assets: stocks, bonds, cash and gold.
You put 25% of your portfolio into each one. Rebalancing occurs annually or when the allocations exceeds certain boundaries. Without too much thought or expense, your portfolio takes advantage of differing correlations between these assets to buy low and sell high.
Here's how it works:
1.Prosperity - good for stocks and bonds.
2.Recession - good for cash.
3.Deflation - good for bonds and cash.
4.Inflation - good for gold.
The major appeal of this approach is equity like returns but with much less volatility.
According to the PP calculator:
https://www.peaktotrough.com/hbpp.cgi
Over the period from 1970 through today (Nov 17 2017), the permanent porfolio achieved an annual return of 8.79% with a max drawn down of 19.79% (in 1980)
An all stock portfolio achieved an annual return of 9.49% with a max drawn down of 54.75% (2007-2009) and many other significant drawn downs.
So you achieve very little additional benefit with an all equity approach for taking on significant added volatility and worry.
The best part about the permanent portfolio approach is that if you're not interested in the stock market, you can turn off CNBC, throw out the business section and stop wasting time listening to the pundits with their predictions and nonsense. You can leave financial worries behind and just enjoy your life knowing your investments are safe.
January 4, 2023
This is one of my favorite books about personal finances. Most of these types of books are full of Blablabla or authors with too much Ego. In this case, it goes straight to the point: explanations, concrete examples and suggestions.
I read a lot of concepts like gold is not that profitable, cash is trash,… but they actually could be a nice idea. This book gives you a perspective about how to invest safely, how different assets could be beneficial for different situations as the economy has different phases.
“The Permanent Portfolio holds four assets to deal with the four possible economic conditions:
1. Prosperity is good for stocks and bonds.
2. Deflation is good for bonds and cash.
3. Recession is not good any asset, but cash serves as a buffer during such periods.
4. Inflation is good for gold.”
I highly recommend it.
I read a lot of concepts like gold is not that profitable, cash is trash,… but they actually could be a nice idea. This book gives you a perspective about how to invest safely, how different assets could be beneficial for different situations as the economy has different phases.
“The Permanent Portfolio holds four assets to deal with the four possible economic conditions:
1. Prosperity is good for stocks and bonds.
2. Deflation is good for bonds and cash.
3. Recession is not good any asset, but cash serves as a buffer during such periods.
4. Inflation is good for gold.”
I highly recommend it.
January 18, 2021
Let me start my review by stating that I read this book in Spanish, thanks to a beautiful initiative by a now Asset Manager previously blogger who has founded a publishing firm to translate the pillars of personal finance and investing among not-so-good neither at finance nor english Spanish people. Just so you now, it is called Colección Baelo.
Now to the proper review. After reading bits and pieces of the Permanent Portfolio around, I was starting to feel like it would be a sound investment, especially for my parents or people alike. As always, the web provides useful but mostly superficial information, so I dived into this book in the hopes of finding a thoughtful, complete guide to the philosophy and structure of this strategy. Although quite complete, and not especially dragging, I found most of this information to be nothing new to what I had previously read, and although the style is simple and clear, the edition sometimes was pretty bad, with plots difficult to read or elementary-style tables. There were some bits about storing and buying physical gold, which by far was the most useful information to be found.
However, I do feel that, if instead of looking for a book to deepen your knowledge in investing, you are look for a fail-safe have it all guide, this book might be a good starting point from which to learn one of the most reasonable strategies, one which doesn't relies on backtest to trim it's results, and one which, very important and sometimes overlooked, will help you sleep soundly at night with your investments.
PS: I could explain its main points, but I am sure people around here or in the web will explain those to you better, in any case, let me know and we can discuss about it!
Now to the proper review. After reading bits and pieces of the Permanent Portfolio around, I was starting to feel like it would be a sound investment, especially for my parents or people alike. As always, the web provides useful but mostly superficial information, so I dived into this book in the hopes of finding a thoughtful, complete guide to the philosophy and structure of this strategy. Although quite complete, and not especially dragging, I found most of this information to be nothing new to what I had previously read, and although the style is simple and clear, the edition sometimes was pretty bad, with plots difficult to read or elementary-style tables. There were some bits about storing and buying physical gold, which by far was the most useful information to be found.
