James Rickards Portfolio

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eufo
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James Rickards Portfolio

Post by eufo » Mon Apr 17, 2017 11:31 pm

I've been listening to a couple of James Rickards' audiobooks recently. They're pretty damn interesting... lots of history on global finance, currency exchanges, central banks, etc.

He is not fond of sovereign debt of any kind... leaving out treasuries. He also doesn't like financial stocks, emerging markets, credit instruments... He does like gold, however...

At the end of The Death of Money he advocates a "robust portfolio" of the following:

20% Gold (physical only, and not stored in a bank)
20% Land (undeveloped, in prime locations)
10% Fine Art (this is a bit unusual, but interesting)
20% Alternate Funds (basically put into an active hedge fund that deals in hard assets and natural resources)
30% Cash (not a cash alternative, actual $$$)

He makes the point that we are teetering between deflation and inflation. The world wants to deflate, while governments want to inflate. He supports this concept very strongly in both of his first two books. He states that the force being applied in both directions has become so strong that when the next crisis appears, it will be much more volatile than 2008, but it could go either direction... hyperinflation or painful deflation (and then likely the opposite).

He's a very smart man, but this seems a bit extreme. Has anyone here read his books?

I do like the way he talked about Cash as being the opposite of leverage. Leaving out bonds just feels foolish to me, but his contention is that they will likely be "wiped out" by inflation, which is supposedly the more likely scenario.
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Re: James Rickards Portfolio

Post by frugal » Tue Apr 18, 2017 2:57 am

Hello eufo,

some questions that you might know :-) :

"20% Gold (physical only, and not stored in a bank)"

Stored where? At home?


"20% Alternate Funds (basically put into an active hedge fund that deals in hard assets and natural resources)"

ACTIVE hedge fund, why not passive?


" 30% Cash (not a cash alternative, actual $$$)"

Out of the bank? No deposit?


Kindest regards.
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Re: James Rickards Portfolio

Post by mathjak107 » Tue Apr 18, 2017 3:11 am

all i can say is if i followed that model ,except for possibly the prime land doing well , odds are i could never have had enough to retire .

as far as my opinion ,another doomsdayer that will end up a whole lot poorer then they should be . we have a few collectible art pieces and i can tell you after sale expenses and fees and insurance riders art can leave you with little left as profit . it is easy to be fraud-ed too
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Hal
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Re: James Rickards Portfolio

Post by Hal » Tue Apr 18, 2017 5:30 am

Well, it looks like the allocations may have changed.

In the "Road to Ruin" book he advises

Gold and Silver - 10%
Cash (some in physical notes) - 30%
Real Estate (Agricultural or income producing)-20%
Fine Art Fund- 5%
Angel and Venture Capital 10%
Hedge Funds 5%
High Quality Sovereign Bonds 10%
Stocks 10% (Resource, Energy, Utilities and Tech)

Breaking this down we have...

Physical Assets 10% +20% =30%
Cash 30%
Bonds 10%
and the remainder in Funds/Equity etc

So to my way of thinking, this is pretty close to the PP.

I was fortunate enough to listen to him at a conference, and he certainly did not come across as a tin foil hat wearing doomer.
What he was concerned about, was that in the next crisis they may close the markets, hence some of his investments are in assets that can be sold if markets are closed.

But.... I think he is catering to an audience that is by far wealthier than myself, so most of his recommendations are irrelevant.
Still happy to stay in the PP, but admittedly I have put aside some physical cash and silver coins (the latter which HB suggested anyway)

Hope this is of some help to those wondering if they should stay in the PP or not.

Hal
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Re: James Rickards Portfolio

Post by barrett » Tue Apr 18, 2017 10:58 am

Hal is right that Rickards always seems to be preaching to the super wealthy. Not many have the means (or knowhow) to just go out and buy high-quality commercial real estate and works of art.

I have read Currency Wars and watched a couple of Rickards things on youtube. He's always preaching doom and claims to be really well connected with the uppity-ups in the US government. He may or may not be right about any of these scenarios but they seem to change over time and he also doesn't give any kind of timeline. He talks about the "snowflake that starts the avalanche" quite a lot.

Anyway, let's say that he's right that we may have hyper-inflation and we might have deflation. A PP contains investments that are meant to protect against both of those scenarios. Long duration treasuries probably don't have a whole lot of oomph when starting from these low levels, but cash is also a good thing to have in a deflationary scenario.

