Mad Money Machine

MMM-188: Happy Constitution Day! September 17

Paul Douglas Boyer — Mon, 10 Sep 2012 16:10:25 +0000

BUY MY BOOK!

A quick update of the Permanent Portfolio performance for 2012.
Article by Brion McLanahan entitled “A Limiting Document?“
16 Votes = No U.S.A.?
Some key quotes from my book.

For more information about The Original Counter-Argument, go to PlanetBoyer.com

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MMM-187: Announcing: The Original Counter-Argument book!

Paul Douglas Boyer — Tue, 15 May 2012 19:48:51 +0000

I announce the publication date of my upcoming book: The Original Counter-Argument: The Founders’ Case Against the Constitution, Adapted for the 21st Century.
I read the Preface
I read the Background chapter.

For more information about The Original Counter-Argument, go to PlanetBoyer.com

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Here’s where I’ve been: Writing a Book!

Paul Douglas Boyer — Tue, 15 May 2012 03:56:51 +0000

I’ve been writing a book since last September, and it will be available for purchase on September 17, 2012.

It is called “The Original Counter-Argument.” And for the subtitle you’ll need to inhale some air:
“The Founders’ Case Against the Constitution and Warnings of Despotism, Adapted for the 21st Century.”

Quick synopsis: I’ve taken the key letters, essays, and speeches from those Founders who were against the ratification of the U.S. Constitution back in 1787-88 and translated them into modern English.

Why?

Because their words were prophetic! They warned about consolidating all of the various state governments into a single national government, that it would lead to waste, abuse, and even tyranny. And that was at a time when the population of the United States was 78 times smaller than it is today!

I’ve learned so much from translating these works. I cannot wait to share it with you. I am releasing it on September 17, 2012, which will be the 225th anniversary of the Signing of the Constitution in Philadelphia. But that day was just the beginning…

I’ll have more to say as the date gets closer. Here’s a link to the pre-order page at Amazon:

Lazy Portfolio Analysis

Paul Douglas Boyer — Tue, 28 Feb 2012 14:34:20 +0000

This is the home of the Mad Money Machine Lazy Portfolio Analysis.

The following table shows the returns of the Lazy Portfolios from the “Investment Professionals.” They are sorted by 5-year returns ending 2011. To see the contents of each portfolio, search for the portfolio name on this page.

And now a different look at the same portfolios, showing Annualized returns for 5 years plotted against the annualized risk (Standard Deviation).

MMM-186: The Future is Unknowable. Invest Accordingly

Paul Douglas Boyer — Mon, 13 Feb 2012 19:30:26 +0000

We announce the Winner of the Lazy Portfolio Smackdown for 2011
Simba’s spreadsheet shows how lazy portfolios performed against each other.
Park City UT has enough snow for me.
TOOL: Podcaster app for iPhone
GURU: Ron Paul’s risky investing strategy. Here is the WSJ article. Here are his holdings (account required)
Can gains still be had in long term bonds?
September 17, 2012 will be the 225th anniversary of the signing of the US Constitution by 39 delegates who stayed around at the Federal Convention in Philadelphia. George Mason, Edmund Randolph, and Elbridge Gerry did not sign.

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Lazy Portfolio Results, With Dividends

Paul Douglas Boyer — Wed, 18 Jan 2012 13:11:42 +0000

The dividend results are in, and I’ve updated the numbers, graphs, and tables. Not much change in the relative performance of the portfolios, but the year-end percentages did rise.

And here is the table:

2011 Lazy Portfolio Results (Preliminary)

Paul Douglas Boyer — Sat, 31 Dec 2011 14:19:00 +0000

Another year bites the dust and Harry Browne once again wins.

Here are the Lazy Portfolio Smackdown results for 2011. Note: these numbers are preliminary because mutual fund dividends have not yet been reported. So those lazy portfolios that hold mutual funds that pay dividends in mid to late December will probably end up about 1% higher than these numbers.

Incredibly, the Harry Browne Permanent Portfolio wins again. It beat all other non-permanent portfolios by at least 5.5%! Have a look at the chart:

Click on the image to get a larger, more readable graphic.

To see the components of each Lazy Portfolio, visit the Professional Lazy Portfolios page.

Look how steadily the Harry Browne Permanent Portfolio (HBPP) gained during 2011. Especially when compared to the rest. Look at the wild ride they would have put you through from April until September. Tough to stomach that!

And for those of you who love a more tabular look:

Breaking down the HBPP, here are how the individual components performed for 2011:

WOW, who would have thought that long-term treasuries would go up 34%? And look at gold, up almost 10%, which also marks its 11th consecutive year of gains. Holy bullion Batman! Even cash money did you better than your bank account, up 1.4% in short-term Treasuries.

Thank you Harry Browne!

How about the losers? Well, the silly Dilbert portfolio, all stocks, dropped almost 10%. Scott Adams recommended this (google it), but it is pretty dumb. Not much less dumb is the portfolio I put out a few years ago, also all stocks, that sought to mimic the IFA Portfolio 100, their riskiest plan. So in a year when risky stocks did poorly, portfolios that invested in all risky stocks stunk.

How about something more reasonable? Good old Rick Ferri, the guy who says his “best investment in gold was his wedding ring” how did he do for you in 2011? Here is his portfolio (prior to December dividend reporting)

He puts 40% into a broad bond index, thinks REITs are cool, and adds some international equities for spice. The portfolio gained you less than if you had put the whole thing into SHY, the short-term treasuries fund. (But dividends for December are still coming) That’s pretty stinky. And as you can see from the chart, you got a pretty wild ride in 2011 to boot. And he makes money doing this?

Which non-Permanent Portfolio did best in 2011? That would be the Scott Burns Couch Potato Portfolio, up 5.9%. (And remember that December dividends aren’t yet included in this result.)

Two funds: stocks and TIPS. Stocks flat-lined. TIPS made you some money. And the ride wasn’t too wild, especially when compared to the others. But HBPP was better in both performance and risk.

I don’t want to wrap up this year-end review without mentioning the poor performance of PFPFX, the Permanent Portfolio Fund. With HBPP up 11.5%, you’d expect that the mutual fund loosely based upon his philosophy would be close to that, but you’d be wrong. PRPFX was up only 2.2% (including December dividends) for 2011. Why? Because it deviates from HBPP in risky ways including Silver, Swiss Francs, and growth stocks. And of course it has a 0.77% expense ratio for its management fees. That is disappointing. But THEY got $118 million, based upon having $15.4 billion invested. I’m not liking this.

Gee whiz, I wish I could create a mutual fund that invested in VTI, 30-year Treasuries, IAU, and short-term Treasuries. I’d pay something like 0.08% and would charge you people 0.20%. Let’s see, with $15 billion dollars under management, I’d take in $18 million each year. Easy money!

MMM-185: Treaty of the United Countries

Paul Douglas Boyer — Wed, 07 Dec 2011 17:20:15 +0000

Something different for this episode!

Imagine that a group of respected people from various Countries got together recently at some National Summit meeting (let’s say, in Philadelphia) for the explicit purpose of modifying their previous UN treaties and agreements with each other. At the outset of the Summit, it was declared that no one was allowed to talk about the Summit outside the meeting. They met for four months, in a closed Summit hall, in complete secrecy. But instead of doing what they said they were going to do and modify previous agreements, they cleverly decided to create a completely new Treaty of the United Countries, seeking to establish a single world government comprised of legislatures, judges, and even a president of the world.

The people who met at the Summit decided that in order for this new United Countries Treaty to come into being, that 9/13ths of the Countries would need to sign it. But instead of requiring signatures from the various legislatures, it just asked for signatures from special Country Summits. At the end of the Philadelphia Summit, even though not everyone at the Summit agreed on the wording or ideas in the Treaty, they stated that the attendees “having written the Treaty decided unanimously to send it to the Countries for approval.” Heh heh, get it? They decided unanimously to send it. Clever. Thinking this would confuse ratifiers into believing the Treaty was unanimously agreed to. The wording of their new Treaty began with the phrase, “We the people of the Unified Countries…” But shouldn’t it have read, “We the countries of the Unified Countries?”

The people in favor of the new Treaty decided to take the name “Nationalists” for themselves and for everyone who agreed with this new world government, even though “Globalists” might have been a more accurate name. They called anyone that disagreed with them “Anti-Nationalists.” (Clever!) After their Summit, three of the key authors of the Treaty wrote Op-Eds in the New York Times under pseudonyms so that no one knew they were the Treaty’s authors. Clever! Their goal was to convince the Countries to agree to the Treaty. The 85 articles they wrote came to be called, “The Nationalist” or “The Nationalist Papers.”

In them they said that this new “National Government” was needed to combat a common threat. They didn’t specify the threat exactly, but perhaps it was a global environmental threat or astroid collision or lone-wolf terrorists or threat of alien invasion. Whatever it was, this threat was a CRISIS! The Countries must act immediately to ratify the Treaty. Some even begged that time need not be taken to debate the Treaty in detail, just agree to it and trust the respected people of the Summit that it is the right thing to do for the Countries.

Some of the articles in the Treaty stated that they would need to impose taxes to fund a defense against the threat. A militant force would be assembled to fight the threat. Land for a headquarters of 10 square miles would have to be established. There was a clause that said that the new National Government could enact laws that were “necessary and proper” for executing their powers. Another one said that the new Congress would have the power to “promote the general welfare” of the United Countries.

Some things not explicitly stated in the Treaty would happen anyway: People would be employed to collect the taxes. A World police would come about to enforce the collection of taxes. After some time, agencies would eventually rise such as the National Bureau of Investigation (NBI), World Security Agency (WSA), The World Guard, External Revenue Service (ERS), World Reconnaissance Office (WRO), National Emergency Management Association (NEMA), Department of World Education, Department of World Energy, et cetera…

Eventually, this new National Government would grow so large as to make the governments of the individual Countries somewhat meaningless. If a Country’s police did not enforce by the new “National” laws, the NBI would be brought in to sweep down and arrest the offenders.

As time went on, the people would eventually forget that the Treaty was supposed to restrict the size of the National Government.

The Anti-Nationalists lost their argument, and the people of the World lost their liberty.

——————–

GURU Roulette:

The following is a letter, written by one of the Summit attendees, an anti-nationalist, to his country’s ratifying convention:

——————–

Gentlemen,

I am honored to enclose, pursuant to my commission, the Treaty proposed by the National Summit.

I did not agree with the system and I will submit my objections to the honorable legislature.

It was painful for me, on a subject of such global importance, to disagree with the respected members who signed the Treaty. But I believed that the World’s liberties were not secured by the new system and that it was my duty to oppose it.

Here are my main objections to the plan:

The people are not adequately represented.
They have no security for the right of an election.
Some powers of the legislative branch are ambiguous, and others are indefinite and dangerous.
The executive branch is blended with, and will have an undue influence over, the legislature.
The judicial branch will be oppressive
Regulations of the highest importance can be formed by the President, with the advice of two-thirds of a quorum of the Senate
The system does not have the security of a Bill of Rights.

These are objections do not apply to just a specific locality, they apply equally to all of the countries.

Since the Summit’s purpose was for “the sole and express purpose of revising existing agreements, and reporting to Congress and the several legislatures, the alterations and provisions that will render the National Treaty adequate to the needs of government and the preservation of the Union of countries,” I did not imagine that these powers extended to the formation of the proposed plan. But the Summit had a different opinion, so I reluctantly accepted it, being fully convinced that in order to preserve the Union, an efficient government was absolutely necessary, and that it would be difficult to make proper amendments to the existing agreements.

The proposed system has few, if any, national features. Instead, it is a system of global government. Nevertheless, in many respects, I think it has great merit, and, by proper amendments, could be adapted to the “needs of government and preservation of liberty.”

The question on this plan involves others of the highest importance:

Will the UN be closed down?
Will the national governments be changed so much that they will effectively be dissolved?
In lieu of the UN and national governments, will the proposed global Treaty be substituted in their place without any amendment?

Never, perhaps, were a people called upon to decide a question of greater magnitude. If the citizens of the world adopt the plan as it now stands, their liberties may be lost. But if they reject it altogether, anarchy might result. It is clear, therefore, that their decision should not be made hurriedly. The subject should be well understood. Otherwise, they might have to refuse to support the government after having hastily accepted it.

Regardless of whether they are for or against the Treaty, if discussions about it remain moderate, they will provide a great deal of information and the result will be a happy one.

Some may urge that we have total confidence in the Summit. But no matter how respectable the members may be who signed the Treaty, only a free people are the proper guardians of their rights and liberties. The greatest men can make mistakes, and their mistakes are sometimes the largest.

Other people might assume that the Treaty can be safely adopted because of the provisions it contains to amend it. But can’t this better be done before it is ratified than after it? Should free people really adopt a form of government knowing that it needs amendment?

Some others might think that if the people do not adopt the plan, that they will not unite in another plan. But surely, while they still have the power to amend it, they do not need to completely reject it.

I have been delayed here longer than I expected, but will leave here in a day or two for America. When I arrive, I will submit the basis for my objections (if required by the legislature).

