6 years in: How has Karl’s Permanent Portfolio performed compared to the DOW or S&P500?

It was August 21, 2015, when I published a buy and hold portfolio which is designed to weather both good times and bad while being static (no trading). The purpose of publishing the portfolio is for educational purposes only, and readers should review the disclosures at the top of the portfolio’s page. I do not make any money on publishing this and even this blog brings me zero income. This is simply information for the public to do with as they wish or to throw in the digital trash. The portfolio has been called “eclectic” because of its diversification and inclusion. With standard-bearers such as Berkshire Hathaway and gold, it also includes Bitcoin and various foreign currencies. I designed it to be static — true buy and hold. The only change was regarding the ending of CurrencyShares Singapore Dollar Trust earlier this year, and I converted that to actual Singapore Dollars. I designed the portfolio to have little tax and fee consequences during its growth.

One can start with $1,000 and add to the portfolio periodically as they wish or not. This is not an ETF, though in retrospect, perhaps I should have created a fund; but this is something anyone can do or follow. The portfolio began with NVR, BRK.b, and PayPal as its top three holdings and a few of its smallest holdings started with Bitcoin and the Singapore Dollar. Since there is no periodic rebalancing of the portfolio, there have been many changes to the top three and bottom three holdings.

It has now been six years, let’s see how it’s done! Over the last six years, the DOW has gone up 113% and the S&P 500 has risen 125% while my permanent portfolio has risen 790% (an average of 131% per year). This return does not consider dividends, etc. Had you invested $10,000 in what the portfolio put forth, it would have increased in value to $79,000 (exclusive of dividends, etc.) Bitcoin has been the highest performing in the portfolio, along with PayPal, NVR, and the iShares Gold Trust, respectively. The worst performing was the Swiss Franc going down almost 3% over the last six years. I do not expect future returns to be anywhere near as rosy as 131% per year (that is unsustainable), although it has always outperformed the DOW and S&P 500. Prior years have shown the following CUMULATIVE returns: YR1 12%, YR2 79.4%, YR3 125%, YR4 159%, YR5 252.3%, YR6 790%.

You can thank the financial mismanagement by our federal government for these above-average returns as “quantitative easing,” raging federal deficits, federal debts, etc have helped to propel this portfolio to new highs. So long as our government acts irresponsibly, my version of a Permanent Portfolio will continue to excel.

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