Department

Department of Finance

First Advisor

Ben Cook

Description

The Permanent Portfolio is a simplistic investing idea created by Harry Browne. The purpose is to have a portfolio consisting of four different investments with even weighting and to try and create a portfolio that will not lose at any economic state. It’s achievable with the concept that one asset class at minimum will have to pull the weight of the others. The four investments are cash, long term bonds, stocks, and gold. Each one capitalizes on different economic states. The portfolio should be able to create return during times of prosperity, inflation, recession and deflation. The research done was to find a way to optimize rebalancing and investment weighting to have the most optimal portfolio. First, confirmation that this portfolio works had to be done. Next we found how to maximize efficiency of the portfolio by just testing different rebalancing techniques. Finally, we found not only the most optimal rebalancing, but also the most optimal weighting. With the use of an efficient frontier, we are able to find the most optimal portfolios for a designated risk or return.

Comments

Oral Presentation, Honors Program

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Live a Happy Retirement: Perfecting the Permanent Portfolio

The Permanent Portfolio is a simplistic investing idea created by Harry Browne. The purpose is to have a portfolio consisting of four different investments with even weighting and to try and create a portfolio that will not lose at any economic state. It’s achievable with the concept that one asset class at minimum will have to pull the weight of the others. The four investments are cash, long term bonds, stocks, and gold. Each one capitalizes on different economic states. The portfolio should be able to create return during times of prosperity, inflation, recession and deflation. The research done was to find a way to optimize rebalancing and investment weighting to have the most optimal portfolio. First, confirmation that this portfolio works had to be done. Next we found how to maximize efficiency of the portfolio by just testing different rebalancing techniques. Finally, we found not only the most optimal rebalancing, but also the most optimal weighting. With the use of an efficient frontier, we are able to find the most optimal portfolios for a designated risk or return.