I will only add that, since the welfare of the Union requires a better Treaty than the UN Treaty, I believe it is my duty as a citizen of America to support whatever is finally adopted, sincerely hoping that it will secure the liberty and happiness of the world.

Sincerely,

E. Gerry.

***September 17, 2012 will be the 225th anniversary of just such an event happening…***

TOOL: Word Substitution

Replace Summit with Convention
Replace Country with State
Replace National with Federal
Replace World or Global with National or Nation
Replace UN with Confederation
Replace Treaty with Constitution
Replace UN Treaty with Articles of Confederation
Replace America with Massachusetts

Music: Casting Crowns I Heard the Bells on Christmas Day

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Lazy Portfolios YTD Thru October

Paul Douglas Boyer — Tue, 01 Nov 2011 12:15:20 +0000

How do ya like ridin’ the roller coaster? I prefer the Slow Train Comin’. Looks like the Permanent Portfolios are still victorious. Two months to go!

And for your tabular view:

I want some Bitcoins!

Paul Douglas Boyer — Thu, 27 Oct 2011 14:56:10 +0000

I gotta admit, I am intrigued by Bitcoin. I love gadgets as much as the next guy. I spent my early years programming computers and designing information systems. I also love the idea of friction-free money. And of a currency that is, possibly, hyper-inflation proof.

The innovations in the Bitcoin realm are coming quickly. And since I last looked, they now discourage mining bitcoins on your own. And also since I looked, there are now physical Bitcoins! I just read an article asking whether they might be considered illegal. These things look great and help push their acceptance forward.

So I finally installed the Bitcoin app and have a Bitcoin address for you to send me some:

1NTsbjZH4HnqeQKK5dpFzfjJvGjr61N1ps

Not to bribe you or anything, but I figure if I can get a couple of coins from my (diminishing) audience, I would be encouraged enough to do another MMM show.

Updated Taylor Larimore 3 Fund Lazy Portfolio Results

Paul Douglas Boyer — Sat, 15 Oct 2011 23:48:28 +0000

The Lazy Portfolio by Taylor Larimore with just three funds had the following performance, ending 30 Sept 2011:

1-mo: -5.2%

2-mo: -8.3%

YTD: -5.2%

Since 12/31/09: 5.4%

Errata: Larimore Portfolios

Paul Douglas Boyer — Sat, 15 Oct 2011 14:40:19 +0000

I just received word that the Taylor Larimore 3 Fund and 4 Fund lazy portfolios that I have listed on this site are in error.

There should only be a 3 Fund portfolio comprised of the following (and the %’s vary for individual investors):

40% Vanguard Total Stock Market Index Fund (VTSMX)
20% Vanguard Total International (VGTSX)
40% Vanguard Total Bond Market (VBMFX)

I will correct this in future portfolio analysis updates.

It was an ugly September

Paul Douglas Boyer — Sat, 01 Oct 2011 15:08:21 +0000

Here’s your monthly Lazy Portfolios update (not that you’re watching that often).

click for full-size ugly graphology

Let’s look at 1 and 2 month returns just for fun, ok? First, returns for September 2011:

Next, returns for August and September 2011 combined:

Ouch Rick Ferri! I think it was this time last year when I went to the Bogleheads convention and Rick Ferri laughed at the idea of owning gold. Who’s laughing now, Ricki? Difference between bottom and top is almost 22%. That’s shocking.

And of course, full Year-To-Date returns for 2011 through September:

Wow, only two Lazy Portfolios are positive this year. Guess who???

It is striking that the PRPFX mutual fund is off so significantly from the pure Harry Browne ETF version. It is probably due to the fact that PRPFX holds some silver, which got killed, and foreign currencies, which were down against the dollar.

Harry Browne, thank you.

A (slightly) Longer Term View

Paul Douglas Boyer — Mon, 26 Sep 2011 16:02:01 +0000

Whoosh, getting whipsawed in 2011. Let’s step back and take a slightly longer term view of the performances of the Lazy Portfolios. (Caution, none of these portfolios were rebalanced!)

One thing that is particularly striking is that PRPFX took a much sharper dip so far in September than the pure Harry Browne 4xETF portfolios. I suspect this is partly due to the fact that PRPFX owns some silver (down very sharply) and also some foreign currencies (down due to rising dollar).

Me still likey the Permanent Portfolio, even though what was once up about 12% for 2011 is now up (only) 6.5%.

Biggest Losers on the chart (caution, not rebalanced) were Dilbert (-1.9%) and Vanguard Windsor (-1.5%), and MMM Do It Yourself Funds (-0.7%). Glad I got out of that idea.

MMM-184: Is Gold in a Bubble?

Paul Douglas Boyer — Wed, 07 Sep 2011 19:42:58 +0000

Summer: Broke 80 three times, 9.3 handicap, won some tournaments.
Lazy Portfolio results since 12/31/2009:
- Harry Browne PP up 30%
- Paul Boyer PP up 29%
- PRPFX up 28%
- next highest was David Swenson Yale up 15%
- lowest was Vanguard Windsor up 1.6%
- Rick Ferri Core Four up 10.7%
If you are investing new money right now, isn’t now a bad time to put money into gold, stocks, or long bonds?
GURU: Bond King Bill Gross sold his US Treasuries last March
Mancation at Myrtle Beach
Trading Currencies: find a government of lower debt!
Is Gold In A Bubble?
Need gold? Try eBay Bullion Center: http://goldandsilver.ebay.com/
TOOL: http://www.goldcoinbalance.com/
Ron Paul: Excellent performance in SC debates. Is Mitt Romney trying to become Ron Paul? Ron Paul’s investments.
Ron Paul will run as the Libertarian candidate, with son Rand as his VP.
Is it worth my time to write an iPhone app that will make me $100?
How about the Obama Countdown Clock app?
Recommended: Go see Wicked! But listen to the album first!
Spotify or Rdio? How about Grooveshark?
How to get Adjusted Historical Stock quotes into a spreadsheet on my Mac?

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Something to Crow About

Paul Douglas Boyer — Thu, 01 Sep 2011 12:15:15 +0000

The divergence between the Permanent Portfolios and the other Lazy Portfolios might actually cause me to turn on the microphone and fire up a new podcast. Wow, lovin’ the PP.

Feeling Better Mid-Year

Paul Douglas Boyer — Fri, 12 Aug 2011 00:22:54 +0000

I was feeling a little left out earlier this year… on my portfolio returns that is. But now I am feeling pretty good. Not that feelings should have anything to do with it! Table as of 10 August 2011.

MMM-183: Fifty? Fifty!

Paul Douglas Boyer — Thu, 24 Mar 2011 17:33:04 +0000

The big 5-0. Golf and Arnold Palmer Zeros
The Arnold Palmer Invitational
The Cars have a new album coming out
My new iPad 2
GURU: Richard Russell, after 50+ years, now recommends the Permanent Portfolio:
http://www.marketwatch.com/story/investing-without-making-any-forecasts-2011-02-11?reflink=MW_news_stmp
http://www.technologyinvestor.com/?p=5790
PRPFX expense at 0.82%. But you can get your own as low as 0.02%
TOOL: Sony Blu-Ray player plays videos from your VUZE server. Vuze.com
Bonus tool: Simba’s spreadsheet is updated for 2011 at Bogleheads.org. search for it
Our hail storm and our new roof
What investments would I recommend right now?
Paleo Nutrition, Primal Blueprint for nutrition and fitness. MarksDailyApple.com is the best.
Should investors FEAR the Permanent Portfolio? NO!

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Spotting the Other Lazy Portfolios a Few Points

Paul Douglas Boyer — Tue, 01 Feb 2011 13:50:30 +0000

One-twelfth of 2011 is already behind us and it appears that the Permanent Portfolios have decided to give the other Lazy Portfolios a head start on the year. Said another way: The Permanent Portfolios are ON SALE! Here is the table of returns through January.

ID#	Portfolio Name	YTD Return
P16	Vanguard Windsor	3.1%
P21	Scott Burns’ Six Ways from Sunday Portfolio	2.2%
P19	Scott Burns’ Four Square Portfolio	1.6%
P13	David Swensen’s Lazy Portfolio	1.5%
P20	Scott Burns’ Five Fold Portfolio	1.3%
P5	Taylor Larimore 4 Fund	1.3%
P4	Taylor Larimore 3 Fund	1.3%
P8	William Bernstein’s Basic No-Brainer Portfolio	1.2%
P6	Rick Ferri Core Four	1.1%
P14	David Swensen’s Yale Endowment	1.1%
P17	Scott Burns’ Couch Potato Portfolio	1.1%
P11	Bill Schultheis’ Coffeehouse Portfolio Vanguard	1.0%
P7	William Bernstein’s No Brainer Cowards Portfolio	1.0%
P18	Scott Burns’ Margarita Portfolio	1.0%
P12	FundAdvice Ultimate Buy & Hold	0.9%
P15	MMM Do It Yourself Funds	0.8%
P22	Larry Swedroe Simple	0.7%
P10	Ted Aronson’s Lazy Portfolio	0.2%
P23	Larry Swedroe Min Fat Tails	-0.3%
P9	Dilbert World’s Simplest	-0.3%
P3	Permanent Portfolio Fund (PRPFX)	-0.7%
P1	Harry Browne Permanent Portfolio (ETF)	-1.8%
P2	Paul Boyer Permanent Portfolio (ETF)	-2.7%

The individual components of the Permanent Portfolios are as follows:

VTI +2.0% – Total Stock Market

TLT -3.1% – Long Term Bonds

IAU -6.4% – Gold

SHY +0.1% – T-bills

—-

VBR +0.6% – Small Cap Value

VWO -3.4% – Emerging Markets

And for reference, here the components of all of the Lazy Portfolios we track here.

ID	FUND NAME	TICKER	%
P1	Harry Browne Permanent Portfolio
	Vanguard Total Stock Market ETF	VTI	25%
	iShares Barclays 20+ Year Treas Bond	TLT	25%
	iShares Barclays 1-3 Year Treasury Bond	SHY	25%
	iShares Gold Trust	IAU	25%

P2	Paul Boyer Permanent Portfolio
	Vanguard Small Cap Value Index	VBR	12.5%
	Vanguard Emerging Mkts Stock Idx	VWO	12.5%
	iShares Barclays 20+ Year Treas Bond	TLT	25%
	iShares Barclays 1-3 Year Treasury Bond	SHY	25%
	iShares Gold Trust	IAU	25%


P3	Permanent Portfolio Fund	PRPFX	100%


P4	Taylor Larimore 3 Fund
	Vanguard Total Stock Mkt Idx	VTSMX	40%
	Vanguard Total Intl Stock Index	VGTSX	20%
	Vanguard Total Bond Market Index	VBMFX	40%
		TOTAL	100%

P5	Taylor Larimore 4 Fund (NOT VALID)
	Vanguard Total Stock Mkt Idx	VTSMX	50%
	Vanguard Total Intl Stock Index	VGTSX	30%
	Vanguard Total Bond Market Index	VBMFX	10%
	Vanguard Inflation-Protected Secs	VIPSX	10%
		TOTAL	100%

P6	Rick Ferri Core Four
	Vanguard Total Stock Mkt Idx	VTSMX	35%
	Vanguard REIT Index	VGSIX	10%
	Vanguard Total Intl Stock Index	VGTSX	15%
	Vanguard Total Bond Market Index	VBMFX	40%
		TOTAL	100%

P7	William Bernstein’s No Brainer Cowards Portfolio
	Vanguard Short-Term Investment-Grade	VFSTX	40%
	Vanguard Total Stock Mkt Idx	VTSMX	15%
	Vanguard Small Cap Value Index	VISVX	10%
	Vanguard Value Index	VIVAX	10%
	Vanguard Emerging Mkts Stock Idx	VEIEX	5%
	Vanguard European Stock Index	VEURX	5%
	Vanguard Pacific Stock Index	VPACX	5%
	Vanguard REIT Index	VGSIX	5%
	Vanguard Tax-Managed Small Cap Inv	VTMSX	5%
		TOTAL	100%

P8	William Bernstein’s Basic No-Brainer Portfolio
	Vanguard 500 Index	VFINX	25%
	Vanguard Tax-Managed Small Cap Inv	VTMSX	25%
	Vanguard Tax-Managed Intl	VTMGX	25%
	Vanguard Short-Term Bond Index	VBISX	25%
		TOTAL	100%

P9	Dilbert World’s Simplest
	Vanguard Total Stock Mkt Idx	VTSMX	50%
	Vanguard Emerging Mkts Stock Idx	VEIEX	50%
	dilbert.com/blog/entry/worlds_simplest_portfolio	TOTAL	100%

P10	Ted Aronson’s Lazy Portfolio
	Vanguard Emerging Mkts Stock Idx	VEIEX	20%
	Vanguard 500 Index	VFINX	15%
	Vanguard Pacific Stock Index	VPACX	15%
	Vanguard Extended Market Idx	VEXMX	10%
	Vanguard Inflation-Protected Secs	VIPSX	10%
	Vanguard European Stock Index	VEURX	5%
	Vanguard High-Yield Corporate	VWEHX	5%
	Vanguard Long-Term U.S. Treasury	VUSTX	5%
	Vanguard Small Cap Growth Index	VISGX	5%
	Vanguard Small Cap Value Index	VISVX	5%
	Vanguard Total Stock Mkt Idx	VTSMX	5%
		TOTAL	100%

