Variable Portfolio FAQ

A place to talk about speculative investing ideas for the optional Variable Portfolio

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craigr
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Variable Portfolio FAQ

Post by craigr » Mon Apr 26, 2010 11:31 am

The Variable Portfolio is an optional component of the Permanent Portfolio strategy. This is a way for investors with some play money they can afford to lose to place their bets.

There are some basic rules for the Variable Portfolio outlined in this FAQ:

https://web.archive.org/web/20160324133 ... portfolio/

Here they are in a nutshell just so everyone understands the difference between the Permanent Portfolio and Variable Portfolio:

1) It must be with money you can afford to lose.
2) You aren’t allowed to replenish the Variable Portfolio with money from the Permanent Portfolio if you lose it.
3) You can’t use margin or take other risks that could cause you to lose more money than you put into the Variable Portfolio investment.

The Permanent Portfolio is for money that is precious to you that you want to grow and protect. The Variable Portfolio is for money you can afford to lose if your bets go wrong.

It is perfectly OK to have 100% of your money in the Permanent Portfolio and no money at all in a Variable Portfolio. The Variable Portfolio is optional.

Fair warning: There is a lot of investing junk out in the world. It's cliche but true: There is no free lunch - AND - Anything that looks too good to be true probably is.

Use your head and don't outsmart yourself!
Last edited by craigr on Mon Apr 26, 2010 11:41 am, edited 1 time in total.
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pors
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Re: Variable Portfolio FAQ

Post by pors » Thu Jan 21, 2021 4:14 am

craigr wrote:
Mon Apr 26, 2010 11:31 am
Here they are in a nutshell just so everyone understands the difference between the Permanent Portfolio and Variable Portfolio:

1) It must be with money you can afford to lose.
2) You aren’t allowed to replenish the Variable Portfolio with money from the Permanent Portfolio if you lose it.
3) You can’t use margin or take other risks that could cause you to lose more money than you put into the Variable Portfolio investment.

Not sure if I'm supposed to reply to the FAQ. If not, please shoot me :)

My question about the VP is the following: let's say I decided on a VP of 10%, and after a few years, the VP grew into 20% of my total investment portfolio. Or the opposite, where the VP shrunk to 5%. Do I rebalance my PP and VP to bring it back to 10%?
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Kriegsspiel
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Re: Variable Portfolio FAQ

Post by Kriegsspiel » Thu Jan 21, 2021 7:34 am

Harry's advice was never rebalance from the PP into your VP.

If you want to add to your PP, that money can come from earned income or you can move over some of your VP.
And as for him who lacks the courage to defend even his own soul: Let him not brag of his progressive views, boast of his status as an academician or a recognized artist, a distinguished citizen or general. Let him say to himself plainly: I am cattle, I am a coward, I seek only warmth and to eat my fill.
Solzhenitsyn, Live Not By Lies
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pors
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Re: Variable Portfolio FAQ

Post by pors » Thu Jan 21, 2021 8:12 am

Kriegsspiel wrote:
Thu Jan 21, 2021 7:34 am
Harry's advice was never rebalance from the PP into your VP.

If you want to add to your PP, that money can come from earned income or you can move over some of your VP.
Yeah, that makes sense. So yes, from VP to PP, but not the other way around. Thanks!
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