However, I do feel that, if instead of looking for a book to deepen your knowledge in investing, you are look for a fail-safe have it all guide, this book might be a good starting point from which to learn one of the most reasonable strategies, one which doesn't relies on backtest to trim it's results, and one which, very important and sometimes overlooked, will help you sleep soundly at night with your investments.
PS: I could explain its main points, but I am sure people around here or in the web will explain those to you better, in any case, let me know and we can discuss about it!
April 24, 2021
Harry Browne proposes a portfolio that is constructed to preserve capital, by using on its composition four different assets: stocks, bonds, cash, and gold. This portfolio is designed to make it thrive through each economical cycle (prosperity, recession, inflation, and deflation), by having complementary assets which on average will have a more stable behavior. The portfolio needs to be rebalanced once per year, to ensure each component represents 25% of the total value.
Historically, the permanent portfolio has provided a better return than the market average, and when the market has collapsed the permanent portfolio had a better performance (from 1970 till 2017 it had an annual return of 8.79%, with a max drop of 20% in 1980).
Here there are some random notes I took while reading the book:
- The majority of the money that is earned during your life will come from your profession.
-Where the investor has a plan, the speculator has only hope. Don't bet all your savings on hope.
- It's rare that people who would never think of visiting a parapsychologist every morning for advice will willingly listen to what a commentator or investment guru tells them about what the future holds for the markets.
-Investors need growth, protection and real returns. If you don't have all three, your investment plan will have serious problems.
-Investing doesn't need to be (and shouldn't be) complicated. There is a close relationship between complicated investment products, low or negative returns, and high risks.
-An immutable principle of investing is understanding that there is no risk-free investment.
-In 1960, professional transactions (pensions, mutual funds ...) accounted for 30% of all those carried out by the market. In 1979 that number increased to 60% 16. In 1989, it reached 70% 17. In 2010 it reached 88% according to a recent analysis by Tabb Group. Only 11% of stock transactions today are from retail investors
-Fund managers cannot beat the market. They are the market. If you invest to achieve the market average, you will probably outperform them in the long run.
-Years go by and you never win a race, but you are constant. So consistent that you have come fifth, fourth, third and even a couple of times in second place many times. You've never won a race but you haven't done too badly either. In fact, you have managed to be in all the races and you have never abandoned any. You are consistent, reliable and always end up with a respectable average of results. After 20 years of such constant performance you will surely see that you have won in a “league” of marathons. Your rivals either quit, or burned out, or were never consistent enough to be in the top five. Being "average" took you into an elite category because you were consistent and dependable year after year.
-It is true that in the 2000s small-cap stocks outperformed large-cap stocks, but this could only be observed after the fact. Nobody can know, but it is possible that in the next 20 years we will see large-caps overtaking small-caps again.
- el riesgo de los tipos de interés es quizás el mayor riesgo para los bonos.
- The only rule you need to remember is that bond prices move in reverse of interest rates, and the bond market instantly adjusts prices to reflect those changes.
-Bonds should be used to provide security, not to speculate.
-Gold is a powerful asset that reacts strongly to high inflation and can offset losses from other assets in a diversified portfolio to provide real returns.
-Interest rates fall in response to deflation
Historically, the permanent portfolio has provided a better return than the market average, and when the market has collapsed the permanent portfolio had a better performance (from 1970 till 2017 it had an annual return of 8.79%, with a max drop of 20% in 1980).
Here there are some random notes I took while reading the book:
- The majority of the money that is earned during your life will come from your profession.
-Where the investor has a plan, the speculator has only hope. Don't bet all your savings on hope.
- It's rare that people who would never think of visiting a parapsychologist every morning for advice will willingly listen to what a commentator or investment guru tells them about what the future holds for the markets.
-Investors need growth, protection and real returns. If you don't have all three, your investment plan will have serious problems.