P11	Bill Schultheis’ Coffeehouse Portfolio Vanguard
	Vanguard Total Bond Market Index	VBMFX	40%
	Vanguard 500 Index	VFINX	10%
	Vanguard Value Index	VIVAX	10%
	Vanguard Total Intl Stock Index	VGTSX	10%
	Vanguard REIT Index	VGSIX	10%
	Vanguard Small Cap Value Index	VISVX	10%
	Vanguard Small Cap Index	NAESX	10%
		TOTAL	100%

P12	FundAdvice Ultimate Buy & Hold
	Vanguard 500 Index	VFINX	6%
	Vanguard Value Index	VIVAX	6%
	Vanguard Small Cap Index	NAESX	6%
	Vanguard Small Cap Value Index	VISVX	6%
	Vanguard REIT Index	VGSIX	6%
	Vanguard Developed Markets Index	VDMIX	12%
	Vanguard Inflation-Protected Secs	VIPSX	8%
	Vanguard Interm-Term U.S. Treas	VFITX	20%
	Vanguard Short-Term Treasury	VFISX	12%
	Vanguard International Value	VTRIX	12%
	Vanguard Emerging Mkts Stock Idx	VEIEX	6%
		TOTAL	100%

P13	David Swensen’s Lazy Portfolio
	Vanguard Total Stock Mkt Idx	VTSMX	30%
	Vanguard REIT Index	VGSIX	20%
	Vanguard Developed Markets Index	VDMIX	15%
	Vanguard Emerging Mkts Stock Idx	VEIEX	5%
	Vanguard Inflation-Protected Secs	VIPSX	15%
	Vanguard Short-Term Treasury	VFISX	15%
		TOTAL	100%

P14	David Swensen’s Yale Endowment
	Vanguard Total Stock Mkt Idx	VTSMX	30%
	Vanguard REIT Index	VGSIX	20%
	Vanguard Developed Markets Index	VDMIX	15%
	Vanguard Emerging Mkts Stock Idx	VEIEX	5%
	Vanguard Inflation-Protected Secs	VIPSX	15%
	Vanguard Long-Term Treasury Investor	VUSTX	15%
		TOTAL	100%

P15	MMM Do It Yourself Funds
	Vanguard 500 Index	VFINX	12%
	Vanguard Value Index	VIVAX	12%
	Vanguard Small Cap Value Index	VISVX	20%
	Bridgeway Ultra-Small Company Market	BRSIX	20%
	Vanguard REIT Index	VGSIX	5%
	Vanguard International Value	VTRIX	9%
	Vanguard International Explorer	VGTSX	9%
	Vanguard Emerging Mkts Stock Idx	VEIEX	13%
		TOTAL	100%

P16	Vanguard Windsor	VWNDX	100%

P17	Scott Burns’ Couch Potato Portfolio
	Vanguard Total Stock Mkt Idx	VTSMX	50%
	Vanguard Inflation-Protected Secs	VIPSX	50%
		TOTAL	100%

P18	Scott Burns’ Margarita Portfolio
	Vanguard Total Stock Mkt Idx	VTSMX	33%
	Vanguard Inflation-Protected Secs	VIPSX	33%
	Vanguard Total Intl Stock Index	VGTSX	33%
		TOTAL	100%

P19	Scott Burns’ Four Square Portfolio
	Vanguard Total Stock Mkt Idx	VTSMX	25%
	Vanguard Inflation-Protected Secs	VIPSX	25%
	Vanguard Total Intl Stock Index	VGTSX	25%
	Vanguard REIT Index	VGSIX	25%
		TOTAL	100%

P20	Scott Burns’ Five Fold Portfolio
	Vanguard Total Stock Mkt Idx	VTSMX	20%
	Vanguard Inflation-Protected Secs	VIPSX	20%
	Vanguard Total Intl Stock Index	VGTSX	20%
	Vanguard REIT Index	VGSIX	20%
	American Century International Bd Inv	BEGBX	20%
		TOTAL	100%

P21	Scott Burns’ Six Ways from Sunday Portfolio
	Vanguard Total Stock Mkt Idx	VTSMX	16.7%
	Vanguard Inflation-Protected Secs	VIPSX	16.7%
	Vanguard Total Intl Stock Index	VGTSX	16.7%
	Vanguard REIT Index	VGSIX	16.7%
	American Century International Bd Inv	BEGBX	16.7%
	Vanguard Energy	VGENX	16.7%
		TOTAL	100.0%

P22	Larry Swedroe Simple
	Vanguard Value Index	VIVAX	15%
	Vanguard Small Cap Value Index	VISVX	15%
	Vanguard Small Cap Index	NAESX	13%
	Vanguard Emerging Mkts Stock Idx	VEIEX	4%
	Vanguard International Value Inv	VTRIX	13%
	Vanguard Inflation-Protected Secs	VIPSX	40%
		TOTAL	100%

P23	Larry Swedroe Min Fat Tails
	Vanguard Small Cap Value Index	VISVX	15%
	Vanguard Emerging Mkts Stock Idx	VEIEX	15%
	Vanguard Inflation-Protected Secs	VIPSX	35%
	Vanguard Short-Term Treasury	VFISX	35%
		TOTAL	100%

Simba’s Spreadsheet is Updated for 2010

Paul Douglas Boyer — Wed, 26 Jan 2011 17:18:50 +0000

For those of us who love to back-test different lazy portfolios, today we can spend our snow day using Simba’s spreadsheet, newly updated with 2010 returns.

I forgot that his comparison page only goes back to 1985 and that I was the one who modified the page to go back to 1972. Guess I’ve got some work to do.

Have fun.

MMM-182: Silver and Gold

Paul Douglas Boyer — Wed, 05 Jan 2011 18:22:33 +0000

Pre-1965 silver coins are worth 23x their face value.
2010 Results of the Lazy Portfolios
TOOL: CarbonFin outliner
Traffic Court
The Department of Free

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Comparing Gold ETFs

Paul Douglas Boyer — Tue, 04 Jan 2011 18:01:41 +0000

In the FWIW category, here is a chart comparing the annual performance of select Gold ETFs. What’s up with GTU?

The fund expense ratios (according to morningstar.com except GTU* ) are as follows:

GLD: 0.40%

IAU: 0.25%

GTU: 0.38%*

SGOL: 0.39%

DGL: .75%

UBG: 0.30%

Lazy Portfolios 2010 Year-End Wrap-Up

Paul Douglas Boyer — Sun, 02 Jan 2011 17:53:02 +0000

As we flip our calendars over to 2011 (or reuse our 1994 calendars), it is time to reflect upon how the various Lazy Portfolios performed for calendar year 2010. See the chart below that shows the cumulative monthly returns and the summary table of 2010 returns. The lazy portfolio that had the highest returns for 2010 was the IFA Index Portfolio 100 Bright Red with a 23% gain. But look at that swing from August through December. And also the swing from April through June! Next, compare the gain of the Permanent Portfolio Mutual Fund (PRPFX – 18.5%) and the path it took to get there.

Cumulative Monthly Performance of Select Lazy Portfolios for 2010 (Click for big view. Data from Yahoo! Finance adjusted quotes from 12/31/09 through 12/31/10 except IFA from IFA.com and after max 0.9% advisor fee.)

Portfolio Name	2010 Return
IFA Index Portfolio 100 Bright Red	23.0%
Permanent Portfolio Fund (PRPFX)	18.5%
MMM Do It Yourself Funds	17.5%
Dilbert World’s Simplest	16.8%
Paul Boyer Permanent Portfolio (ETF)	15.8%
Ted Aronson’s Lazy Portfolio	14.9%
Harry Browne Permanent Portfolio (ETF)	14.5%
Scott Burns’ Four Square Portfolio	14.4%
Vanguard Windsor	14.2%
Bill Schultheis’ Coffeehouse Portfolio Vanguard	13.6%
David Swensen’s Yale Endowment	13.5%
IFA Index Portfolio 50	13.0%
David Swensen’s Lazy Portfolio	12.9%
Taylor Larimore 3 Fund	12.2%
Larry Swedroe Simple	12.1%
Rick Ferri Core Four	12.1%
Taylor Larimore 4 Fund	12.1%
William Bernstein’s Basic No-Brainer Portfolio	12.1%
William Bernstein’s No Brainer Cowards Portfolio	12.0%
Scott Burns’ Five Fold Portfolio	10.9%
Scott Burns’ Couch Potato Portfolio	10.6%
Scott Burns’ Six Ways from Sunday Portfolio	10.6%
Scott Burns’ Margarita Portfolio	10.1%
FundAdvice Ultimate Buy & Hold	10.0%
Larry Swedroe Min Fat Tails	8.0%

The IFA 100 portfolio consists of 100% stocks and is designed to be IFA’s riskiest portfolio while the PRPFX is roughly 25% stocks and is designed to be lowest risk for return. Pretty interesting that they are the two highest returning portfolios for 2010. And they reached their peaks taking wildly different paths. The IFA 100 was erratic while the PRPFX was smooth and steady. The HBPP and PBPP were even steadier but with slightly lower returns than PRPFX.

In a fairer comparison of IFA portfolios to permanent portfolios, the IFA 50 had a 13.0% gain. The long term risk of IFA 50 is closer than IFA 100 to that of HBPP.

One of the surprises of 2010 was the relatively poor performance of the Larry Swedroe Minimum Fat Tails portfolio. Its long term risk-adjusted results for the last 30 years were quite good when compared to the HBPP. But not so in 2010. Digging into it shows that 70% of the portfolio is in TIPS or short term Treasuries. They were up 6.1% and 2.3%, respectively. The other 30% of the portfolio is 15% small cap value and 15% emerging market. They helped to bring the whole portfolio up to a 8% return for the year. I have often heard people say that investing in TIPS is protection against inflation. I think I’d rather have gold (up 29.3%) serving as intended in its inflation-protection role.

The purist Harry Browne Permanent Portfolio (ETF version) which invests one quarter in each stocks, bonds, cash, and gold had these respective gains: VTI 17.4%, TLT 9.0%, SHY 2.3%, and GLD 29.3% for a total return of 14.5%.

My variation of Harry Browne’s portfolio was up 15.8% because of a slightly riskier stock position. Instead of putting a quarter in VTI (up 17.4%), I place an eighth in small cap value (VBR up 25.1%) and an eighth in emerging markets (VWO up 19.5%) for a combined stocks gain of 22.3%.

And in a final note, I am finally fully invested in my own portfolio, with some minor variations due to legacy investments (like that amazing SCCO). So with my large cash holding through most of the year, my portfolio gained 11.3% in 2010. Considering that I am counting on an average 6% gain, I dun purty good.

Good luck in 2011. See you right here again in 365 days.

[Returns computed using Yahoo! Finance adjusted historical quotes from 12/31/09 through 12/31/10 except IFA from IFA.com and after 0.9% max advisor fee.]

Lazy Portfolios Through November 2010

Paul Douglas Boyer — Wed, 01 Dec 2010 13:47:18 +0000

The lazy portfolios did not all move in lock step during November — some went up and some went down. The PRPFX mutual fund took the lead with a monthly gain of 1.4% while the Paul Boyer PP and Harry Browne PP stayed relatively flat for the month. IFA Index Portfolio 100 gained over 1% (est.) to vault into 2nd place for 2010. The biggest loser for November was the Scott Burns’ Five Fold Portfolio losing 3.3% due to its REIT and foreign bond holdings. One more month go to and we can crown the 2010 Lazy Portfolio champion.

ID#	Portfolio Name	YTD Return
P3	Permanent Portfolio Fund (PRPFX)	15.2%
P24	IFA Index Portfolio 100 Bright Red	14.1%
P2	Paul Boyer Permanent Portfolio (ETF)	13.9%
P1	Harry Browne Permanent Portfolio (ETF)	12.9%
P14	David Swensen’s Yale Endowment	11.0%
P19	Scott Burns’ Four Square Portfolio	10.7%
P15	MMM Do It Yourself Funds	10.5%
P10	Ted Aronson’s Lazy Portfolio	10.4%
P11	Bill Schultheis’ Coffeehouse Portfolio Vanguard	10.2%
P9	Dilbert World’s Simplest	10.2%
P13	David Swensen’s Lazy Portfolio	9.6%
P22	Larry Swedroe Simple	9.2%
P6	Rick Ferri Core Four	8.9%
P17	Scott Burns’ Couch Potato Portfolio	8.7%
P7	William Bernstein’s No Brainer Cowards Portfolio	8.3%
P25	IFA Index Portfolio 50	8.2%
P20	Scott Burns’ Five Fold Portfolio	8.1%
P23	Larry Swedroe Min Fat Tails	7.8%
P12	FundAdvice Ultimate Buy & Hold	7.7%
P8	William Bernstein’s Basic No-Brainer Portfolio	7.3%
P21	Scott Burns’ Six Ways from Sunday Portfolio	7.2%
P5	Taylor Larimore 4 Fund	7.1%
P4	Taylor Larimore 3 Fund	7.0%
P18	Scott Burns’ Margarita Portfolio	6.6%
P16	Vanguard Windsor	6.3%

Click for larger graphic.

