Simple Plan, Complete Protection
The Permanent Portfolio is one that allows you to save the capital safely in any economic circumstances. But not only that, but will generate a good return in many years that possess it. We can dream of any future financial nightmare uneasy us, but out of sleep, in reality, you may find yourself safe. Any of the economic climate we can not fear your wallet, not if we see it from the point of view of the long term.
It is very important that your portfolio positive reaction to market movements in the four major states:
- Prosperity. A period of economic growth and bustling shopping streets. Businesses flourish and citizens work, spend money and enjoy the decrease in unemployment.
- Inflation. Prices of consumer goods grow. In the U.S. arrived to give periods of 25% inflation in some years of its recent history.
- Recession. The growth of capitalist society is slow or negative. Businesses go bankrupt, unemployment is rising, people stop spending, bankruptcies, family.
- Deflation. The opposite of inflation. The falling prices of goods and money can buy more things.
These four economic climates tend to overlap each other. For example, inflation generally begins to appear before the end of a long period of prosperity, and disappears but not before sharing months with the first steps of the recession. But one is always predominant, and the permanent portfolio is ready for it.
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Businesses, economic climates, Inflation, investors, Permanent Portfolio, ProsperityInvesting in the Right Active
The Economic Time Bomb
The Permanent Portfolio contains four types of assets: stocks, bonds, gold and cash, with a rate of 25% in each of them. Each of the four categories will protect your assets in different economic climates, as long as assets selections correct for each type of investment.
For your portfolio work properly you must meet the following premises:
- The asset must be tremendously effective in every situation. For example, during periods of inflation is to buy gold, but not just any related assets such as stocks of mining companies.
- The asset must survive. There is no point in a period of deflation bonds work great if in the previous recession we lost because of the failure of companies to which they belonged.
- The asset must be very volatile. Since each type of investment represents only 25% of the portfolio, the strength demonstrated by each asset in good times should be enough to keep up the portfolio. The exception is the cash, which represents the stable part of the portfolio.
Let’s move on to see what kind of assets is valid for each of the parts of the portfolio:
- Actions. The asset of choice for Harry Browne for the shares is the index fund. When there were no such funds, he advocated a choice of three growth-style mutual funds, especially volatile in times of economic boom. But once the index funds proved their worth, he yielded to the evidence and went on to recommend to the American citizen to the U.S. market index funds. Of course, diversifying in three different managers to change the broker or depository.
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Guide to Investing in Gold and Silver
Due to the interest it has caused me the Permanent Portfolio and read books Harry Browne, purchased Guide to Investing in Gold and Silver in order to investigate what is supposed to know to get the benefit of buying gold and silver . Written by Michael Maloney, and edited by the series of Rich Dad Robert Kiyosaki Advidsors, the book takes you on a journey through the history of economic crisis and its relation to gold, and as we read cycles studied metals precious and its relationship with other possible assets.
The guide is divided into four main parts:
1. Yesterday. In the first study of business cycles, crises, and the ratio of currency to gold and silver. It is argued that the money you know, the notes are debt from the moment it is created by the central bank to shift debt is becoming a snowball as it passes by the state, the most expensive sold to financial institutions and savers, financial resell them to consumers, …, and so on until we reach the breaking point now, where the only real money seems to be the precious metal. Thanks to the understanding of the bubbles on assets in particular and its relation to gold, the transfer of wealth becomes more understandable.
2. Today. The second part examines the current collapse of the countries and their currencies. Deficits and debts that the author thinks are impossible to fix, which will result, again according to Maloney, one of the most spectacular ascents of the same asset class in history, and that asset is the precious metal. (The book was written in 2008)
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