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craigr

craigr
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  • A Portfolio For All Seasons? [View article]
    Thanks for the article, Howard!
    Jul 18 03:22 PM | 1 Like Like |Link to Comment
  • The Uncanny Permanent Portfolio: Does Adding a REIT Help? [View article]
    Also I would add that gold is far and away the best kind of hard asset to hold for this portfolio. DBC is a commodity fund and won't respond to monetary crises they way gold does. In 2008 commodity funds fell somewhere in the -50-70% range at the worst. Yet gold was up +5%. When banks are threatening to collapse, people want to hold gold and not other commodities.
    Mar 31 04:41 PM | Likes Like |Link to Comment
  • The Uncanny Permanent Portfolio: Does Adding a REIT Help? [View article]
    REITs straddle the equity/hard asset realm. They aren't really a great stock and not really a replacement for gold. That's why they aren't used in the portfolio in the strict sense. They would probably only be something I'd recommend as a speculative asset class to add on top of the core portfolio.

    Also be aware that the Total Stock Market already has a significant exposure to real estate. Not only in the REITs that it holds, but the companies in the index own significant amounts of real estate as well and this value is reflected on their balance sheets.

    Bottom line is that REITs are a specialty sector. It may pay off, but may not. Also some REITs are more of a mortgage speculation play rather than ownership in real estate itself. It's a murky area. Overall, the portfolio continues to work fine with the four basic asset classes as they are. Anything above this should be considered speculative investing only with money you can afford to lose.
    Mar 31 04:38 PM | 1 Like Like |Link to Comment
  • Gold, U.S. Equities, Long-Term Treasuries and Cash Make for Uncanny Retirement Portfolio [View article]
    Don't use Muni bonds in the portfolio. They really offer very negligible tax advantages and carry credit and call risk. Treasury bond interest is not taxable at the state and local level so the tax savings of munis is largely arbitraged away. In the credit crisis of 2008 muni bonds got hammered but the US Treasury LT bonds went up over 30%. All the supposed tax savings of the munis didn't offer any protection when needed.
    Mar 16 03:00 PM | 2 Likes Like |Link to Comment
  • Gold, U.S. Equities, Long-Term Treasuries and Cash Make for Uncanny Retirement Portfolio [View article]
    I run a blog dedicated to this strategy:

    www.crawlingroad.com

    I have been following this portfolio for years. There is no need to do tactical asset allocation. The portfolio works fine being completely passively managed. Many of the risks Harry Browne considered have allowed this portfolio to make money in virtually every market condition the past 40 years. The worst losing year was -4-6% in 1981.

    Also the bond portion should be US Treasury Long Term Bonds (for US investors). The LQD ETF is for corporate bonds. This is definitely not what you want to use. US Treasuries have much lower risk than corporate bonds. They are the only bonds that will perform in a sudden and severe deflationary situation (like what occurred in 2008).
    Mar 15 06:12 PM | 3 Likes Like |Link to Comment
  • The Desired Portfolio Zig-Zag Effect [View article]
    Gold Bullion is much different than gold miners for inflation protection. A bad market caused by inflation can hurt the operators of mines just as it does other companies. As a result, it is possible you'll see bull and bear markets in miners that move differently than the gold they are mining. 2008 showed many people that owning gold miners is much different than owning gold when the dollar is under threat. While gold stayed up 3-5% for the year, gold miners declined over 50%.

    Gold works better than straight commodity funds because it is a commodity, but it is also a form of money. It offers protections for you when inflation is threatening the dollar or when there is a serious crisis that may affect the dollar even if not immediately inflationary. Commodities in 2008 dropped by 50% as well whereas again gold held it's value. People were happy to sell off their oil and wheat when banks were on the edge of collapsing, but weren't so keen to sell their gold.

    Gold as a an asset has no returns. It will simply match inflation over time. However as part of a diversified portfolio where you are religious about rebalancing when it exceeds the allocation bands it can help significantly reduce volatility and increase returns.

    As for the other parts of the portfolio, they were chosen to react to economic conditions present at any one time. The theory is much different than how other asset allocation models are implemented but it works well. My website has not only Harry Browne's radio shows that discuss all these topics in great detail, but also articles that discuss the background and theory as well.

    Thanks Roger for the write-up.
    Jun 9 12:54 AM | Likes Like |Link to Comment
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