I think the issue with a permament portfolio is that it is going to be dependent on your risk tolerance. If you're happy to ride out any volatility then you can potentially go all in on stocks and your main issue might be the weightings of US vs International. But if you have a very low risk tolerance and know you'd panic if you lost any money at all, then your weighting to stocks is likely very low if not zero, and the bulk of your investments are going to be in CDs or T-bills etc?
If you are actually diversified your CAGR will be higher in the event of extreme drawdowns. A lot of it revolves around the non-linear impact of variance drag on CAGRs.
If you are unwilling to tolerate any drawdowns you will not be able to invest for returns, so that's true.
The permanent portfolio concepts really depend on whether the diversification is real and whether there will be large drawdowns in the future (it will outperform when you want it to
allowing you to rebalance DCA).
The diversification part is the harder one and the costs to access the diversification matter.
I'm thinking about this from a retail (mom and pop) viewpoint, and my experience there is that there are some people there who absolutely do not want to be lose money. It may be rational, it may be irrational, but it is definitely a real phenomenon.
Great RATM link
I think the issue with a permament portfolio is that it is going to be dependent on your risk tolerance. If you're happy to ride out any volatility then you can potentially go all in on stocks and your main issue might be the weightings of US vs International. But if you have a very low risk tolerance and know you'd panic if you lost any money at all, then your weighting to stocks is likely very low if not zero, and the bulk of your investments are going to be in CDs or T-bills etc?
If you are actually diversified your CAGR will be higher in the event of extreme drawdowns. A lot of it revolves around the non-linear impact of variance drag on CAGRs.
If you are unwilling to tolerate any drawdowns you will not be able to invest for returns, so that's true.
The permanent portfolio concepts really depend on whether the diversification is real and whether there will be large drawdowns in the future (it will outperform when you want it to
allowing you to rebalance DCA).
The diversification part is the harder one and the costs to access the diversification matter.
I'm thinking about this from a retail (mom and pop) viewpoint, and my experience there is that there are some people there who absolutely do not want to be lose money. It may be rational, it may be irrational, but it is definitely a real phenomenon.
Yea, there's someone to blame for this misunderstanding of reality but I'm not sure who