Data calculated using Yahoo! Finance historical adjusted quotes, except for IFA from IFA.com and using 11/29/10 data. There may be errors in the calculations, invest at your own risk.

MMM-181: Throwing the Bums Out

Paul Douglas Boyer — Fri, 05 Nov 2010 17:33:38 +0000

Maybe Californians thought they were voting for HARRY Browne?
My first “Fan” takes 20 seconds of my fame.
Ding Dong the Wicked Witch is Dead
It will be VERY INTERESTING if Ron Paul is made Chairman of the Monetary Policy Subcommittee
Guru Roulette: James Wesley Rawles
Listen to the Crawling Road Money Show podcast
Kristina Train – Don’t Remember from Spilt Milk
I am still 35% in cash. Where is that big pullback?
BTW: PCU is now SCCO
TOOL: ETFReplay.com allows you to backtest your ETF portfolio, including dividends reinvested.
Max Drawdown is a more user-friendly measurement of risk.
Sharpe ratio, Sortino ratio, Calmar ratio
Better Than Ezra’s Good
First song by a major artist about fiat currency? Elvis Costello’s National Ransom (lyrics)

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Upton Sinclair’s Advice for Improving Your 401(k) Returns

Paul Douglas Boyer — Thu, 04 Nov 2010 11:53:28 +0000

Here’s a video I put together quickly around IFA’s Quote of the Week 79.
Upton Sinclair’s quote is, “It is difficult to get a man to understand something when his salary depends upon his not understanding it.” The quote applies to your 401(k) plan and those who make their salary upon recommending actively-managed funds.

Lazy Portfolios Through October 2010

Paul Douglas Boyer — Mon, 01 Nov 2010 13:27:58 +0000

Just a quick update on the performance of the Lazy Portfolios through Halloween. What a move they have had since August. Is it a repeat of the move that we saw from Feb – Apr? I’ll update you in a couple of months and we will find out. In the meantime, I don’t really care because the Permanent Portfolio allows me to not worry about the economy, the markets, or the FED.

ID#	Portfolio Name	YTD Return
P2	Paul Boyer Permanent Portfolio (ETF)	13.9%
P3	Permanent Portfolio Fund (PRPFX)	13.8%
P14	David Swensen’s Yale Endowment	12.8%
P19	Scott Burns’ Four Square Portfolio	12.8%
P24	IFA Index Portfolio 100 Bright Red	12.7%
P1	Harry Browne Permanent Portfolio (ETF)	12.7%
P9	Dilbert World’s Simplest	11.4%
P20	Scott Burns’ Five Fold Portfolio	11.3%
P13	David Swensen’s Lazy Portfolio	11.2%
P10	Ted Aronson’s Lazy Portfolio	11.0%
P15	MMM Do It Yourself Funds	10.8%
P11	Bill Schultheis’ Coffeehouse Portfolio Vanguard	10.7%
P22	Larry Swedroe Simple	9.9%
P6	Rick Ferri Core Four	9.7%
P21	Scott Burns’ Six Ways from Sunday Portfolio	9.5%
P12	FundAdvice Ultimate Buy & Hold	9.4%
P17	Scott Burns’ Couch Potato Portfolio	9.3%
P7	William Bernstein’s No Brainer Cowards Portfolio	8.7%
P23	Larry Swedroe Min Fat Tails	8.6%
P18	Scott Burns’ Margarita Portfolio	8.6%
P5	Taylor Larimore 4 Fund	8.5%
P25	IFA Index Portfolio 50	8.4%
P4	Taylor Larimore 3 Fund	8.3%
P8	William Bernstein’s Basic No-Brainer Portfolio	7.7%
P16	Vanguard Windsor	6.2%

Subscribe to the Crawling Road Money Show Podcast

Paul Douglas Boyer — Wed, 27 Oct 2010 00:14:55 +0000

Craig at Crawlingroad.com/blog has just released episode one of a new podcast that talks about the Harry Browne Permanent Portfolio. I encourage you to subscribe to it in iTunes and listen to every episode he puts forward in the future. It is going to be great.

Use this link to subscribe in iTunes (copy and past it into iTunes using the Advanced -> Subscribe to Podcast… menu:

http://www.crawlingroad.com/podcasts/podcasts.xml

Max Drawdown in Lazy Portfolios 2001 – 2009

Paul Douglas Boyer — Fri, 22 Oct 2010 19:50:49 +0000

Instead of using Standard Deviation as the measure of a portfolio’s risk, I have been looking at using Max Drawdown which I believed could be more user-friendly. Standard Deviation involves complicated statistical computations. Could you explain Standard Deviation to your grandmother? Max Drawdown would be easier to explain. It is the largest peak to trough drop in a portfolio, measured in percentage. For example, if the largest drop of a portfolio during a studied time period was from $100,000 to $60,000, that would be a Max Drawdown of 40% for that time period.

Recently, I have been computing the Max Drawdown of the many Lazy Portfolios. I modified Simba’s spreadsheet to include monthly returns data instead of just yearly data because a portfolio could suffer drawdown within the year and recover before the end of the year, thus masking the fact that a larger drawdown occurred.

The following chart shows the Annualized Returns vs. Monthly Max Drawdown for several Lazy Portfolios from the beginning of 2001 through the end of 2009. (I am in the process of renumbering the Lazy Portfolios, so this post does not correlate with previous posts. See the Appendix for portfolio names.)

Figure 1: Annualized Return vs. Monthly Max Drawdown 2001 – 2009. Click it for a larger chart. See the full legend below.

This next figure is the more traditional chart showing Annualized Returns vs Annualized Standard Deviation in percent.

Figure 2: Annualized Return vs Annualized Standard Deviation 2001 – 2009. Click it for a larger chart. See the full legend below.

The ideal location of a portfolio’s plot point would be at the top left of either chart.

I was really surprised that these two charts looked so similar. Most of the Lazy Portfolios are in the same relative location on both charts. There are some small variations for select plots, but overall the chart looks the same. The biggest part of my surprise is that the Max Drawdown chart used monthly data and the Standard Deviation chart used only end of year data. Specifically, the Max Drawdown chart used 83 sample points while the Standard Deviation chart used only 9. The similarity of the charts gives me confidence that using Standard Deviation as a measure of risk is appropriate for evaluating the relative performance vs. risk of the Lazy Portfolios.

However, in terms of human understandability, I like Max Drawdown better because one can immediately apply the number to their own situation. It is simply a matter of multiplying one’s portfolio value by the Max Drawdown percentage. For example, for a peak portfolio value of $100,000 invested in the PBPP, the Max Drawdown during the period was about $15,000. That number is understandable. It also is easy to compare the Max Drawdown of PBPP to the Max Drawdown of the Rick Ferri Core Four portfolio, for example, which dropped about $45,000.

The problem with Max Drawdown is that computing it requires many more sample points to get the actual value. I had previously computed Max Drawdown using only year-end values. When I did that, the Max Drawdown of the PBPP was only 0.5% compared to about 15% for using month-end values. It turns out that the PBPP dropped about 15% in 2008 but recovered most of it before the end of the year. Even so, Obviously we would need daily values to get the true maximum number. Even so, a chart of Max Drawdown using only year-end values showed the same relationship between the Lazy Portfolio plot points.

Max Drawdown is an easier risk number to comprehend than standard deviation. But it is more difficult to compute. And the relationship between the portfolios’ risk remains largely the same.

Appendix

The following table lists the legend key for each plotted Lazy Portfolio along with its full name.

Legend Key	Portfolio Name
P1 HBPP	Harry Browne Permanent Portfolio
P2 PBPP	Paul Boyer Permanent Portfolio
P3 PRPFX	Permanent Portfolio Mutual Fund
P4 CH	Bill Schultheis Coffee House
P5 BBNBC	Bill Berstein No Brainer Cowards
P6 BBNB	Bill Berstein No Brainer
P7 DP	Dilbert’s Portfolio
P8 FAUBH	FundAdvice Ultimate Buy & Hold
P9 DSLP	David Swenson Lazy Portfolio
P10 DSYE	David Swenson Yale Endowment
P11 RFCF	Rick Ferri Core Four
P12 SBCP	Scott Burns Couch Portfolio
P13 SBM	Scott Burns Margaritaville
P14 SBFS	Scott Burns Four Square
P15 SBFF	Scott Burns Five Fold
P16 SBSWS	Scott Burns Six Ways from Sunday
P17 LSSP	Larry Swedroe Simple Portfolio
P18 LSMFTP	Larry Swedroe Minimize FatTails Portfolio
P19 VW	Vanguard Windsor
P20 TAFT	Ted Aronson Family Taxable
P21 2nd	2nd Grader
P22 6 SIB	Six Core Asset Index Funds Strategic Asset Allocation Moderate
S&P 500	Standard & Poors 500 Index

Here is the spreadsheet of each portfolio’s holdings. Click to make it readable. Someday I will update this web site to show the contents of each of these Lazy Portfolios in HTML format.

Data is from Yahoo! Finance historical adjusted returns. Actual data used where possible. Data prior to inception for VBR used VISVX, VWO used VEIEX, TLT used VUSTX, GLD used gold, SHY used VFISX. The data and the resulting analysis may contain errors. Invest at your own risk.

MMM-180: The Golden Boglehead

Paul Douglas Boyer — Sat, 16 Oct 2010 21:34:32 +0000

I recount the great time I had at Bogleheads 9 Reunion in Philly and find out why the Bogleheads laugh at gold.

I ENCOURAGE you to Download this show thru iTunes! But, if you just cannot deal with that then go ahead and Play the new show right now

Topics in this week’s show include:

Sign up to be a Boglehead at Bogleheads.org
I recount my experience at the conference, talk about Jack Bogle’s appearance and his new book, our visit to Vanguard, and the panel discussions.
I ask, “Why do you all laugh at gold?”
Here is Bill Bernstein’s article “Wild About Harry“

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Bernstein Views Bernstein

Paul Douglas Boyer — Sat, 16 Oct 2010 18:28:49 +0000

At the Bogleheads 9 Reunion in Philly this past week, I had the opportunity to show Dr. Bill Bernstein the first part of the video we put together that featured Dr. Bill Bernstein’s quote. He laughed and laughed. And he signed my copy of his book.

And here is the video:

Some Observations From Bogleheads 9 and From Jack Bogle Himself

Paul Douglas Boyer — Fri, 15 Oct 2010 01:04:11 +0000

I have the rare privilege of attending the Bogleheads 9 reunion in Philly this year. I wanted to attend the one much closer to my home a couple of years ago, but was way too late in registering. They only let 120 or so folks attend these things. So I registered early enough this year and I thought it might be helpful if I could share some of the things I’ve heard today and will hear tomorrow. At least I’ll be able to remember them better this way.

Today (Thursday, 14 October) was basically Jack Bogle Day. Sure, we heard some about how the Bogleheads got started and we even took the time to go around the meeting room and have every person in attendance tell something about themselves. In addition to Jack Bogle, also in attendance are some authors of investing books you may know: Bill Bernstein, Bill Schultheis, Rick Ferri, and the authors of the various Bogleheads books.

But immediately after the introductions, Jack showed up a little early. Don’t think me presumptuous for using his nickname, that is what he prefers. He spoke with some prepared remarks for about an hour or so and then took questions for another hour or so. We had lunch, then he and Bill Bernstein answered some more questions. He then gave each of us a copy of his new book “Don’t Count On It!” Subtitled Reflections on Investment Illusions, Capitalism, “Mutual” Funds, indexing, Entrepreneurship, idealism, and Heroes. Then we stood in line to have Jack sign his name and we spoke with all of the other authors present.

Here are some representative notes and quotes I took from Jack’s talk.

“Mutual fund companies are run for the benefit of the managers and not the benefit of investors.” Except, of course, one mutual fund company…

“Last year Fidelity managers made $2.6B and Vanguard managers made $0.” [Correction: he said Fidelity's earnings were $2.6B]

He showed a chart of how Vanguard’s average expense ratio keeps dropping. But noted that now with the size of assets under management, one basis point equals $140M. So it would be easy to say, “Let’s spend $140M on something, they’ll never know.” So Jack recommends they think in terms of dollars and not in terms of basis points.

He said, “Keeping expenses low is a simple, moronically simple, yet it is an idea that nobody thought of.”

He said that in 2010, ETF’s share of the index market matches the index fund share. ETF share of index assets is 51.9%

On the topic of holding assets for the long term, he said, “One firm holds its assets for an average of 11 seconds. I don’t know how you feel about that, but that’s not long term investing.”

“There is no place to hide these days. Never seen anything like it. Assuming we don’t have a big disaster, which is a big assumption to me, we will see 2.5% real returns on equities in future (after inflation and expenses).”

