Fail-Safe Investing

Published in 1998, "Fail-Safe Investing" describes Harry Browne's approach to investing in any market environment using his concept of the "Permanent Portfolio."

The Permanent Portfolio

The Permanent Portfolio is a simple investment strategy in which the investor divides his portfolio equally among four primary asset classes.

* Stocks - Represented by a broad-market index fund, such as one that follows the S&P 500
* Bonds - Represented by U.S. Treasury bonds in the longest term available, or high-grade corporate bonds
* Cash - Represented by short-term U.S. Treasury bills
* Gold - Preferably in bullion form

In the book, Harry advocates checking the portfolio once each quarter. If any of the asset classes outperformed or underpeformed by more than 10%, then funds should be redistributed to maintain the approximately equal balance. New funds should be added equally to each asset class (or in such a way as to make the value of each asset class approximately equal once the new funds were added).

A table and graph of theoretical returns of a permanent portfolio strategy is available on Harry Browne's web site. [cite web|url=http://www.harrybrowne.org/PermanentPortfolioResults.htm|title=Yearly Permanent Portfolio Results, 1970 through 2003|accessdate=2008-06-25]

According to his web site, Harry Browne was also a consultant to the The Permanent Portfolio Family of Funds, which offers a Permanent Portfolio Fund (symbol PRPFX) that follows an investment strategy similar to that described in "Fail-Safe Investing". [cite web|url=http://harrybrowne.org/|title=HarryBrowne.org|accessdate=2008-06-25]

References