I do like the idea of having some physical cash on hand. Otherwise I don't find much of what Rickards is fearful of to be actionable for someone who is already in a "firewalls" portfolio like the PP.

I also want to own stocks for when conditions are right for them to thrive (like three of the last four decades).
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Re: James Rickards Portfolio

Post by eufo » Tue Apr 18, 2017 8:01 pm

frugal wrote:Hello eufo,

some questions that you might know :-) :

"20% Gold (physical only, and not stored in a bank)"

Stored where? At home?
That's one possibility, yes. The idea is that it should be readily available instead of tied up in a secured location you may not end up having access to during a crisis.
frugal wrote: "20% Alternate Funds (basically put into an active hedge fund that deals in hard assets and natural resources)"

ACTIVE hedge fund, why not passive?
He doesn't say, really.
frugal wrote: " 30% Cash (not a cash alternative, actual $$$)"

Out of the bank? No deposit?


Kindest regards.
He doesn't say that explicitly, but he makes it clear that getting your hands on cash during a crisis is often a huge ordeal... that banks can and do sometimes place major limitations on your ability to access it... perhaps allowing you to only withdraw a small amount per day or week. This wouldn't be a problem currently, but it might if we're having other problems, like communication issues.

I think having 30% cash in your home safe is a bit extreme, especially as the portfolio grows in size. It's always a good idea to have some ready cash available, but how much is up to your own personal preference. It carries some risk, of course... being robbed, house fire, perhaps some kind of ridiculous situation like India, etc.
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Re: James Rickards Portfolio

Post by eufo » Tue Apr 18, 2017 8:05 pm

mathjak107 wrote:all i can say is if i followed that model ,except for possibly the prime land doing well , odds are i could never have had enough to retire .
Yes, it's a very defensive portfolio that won't generate much income during normal times. I think it's more of a wealth preservation strategy.
mathjak107 wrote:as far as my opinion ,another doomsdayer that will end up a whole lot poorer then they should be . we have a few collectible art pieces and i can tell you after sale expenses and fees and insurance riders art can leave you with little left as profit . it is easy to be fraud-ed too
Yeah, fine art sounds like a complete hassle... though a decent investment for the right kind of person.
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Re: James Rickards Portfolio

Post by eufo » Tue Apr 18, 2017 8:13 pm

Hal wrote:Well, it looks like the allocations may have changed.

In the "Road to Ruin" book he advises

Gold and Silver - 10%
Cash (some in physical notes) - 30%
Real Estate (Agricultural or income producing)-20%
Fine Art Fund- 5%
Angel and Venture Capital 10%
Hedge Funds 5%
High Quality Sovereign Bonds 10%
Stocks 10% (Resource, Energy, Utilities and Tech)

Breaking this down we have...

Physical Assets 10% +20% =30%
Cash 30%
Bonds 10%
and the remainder in Funds/Equity etc

So to my way of thinking, this is pretty close to the PP.

I was fortunate enough to listen to him at a conference, and he certainly did not come across as a tin foil hat wearing doomer.
What he was concerned about, was that in the next crisis they may close the markets, hence some of his investments are in assets that can be sold if markets are closed.

But.... I think he is catering to an audience that is by far wealthier than myself, so most of his recommendations are irrelevant.
Still happy to stay in the PP, but admittedly I have put aside some physical cash and silver coins (the latter which HB suggested anyway)

Hope this is of some help to those wondering if they should stay in the PP or not.

Hal
Yes, it is not far off from the PP... I agree. He did change some of his allocations from his earlier books. I've yet to read Road to Ruin, but it's in queue.

His information does seem more tailored to the very wealthy, but still very fascinating stuff for small investors like myself. I'm surprised to see him drop gold down to 10% and to include silver in the mix. That's very different from his Gold is Money mantra in the first two books. Perhaps he was losing the faith as it slid in value?
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Re: James Rickards Portfolio

Post by eufo » Tue Apr 18, 2017 8:16 pm

barrett wrote:Hal is right that Rickards always seems to be preaching to the super wealthy. Not many have the means (or knowhow) to just go out and buy high-quality commercial real estate and works of art.