-Investing doesn't need to be (and shouldn't be) complicated. There is a close relationship between complicated investment products, low or negative returns, and high risks.
-An immutable principle of investing is understanding that there is no risk-free investment.
-In 1960, professional transactions (pensions, mutual funds ...) accounted for 30% of all those carried out by the market. In 1979 that number increased to 60% 16. In 1989, it reached 70% 17. In 2010 it reached 88% according to a recent analysis by Tabb Group. Only 11% of stock transactions today are from retail investors
-Fund managers cannot beat the market. They are the market. If you invest to achieve the market average, you will probably outperform them in the long run.
-Years go by and you never win a race, but you are constant. So consistent that you have come fifth, fourth, third and even a couple of times in second place many times. You've never won a race but you haven't done too badly either. In fact, you have managed to be in all the races and you have never abandoned any. You are consistent, reliable and always end up with a respectable average of results. After 20 years of such constant performance you will surely see that you have won in a “league” of marathons. Your rivals either quit, or burned out, or were never consistent enough to be in the top five. Being "average" took you into an elite category because you were consistent and dependable year after year.
-It is true that in the 2000s small-cap stocks outperformed large-cap stocks, but this could only be observed after the fact. Nobody can know, but it is possible that in the next 20 years we will see large-caps overtaking small-caps again.
- el riesgo de los tipos de interés es quizás el mayor riesgo para los bonos.
- The only rule you need to remember is that bond prices move in reverse of interest rates, and the bond market instantly adjusts prices to reflect those changes.
-Bonds should be used to provide security, not to speculate.
-Gold is a powerful asset that reacts strongly to high inflation and can offset losses from other assets in a diversified portfolio to provide real returns.
-Interest rates fall in response to deflation
July 22, 2020
So I have been meaning to read this book for ages, even after reading the criticisms of the espoused financial strategies therein. And I'm really glad I did. It was a dry read. But I learned a lot that I didn't know. I was honestly fairly disturbed by some of it. I had no idea that the US government confiscated citizens gold in the past and that other governments have confiscated citizens retirement savings to put towards a federal retirement plan.
But I learned other things that were just fascinating: like the reason US citizens can't get a Swiss bank account easily anymore. I admit the tables went over my head, but I am glad I made time for this book.
But I learned other things that were just fascinating: like the reason US citizens can't get a Swiss bank account easily anymore. I admit the tables went over my head, but I am glad I made time for this book.
February 14, 2018
The book is worth a read because there are some valuable pieces in here but in the end I don't agree with the portfolio. The returns that it gets are pretty low although they are relatively safe (which is the goal) if you have an outlook of longer than 10 years it doesn't seem to make sense. And if your outlook is shorter I would probably still avoid it because the returns are low.
The valuable information is about asset allocation and how they correlate or do not correlate and why that is important.
The valuable information is about asset allocation and how they correlate or do not correlate and why that is important.
August 29, 2020
Well-written and easy to follow book on Harry Browne's investment strategy. While I am not entirely sold on his strategy, this book is easier to follow and much more up-to-date than Browne's books though even this one is getting a little long in the tooth with a 2012 publication date. I'd really like to know that they think about today's coronavirus economic environment and how well this strategy will hold up in an economic situation unlike any of the possibilities that they describe. Still a worthwhile read. Recommended.
April 5, 2018
Great book -- it's well-written and explains a rather complicated concept in a way that makes it very accessible.
Extra points that it answers 99% of the questions I had about implementing the method described in it, and the rest it just can't (without making the book unreadable).
The only con I can think of is that it is mostly US-centric (by design), but it stills pays attention to the questions international readers might have and answers the most important ones.
Highly recommended!
Extra points that it answers 99% of the questions I had about implementing the method described in it, and the rest it just can't (without making the book unreadable).
The only con I can think of is that it is mostly US-centric (by design), but it stills pays attention to the questions international readers might have and answers the most important ones.
Highly recommended!
April 2, 2018
Are you interested on the Permanent Portfolio? In that case, this book will be your Bible. This must be the first book you should read about the Permanent Portoflio. Even before, Harry Browne's books.