“Gold was a terrible investment over 100 years. Rank speculations. I am almost tempted to buy gold but I won’t. 1 or 2 or even 5% to play with is OK.”

“I am a little worried about the risks that are still out there. US Financials is a mess. Pensions are bankrupt. Don’t see how they will get 8%. Wall St. Values are in tatters. America has lost ability to govern itself. I find a lot of resonance when I speak about values. I find young people are seeking something nobler. I am hoping to make a tiny difference in values. To get a financial system that works for all of you and not Wall St.”

“Rebalance? Data says don’t bother. Maybe if you need a 50/50 portfolio and it gets to 60/30 then rebalance if you need to.”

“The power of money in Washington is disgusting.”

“I think about what is going on with Emerging Market funds. They are among the largest ETFs. The Data said 33% of all EM holdings were in ETFs. Makes me worried because ETF owners are traders. Suppose something happens to Brazil and traders decide to get out. Could be a big… Still, in the long run that should not matter. If EM is held up by Mutual fund demand, when they go it could cause trouble. Vanguard should be careful when getting into these funds.”

Finally, Bill Schultheis, the author of The Coffeehouse Investor, stood up and asked a question of Jack and Bill Bernstein. It was about the disaster of 401K plans for the average citizen. How they don’t understand how to invest their own money. And would Jack and Bill recommend a more managed approach. Bill answered first and said, “The less autonomity the better. Don’t let people run their own funds. I want a big maternalistic approach.” Jack basically agreed and listed a few points about 401(k) plans: “1. You’re going to borrow money from it 2. You will take it out. 3 you don’t have to contribute to it 4. The investor has no guidance . With the average 401k being $54,000, have a great retirement.” Jack prefers the idea of a privatized personal retirement plan like former President George W. Bush initially suggested.

I asked Jack about his thoughts on the future of the US Dollar and the Federal debt and how that would affect the investor. Would we see hyperinflation? He answered that currency speculation is not something to get into. That we would want the dollar to fall relative to China. That China owns a large amount of our bonds and they may fall in value if interest rates rise. He repeated that he should probably buy some gold for insurance (against the US Dollar) but that he is just “too busy” to do it.

It has been great being here at the Bogleheads 9 reunion. Everyone is nice to talk with and with such a small gathering, we have lots of time to talk to everyone.

Proof You Gotta Own Some Stock

Paul Douglas Boyer — Tue, 12 Oct 2010 00:38:58 +0000

You gotta own some stocks, but how much? I took the Paul Boyer Permanent Portfolio and varied the percentage of stock ownership from 0% to 100% in 5% increments while keeping gold, long term bonds, and cash divided equally among the remaining amount. Then I plotted each portfolios return vs. risk for 1975 through 2009. Take a look at the resulting graph. It turns out that portfolios with less than about 25% stocks were generally the same level of risk or even (surprise) a higher level of risk than holding 25% stock. Each of the numbered portfolios P0 through P100 split their stock ownership between Small Cap Value (VISVX) and Emerging Market (VEIEX). I also plotted the pure Harry Browne Permanent Portfolio and a simulated PRPFX.

It looks like Harry Browne was really onto something with his recommendation of owning 25% in stocks.

Two and 3/4 Years of Lazy Portfolios

Paul Douglas Boyer — Tue, 05 Oct 2010 00:30:25 +0000

Not satisfied with just 2010 Year-to-date results? How about results from January 2008 through September 2010? Here is the graph:

(click for larger graphic)

If you cannot read this, it says that the permanent portfolios are up about 20% since January 2008 and just about everything else is still negative.

Lazy Portfolios Thru September 2010

Paul Douglas Boyer — Fri, 01 Oct 2010 12:34:53 +0000

Here is a chart plotting the end-of-month returns for the lazy portfolios. Wow, what a roller coaster ride if your portfolio was 100% in stocks. On the other hand, wow, what a nice smooth ride if you were in one of the three permanent portfolios. The Paul Boyer Permanent Portfolio remains in the lead with an amazing 13.1% gain through the first three quarters of 2010. Look at that steady upward blue line! Thank you Harry Browne.

And here is the table of returns through September 2010:

ID#	Portfolio Name	YTD Return
P2	Paul Boyer Permanent Portfolio (ETF)	13.1%
P1	Harry Browne Permanent Portfolio (ETF)	11.8%
P3	Permanent Portfolio Fund (PRPFX)	10.8%
P14	David Swensen’s Yale Endowment	9.5%
P24	IFA Index Portfolio 100 Bright Red	8.8%
P19	Scott Burns’ Four Square Portfolio	8.3%
P11	Bill Schultheis’ Coffeehouse Portfolio Vanguard	7.9%
P10	Ted Aronson’s Lazy Portfolio	7.7%
P9	Dilbert World’s Simplest	7.4%
P13	David Swensen’s Lazy Portfolio	7.2%
P20	Scott Burns’ Five Fold Portfolio	7.1%
P15	MMM Do It Yourself Funds	6.7%
P12	FundAdvice Ultimate Buy & Hold	6.5%
P22	Larry Swedroe Simple	6.4%
P23	Larry Swedroe Min Fat Tails	6.4%
P6	Rick Ferri Core Four	6.0%
P7	William Bernstein’s No Brainer Cowards Portfolio	5.9%
P25	IFA Index Portfolio 50	5.9%
P17	Scott Burns’ Couch Potato Portfolio	5.5%
P21	Scott Burns’ Six Ways from Sunday Portfolio	5.3%
P18	Scott Burns’ Margarita Portfolio	4.8%
P4	Taylor Larimore 3 Fund	4.8%
P5	Taylor Larimore 4 Fund	4.7%
P8	William Bernstein’s Basic No-Brainer Portfolio	4.4%
P16	Vanguard Windsor	2.0%

Data on IFA portfolios is courtesy of ifa.com. All other portfolio returns are calculated using Yahoo! Finance historical returns and may not include dividends paid in the most recent month.

Video Lessons: Proper Benchmarking and Alpha

Paul Douglas Boyer — Thu, 30 Sep 2010 13:18:08 +0000

How can you properly determine if your investment have met your expectations?

Watch “Proper Benchmarking and Alpha” for a lesson on measuring risk against a complete set of important factors. These videos are based upon IFA’s Quote of the Week Issue #82.

Part 1:

Part 2:

MMM-179: Vertigo

Paul Douglas Boyer — Sun, 19 Sep 2010 22:54:22 +0000

VERTIGO! Listen to Shrugging Out podcast. OLD: D vs. R. New: P vs L. Inflation or deflation? A cool tool. A cool Guru. I ENCOURAGE you to Download this show thru iTunes! But, if you just cannot deal with that then go ahead and Play the new show right now

Topics in this week’s show include:

Vertigo. Poem by Leysa Lowery
Vertigo: Feeling you are about to fall
Vestibular Neuronitis
Things I consume: Shrugging Out podcast is one worth checking out. Pete really has a rational head. No-nonsense discussion of what is happening. Some real gems of shows in his podcast catalog.
Also, No Agenda, Glenn Beck, Lew Rockwell, Freetalk Live, Alex Jones, Freedom Watch, Stossel.
Democrats vs. Republicans is no longer the divide. Today it is Big Government vs. Libertarian ideas.
Permanent Portfolio review.
We can’t predict the future, so invest in all possibilities.
Inflation or Deflation? See Mish.
See Jason Zweig’s article about the Permanent Portfolio in the WSJ. Note that the expense ratio of PFPFX is 0.75%.
William Bernstein wrote about the Harry Browne Permanent Portfolio
Nassim Taleb said not to buy bonds. In fact, SHORT THEM! How’d that work out for ya? (HINT: badly)
Tool: SmartMoney real-time portfolio tracker
Guru: Henry David Thoreau author of Civil Disobedience

Got Feedback? Try any one of these methods:

email: feedback AT MadMoneyMachine DOT com
Hook up with Mad Money Machine at Facebook
voicemail: 571-366-7121
Twitter me at Twitter.com/MadMoneyMachine
Take the MMM Survey

Lazy Portfolios Thru August 2010

Paul Douglas Boyer — Wed, 01 Sep 2010 13:58:37 +0000

The Permanent Portfolio style lazy portfolios continue to do well. Listed below is a table of YTD results for 25 portfolios or funds that I am tracking. The contents of each portfolio are listed in an earlier post. The Paul Boyer Permanent Portfolio continues its lead, having returned 9.8% so far in 2010. It differs from the Harry Browne PP (up 8.9% YTD) in that instead of a total US Stock Market fund (VTI), it holds half of its stock allocation in US Small Cap (VBR) and half in emerging markets (VWO). Other than that, they both hold 25% in gold (GLD), 25% in long term US Treasury bonds (TLT), and 25% in cash (SHY). The Permanent Portfolio mutual fund (PRPFX) came in third place at 6.0%.

Most all of the other portfolios are stock-centric and while they may own some bonds, they are usually a mixed bond portfolio instead of purely long-term (20- to 30-year) US Treasuries. None of the other own gold.

ID#	Portfolio Name	YTD Return
P2	Paul Boyer Permanent Portfolio (ETF)	9.8%
P1	Harry Browne Permanent Portfolio (ETF)	8.9%
P3	Permanent Portfolio Fund	6.0%
P14	David Swensen’s Yale Endowment	4.4%
P23	Larry Swedroe Min Fat Tails	3.0%
P11	Bill Schultheis’ Coffeehouse Portfolio Vanguard	2.8%
P19	Scott Burns’ Four Square Portfolio	2.6%
P20	Scott Burns’ Five Fold Portfolio	2.0%
P13	David Swensen’s Lazy Portfolio	1.8%
P12	FundAdvice Ultimate Buy & Hold	1.0%
P17	Scott Burns’ Couch Potato Portfolio	1.0%
P7	William Bernstein’s No Brainer Cowards Portfolio	0.6%
P22	Larry Swedroe Simple	0.5%
P25	IFA Index Portfolio 50	-0.2%
P10	Ted Aronson’s Lazy Portfolio	-0.2%
P21	Scott Burns’ Six Ways from Sunday Portfolio	-0.4%
P6	Rick Ferri Core Four	-0.8%
P18	Scott Burns’ Margarita Portfolio	-1.5%
P24	IFA Index Portfolio 100 Bright Red	-2.1%
P9	Dilbert World’s Simplest	-2.4%
P4	Taylor Larimore 3 Fund	-2.4%
P5	Taylor Larimore 4 Fund	-2.6%
P8	William Bernstein’s Basic No-Brainer Portfolio	-2.8%
P15	MMM Do It Yourself Funds	-3.0%
P16	Vanguard Windsor	-6.7%

Here are the individual component YTD results of the Paul Boyer Permanent Portfolio:

Small Cap (VBR): -0.7%
Emerging Market (VWO): -0.5%
20+ Treasury Bonds (TLT): 23.6%
Gold (GLD): 13.8%
Cash (SHY): 2.3%

It is amazing to note that Cash in the form of short term treasuries (SHY) outperformed all but 7 of the 25 lazy portfolios! And who would have thought that long term bonds would be up 23.6% after only 8 months? Not me. And that is why one invests in a Permanent Portfolio: No one can predict the future. So invest in all four economic possibilities: prosperity, inflation, deflation, and recession.

The Siren Songs of Active Management

Paul Douglas Boyer — Tue, 03 Aug 2010 20:30:17 +0000

Lazy Portfolios Through July 2010

Paul Douglas Boyer — Sat, 31 Jul 2010 14:56:24 +0000

The permanent portfolios continue to do well. See previous posts for full details about the contents of each lazy portfolio. The Paul Boyer Permanent Portfolio has risen 1% per month so far with small volatility. 12.5% VBR, 12.5% VWO, 25% TLT, 25%, GLD, and 25% SHY. You can do it!

ID#	Portfolio Name	YTD Return
P2	Paul Boyer Permanent Portfolio (ETF)	7.0%
P1	Harry Browne Permanent Portfolio (ETF)	6.1%
P14	David Swensen’s Yale Endowment	5.2%
P11	Bill Schultheis’ Coffeehouse Portfolio Vanguard	4.9%
P3	Permanent Portfolio Fund	4.5%
P19	Scott Burns’ Four Square Portfolio	4.4%
P13	David Swensen’s Lazy Portfolio	3.8%
P23	Larry Swedroe Min Fat Tails	3.5%
P24	IFA Index Portfolio 100 Bright Red	3.5%
P20	Scott Burns’ Five Fold Portfolio	3.3%
P7	William Bernstein’s No Brainer Cowards Portfolio	3.0%
P22	Larry Swedroe Simple	2.9%
P12	FundAdvice Ultimate Buy & Hold	2.8%
P25	IFA Index Portfolio 50 Bright Red	2.6%
P10	Ted Aronson’s Lazy Portfolio	2.4%
P15	MMM Do It Yourself Funds	2.4%
P17	Scott Burns’ Couch Potato Portfolio	2.4%
P6	Rick Ferri Core Four	2.0%
P21	Scott Burns’ Six Ways from Sunday Portfolio	1.6%
P9	Dilbert World’s Simplest	1.1%
P8	William Bernstein’s Basic No-Brainer Portfolio	1.1%
P4	Taylor Larimore 3 Fund	0.6%
P18	Scott Burns’ Margarita Portfolio	0.5%
P5	Taylor Larimore 4 Fund	0.4%
P16	Vanguard Windsor	-1.0%

Lazy Portfolios Thru June 2010

Paul Douglas Boyer — Sun, 04 Jul 2010 14:23:10 +0000

We have arrived at mid-year 2010 and can now take a look at the half-year results of the lazy portfolios we have been tracking. It looks like the Paul Boyer Permanent Portfolio has gained 1% per month this year. Just four of the portfolios are positive with three of them based around the Permanent Portfolio concept. Portfolios P2 and P1 used Vanguard mutual funds. If we would have used the recommended ETFs TLT, SHY, VTI, VBR, VWO, and GLD, the results were 6.6% and 6.1%, respectively.

