Important News: A New Permanent Portfolio Book Is On The Way!

[craigr]

I am happy to announce that Medium Tex and I were contacted many months back to write a book updating the Permanent Portfolio strategy. While the strategy itself is simple and timeless, many new investment vehicles to make the portfolio more accessible have opened up over the years since Harry Browne's passing. Additionally, many changes in US laws have made some of the advice (such as geographic diversification) more difficult for investors.

An announcement list for the book is here. We won't use it to spam you:

Permanent Portfolio Book Announcement List

Medium Tex and I thought that an update would be a good idea and accepted the challenge. The book will be coming out around the end of the Q1 of this year in both print and electronic form. The manuscript of the book is well under way and we are announcing this book to not only let you know that it is coming, but also to let you give us input on topics you'd like to see specifically covered in the book. The book will address the following topics in detail:

Foreword

Introduction

Chapter – Our Stories

Chapter – 16 Golden Rules of Financial Safety

Chapter – Permanent Portfolio Performance

Chapter – How To Make Money In Investing

Chapter – Investing Based on Economic Conditions

Chapter – Stocks

Chapter – Bonds

Chapter – Cash

Chapter – Gold

Chapter – Implementing the Permanent Portfolio

Chapter – Rebalancing

Chapter – Tax Deferred Accounts and Tax Management

Chapter – Geographic and Institutional Diversification

Chapter - The Permanent Portfolio Fund

Chapter – Appendix and Resources

The book will contain not just updates to Harry Browne's ideas onto today's markets. But it will also have detailed and complete reviews of less orthodox but important topics such as geographic diversification techniques for today and more. While we feel that Harry Browne's previous books stand on their own in detail and clarity. We believe this book will carry on his tradition of sharing information to protect investors in any markets, no matter what the future brings.

Please feel free to offer comments on what you'd like to see covered to make this book something that will help you. I will keep you updated on the publication date and where you can order a copy when it is available. We are excited about this book and hope you will be, too.

Thanks!

Re-Posted on the Blog:

https://web.archive.org/web/20160324133 ... n-the-way/

[Reub]

I'm definitely going to buy it.

Could you please consider starting a HBPP mutual fund, as well? You two are definitely worth more than Cuggino!

[Khisanth]

I will buy multiple copies of this book to pass around.

I also second the request for an HBPP fund.

Although when I read this article I got discouraged:
http://www.ehow.com/how_5829275_create-mutual-fund.html

I mean, the HBPP is fairly simple, and the boring methodology isn't going to woo many investors. Plus paying for marketing, sales, auditing, accounting, SEC registration, lawyers, insurance, secure storage is going to mean some pretty hefty startup expenditures.

[Storm]

Wow, you guys.  The support on this forum is definitely enviable, but I don't think Craigr and MT are qualified to run a mutual fund.  In order to do that you definitely need to pledge your undying support for Cthulhu and drink from the chalice of unending sorrow... LOL... just kidding about that, but seriously, there is something about US securities law that makes starting your own mutual fund almost impossible, unless of course, you are a brain-dead Greenspan apostle....  Brains!!!1!!...  BRAAAAIINNSSSS!!1!!!

[craigr]

Although when I read this article I got discouraged:
http://www.ehow.com/how_5829275_create-mutual-fund.html

I mean, the HBPP is fairly simple, and the boring methodology isn't going to woo many investors. Plus paying for marketing, sales, auditing, accounting, SEC registration, lawyers, insurance, secure storage is going to mean some pretty hefty startup expenditures.

Unfortunately, it is extremely expensive and ongoing compliance costs would also be very high.

[ozzy]

That’s fantastic news!    I can’t wait to buy the book.  I believe the Permanent Portfolio deservers more much publicity. 

I remember when I first stumbled upon the PP while studying the teachings of Harry.  I thought "How could something that so reliably produces 9% annually never be mentioned by the financial gurus?"

When I tell people about the PP they're always surprised.  I have been thanked many times for informing people about it.
It’s almost like a secret underground portfolio.

[gap]

That is great news.

One topic I would like to see in the Appendix is historic monthly data on the four asset classes, going as far back as is available.
While there is always the usual disclaimer about historic data, I find the best way to stand your ground during a tough period is to have seen and played with the historic data until one is personally convinced about its efficacy.

Looking forward to buying  the book. I would want give it to my family instead of me trying to educate them about PP and investing in general.

Best of luck

[Indices]

This is awesome news. Who is the publisher?

[dualstow]

I'm curious about the publsher, too. Very interested.

[travelingheelfan]

Great news!!  Looking forward to the release.

[Gumby]

Congrats. That's awesome.

I think it would be a good idea to include a chapter about the Variable Portfolio. Browne believed that this mental separation between the PP and VP was essential to sticking to the Permanent Portfolio concept (as he described in The Best Laid Plans). Explaining how the PP/VP allows everyone to tailor their own risk without risking their life savings is a pretty big revelation.

