RPF-0030-Permanent_Portfolio_with_Jake

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00:00:27.160 | Personal Finance Episode 30.

00:00:30.040 | On today's show, what if it were possible to build a portfolio that could succeed no

00:00:36.920 | matter what the economic climate happened to be?

00:00:41.280 | And what if that portfolio were incredibly simple, incredibly low cost, and incredibly

00:00:48.020 | low maintenance?

00:00:49.020 | Could it exist?

00:00:52.200 | Today's show is a discussion with Jake DeSilis of The Voluntary Life of Harry Brown's concept

00:00:58.000 | of the permanent portfolio.

00:01:16.440 | So welcome to the Radical Personal Finance Podcast for today, Tuesday, July 29, 2014.

00:01:22.400 | I'm glad you're here.

00:01:23.400 | Today's show is going to be an interview with Jake DeSilis of The Voluntary Life, and today

00:01:28.600 | we're going to be talking about the permanent portfolio, which is an investment concept

00:01:33.840 | pioneered by a man named Harry Brown.

00:01:37.080 | And we're going to talk all about that in detail and have a conversation.

00:01:40.120 | I hope you'll find it interesting.

00:01:48.960 | The name Jake DeSilis may be familiar to you.

00:01:51.080 | If you remember, he was already on the show.

00:01:53.600 | He was on the show with Episode, I think it was 22, was it?

00:01:59.280 | Hold on just a moment.

00:02:00.280 | Let me check.

00:02:01.280 | Jake DeSilis, Jake DeSilis, Episode 20, Entrepreneurship.

00:02:05.880 | Show entitled Entrepreneurship is the only opportunity to seek financial freedom that

00:02:09.280 | is open to anyone.

00:02:10.280 | So that's Episode 20.

00:02:11.880 | If you enjoyed that interview, or even if you enjoyed this one, go back and listen to

00:02:15.080 | that one.

00:02:16.080 | You'll find it at RadicalPersonalFinance.com/20.

00:02:19.120 | But at today's show, we're going to talk about something a little different.

00:02:21.480 | So I've enjoyed Jake's podcasts over the years, and I've thought that he did an excellent

00:02:26.140 | job in the past discussing the concept of the permanent portfolio.

00:02:30.220 | And so I thought it'd be more fun to bring a guest on and talk about the concept together

00:02:34.360 | rather than me just talking on and on about it.

00:02:37.260 | Because I think it's a really valuable concept.

00:02:41.160 | So today's show, we're going to talk about the permanent portfolio.

00:02:44.740 | Before we do that, and I'm not going to do much in the intro here as far as talking about

00:02:48.560 | details.

00:02:49.860 | Before we do that, I do have to give just a quick disclaimer.

00:02:53.240 | Anytime we talk about investment philosophies and investment topics, and unfortunately this

00:02:57.860 | is important.

00:02:58.860 | I know you get tired of these stupid disclaimers, but they are important.

00:03:02.640 | I'm going to bring a lot of people on this show.

00:03:05.120 | My goal.

00:03:06.120 | I want to bring a lot of people on this show from a lot of different philosophies and grill

00:03:09.720 | them.

00:03:10.720 | I view having a podcast as kind of my little opportunity to ask people all the questions

00:03:15.760 | I've wanted to ask them but never had time to ask them in the past.

00:03:18.480 | So I'll try to bring people on from all different walks of the investing world.

00:03:22.240 | I'll try to bring people on that I agree with, that I disagree with.

00:03:25.320 | I will talk about agreeing with people and disagreeing with people.

00:03:28.880 | I'm just interested in learning, and I love to bring people on that I disagree with more

00:03:32.680 | than - probably more than I would do people that I agree with.

00:03:36.020 | And so this is just the start about that.

00:03:38.600 | I want to provide some really great content as far as providing some real meat for you

00:03:45.200 | when it comes to thinking through investments.

00:03:48.380 | But none of this is going to be investment recommendations.

00:03:51.360 | None of it is investment suggestions.

00:03:52.360 | That's very important.

00:03:53.360 | That's not just a disclaimer that people put on radio shows.

00:03:56.280 | Your situation is incredibly unique, and there is - my opinion - there is no one investment

00:04:03.200 | strategy that's going to serve everybody because depending on where you're at in your financial

00:04:09.160 | plan, depending on where you're at in your life cycle, depending on where you're at as

00:04:12.400 | a person, on what your personal inclinations and proclivities are, that's what's going

00:04:17.160 | to ultimately design - determine your investment choices.

00:04:22.480 | So I'm going to try to bring you lots of even conflicting guests on here, and I'm doing

00:04:26.760 | that by design to try to help you to think.

00:04:29.440 | And my hope is that as time goes on, you'll start to see and understand the things that

00:04:33.600 | are similar among different investing approaches and the things that are different.

00:04:37.000 | And then with greater education, you'll be able to figure out what's right for you.

00:04:40.280 | So that's going to be today's show.

00:04:41.920 | I'm excited about doing it.