ID#	Portfolio Name	YTD Return
P2	Paul Boyer Permanent Portfolio	6.0%
P1	Harry Browne Permanent Portfolio	5.4%
P3	Permanent Portfolio Fund	2.5%
P23	Larry Swedroe Min Fat Tails	0.9%
P11	Bill Schultheis’ Coffeehouse Portfolio Vanguard	-0.3%
P14	David Swensen’s Yale Endowment	-0.9%
P17	Scott Burns’ Couch Potato Portfolio	-1.3%
P22	Larry Swedroe Simple	-1.9%
P7	William Bernstein’s No Brainer Cowards Portfolio	-2.0%
P19	Scott Burns’ Four Square Portfolio	-2.5%
P13	David Swensen’s Lazy Portfolio	-2.5%
P25	IFA Index Portfolio 50 Bright Red	-2.5%*
P12	FundAdvice Ultimate Buy & Hold	-2.6%
P20	Scott Burns’ Five Fold Portfolio	-3.3%
P10	Ted Aronson’s Lazy Portfolio	-3.9%
P24	IFA Index Portfolio 100 Bright Red	-4.4%*
P6	Rick Ferri Core Four	-4.6%
P8	William Bernstein’s Basic No-Brainer Portfolio	-4.8%
P18	Scott Burns’ Margarita Portfolio	-4.9%
P21	Scott Burns’ Six Ways from Sunday Portfolio	-5.2%
P15	MMM Do It Yourself Funds	-5.2%
P4	Taylor Larimore 3 Fund	-5.8%
P5	Taylor Larimore 4 Fund	-5.9%
P9	Dilbert World’s Simplest	-6.7%
P16	Vanguard Windsor	-8.7%

Have you shifted into a Permanent Portfolio yet?

Here are the returns of the individual components of the lazy portfolios:

ID	FUND NAME	TICKER	%	YTD Return
P1	Harry Browne Permanent Portfolio
	Vanguard Total Stock Mkt Idx	VTSMX	25%	-6.4%
	Vanguard Long-Term Treasury Investor	VUSTX	25%	12.4%
	Vanguard Short-Term Treasury	VFISX	25%	2.1%
	SPDR Gold Shares	GLD	25%	13.4%
				5.4%
P2	Paul Boyer Permanent Portfolio
	Vanguard Small Cap Value Index	VISVX	12.5%	-1.0%
	Vanguard Emerging Mkts Stock Idx	VEIEX	12.5%	-6.9%
	Vanguard Long-Term Treasury Investor	VUSTX	25%	12.4%
	Vanguard Short-Term Treasury	VFISX	25%	2.1%
	SPDR Gold Shares	GLD	25%	13.4%
				6.0%

P3	Permanent Portfolio Fund	PRPFX	100%	2.5%


P4	Taylor Larimore 3 Fund
	Vanguard Total Intl Stock Index	VTSMX	50%	-6.4%
	Vanguard Short-Term Bond Index	VGTSX	30%	-12.0%
	Vanguard Total Bond Market Index	VBMFX	20%	4.9%
		TOTAL	100%	-5.8%

P5	Taylor Larimore 4 Fund
	Vanguard Total Intl Stock Index	VTSMX	50%	-6.4%
	Vanguard Short-Term Bond Index	VGTSX	30%	-12.0%
	Vanguard Total Bond Market Index	VBMFX	10%	4.9%
	Vanguard Inflation-Protected Secs	VIPSX	10%	3.9%
		TOTAL	100%	-5.9%

P6	Rick Ferri Core Four
	Vanguard Total Intl Stock Index	VTSMX	48%	-6.4%
	Vanguard REIT Index	VGSIX	8%	4.7%
	Vanguard Total Intl Stock Index	VGTSX	24%	-12.0%
	Vanguard Total Bond Market Index	VBMFX	20%	4.9%
		TOTAL	100%	-4.6%

P7	William Bernstein’s No Brainer Cowards Portfolio
	Vanguard Short-Term Investment-Grade	VFSTX	40%	2.5%
	Vanguard Total Stock Mkt Idx	VTSMX	15%	-6.4%
	Vanguard Small Cap Value Index	VISVX	10%	-1.0%
	Vanguard Value Index	VIVAX	10%	-6.0%
	Vanguard Emerging Mkts Stock Idx	VEIEX	5%	-6.9%
	Vanguard European Stock Index	VEURX	5%	-16.9%
	Vanguard Pacific Stock Index	VPACX	5%	-6.9%
	Vanguard REIT Index	VGSIX	5%	4.7%
	Vanguard Tax-Managed Small Cap Inv	VTMSX	5%	-0.9%
		TOTAL	100%	-2.0%

P8	William Bernstein’s Basic No-Brainer Portfolio
	Vanguard 500 Index	VFINX	25%	-7.2%
	Vanguard Tax-Managed Small Cap Inv	VTMSX	25%	-0.9%
	Vanguard Tax-Managed Intl	VTMGX	25%	-13.7%
	Vanguard Short-Term Bond Index	VBISX	25%	2.6%
		TOTAL	100%	-4.8%

P9	Dilbert World’s Simplest
	Vanguard Total Intl Stock Index	VTSMX	50%	-6.4%
	Vanguard Short-Term Bond Index	VEIEX	50%	-6.9%
		TOTAL	100%	-6.7%

P10	Ted Aronson’s Lazy Portfolio
	Vanguard Emerging Mkts Stock Idx	VEIEX	20%	-6.9%
	Vanguard 500 Index	VFINX	15%	-7.2%
	Vanguard Pacific Stock Index	VPACX	15%	-6.9%
	Vanguard Extended Market Idx	VEXMX	10%	-1.8%
	Vanguard Inflation-Protected Secs	VIPSX	10%	3.9%
	Vanguard European Stock Index	VEURX	5%	-16.9%
	Vanguard High-Yield Corporate	VWEHX	5%	2.3%
	Vanguard Long-Term U.S. Treasury	VUSTX	5%	12.4%
	Vanguard Small Cap Growth Index	VISGX	5%	-1.7%
	Vanguard Small Cap Value Index	VISVX	5%	-1.0%
	Vanguard Total Stock Mkt Idx	VTSMX	5%	-6.4%
		TOTAL	100%	-3.9%

P11	Bill Schultheis’ Coffeehouse Portfolio Vanguard
	Vanguard Total Bond Market Index	VBMFX	40%	4.9%
	Vanguard 500 Index	VFINX	10%	-7.2%
	Vanguard Value Index	VIVAX	10%	-6.0%
	Vanguard Total Intl Stock Index	VGTSX	10%	-12.0%
	Vanguard REIT Index	VGSIX	10%	4.7%
	Vanguard Small Cap Value Index	VISVX	10%	-1.0%
	Vanguard Small Cap Index	NAESX	10%	-1.4%
		TOTAL	100%	-0.3%

P12	FundAdvice Ultimate Buy & Hold
	Vanguard 500 Index	VFINX	6%	-7.2%
	Vanguard Value Index	VIVAX	6%	-6.0%
	Vanguard Small Cap Index	NAESX	6%	-1.4%
	Vanguard Small Cap Value Index	VISVX	6%	-1.0%
	Vanguard REIT Index	VGSIX	6%	4.7%
	Vanguard Developed Markets Index	VDMIX	12%	-13.5%
	Vanguard Inflation-Protected Secs	VIPSX	8%	3.9%
	Vanguard Interm-Term U.S. Treas	VFITX	20%	6.3%
	Vanguard Short-Term Treasury	VFISX	12%	2.1%
	Vanguard International Value	VTRIX	12%	-14.7%
	Vanguard Emerging Mkts Stock Idx	VEIEX	6%	-6.9%
		TOTAL	100%	-2.6%

P13	David Swensen’s Lazy Portfolio
	Vanguard Total Stock Mkt Idx	VTSMX	30%	-6.4%
	Vanguard REIT Index	VGSIX	20%	4.7%
	Vanguard Developed Markets Index	VDMIX	15%	-13.5%
	Vanguard Emerging Mkts Stock Idx	VEIEX	5%	-6.9%
	Vanguard Inflation-Protected Secs	VIPSX	15%	3.9%
	Vanguard Short-Term Treasury	VFISX	15%	2.1%
		TOTAL	100%	-2.5%

P14	David Swensen’s Yale Endowment
	Vanguard Total Stock Mkt Idx	VTSMX	30%	-6.4%
	Vanguard REIT Index	VGSIX	20%	4.7%
	Vanguard Developed Markets Index	VDMIX	15%	-13.5%
	Vanguard Emerging Mkts Stock Idx	VEIEX	5%	-6.9%
	Vanguard Inflation-Protected Secs	VIPSX	15%	3.9%
	Vanguard Short-Term Treasury	VUSTX	15%	12.4%
		TOTAL	100%	-0.9%

P15	MMM Do It Yourself Funds
	Vanguard 500 Index	VFINX	12%	-7.2%
	Vanguard Value Index	VIVAX	12%	-6.0%
	Vanguard Small Cap Value Index	VISVX	20%	-1.0%
	Bridgeway Ultra-Small Company Market	BRSIX	20%	-1.9%
	Vanguard REIT Index	VGSIX	5%	4.7%
	Vanguard International Value	VTRIX	9%	-14.7%
	Vanguard International Explorer	VGTSX	9%	-12.0%
	Vanguard Emerging Mkts Stock Idx	VEIEX	13%	-6.9%
		TOTAL	100%	-5.2%

P16	Vanguard Windsor	VWNDX	100%	-8.7%

P17	Scott Burns’ Couch Potato Portfolio
	Vanguard Total Stock Mkt Idx	VTSMX	50%	-6.4%
	Vanguard Inflation-Protected Secs	VIPSX	50%	3.9%
		TOTAL	100%	-1.3%

P18	Scott Burns’ Margarita Portfolio
	Vanguard Total Stock Mkt Idx	VTSMX	33%	-6.4%
	Vanguard Inflation-Protected Secs	VIPSX	33%	3.9%
	Vanguard Total Intl Stock Index	VGTSX	33%	-12.0%
		TOTAL	100%	-4.9%

P19	Scott Burns’ Four Square Portfolio
	Vanguard Total Stock Mkt Idx	VTSMX	25%	-6.4%
	Vanguard Inflation-Protected Secs	VIPSX	25%	3.9%
	Vanguard Total Intl Stock Index	VGTSX	25%	-12.0%
	Vanguard REIT Index	VGSIX	25%	4.7%
		TOTAL	100%	-2.5%

P20	Scott Burns’ Five Fold Portfolio
	Vanguard Total Stock Mkt Idx	VTSMX	20%	-6.4%
	Vanguard Inflation-Protected Secs	VIPSX	20%	3.9%
	Vanguard Total Intl Stock Index	VGTSX	20%	-12.0%
	Vanguard REIT Index	VGSIX	20%	4.7%
	American Century International Bd Inv	BEGBX	20%	-6.8%
		TOTAL	100%	-3.3%

P21	Scott Burns’ Six Ways from Sunday Portfolio
	Vanguard Total Stock Mkt Idx	VTSMX	16.7%	-6.4%
	Vanguard Inflation-Protected Secs	VIPSX	16.7%	3.9%
	Vanguard Total Intl Stock Index	VGTSX	16.7%	-12.0%
	Vanguard REIT Index	VGSIX	16.7%	4.7%
	American Century International Bd Inv	BEGBX	16.7%	-6.8%
	Vanguard Energy	VGENX	16.7%	-14.3%
		TOTAL	100.0%	-5.2%

P22	Larry Swedroe Simple
	Vanguard Value Index	VIVAX	15%	-6.0%
	Vanguard Small Cap Value Index	VISVX	15%	-1.0%
	Vanguard Small Cap Index	NAESX	13%	-1.4%
	Vanguard Emerging Mkts Stock Idx	VEIEX	4%	-6.9%
	Vanguard International Value Inv	VTRIX	13%	-14.7%
	Vanguard Inflation-Protected Secs	VIPSX	40%	3.9%
		TOTAL	100%	-1.9%

P23	Larry Swedroe Min Fat Tails
	Vanguard Small Cap Value Index	VISVX	15%	-1.0%
	Vanguard Emerging Mkts Stock Idx	VEIEX	15%	-6.9%
	Vanguard Inflation-Protected Secs	VIPSX	35%	3.9%
	Vanguard Short-Term Treasury	VFISX	35%	2.1%
		TOTAL	100%	0.9%

