Harry Browne’s Permanent Portfolio: What Is Behind The Asset Allocation?

The December 2012 issue of the American Association of Individual Investors Journal carried an interesting article, The Permanent Portfolio: Using Allocation to Build and Protect Wealth.  The article is all about Harry Browne’s portfolio laid out several decades ago.  Browne recommended the follow asset allocation.

1. 25% in stocks.

2. 25% in bonds

3. 25% in cash

4. 25% in gold

On face value, this is a very conservative portfolio, yet over the last 40 years the allocation plan returned 9.5% compounded annually.  From the AAII article, “The worst loss, a drop of 5%, occurred in 1981.  In 2008’s financial crisis, the portfolio was down only around 2% for the year.”

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Madison Portfolio Update: 28 December 2012

Of the eleven portfolios tracked here at ITA Wealth Management, the Madison is one of three where the asset allocation plan is visible to Platinum members, but not all the individual transactions.  Permission was not granted to divulge all the details of the Maxwell, Euclid or Madison.

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