00:04:44.140 | The interview is pre-recorded, so I'm going to play it now.

00:04:46.140 | But I really enjoyed doing the interview, and I hope that you enjoy listening.

00:04:50.840 | So here's the interview, and then I'll be back with some additional thoughts for you.

00:04:55.760 | So Jake, welcome to the Radical Personal Finance Podcast.

00:05:04.440 | I'm glad you're here with us again.

00:05:05.920 | Yeah, thanks.

00:05:06.920 | So last time we talked about entrepreneurship, and I enjoyed that conversation, and I'm sure

00:05:12.440 | we could talk for a few more hours about that.

00:05:15.280 | But I know that we've got a couple of other things that we would enjoy talking about.

00:05:18.600 | And one of the things that I wanted to talk about today is a concept called the permanent

00:05:22.680 | portfolio.

00:05:24.140 | So we'll let you kind of explain a little bit of what that is.

00:05:26.720 | But I thought where we'd start is, how did you first come in contact with the concept

00:05:31.980 | of the permanent portfolio?

00:05:33.200 | How did you discover it?

00:05:34.680 | Yeah, well, I discovered it through Harry Brown.

00:05:37.880 | So I read Harry Brown's book, How I Found Freedom in an Unfree World, which is a book

00:05:44.640 | about achieving freedom in your own life.

00:05:46.960 | It's a great book, and it was really influential on me.

00:05:49.360 | And it's actually been really influential on my podcast, Voluntary Life.

00:05:55.640 | And so I knew that book, and I knew about Harry Brown, and I knew that he had made his

00:06:00.720 | money as an investment advisor.

00:06:03.480 | And I was just getting really serious about getting into investing at the same time.

00:06:09.600 | This is sort of in the early 2000s.

00:06:12.960 | And so I found his radio show, which he was doing at the time, an investment radio show.

00:06:19.120 | And I downloaded all the MP3s of his episodes on investment.

00:06:23.480 | And I also read a book of his, which he describes the permanent portfolio, which is called Failsafe

00:06:30.040 | Investing.

00:06:31.040 | And that's, by the way, a very good introduction to the permanent portfolio.

00:06:34.360 | But that's how I found out about it.

00:06:35.600 | It was originally through Harry Brown, who was the guy who basically came up with this

00:06:40.280 | strategy.

00:06:42.160 | And I read loads of other investment books and other investment sort of approaches.

00:06:49.160 | And I found lots of useful stuff in them.

00:06:50.880 | But nothing convinced me.

00:06:54.680 | Nothing really worked for me or seemed to be as useful and to fit my needs as much as

00:07:02.440 | the approach of the permanent portfolio.

00:07:04.680 | And by the way, I just wanted to say also, I should say at the beginning that I'm an

00:07:08.600 | individual investor, and I use the permanent portfolio.

00:07:12.280 | And in our discussion, I can talk about my reasons for choosing this approach and why

00:07:18.520 | it works for me.

00:07:20.440 | Anyone listening, obviously, you'll have to do your own research.

00:07:23.720 | You'll have to decide for yourself which investment approach works and make your own decisions

00:07:28.000 | about your money.

00:07:29.220 | So I'm not going to give advice.

00:07:30.600 | But I will explain why I think it's the best approach for me.

00:07:34.240 | And hopefully, that can be useful for others who are interested.

00:07:36.880 | I think that's super valuable because there are a lot of excellent investment approaches.

00:07:41.840 | And one of the things that I'm kind of developing when the show is where I talk about investments

00:07:46.340 | is that the key to any investment philosophy is understanding your philosophy and understanding

00:07:52.300 | what your goals are and understanding what you're trying to accomplish so that you can

00:07:56.360 | stick with that philosophy in the good times and the bad times.

00:08:01.240 | And what I've observed is a lot of times, people don't understand their philosophy and

00:08:05.520 | they don't understand what they're actually doing.

00:08:07.600 | For example, I'm very attracted to the permanent portfolio, but I don't practice it because

00:08:12.360 | it's not appropriate, as I perceive, for my needs.

00:08:16.560 | So I love the way that you said that.

00:08:18.480 | It's important.

00:08:19.480 | It's not just a stick-in disclaimer here.

00:08:22.560 | It's important.

00:08:23.560 | You need to understand what you're trying to accomplish and then the strengths and weaknesses

00:08:28.480 | of whatever investment philosophy and strategy you're following.

00:08:31.840 | So go ahead and follow that path along.

00:08:35.800 | What attracts you to the -- first of all, explain what the permanent portfolio is and

00:08:39.400 | then what attracts you to it.

00:08:41.000 | Yeah.

00:08:42.000 | And just one more point on what you just said, actually.

00:08:44.440 | Really, really great point that Harry Brown makes in his book and in his approach to investing

00:08:50.800 | is one of his fundamental rules is that you should never invest in anything that you don't

00:08:57.240 | understand.

00:08:58.800 | And that, to me, is -- I really took that to heart.