P24	IFA Index Portfolio 100 Bright Red
	DFA U.S. Large Company	DFUSX	12%	-7.2%
	DFA U.S. Large Cap Value	DFLVX	12%	-4.4%
	DFA U.S. Micro Cap	DFSTX	20%	-0.5%
	DFA U.S. Small Cap Value	DFFVX	20%	-1.4%
	DFA Real Estate Securities	DFGEX	5%	-1.3%
	DFA Intl Value	DFIVX	6%	-14.4%
	DFA Intl Small Company	DFISX	6%	-6.9%
	DFA Intl Small Cap Value	DISVX	6%	-10.7%
	DFA Emerging Markets	DFEMX	4%	-6.0%
	DFA Emerging Markets Value	DFEVX	4%	-6.8%
	DFA Emerging Markets Small Cap	DEMSX	5%	-1.8%
		TOTAL	100%	-4.9%*

P25	IFA Index Portfolio 50 Bright Red
	DFA U.S. Large Company	DFUSX	12%	-7.2%
	DFA U.S. Large Cap Value	DFLVX	12%	-4.4%
	US Small Cap	DFSTX	6%	-0.5%
	DFA U.S. Small Cap Value	DFFVX	6%	-1.4%
	DFA Real Estate Securities	DFGEX	6%	-1.3%
	DFA Intl Value	DFIVX	6%	-14.4%
	DFA Intl Small Company	DFISX	3%	-6.9%
	DFA Intl Small Cap Value	DISVX	3%	-10.7%
	DFA Emerging Markets	DFEMX	2%	-6.0%
	DFA Emerging Markets Value	DFEVX	2%	-6.8%
	DFA Emerging Markets Small Cap	DEMSX	2%	-1.8%
	DFA One-Year Fixed-Income I	DFIHX	10%	0.6%
	DFA Two-Year Global Fixed-Income I	DFGFX	10%	1.1%
	DFA Five-Year Government I	DFFGX	10%	2.8%
	DFA Five-Year Global Fixed-Income I	DFGBX	10%	3.2%
		TOTAL	100%	-3.0%*

*Note that these results use Yahoo! Finance adjusted historical returns with the exception of IFA portfolios results from IFA.com that include IFA’s fee.

Permanent Portfolio volatility in May

Paul Douglas Boyer — Wed, 02 Jun 2010 20:54:59 +0000

Dave sent this to me and said I could post it for all of you. Nice analysis of how the Permanent Portfolio did last month.

Permanent Portfolio performance during the very volatile month of May

This May was the worst May since 1940. The Dow and VTI (total stock market) both had losses of -7.9%. Volatility has returned to the market! When the market is volatile, the wisdom of investing in the Permanent Portfolio becomes apparent. The Harry Browne Permanent Portfolio always has the same four assets: total stock market (VTI), gold (GLD), long term Treasury bonds (TLT) and short term Treasury bonds (SHY). These assets are rebalanced each year.

Let’s see how the Permanent Portfolios performed on a weekly basis for the very volatile month of May.

Date Stocks Gold Long Bonds Short Bonds PermPort
— VTI GLD TLT SHY

May   3 –   7          -7.0%               2.5%              4.1%                  0.3%                     0.0%
May 10 – 14           3.0%               1.8%             -0.7%                 0.1%                     1.0%
May 17 – 21          -4.5%              -4.3%              3.7%                 0.1%                    -1.2%
May 24 – 28           0.7%               3.2%             -2.0%                  0.0%                     0.5%

Total for May -7.9% 3.1% 5.1% 0.5% 0.2%

2010 to May -0.1% 10.8% 8.9% 1.4% 5.5%

The week-by-week returns show that the Permanent Portfolio is much less volatile than the VTI. The volatility is amazingly low because the VTI and TLT (and GLD) move in opposite directions — they are negatively correlated. The first week of May provides a good example of the negative correlation of the assets: the VTI was down -7.0% while GLD was up 2.5%, TLT was up 4.1% and SHY was up 0.3%. This resulted in a 0.0% change for the Permanent Portfolio. The returns for each of the other three weeks further demonstrate the negative correlations of the assets.

The final returns for the month of May show that if you had been invested in the Permanent Portfolio you would have been ahead by 0.2% instead of being behind by -7.9% for a VTI investment. A Permanent Portfolio investor would not think that this May was the worst May since 1940.

The last line in the table shows the year-to-date returns for each of the assets. The advantage of the Permanent Portfolios over the VTI (total stock market) is obvious.

The main problem with the Permanent Portfolio is that it is just too boring for most investors!

MMM-178: A Look Back, A Look Forward

Paul Douglas Boyer — Mon, 31 May 2010 23:50:15 +0000

How have lazy portfolios performed so far in 2010? How do you get started investing in the Permanent Portfolio?

I ENCOURAGE you to Download this show thru iTunes! But, if you just cannot deal with that then go ahead and Play the new show right now

Topics in this week’s show include:

Review the performance of Lazy Portfolios
Why does risk matter?
Which account holds which asset?
How to buy bonds?

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Lazy Portfolios Thru May 2010

Paul Douglas Boyer — Sat, 29 May 2010 12:28:45 +0000

Here are the Year-To-Date returns of the Lazy Portfolios through the end of May 2010. The components of each portfolio are listed at the end. The “Paul Boyer Permanent Portfolio” is my modification of the Harry Browne Permanent Portfolio where instead of investing 25% in the total US stock market, we invest 12.5% in US Small Cap Value and 12.5% in Emerging Markets.

ID#	Portfolio Name	YTD Return
P2	Paul Boyer Permanent Portfolio	5.0%
P1	Harry Browne Permanent Portfolio	4.8%
P3	Permanent Portfolio Fund	3.3%
P11	Bill Schultheis’ Coffeehouse Portfolio Vanguard	2.6%
P23	Larry Swedroe Min Fat Tails	1.6%
P14	David Swensen’s Yale Endowment	1.6%
P24	IFA Index Portfolio 100 Bright Red	1.3%
P17	Scott Burns’ Couch Potato Portfolio	1.3%
P22	Larry Swedroe Simple	1.2%
P7	William Bernstein’s No Brainer Cowards Portfolio	0.9%
P19	Scott Burns’ Four Square Portfolio	0.8%
P13	David Swensen’s Lazy Portfolio	0.7%
P25	IFA Index Portfolio 50	0.4%
P15	MMM Do It Yourself Funds	0.1%
P12	FundAdvice Ultimate Buy & Hold	-0.7%
P20	Scott Burns’ Five Fold Portfolio	-0.9%
P10	Ted Aronson’s Lazy Portfolio	-1.2%
P6	Rick Ferri Core Four	-1.2%
P8	William Bernstein’s Basic No-Brainer Portfolio	-1.3%
P16	Vanguard Windsor	-1.5%
P21	Scott Burns’ Six Ways from Sunday Portfolio	-2.3%
P4	Taylor Larimore 3 Fund	-2.8%
P5	Taylor Larimore 4 Fund	-2.9%
P18	Scott Burns’ Margarita Portfolio	-2.9%
P9	Dilbert World’s Simplest	-3.6%

Below is a Return vs. Risk Chart for these portfolios from 1985 through 2009 (Note: this chart does not include returns through the end of May 2010). The ideal portfolio would be high return at low risk and thus appear at the top left of the chart. [Chart data is computed using Simba's spreadsheet from the Bogleheads.org forum with the exception of IFA portfolios from ifa.com.]

See how there is almost an invisible boundary line from lower left to upper right? That is the “Efficient Frontier” and shows that returns are correlated with risk over the long term. It is nearly impossible to construct a portfolio that will be above that efficient frontier. So the only question you need to answer is, how much risk are you willing to accept. That is, can you tolerate the downturns in the market in the short term?

Looking at a shorter term, here is a chart showing just the previous ten years from 2000 through 2009.

I like the boost to returns the Paul Boyer Permanent Portfolio got during prosperity and it didn’t hurt too much during recession either.

And to see if you can indeed stomach a bad short term, here is a chart with just the previous three years:

How about a chart of just the recent heyday of stocks from 2003 thru 2006:

Looking at past charts is fun, but should not be the only data you use to make investment decisions. I like the Permanent Portfolio concept because it is so simple, has low fees, and covers the four economic cycles of prosperity, inflation, deflation, and recession. It has been shown to be the lowest in risk among the lazy portfolios while not sacrificing returns. They are the only portfolios to include gold.

Here are the components of each of the portfolios*:

				YTD
ID#	PORTFOLIO NAME	TICKER	%	Return
P1	Harry Browne Permanent Portfolio
	Vanguard Total Stock Mkt Idx	VTSMX	25%	-0.4%
	Vanguard Long-Term Treasury Investor	VUSTX	25%	7.3%
	Vanguard Short-Term Treasury	VFISX	25%	1.4%
	SPDR Gold Shares	GLD	25%	10.8%
		TOTAL	100%	4.8%
P2	Paul Boyer Permanent Portfolio
	Vanguard Small Cap Value Index	VISVX	12.5%	7.7%
	Vanguard Emerging Mkts Stock Idx	VEIEX	12.5%	-6.9%
	Vanguard Long-Term Treasury Investor	VUSTX	25%	7.3%
	Vanguard Short-Term Treasury	VFISX	25%	1.4%
	SPDR Gold Shares	GLD	25%	10.8%
		TOTAL	100%	5.0%

P3	Permanent Portfolio Fund	PRPFX	100%	3.3%


P4	Taylor Larimore 3 Fund
	Vanguard Total Intl Stock Index	VTSMX	50%	-0.4%
	Vanguard Short-Term Bond Index	VGTSX	30%	-11.0%
	Vanguard Total Bond Market Index	VBMFX	20%	3.2%
		TOTAL	100%	-2.8%

P5	Taylor Larimore 4 Fund
	Vanguard Total Intl Stock Index	VTSMX	50%	-0.4%
	Vanguard Short-Term Bond Index	VGTSX	30%	-11.0%
	Vanguard Total Bond Market Index	VBMFX	10%	3.2%
	Vanguard Inflation-Protected Secs	VIPSX	10%	2.9%
		TOTAL	100%	-2.9%

P6	Rick Ferri Core Four
	Vanguard Total Intl Stock Index	VTSMX	48%	-0.4%
	Vanguard REIT Index	VGSIX	8%	11.5%
	Vanguard Total Intl Stock Index	VGTSX	24%	-11.0%
	Vanguard Total Bond Market Index	VBMFX	20%	3.2%
		TOTAL	100%	-1.2%

P7	William Bernstein’s No Brainer Cowards Portfolio
	Vanguard Short-Term Investment-Grade	VFSTX	40%	1.7%
	Vanguard Total Stock Mkt Idx	VTSMX	15%	-0.4%
	Vanguard Small Cap Value Index	VISVX	10%	7.7%
	Vanguard Value Index	VIVAX	10%	-0.4%
	Vanguard Emerging Mkts Stock Idx	VEIEX	5%	-6.9%
	Vanguard European Stock Index	VEURX	5%	-16.0%
	Vanguard Pacific Stock Index	VPACX	5%	-4.8%
	Vanguard REIT Index	VGSIX	5%	11.5%
	Vanguard Tax-Managed Small Cap Inv	VTMSX	5%	6.7%
		TOTAL	100%	0.9%

P8	William Bernstein’s Basic No-Brainer Portfolio
	Vanguard 500 Index	VFINX	25%	-1.5%
	Vanguard Tax-Managed Small Cap Inv	VTMSX	25%	6.7%
	Vanguard Tax-Managed Intl	VTMGX	25%	-12.2%
	Vanguard Short-Term Bond Index	VBISX	25%	1.7%
		TOTAL	100%	-1.3%

P9	Dilbert World’s Simplest
	Vanguard Total Intl Stock Index	VTSMX	50%	-0.4%
	Vanguard Short-Term Bond Index	VEIEX	50%	-6.9%
		TOTAL	100%	-3.6%

P10	Ted Aronson’s Lazy Portfolio
	Vanguard Emerging Mkts Stock Idx	VEIEX	20%	-6.9%
	Vanguard 500 Index	VFINX	15%	-1.5%
	Vanguard Pacific Stock Index	VPACX	15%	-4.8%
	Vanguard Extended Market Idx	VEXMX	10%	5.7%
	Vanguard Inflation-Protected Secs	VIPSX	10%	2.9%
	Vanguard European Stock Index	VEURX	5%	-16.0%
	Vanguard High-Yield Corporate	VWEHX	5%	0.4%
	Vanguard Long-Term U.S. Treasury	VUSTX	5%	7.3%
	Vanguard Small Cap Growth Index	VISGX	5%	5.8%
	Vanguard Small Cap Value Index	VISVX	5%	7.7%
	Vanguard Total Stock Mkt Idx	VTSMX	5%	-0.4%
		TOTAL	100%	-1.2%

