I've also been circling back to your thoughts on permanent portfolio. Some years ago I suggested to a friend the general concept and was asked to create something in that nature. What I chose was VNQ (real estate) VUG (growth stocks) and IAU (gold surrogate). Further, after looking at longer histories of these three it appeared that rebalancing the three over time would build a nice, low worry long term portfolio.
I set up some "drift" values for them that would trigger rebalances rather than using a calendar date. This requires a bit more attention and effort on the part of the user but seemed to look worthwhile. But, I found one thing I didn't appreciate. Sometimes the rebalancing occurred when all three were "up" or "down" but not the same amounts, which then had some internal conflict relative to potential capital gain sales tax. I "solved" this issue by changing the makeup of the portfolio from 33% each to 30% each and holding 10% in money funds. In this way, many of the rebalances could be done with no selling of the over-weight component. The cash reserve was used to fatten the under-weight component(s). All dividends and interest collected in the money fund, so at times it was over 10%. That also served the portfolio management well.
This histogram illustrates how the three components moved over time. Please stretch the X-Axis to the fullest extent (Sept, 2004; 5022 days) to see the various times of divergence and drift. https://stockcharts.com/freecharts/perf.php?IAU,VUG,VNQ&n=2516&O=011000 Through the financial crisis and all the way to around 2011 the gold portion would have done a nice job of funding purchases of both real estate and growth. From around 2011 through 2016 those two components would have funded a 'restocking' of the gold component. Not much would have occurred except keeping the three components generally at around 30% each with use of the Cash up until Covid (2020). Again gold would have offered to fund rebalancing of the other two components if the money fund wasn't enough to do the job. The growth run-up through 2022 would have mainly repaid gold as it was somewhat flat and real estate was climbing, but at a slower pace. Since the start of 2023, growth would have been funding real estate to a greater degree than gold.
In recent history we've had enough inflation that real estate could again be a sanctuary for investors hoping to avoid further debasement of currency. Maybe that component will be the next HERO to fund the growth side if we see a stock market correction. So far the 30/30/30/10 portfolio has been easy for them to maintain with relatively small capital gain tax burden. Without checking, I think I'd told them to use 5% drift from the model. That meant than any of the three components that drifted from 30% to either 25% or 35% should trigger a rebalance regardless of date. Annually I suggested they tweak the ratios back to the model using mostly the cash reserve to fund the weakest of the three. Cash has floated up to around 15% of total off and on. So, spreading it around to rebalance meant essentially no capital gain tax.
Market Data 
Markets 
AI
