The material provided on this website should be used for informational purposes only and in no way should be relied upon for financial advice. Also, note that such material is not updated regularly and some of the information may not, therefore, be current. Please be sure to consult your own financial advisor when making decisions regarding your financial management. This portfolio is not necessarily Karl Dickey’s personal portfolio.
This page has been created after receiving several inquiries regarding my blog post on stocks and diversification of one’s investments. The purpose of the portfolio has the long-term in mind. I define long-term as over 10 years in time. Since this is a new page, we will start with new valuations, calculated on an investment of $1,000,000 on August 21, 2015 — though it could be done for much higher and much lower net worths. This page may eventually migrate to its own blog or website; however, since there is very little trading involved (if any), this page should be adequate for informational/educational purposes. I recommend going here first so you educate yourself about the overall concept of the permanent portfolio.
A few quick important notes. In the below portfolio, it excludes certain assets one may possess like homes, small business ownership (if you are an entrepreneur), artwork (collectibles), etc. It also excludes commissions as those vary widely and we are entering an era where we may soon be without any commission costs. Also, one may be interested in owning the physical Singapore Dollar, New Zealand Dollar, and gold bullion, for example, rather than going through indexes as I have listed in the portfolio. Also, you may wish to own investment real estate rather than go through a REIT mutual fund as seen below. This portfolio is static, meaning it will not assume one is adding regularly to the portfolio and does not take into account any tax consequences because both factors vary widely for individuals. Even those with little to invest can get started saving for retirement utilizing a ROTH IRA (to save on taxes) and/or utilizing a service such as Sharebuilder, Acorns or Stockpile. Also, for those with positive cash flow income, it may be a good idea to integrate a monthly or quarterly dollar cost averaging investment program. Heck, even if you have $1M in cash to invest, it may be more beneficial to invest over the course of a year, rather than putting it all to work in one fell swoop as we have done here in the below chart’s example. That is up to each individual’s circumstance. We also are not going to take into account income and dividends as part of our returns so our actual returns would be higher than we are publishing here.
Basically, we have a few individual stocks (BRK, PYPL, NVR), a few mutual funds and ideally one would own the physical gold, silver, and foreign currency as well as $30,000 in Bitcoins (rather than using the index) and retaining $32k in U.S. Dollars.
I will periodically update this page so you may watch how the portfolio performs (see after the chart). The chart below assumes we put $1,000,000 in a brokerage account and made the purchases on 8/21/2015, kept approximately $36,000 of U.S. Dollars in a money market fund (VMMXX) and did nothing else.
|Name||Symbol||% of Initial Investment||Last price||Shares||Cost basis||Mkt value||Gain||Gain %|
|Paypal Holdings Inc||PYPL||10.50%||120.61||3000||105000||361830||256830||244|
|Berkshire Hathaway Inc.||BRK.B||13.70%||182.67||1000||137000||182670||45670||25|
|Dow Jones New Zealand Index (USD)||NZDOWD||3.10%||358.39||130||31066||46590||15525||50|
|Guggenheim CurrencyShares Swiss||FXF||3.50%||95.52||300||30450||28656||-1794||-6.3|
|The NYSE Bitcoin Index||NYXBT||3.00%||8809||130||30420||1145170||1114750||3665|
|iShares IBoxx $ Invest Grade Corp Bd Fd||LQD||1.74%||128.34||150||17400||19251||1851||10.6|
|Vanguard Mid-Cap Index Fund Admiral Shares||VIMAX||10.60%||180.81||700||106050||126527||20517||19.3|
|Vanguard Small-Cap Index Fund Admiral Shares||VSMAX||8.25%||61.17||1500||82500||91755||9255||11.2|
|Vanguard Global ex-U.S. Real Estate Index Fund Admiral Shares||VGRLX||9.50%||26.87||3000||95250||80610||-14640||-15.3|
|iShares Gold Trust(ETF)||IAU||7.40%||16.22||7000||78050||113540||35490||45.6|
|iShares Silver Trust (ETF)||SLV||7.47%||13.92||5000||72750||69600||-3150||-4.3|
|DOW on 8/21/2015||16,459.00||23723||7264||44|
|S&P on 8/21/2015||1970||2830||1251||43.7|
UPDATE 05/02/2020: I was not planning to do another update until August 21, 2020, which would be the five year anniversary I made this portfolio public, but with all that is going on, I thought we’d do a quick check-in.