P11	Bill Schultheis’ Coffeehouse Portfolio Vanguard
	Vanguard Total Bond Market Index	VBMFX	40%	3.2%
	Vanguard 500 Index	VFINX	10%	-1.5%
	Vanguard Value Index	VIVAX	10%	-0.4%
	Vanguard Total Intl Stock Index	VGTSX	10%	-11.0%
	Vanguard REIT Index	VGSIX	10%	11.5%
	Vanguard Small Cap Value Index	VISVX	10%	7.7%
	Vanguard Small Cap Index	NAESX	10%	6.7%
		TOTAL	100%	2.6%

P12	FundAdvice Ultimate Buy & Hold
	Vanguard 500 Index	VFINX	6.00%	-1.5%
	Vanguard Value Index	VIVAX	6.00%	-0.4%
	Vanguard Small Cap Index	NAESX	6.00%	6.7%
	Vanguard Small Cap Value Index	VISVX	6%	7.7%
	Vanguard REIT Index	VGSIX	6%	11.5%
	Vanguard Developed Markets Index	VDMIX	12%	-12.1%
	Vanguard Inflation-Protected Secs	VIPSX	8%	2.9%
	Vanguard Interm-Term U.S. Treas	VFITX	20%	4.1%
	Vanguard Short-Term Treasury	VFISX	12%	1.4%
	Vanguard International Value	VTRIX	12%	-12.7%
	Vanguard Emerging Mkts Stock Idx	VEIEX	6%	-6.9%
		TOTAL	100.00%	-0.7%

P13	David Swensen’s Lazy Portfolio
	Vanguard Total Stock Mkt Idx	VTSMX	30%	-0.4%
	Vanguard REIT Index	VGSIX	20%	11.5%
	Vanguard Developed Markets Index	VDMIX	15%	-12.1%
	Vanguard Emerging Mkts Stock Idx	VEIEX	5%	-6.9%
	Vanguard Inflation-Protected Secs	VIPSX	15%	2.9%
	Vanguard Short-Term Treasury	VFISX	15%	1.4%
		TOTAL	100%	0.7%

P14	David Swensen’s Yale Endowment
	Vanguard Total Stock Mkt Idx	VTSMX	30%	-0.4%
	Vanguard REIT Index	VGSIX	20%	11.5%
	Vanguard Developed Markets Index	VDMIX	15%	-12.1%
	Vanguard Emerging Mkts Stock Idx	VEIEX	5%	-6.9%
	Vanguard Inflation-Protected Secs	VIPSX	15%	2.9%
	Vanguard Short-Term Treasury	VUSTX	15%	7.3%
		TOTAL	100%	1.6%

P15	MMM Do It Yourself Funds
	Vanguard 500 Index	VFINX	12.00%	-1.5%
	Vanguard Value Index	VIVAX	12.00%	-0.4%
	Vanguard Small Cap Value Index	VISVX	20.00%	7.7%
	Bridgeway Ultra-Small Company Market	BRSIX	20.00%	6.4%
	Vanguard REIT Index	VGSIX	5.00%	11.5%
	Vanguard International Value	VTRIX	9.00%	-12.7%
	Vanguard International Explorer	VGTSX	9.00%	-11.0%
	Vanguard Emerging Mkts Stock Idx	VEIEX	13.00%	-6.9%
		TOTAL	100.00%	0.1%

P16	Vanguard Windsor	VWNDX	100.00%	-1.5%

P17	Scott Burns’ Couch Potato Portfolio
	Vanguard Total Stock Mkt Idx	VTSMX	50%	-0.4%
	Vanguard Inflation-Protected Secs	VIPSX	50%	2.9%
		TOTAL	100%	1.3%

P18	Scott Burns’ Margarita Portfolio
	Vanguard Total Stock Mkt Idx	VTSMX	33.30%	-0.4%
	Vanguard Inflation-Protected Secs	VIPSX	33.30%	2.9%
	Vanguard Total Intl Stock Index	VGTSX	33.30%	-11.0%
		TOTAL	99.90%	-2.9%

P19	Scott Burns’ Four Square Portfolio
	Vanguard Total Stock Mkt Idx	VTSMX	25%	-0.4%
	Vanguard Inflation-Protected Secs	VIPSX	25%	2.9%
	Vanguard Total Intl Stock Index	VGTSX	25%	-11.0%
	Vanguard REIT Index	VGSIX	25%	11.5%
		TOTAL	100%	0.8%

P20	Scott Burns’ Five Fold Portfolio
	Vanguard Total Stock Mkt Idx	VTSMX	20%	-0.4%
	Vanguard Inflation-Protected Secs	VIPSX	20%	2.9%
	Vanguard Total Intl Stock Index	VGTSX	20%	-11.0%
	Vanguard REIT Index	VGSIX	20%	11.5%
	American Century International Bd Inv	BEGBX	20%	-7.4%
		TOTAL	100%	-0.9%

P21	Scott Burns’ Six Ways from Sunday Portfolio
	Vanguard Total Stock Mkt Idx	VTSMX	16.7%	-0.4%
	Vanguard Inflation-Protected Secs	VIPSX	16.7%	2.9%
	Vanguard Total Intl Stock Index	VGTSX	16.7%	-11.0%
	Vanguard REIT Index	VGSIX	16.7%	11.5%
	American Century International Bd Inv	BEGBX	16.7%	-7.4%
	Vanguard Energy	VGENX	16.7%	-9.2%
		TOTAL	100.0%	-2.3%

P22	Larry Swedroe Simple
	Vanguard Value Index	VIVAX	15%	-0.4%
	Vanguard Small Cap Value Index	VISVX	15%	7.7%
	Vanguard Small Cap Index	NAESX	13%	6.7%
	Vanguard Emerging Mkts Stock Idx	VEIEX	4%	-6.9%
	Vanguard International Value Inv	VTRIX	13%	-12.7%
	Vanguard Inflation-Protected Secs	VIPSX	40%	2.9%
		TOTAL	100%	1.2%

P23	Larry Swedroe Min Fat Tails
	Vanguard Small Cap Value Index	VISVX	15%	7.7%
	Vanguard Emerging Mkts Stock Idx	VEIEX	15%	-6.9%
	Vanguard Inflation-Protected Secs	VIPSX	35%	2.9%
	Vanguard Short-Term Treasury	VFISX	35%	1.4%
		TOTAL	100%	1.6%

P24	IFA Index Portfolio 100 Bright Red
	DFA U.S. Large Company	DFLCX	12%	0.0%
	DFA U.S. Large Cap Value	DFLVX	12%	3.8%
	DFA U.S. Micro Cap	DFSCX	20%	8.7%
	DFA U.S. Small Cap Value	DFSVX	20%	9.0%
	DFA Real Estate Securities	DFREX	5%	11.7%
	DFA Intl Value	DFIVX	6%	-11.6%
	DFA Intl Small Company	DFISX	6%	-5.7%
	DFA Intl Small Cap Value	DISVX	6%	-8.0%
	DFA Emerging Markets	DFEMX	4%	-5.5%
	DFA Emerging Markets Value	DFEVX	4%	-6.8%
	DFA Emerging Markets Small Cap	DEMSX	5%	-3.6%
		TOTAL	100%	1.32%*

P25	IFA Index Portfolio 50
	DFA U.S. Large Company	DFLCX	12%	0.0%
	DFA U.S. Large Cap Value	DFLVX	12%	3.8%
	DFA U.S. Micro Cap	DFSCX	6%	8.7%
	DFA U.S. Small Cap Value	DFSVX	6%	9.0%
	DFA Real Estate Securities	DFREX	6%	11.7%
	DFA Intl Value	DFIVX	6%	-11.6%
	DFA Intl Small Company	DFISX	3%	-5.7%
	DFA Intl Small Cap Value	DISVX	3%	-8.0%
	DFA Emerging Markets	DFEMX	2%	-5.5%
	DFA Emerging Markets Value	DFEVX	2%	-6.8%
	DFA Emerging Markets Small Cap	DEMSX	2%	-3.6%
	DFA One-Year Fixed-Income I	DFIHX	10%	0.4%
	DFA Two-Year Global Fixed-Income I	DFGFX	10%	0.8%
	DFA Five-Year Government I	DFFGX	10%	2.3%
	DFA Five-Year Global Fixed-Income I	DFGBX	10%	3.2%
		TOTAL	100%	0.36%*

*Note that these results use Yahoo! Finance adjusted historical returns with the exception of IFA portfolios results from IFA.com that include IFA’s fee.

Mark Hulbert Writes About the Permanent Portfolio

Paul Douglas Boyer — Wed, 19 May 2010 14:30:12 +0000

In his MarketWatch article today, Mark Hulbert writes,

Would you be interested in an all-weather portfolio that, despite hardly ever changing its composition, performs creditably in almost all market environments?

Hulbert characterizes the Permanent Portfolio this way:

Browne’s idea was to invest in a basket of asset classes, each one of which has a low correlation with the others. As a result, when any one of the asset classes is performing poorly, there is a good chance that the others will at least be holding their own — if not actually appreciating in value.

He describes Harry Browne’s Permanent Portfolio as an antidote to volatility. He then gives some past performance of the PRPFX fund which somewhat implements Harry Browne’s concept:

This fund over the last 15 years (through Apr. 30) has produced an 8.2% annualized return, which is remarkable given that stocks, gold and bonds did not, individually, do as well: The Wilshire 5000 index gained 7.9% over the same period, the Shearson Lehman Treasury Index produced a 6.3% annualized return, and gold bullion rose at a 7.7% annualized pace.

I might suggest that while the result of the four asset classes is low correlation, that is not the way Harry Browne explained the reasoning. Instead, the portfolio is designed to have one component that does well in each of four different economic circumstances: prosperity (stocks), inflation (gold), deflation (LT Bonds), and recession (cash). Harry said that while you can expect one of the assets to go down, the one that goes up more than makes up for the loser. For example, while one asset may go down 30% or 40%, the winning asset can go up 200% or 300%, more than making up for the loss.

I think the best thing about the portfolio is this: No one can predict the future so we might as well invest in all possibilities.

Present Permanent Portfolio Performance…

Paul Douglas Boyer — Fri, 07 May 2010 14:55:37 +0000

So, how has the Harry Browne Permanent Portfolio done so far in 2010?

Thru yesterday’s market turmoil, the components have done the following:

VTI +2.8% (Stocks)

TLT +9.2% (Bonds)

SHY +1.3% (Cash)

GLD +10.4% (Gold)

And the total portfolio, assuming 25% in each at the start of 2010 is…

+5.9%

How’s that compare with YOUR portfolio?

MMM-177: Harry Browne’s 16 Golden Rules of Financial Safety

Paul Douglas Boyer — Wed, 05 May 2010 16:41:40 +0000

I present Harry Browne’s 16 Golden Rules of Financial Safety and talk about his Permanent Portfolio.

I ENCOURAGE you to Download this show thru iTunes! But, if you just cannot deal with that then go ahead and Play the new show right now

Topics in this week’s show include:

Radiohead – No Surprises
Read Harry Browne’s 16 Golden Rules of Financial Safety.
Link to the link to Harry Browne’s radio show where he discussed the 16 rules.
The book Fail-Safe Investing: Lifelong Financial Security in 30 Minutes by Harry Browne
Join the Permanent Portfolio Forum
GLD, PHYS, TLT, SHY, VBR, VWO
Tears for Fears – Sowing the Seeds of Love
The Fixx – Two Different Views

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Permanent Portfolio Discussion Forum

Paul Douglas Boyer — Fri, 30 Apr 2010 15:07:25 +0000

If you have any questions about Harry Browne’s Permanent Portfolio, head over to the Permanent Portfolio Discussion Forum that CraigR just started over at CrawlingRoad.com. Experts there have studied it from all angles and can help you get it implemented yourself.

And here’s the book you need to read:

iPad Cat Teaches Investing

Paul Douglas Boyer — Sat, 24 Apr 2010 20:02:07 +0000

The latest video from MadMoneyMachine studios:

MMM-176: Things Are Messed UP

Paul Douglas Boyer — Fri, 09 Apr 2010 16:29:32 +0000

Mulch Guy showed up. EPCOT Candy Lady. GURU MediumTex. Quotes. What’s UP with UP? Voiceover class. TOO: FireCalc. Bonus: iPad unboxing.

I ENCOURAGE you to Download this show thru iTunes! But, if you just cannot deal with that then go ahead and Play the new show right now

Topics in this week’s show include:

Mulch Guy showed up. Why didn’t we get his phone number?
How can Candy Lady at EPCOT remain enthusiastic after all these years?
GURU: MediumTex, world’s most ardent advocate for the Harry Browne Permanent Portfolio. Read MediumTex at Bogleheads.org.
Harry Browne Quote of the Week
Wise words from Reagan’s first inaugural.
Things are Messed UP.
Voiceover Class. Is everything a scam?
Have you watched the YouTube videos I put together for IFA? See previous posts here on the blog.
TOOL: FireCalc to see if you have enough money.
BONUS SEGMENT: iPad Unboxing.

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email: feedback AT MadMoneyMachine DOT com
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voicemail: 571-366-7121
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Take the MMM Survey