I have read Currency Wars and watched a couple of Rickards things on youtube. He's always preaching doom and claims to be really well connected with the uppity-ups in the US government. He may or may not be right about any of these scenarios but they seem to change over time and he also doesn't give any kind of timeline. He talks about the "snowflake that starts the avalanche" quite a lot.

Anyway, let's say that he's right that we may have hyper-inflation and we might have deflation. A PP contains investments that are meant to protect against both of those scenarios. Long duration treasuries probably don't have a whole lot of oomph when starting from these low levels, but cash is also a good thing to have in a deflationary scenario.

I do like the idea of having some physical cash on hand. Otherwise I don't find much of what Rickards is fearful of to be actionable for someone who is already in a "firewalls" portfolio like the PP.

I also want to own stocks for when conditions are right for them to thrive (like three of the last four decades).
Agree 100% with everything here... well put.
Don't agree with me too strongly or I'm going to change my mind
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Re: James Rickards Portfolio

Post by Kbg » Tue Apr 18, 2017 8:50 pm

The financial press (advertising) is no different than any other commercial news source with paying advertisers...bad news sells.

He's selling doom porn. Good for his bottom line, likely not the best for yours.
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Re: James Rickards Portfolio

Post by eufo » Tue Apr 18, 2017 10:17 pm

Kbg wrote:The financial press (advertising) is no different than any other commercial news source with paying advertisers...bad news sells.

He's selling doom porn. Good for his bottom line, likely not the best for yours.
A pittance for an excellent read/listen about the history of markets, central banks, ghost cities, bubbles, financial manipulation, currency devaluations, asset seizure, etc.
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Re: James Rickards Portfolio

Post by Hal » Tue Apr 18, 2017 11:12 pm

And for those interested in the economic theory / history James Rickards discusses I highly recommend visiting the Mises Institute

As a sampler... https://www.youtube.com/watch?v=ml2U9_Zi2QI
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Re: James Rickards Portfolio

Post by AnotherSwede » Wed Apr 19, 2017 11:20 am

How many doesn't already have a large % exposure in RE?

A few percent fine art, like Spiderman comics or an antique shotgun or motorcycle, is a decent VP if you like it, no need contaminating the PP.
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Re: James Rickards Portfolio

Post by Smith1776 » Fri Apr 28, 2017 3:32 pm

I have just finished reading James Rickard's books. He has, to say the least, an interesting, but compelling, take on the state of the world and its history. I'm not sure what to make of it, to be honest. On the other hand, if you're a Permanent Portfolio user, you'll have assets allocated somewhat similarly to the Rickards portfolio. I think that people in this forum probably don't have as much to worry about as those holding traditional portfolios.
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Re: James Rickards Portfolio

Post by frugal » Fri Apr 28, 2017 4:32 pm

Smith1776 wrote:I have just finished reading James Rickard's books. He has, to say the least, an interesting, but compelling, take on the state of the world and its history. I'm not sure what to make of it, to be honest. On the other hand, if you're a Permanent Portfolio user, you'll have assets allocated somewhat similarly to the Rickards portfolio. I think that people in this forum probably don't have as much to worry about as those holding traditional portfolios.
hi

which good investment and portfolio ideas you read there?

8)
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Re: James Rickards Portfolio

Post by Smith1776 » Fri Apr 28, 2017 4:45 pm

frugal wrote:
Smith1776 wrote:I have just finished reading James Rickard's books. He has, to say the least, an interesting, but compelling, take on the state of the world and its history. I'm not sure what to make of it, to be honest. On the other hand, if you're a Permanent Portfolio user, you'll have assets allocated somewhat similarly to the Rickards portfolio. I think that people in this forum probably don't have as much to worry about as those holding traditional portfolios.
hi

which good investment and portfolio ideas you read there?

8)
James Rickards is very concerned about digital and paper assets in particular -- at least, that's what my impression of his perspective was. He also seems concerned about assets that have counterparty risk. To him, things that minimize the threat of hacking, repudiation, default, etc. seem to have the most appeal. As such, he likes fine art, gold, real estate, and the like. Although, as a previous poster mentioned, he seems to have relaxed a bit in terms of his dislike for, say, stocks. He also mentions cash as having tremendous optionality, despite its inflation weakness.

The great thing for us Permanent Portfolio users is that we don't have to have an opinion on his prognostications or on anyone elses! We have reasonable protection under all economic scenarios. ^-^
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