So, we have had one change regarding the CurrencyShares Singapore Dollar Trust. This is no longer on the exchange so hereon, I will use the actual currency exchange rate between the actual Singapore Dollar and the U.S. Dollar. It had no effect as the Trust never moved very much and you will see at 71SD to 1USD, it is precisely the same value it was in 2015.
Moving on to the portfolio as a whole, much to my surprise, it actually ticked up since the beginning of the year. It went up 1.3% YTD while the S&P and DOW have been down YTD. Perhaps the most disappointing so far this year has been Berkshire Hathaway, NVR, Vanguard’s Small Cap Index Fund, and Vanguard’s U.S. Real Estate Fund. These have taken a dive.
From August 21,2015 through May 1, 2020, the portfolio has returned a gain of 163% (exclusive of dividends) while the S&P has returned 43.7% and the DOW 44%. The portfolio has continued to outperform even in times of turmoil, which is how it was designed to perform. Next update will be on August 21, 2020.
UPDATE 12/31/2019: So, we close out 2019 with only a slight gain from 2018; however, still a significant positive difference from the DOW and the S&P. The portfolio has increased in value by just shy of 160% (159.5%) while the DOW increased 73% and the S&P increased 63.5% over the same period (8/21/2015-12/31/2019).
Here we are with another update of the Permanent Portfolio and it has been performing well. Overall, it has increased in value of 159% with an annualized return of 27.47% (inclusive of dividends). During the same time frame, the DOW has increased in value by 50.7% and the S&P has increased by 39.6%. The relatively small original investment in Bitcoin has taken over a disproportionate percentage (41.1%) of the portfolio due to its dramatic rise over time. The portfolio’s worst performers have been investing in the Swiss Franc (a loss of almost 9%) and silver (a loss of over 6%). Besides Bitcoin, the best performers in the portfolio are NVR (108%), PayPal (over 213%), and the New Zeland Dollar (over 51%).
As said in the intro, this portfolio is designed to remain static (no trading) while also keeping one’s tax bill and fees to the lowest levels. I feel it would have been prudent to have trimmed the Bitcoin investment so it didn’t “take over” the portfolio with its wild swings. But we’re in for the long haul on this one, so it will be interesting to see its progression. Next update will be on the four-year mark – August 21, 2019.
We thought with the last market fluctuations and it is the end of the year, it would be good to do a quick
update/comparison with the portfolio compared to the DOW and the S&P. Since the start of this portfolio (August 21, 2015) it has risen just over 80% while the DOW has risen 34.5% and the S&P has risen 23% over the same period.
The portfolio remains strong with an average return of over 26% per year.
So, although the portfolio is doing well overall, I almost feel like Warren Buffett during the late 90s runup of tech stocks. The portfolio has taken a hit over the last six months, while the overall market is running on all cylinders. NVR and Bitcoin are notable hits and the overall portfolio, wiped out 50% of gains over the last six months. It is still up over 125% since I posted it three years ago which is an average of over 42% per year. That sounds great, but the original 3% of funds to buy Bitcoin messes with the numbers a bit as it has now grown to be 37% of the portfolio. Not that that is bad, as it was originally a speculative investment, but in the real world I would have sold off a large chunk of it. The four main contributors to the growth of the portfolio have been PYPL, Bitcoin, VSMAX, and NVR. As well, there have only been two securities which have turned in a loss, and those losses are tiny (around $5,000 of a $1 million portfolio). This portfolio is meant to be truly static so Bitcoin will remain whether it goes to zero or to $500k a piece. The portfolio has not fully been tested and for that we will need to wait over time and/or a serious challenge to the traditional markets, not just a correction.
