- permanent portfolio (from Harry Browne's "Failsafe Investing") - allocating your savings in a manner that's neutral to market outcomes (boom, inflation, depression, recession) - i also want to talk about the causality as to what causes different assets to go up and down - the portfolio performs at about 9% per year on average if you backtest it for like 50+ yrs - assets: Stocks: stocks are claims to future corporate profits, discounted by the risk free rate, do well when corporate profit expectations go up, risk free rate expectations go down, talk about source of corporate profits/kalecki equation Long Term Gov Bonds: are claims to future fixed interest payments based on current rate, do well when expectations of future rates decline Gold: does well when real interest rates are low (real rates = rates - inflation), so they do well when inflation is high and/or rates are low or a combination of the two. Cash: short term treasury bonds, 1 year or less, do well in recession when rates are still high for a little bit, offer liquidity and safety
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