Also, I would imagine most people will finish the book wondering what the risks are to the PP approach. Talk to Clive for some ideas on that front.

Perhaps getting John Chandler or Terry Coxon to write an introduction to the book that honors Harry Browne's contributions and maybe tells a story about how he came to realizing the PP concept.

[WildAboutHarry]

Congratulations.

A great continuation of Harry's investment legacy.

How about some history regarding the development of Harry's ideas regarding the genesis of the PP.

[HB Reader]

Craigr & MT -- 

This is a great idea, but sounds like a lot of work for you guys.    I've given old copies of HB's books to a number of friends, but it seems I've always had to provide updated advice (e.g., realistic geographic diversification possibilities) orally or through notes.

You might want to specifically address how a more speculative Variable Portfolio can co-exist with the Permanent Portfolio.  I know that is already covered in the rules, but I have found truly separating the two is a surprisingly difficult task for many people to both comprehend and implement so maybe that discussion could be reinforced somewhere.

I'll buy several copies.

[AdamA]

The manuscript of the book is well under way and we are announcing this book to not only let you know that it is coming, but also to let you give us input on topics you'd like to see specifically covered in the book.

That is fantastic news.  I can't wait to read it.

A few things I would love to hear you guys discuss would be:

1.  ETF's.  Specificially, I'd like to know if you think the counter-party risk issues that are often debated on this website seem valid or silly.

2.  Geographic Diversification.  Can Americans obtain it in a meaningful way?  

3.  Tax treatment for various investment vehicles, especially things like GTU and EDV.

4  Pros and cons of Treasury Direct versus direct ownership through a brokerage versus funds (for cash and bonds).

By the way...are either one you guys considering running for president on the Libertarian ticket? 

[MediumTex]

Thanks for the great feedback so far.

Writing a book is a large undertaking.  Writing a good book is a HUGE undertaking.

The feedback above is what we were looking for.

I would rather not address the name of the publisher right now, but we were very fortunate to connect with a major publisher of finance and investment-related books.

One thing that would be helpful to me would be any stories or comments about what finally won you over to the PP strategy and how long it took you to get comfortable with it (assuming, of course, that you are comfortable with it).  I think that it is difficult for an investor to go from believing the normal Wall Street propaganda to being a PP enthusiast without there being an interesting process of self-discovery along the way.

Unlike any investment strategy I have ever encountered, the PP is based upon a comprehensive worldview that incorporates many very subtle insights into human nature.  I look forward to working as much of that part of the PP into the book's narrative as we can.

[6 Iron]

Congratulations, in advance, gentlemen. One thing that I hope you can delve into, is how difficult it can be for an investor to start the permanent portfolio psychologically. One is either putting a fourth, or more, of one's savings in an asset that is bubbling, or is nearly universally derided as a loser. Once this leap of faith, if you will, is behind you, the sailing is pretty smooth, but jumping in is much like anticipating jumping into a Minnesota lake Memorial Day weekend....a bit unsettling.

I find that the longer I hold the permanant portfolio, the less I care about market conditions, but very few investors will, or perhaps should, have that sense of peace prior to or early on in their involvement.

[MediumTex]

Congratulations, in advance, gentlemen. One thing that I hope you can delve into, is how difficult it can be for an investor to start the permanent portfolio psychologically. One is either putting a fourth, or more, of one's savings in an asset that is bubbling, or is nearly universally derided as a loser. Once this leap of faith, if you will, is behind you, the sailing is pretty smooth, but jumping in is much like anticipating jumping into a Minnesota lake Memorial Day weekend....a bit unsettling.

I find that the longer I hold the permanant portfolio, the less I care about market conditions, but very few investors will, or perhaps should, have that sense of peace prior to or early on in their involvement.

You are hitting the nail right on the head.

The point you are touching on above is, for me, one of the most interesting and challenging things about the PP. 

[craigr]

Looks like I dropped the Variable Portfolio during the cut and paste. That will definitely be discussed. As Tex said, it is a major publisher and will be available in hardcover, softcover and electronically. The book will absolutely be discussing modern options for implementing the portfolio at all levels. We will release details soon for those looking to pre-order. The Foreword will be written by two special guests.

[AdamA]

One thing that would be helpful to me would be any stories or comments about what finally won you over to the PP strategy and how long it took you to get comfortable with it (assuming, of course, that you are comfortable with it). 

Here's my story.  It's probably too lame to be of help with the book, but I like to tell it.

I was invested in about five stocks in late 2009, all of them recommendations  by one of The Motley Fool's subscription newsletters.  I didn't blink during the crash in 2008 because TMF's mantra is to tune out market noise and just own good companies for the long haul.  

A friend of mine gave me Peter Schiff's book "Crash Proof" and suddenly, I was convinced that we were on the brink of another market crash and a hyper inflationary disaster, and that I had to sell all my stocks and buy gold, which I did, mostly in the form mining companies from another newsletter I subscribed to and the ETF GLD.  

