Intro To Permanent Portfolio
Permanent Portfolio is a portfolio construction theory devised by free-market investment analyst Harry Browne in the 1980s.
Browne constructed what he called the permanent portfolio, which he believed would be a safe and profitable portfolio in any economic climate. Harry Browne argued that the portfolio mix would be profitable in all types of economic situations –
1. Growth stocks would prosper in expansionary markets
2. Precious metals in inflationary markets
3. Bonds in recessions
4. T-bills in depressions
Browne eventually created what was called the Permanent Portfolio Fund, with an asset mix similar to his theoretical portfolio in 1982. Over a 25-year period, the fund averaged an annual return of 6.38%, only losing money three times.
Building Singapore Permanent Portfolio
Written by Alvin Chow of BigFatPurse, the Singapore Permanent Portfolio is an enjoyable book that you can easily finish in one sitting. Don’t get me wrong, I meant that as a form of complement because I value simplicity very highly. Things tend to get done when we understand them. I didn’t want to call this post a review because it’s more of me sharing my thoughts on this book.
Even if you are a novice investor, I believe that the clear and progressive approach by Alvin ensures that you will have a decent understanding of the Singapore Permanent Portfolio by the time you finish reading the book. There are chapters on the concept of Permanent Portfolio, how it has performed and of course, how to implement it.
In his book, I very much like the way Alvin guides you through the process of building a Singapore Permanent Portfolio and explains why he chose to use specific tools/instruments to do so e.g. why SGS bonds instead of SG Bond ETF.
Is It Worth The Moolah?
Please dis-regard how thin the book is. The content is clear, concise and practical. For the novice readers, I feel that S$19.90 (use discount code ‘BigFatPurse’ for additional savings) represents very good value. Alvin has basically done all the hard work and research for you by presenting the Permanent Portfolio in local context. Even I, myself has found nuggets of information that are particularly enlightening.
Truth be told, the Singapore Permanent Portfolio was an investment strategy that I myself have explored and considered. At the end of the day, I decided that it wasn’t really my cup of tea so I didn’t pursue it any further.
Ironically, if you are new to the concept of investing, you might not have the stomach for Singapore Permanent Portfolio. While the portfolio appears to have “low” volatility when seen in its entirety, the rationale behind why the portfolio works rests on quite the opposite. And you need patience. Lots of it.
The Permanent Portfolio is a capital gains portfolio .. Keep in mind that the Permanent Portfolio returns come from capital gains acquired through the portfolio rebalancing process.
– The Singapore Permanent Portfolio
If you have understood the logic behind the portfolio, you would love to see extreme volatility within each asset class. After all, Singapore Permanent Portfolio is a capital gains portfolio. Buy low, and sell high.
Do you want a simpler and easier method to grow your investment portfolio? Without the risk? Under all circumstances? Literally, a bullet-proof portfolio? The Singapore Permanent Portfolio By Alvin Chow might be what you’re looking for.
Andrew Hallam also believes in the Permanent Portfolio and has written about it in his second book, The Global Expatriate’s Guide To Investing. Teh Hooi Ling (previously of The Business Times) has articles on it too – this link is from my old blog way back in 2013. Lastly, Yours Truly also has an ETF implementation of the Permanent Portfolio.
I first met Alvin during finance bloggers gathering back in May 2015. Although we didn’t get to chat much then, he got to know that I write about Index Investing and gave me a copy of The Singapore Permanent Portfolio. He did not request for anything in return, and I do not gain anything from the sale of his awesome, kick-ass book.