{"id":82127,"date":"2024-02-26T04:15:31","date_gmt":"2024-02-26T12:15:31","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=82127"},"modified":"2024-07-13T11:02:26","modified_gmt":"2024-07-13T18:02:26","slug":"is-there-a-perfect-portfolio-allocation","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id82127-is-there-a-perfect-portfolio-allocation.html","title":{"rendered":"Is There a Perfect Portfolio Allocation?"},"content":{"rendered":"
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Is there a perfect portfolio allocation? Quite possibly.<\/p><\/div>\n

Economically speaking, at any point in time, the world is typically in one of four scenarios: prosperity, inflation, recession or deflation. For most folks, their investments tend to do well in times of prosperity, but not so well in other conditions.<\/p>\n

For example, stocks perform very well during prosperous times. On the other hand, stock prices tend to fall during deflation and recession — which is why cash is the preferred holding during those times.<\/p>\n

Cash’s weak link is inflation, which results in lost purchasing power for those who hold it.<\/p>\n

Bonds not only perform reasonably well during periods of prosperity — but also during recessions and deflationary periods. Bonds aren’t so hot, though, when inflation is running rampant.<\/p>\n

Gold shines during times of turmoil; it doesn’t matter whether economic conditions are inflationary and deflationary — unlike cash, which loses value during times of inflation, or becomes scarce when the economy is deflating. Its weak link is that it badly underperforms other assets during prosperous times.<\/p>\n

So … wouldn’t it be great if we could create a portfolio that was able to perform well even during times of inflation, recession and deflation?<\/p>\n

It turns out that many decades ago, a man named Harry Browne did just that. He called his creation ‘The Permanent Portfolio’ and it was allocated like this:<\/p>\n