One day I was listening to Peter Schiff's radio show, and he had a debate with Robert Prechter.  Prechter thought that deflation was a sure bet, and that Treasury Bills were the only safe place to be.  I read his book Prechter's Perspective
and Conquer the Crash, and then I started to fret about deflation.

I couldn't figure which way I was supposed to bet.  Inflation or deflation?  That's when I somehow came across Craig's Podcast about how he dodged the real estate bubble because he got freaked when a porno director sold him his cameras because he was going into real estate.  I listened to the first two podcasts, and I was sold.

I hear a lot of people talk about how it's psychologically difficult to stick the PP, but that has never been the case for me.  It makes such logical sense to me after all the stress of pondering inflation vs. deflation etc. that I never have any stress at all about my investment strategy.  The things I think about now are more or less just ways to keep my PP as safe as possible, and, or course, what I can be doing to get more money into it.  

[craigr]

I couldn't figure which way I was supposed to bet.  Inflation or deflation?  That's when I somehow came across Craig's Podcast about how he dodged the real estate bubble because he got freaked when a porno director sold him his cameras because he was going into real estate.

LOL. He sold me his welding gear. But I like your version a lot better! When I tell people that story it's just so random I guess they kind of remember it for a while. But I'm dead serious that is what happened. I kid you not.

[6 Iron]

I couldn't figure which way I was supposed to bet.  Inflation or deflation?  That's when I somehow came across Craig's Podcast about how he dodged the real estate bubble because he got freaked when a porno director sold him his cameras because he was going into real estate.

LOL. He sold me his welding gear. But I like your version a lot better! When I tell people that story it's just so random I guess they kind of remember it for a while. But I'm dead serious that is what happened. I kid you not.

A porn director with market exposure that can weld? That guy lives the permanent portfolio. Is he writing the foreword?

edit: spelling error

[AdamA]

LOL. He sold me his welding gear. But I like your version a lot better! When I tell people that story it's just so random I guess they kind of remember it for a while. But I'm dead serious that is what happened. I kid you not.

Whatever makes for a good story. 

It really was your podcasts that sold me on it.  As much as I love to read HB's writings, I'm really glad you and MT are going to publish a book.  Fail Safe Investing is great, but honestly I think your podcasts and blog explain things in a  clearer manner that is likely to resonate a bit more with the average investor.

[FarmerD]

To an average person on the street, there are many different advisors out there pushing their own strategy.  Most people would be skeptical of any new investment strategy.  So how would a reader of the book know the PP is better than the alternatives?  I think in order to differentiate the PP from these other strategies, it may be a good idea to include a chapter on how the PP has stacked up historically on a yearly basis to, say the typical Boglehead 60/40 stock strategy, or perhaps some of the other lazy portfolios.  This isn’t to bash these other portfolios as bad, but merely to show the PP may be a better and less volatile solution. 

I can't wait for your book to be published.  Mark me down for an advance order.

[CA PP]

The book is good news.

here are some suggestions:

Chapter Bonds: It could be useful to include a reflexion around duration of bonds as opposed to maturity.  A US PP would use 30y bonds (by default and being a practical/good advice) for its high duration but in other countries: Canada, UK, some longer maturities are available that could be more approriate.   It could also be that, at one point in the US (maybe now?),  zero-coupons would be practical to own (an updated cost-benefit analysis could be included)to bring the duration of the bond component to a theoretical optimum level which could be a bit higher than what the 30y has.

Chapter other countries PP: I find it facinating that the behaviors of the US PP, CA PP, UK PP and EU PP are similar and hold up to the theory.  Data could be presented to further support the PP case.  A discussion on currency risk could be included to guide non-USers to appropriate country/currency exposures.  I am not sure about exposure to US PP for non-USers, but I tend to think there would be value to that, in view of the reserve currency status. In 2008 and 2011 US PP did very well compared to other PPs (currency adjusted) so perhaps a 15 to 25% of assets in US PP could be advisable to non-USers to mitigate more extreme events (like Iceland 2008). Althoug on the long run, it seems to be at the cost of incresed volatility (currency risk).

Chapter Retirement: at the end of the day, I think most PP uses are for retirement purposes.  A discussion around safe withdrawl rates, draining cash position during retirement phase (using a 1-3 year ladder?) could be useful/interesting.

[Storm]

I couldn't figure which way I was supposed to bet.  Inflation or deflation?  That's when I somehow came across Craig's Podcast about how he dodged the real estate bubble because he got freaked when a porno director sold him his cameras because he was going into real estate.

LOL. He sold me his welding gear. But I like your version a lot better! When I tell people that story it's just so random I guess they kind of remember it for a while. But I'm dead serious that is what happened. I kid you not.

Maybe you should tell the story about how you dodged the Bitcoin bubble because some crazy guy on the forum was talking about i...