Everything is well explained and it gives real products for designing you own portfolio.
Must read.
Everything is well explained and it gives real products for designing you own portfolio.
Must read.
August 26, 2019
A gem of a book. I already had an idea of how to invest and basic concepts like "diversification" but this book definitely took me to a whole new level. It offers a fully fledged strategy that's been tried and tested and based on sound logic that the book explains in detail. If are a beginner investor this book's is perfect for you!
January 21, 2022
Interesting book for the moderate risk takers. The details of the underlying concept are explained well. Written from USA perspective, one has to consider one's own country rules and taxes to optimise. It's supposed to create a safe portfolio, however, assuming that risks will not be there is risky enough.
May 6, 2022
Somewhere between alright - good. Very verbose - could have been half as long. I don't think I'll actually follow what the book suggests, but it contributes to an understanding of how portfolios behave in various macroeconomic conditions. For that alone, it was a good read.
February 21, 2020
二十分钟读完《哈利布朗：永久投资组合》，信息量很大却没有什么收获，或者说可以实际操作的重点内容寥寥无几。此书内容和个人资金、国情、投资阶段联系紧密，注意跳读。
September 2, 2020
Excellent book for investment strategy, both in theory and practical.
December 18, 2020
Great and practical explanation of the method. I'm afraid it quickly becoming outdated though
April 4, 2022
Straightforward and informative.
April 12, 2016
Great book on investing using Harry Browne's investment strategy with all the details you would need to know. Harry Browne's method of investing is meant to be conservative for an unknown world and events.
Having wasted 10s of thousands of dollars by not investing my money it's nice to read a book that makes everything seem pretty straight forward and it's nice to think that I won't have to worry about my investments or try and speculate what the future holds.
Now, Harry Browne called some future events on what would happen in the financial sector. He was correct, but later he advised that you cannot always know what is going to happen. Maybe long term you can, but if that long term knowledge takes 100 years to happen then it doesn't do you any good.
I don't think The Permanent Portfolio is necessarily the best investment method out there. But it is probably a good one to go with. I'm sure there is some other mix of investments that achieve higher returns and lower deviation, but what that is, who knows. I think I'll just stick with this one for now unless someone figures something else out.
Some of the interesting things from the book. Iceland's financial crash in 2008 and how the PP saved investors from losing just about everything that others in that country lost. (If you were invested in the PP you gained 50% in the crisis - over other Icelanders, but lost 50% compared to the rest of the world.) For the 2008 US financial turmoil the PP lost 2 or 3% that year, much better than the 40% others had lost.
Anyone that says we live in a free country needs to read more, with the borders closing physically and financially in this country, whether you are coming or leaving the country shows how in peril we are as a nation. I hope things get better. I just wonder at what point do you leave? And where do you go? Hopefully things get better but if they don't I hope my children or grandchildren will be able to escape and find a freer location.
Having wasted 10s of thousands of dollars by not investing my money it's nice to read a book that makes everything seem pretty straight forward and it's nice to think that I won't have to worry about my investments or try and speculate what the future holds.
Now, Harry Browne called some future events on what would happen in the financial sector. He was correct, but later he advised that you cannot always know what is going to happen. Maybe long term you can, but if that long term knowledge takes 100 years to happen then it doesn't do you any good.
I don't think The Permanent Portfolio is necessarily the best investment method out there. But it is probably a good one to go with. I'm sure there is some other mix of investments that achieve higher returns and lower deviation, but what that is, who knows. I think I'll just stick with this one for now unless someone figures something else out.
Some of the interesting things from the book. Iceland's financial crash in 2008 and how the PP saved investors from losing just about everything that others in that country lost. (If you were invested in the PP you gained 50% in the crisis - over other Icelanders, but lost 50% compared to the rest of the world.) For the 2008 US financial turmoil the PP lost 2 or 3% that year, much better than the 40% others had lost.