So, the portfolio continues to do well. I am looking forward to seeing how it performs when there is a serious correction in the equity markets so we can truly test its buoyancy. NVR was a stock that has gotten beaten up lately, though we still have a 106% return since mid-2015 when the portfolio started. We continue to profit from Bitcoin, though in reality, we would have sold off probably half of the position a while ago and spread it around to other cryptos and also spread some of the profits to other positions which would have caused a tax payment. But for our purposes here, we are remaining static in the portfolio.
Overall, the portfolio has returned a net profit of 176.75% since August 21, 2015. Over that same time period, the DOW is up 58.9% and the S&P is up 43.3%. So, the portfolio continues to vastly outperform these two metrics.
The portfolio continues to outperform the major indexes, by far. It is up 160% since August 2015 while the DOW and S&P are up only 45 and 46% over the same time period.
UPDATE 8/21/2017 (2 Years):
So it has now been exactly two years since I made my version of the Permanent Portfolio public and it has outpaced the DOW and the S&P. The net return has been 79.4% while the DOW has had a return of 31.9% and the S&P 23.2% during the same time period. And, for the naysayers regarding my small investment in Bitcoin for the portfolio then one would have to say the same about NVR and PYPL, etc. But if one was to remove Bitcoin from the mix completely, the investment would have been within a point of the DOW’s return without any of the risks in holding just 30 equity stocks or a single ETF for the DOW. This portfolio is eclectic, to say the least, but is designed to weather some heavy financial storms as well. It also has a minimum 10-year horizon, so at two years, it is still in its infancy.
UPDATE May 25, 2017:
So, we thought we’d check in to see how the portfolio was doing. The portfolio was posted in August 2015 and as of today, it has risen 53.3% while the DOW has risen by only 24% and the S&P by 18.7%. Our best-performing stocks have been Paypal and NVR; while the one outlier is owning a small amount of Bitcoin (in this example, the NYSE Bitcoin Index) which has risen well over 1,000% during our timeframe. Too bad we didn’t devote more money toward it. Bitcoin was a relatively small portion of the portfolio, but now it has become the single largest part of the portfolio. Even without the Bitcoin phenomena, the portfolio still would have performed well, especially for an “invest and forget it”/low-risk type strategy.
UPDATE DECEMBER 31, 2016:
It’s been one month since the last update and we’ve had Donald Trump as our President-Elect which has caused massive changes in markets around the world. The Portfolio has increased in value by 13.6% since August 2015. During the same time, the DOW has increased by only 8.5%, the S&P 5.9% and the NASDAQ as gained 6.34%.
UPDATE November 21. 2016:
The biggest changes for the Permanent Portfolio are that the Swiss Franc continues to weaken while the best returns continue to be with Bitcoin, PayPal, Berkshire, the New Zealand Dollar, and the small-cap index fund.
UPDATE October 21, 2016:
From August 21, 2015 to October 21,2016 the DOW Industrial Average rose 3.82% and the Permanent Portfolio rose 12.9% – more than three times the DOW and more than 5 times what the S&P did over the same time period (14 months). Although this is a small window in an investor’s life, we are beginning to see how this basic portfolio works over time. Again, this return is a static buy it and leave it type strategy that is both defensive against downturns while it also grows without the investor having to do anything. The best returns were from owning Bitcoins, PayPal and New Zealand Dollars. It only had one category lose money over this time period and that was owning Swiss Francs. One last note: this portfolio return does not take into account any interest, dividends or tax consequences if any.
UPDATE December 31, 2015:
So, since August 2015 the portfolio increased by 4.3%. Not too exciting especially since over the same period, the DOW and the S&P increased about 10% over the same time period. If only looking at this time period, one would have clearly been better off in an Index ETF. Let’s see how 2016 goes!
UPDATE September 21, 2015:
The value of the portfolio declined by about 1%. If we had done as we recommended above, putting money in month-over-month instead of in one lump sum as per this one chart, then we would have benefited more by buying at the low prices over late August and this month of September with better returns. Overall, our best return was with NVR and our worst was with Berkshire Hathaway.