Anyone that says we live in a free country needs to read more, with the borders closing physically and financially in this country, whether you are coming or leaving the country shows how in peril we are as a nation. I hope things get better. I just wonder at what point do you leave? And where do you go? Hopefully things get better but if they don't I hope my children or grandchildren will be able to escape and find a freer location.
December 20, 2012
This is one of those rare, well-written book that sends its message across clearly and consistently.
I would highly recommend this book to a novice investor or anyone who is too lazy to bother with stock-picking, asset allocation and what-not, but would still like to have an investment account so as not to let the money sit around and not produce anything.
As J.D. Roth puts it - This book doesn't just cover the theories behind this method; it also gives details for putting the theories to work in the real world.
I can't find any better words to substitute that. It is true. After you're convinced of the workings behind the Permanent Portfolio theory, Craig Rowland and J.M. Lawson show you exactly how you can implement and put into action those theories. They list down some of the best ETFs they have in mind and resources for you to do your own research if you're keen.
I don't think there are too many books out there with this format. Most are heavy on theory but light in implementation. So kudos to the authors!
I would highly recommend this book to a novice investor or anyone who is too lazy to bother with stock-picking, asset allocation and what-not, but would still like to have an investment account so as not to let the money sit around and not produce anything.
As J.D. Roth puts it - This book doesn't just cover the theories behind this method; it also gives details for putting the theories to work in the real world.
I can't find any better words to substitute that. It is true. After you're convinced of the workings behind the Permanent Portfolio theory, Craig Rowland and J.M. Lawson show you exactly how you can implement and put into action those theories. They list down some of the best ETFs they have in mind and resources for you to do your own research if you're keen.
I don't think there are too many books out there with this format. Most are heavy on theory but light in implementation. So kudos to the authors!
May 28, 2024
The proposed investment strategy is not that effective. It's been proven by various analyses that gold is not an effective inflation hedge (perhaps only in the super long term), and bonds' performance in the decade after the book's publishing has basically refuted its main theory about them.
I understand the concept of sacrificing growth to get less volatility, but it's quite inefficient to consider such a strategy "permanent"; it's way more efficient to start investing aggressively and taking higher risks when we're younger, then progressively reduce risk and volatility as we age and our portfolios become larger.
That being said, the book is still valuable, as it contains lots of food for thought. 3.5 stars.
I understand the concept of sacrificing growth to get less volatility, but it's quite inefficient to consider such a strategy "permanent"; it's way more efficient to start investing aggressively and taking higher risks when we're younger, then progressively reduce risk and volatility as we age and our portfolios become larger.
That being said, the book is still valuable, as it contains lots of food for thought. 3.5 stars.
November 21, 2013
Whether you choose to invest according to The Permanent Portfolio or not, the book is still a must read in my opinion. And whether you agree with the premises put forward or not, you'll still be wiser after reading. Creating The Permanent Portfolio is a relatively simple matter....this is not a complicated book. But the best investment theories are simple and straightforward. For the serious personal investor....I believe this is must-read book. Like studying Freud if your a psychologist. I recommend.
March 14, 2013
I definitely buy into the investment strategy as I've been using it since early 2012. This book goes into great detail about the 'why' which is great to see. IT goes a little overboard in the geographic diversification/gold/T-Bill sections, but other than that a solid read for someone looking for an old, but consistent and uncommon approach to investing.
December 20, 2016
Excellent tool for developing for yourself a widely diversified, methodical investment plan. Current information for US investors and non US investors alike. Understandable for anyone interested in this even without a background in economics, but still with sophisticated succinct recommendations.
June 12, 2013
The content is good, but the layout is atrocious. The sidebars are inline with the text, making it repetitious. He makes a convincing case for simplified asset allocation model that accounts for high or low employment levels, and an expanding or contracting economy.
September 18, 2012
highly recommend great book on investing
September 28, 2012
Excellent update to the investing strategy that I find most suitable personally.
March 4, 2015
im setting up a permanent portfolio on singapore market
June 5, 2020
Reason for 5 stars: My annoying friend forced me!
Displaying 1 - 27 of 27 reviews