00:09:01.080 | And I think that's really important, that whatever approach you follow, it's really

00:09:04.640 | important to know why you're following that approach and to understand what you're doing

00:09:08.480 | with your money so that you have -- you're making informed choices.

00:09:12.760 | When I first got interested in investing, I went to a bunch of investment advisors in

00:09:17.280 | my bank and other banks and various places, and they all basically said, "Entrust us with

00:09:23.440 | your money, and we will put it into this fund, and this fund does really well."

00:09:28.080 | And I said, "Okay, well, what's the strategy of the fund?"

00:09:32.040 | And then there was a lot of talking and a lot of smoke and a lot of mirrors, and I could

00:09:38.840 | never get to the bottom of it.

00:09:39.960 | And in fact, it was at the same time that I was getting interested in the permanent

00:09:42.960 | portfolio.

00:09:43.960 | So I would say, "Well, look, here's this strategy.

00:09:45.760 | It's so clear that I can backtest it, and I have backtested it for the last 10 years,

00:09:50.320 | so show me your backtest of your strategy."

00:09:53.120 | And they couldn't do that because their strategy was ad hoc and it was done on the fly.

00:09:57.200 | And so that's one of the things that's great about this approach is I understand it, and

00:10:02.320 | you can too, and it's very transparent and clear.

00:10:05.320 | And that was one of the reasons why I kept finding this to be the right approach.

00:10:13.440 | I think that was a long detour, and I'm not sure I answered your question.

00:10:16.480 | What was it you were asking me?

00:10:18.120 | Let me actually jump in, and then we'll go back to the question because it's an important

00:10:22.280 | point.

00:10:23.280 | There was something -- so I come from that world of being an investment advisor.

00:10:25.920 | I'm a former investment advisor, and professionally in those meetings.

00:10:30.600 | And there are a number of problems, which we don't need to get to right here, but this

00:10:35.480 | is one of the major problems in investment advice is that looking back on -- if you're

00:10:41.640 | talking with an individual advisor about what their specific strategy is, there are very

00:10:46.320 | few clear, replicatable industry standards for, "This is how I've done.

00:10:52.160 | Let me prove to you what I've done."

00:10:54.280 | Because if you are actually managing individual portfolios for clients, then each client's

00:11:01.120 | results are going to be different based upon what that client needs.

00:11:04.240 | And so it's very challenging to answer that question, and rightly so, but yet it's an

00:11:08.760 | important one that does need to be answered.

00:11:10.620 | But the main point I was going to give is that one thing I used to tell, which is why

00:11:13.360 | I like in Harry Brown's book and his book, "Failsafe Investing," don't do anything you

00:11:17.200 | don't understand.

00:11:18.200 | I used to tell this to my clients, and they would often not take me up on it, but I still

00:11:24.240 | think it's valuable advice.

00:11:26.120 | And it is hard to put into practice, but years ago, I remember when I was a teenager, I was

00:11:31.200 | listening to a Brian Tracy tape, and he said, "Spend as much time researching the investment

00:11:39.040 | opportunity that you have as it took you to earn the money that you're going to put into

00:11:43.600 | the opportunity."

00:11:45.000 | And the point was that if you're going to make a $10 investment, well, go ahead and

00:11:48.120 | research that for as much time as it takes you to earn $10.

00:11:53.120 | If you're going to make a $10,000 investment, don't make that investment until you've spent

00:11:59.600 | an equivalent amount of time as it might take you to earn $10,000 learning about the investment.

00:12:04.960 | Now I think that that's not the struggle with even saying that, and I would tell it to my

00:12:08.680 | clients just to kind of encourage them to do their due diligence and understand their

00:12:12.320 | strategies.

00:12:13.460 | You reach a point where you can't practically do that once your portfolio grows large, but

00:12:18.240 | by then you'll be so far down the road that you'll be well-educated and you'll really

00:12:22.360 | understand what it is that you're doing.

00:12:24.240 | So if you're doing something yourself, if you're a do-it-yourselfer, that's fine.

00:12:28.680 | Understand your strategy so that you stick with it.

00:12:30.520 | If you're hiring a professional advisor for some services that they provide, that's fine.

00:12:35.680 | Then you'll understand what services that professional advisor is providing or isn't

00:12:40.040 | providing.

00:12:41.040 | And you won't assume that they're doing something that they're actually not capable of doing.

00:12:45.320 | You won't assume that you're hiring your advisor to beat the market when I, as an advisor,

00:12:49.680 | would tell a client quite clearly, "Listen, I'm not capable of doing that, so don't hire

00:12:52.320 | me for that."

00:12:53.720 | And so the research and the understanding is so key.

00:12:58.200 | That's why, frankly, Jake, that's why I'm creating the show, is to try to provide straight

00:13:03.100 | talk on all this stuff to give people a tool in their arsenal when they're trying to research

00:13:09.120 | these topics.

00:13:10.120 | Right, right.

00:13:12.400 | So the question was, I can't remember what the question was.

00:13:15.840 | Basically, explain what the permanent portfolio is and how it works, first of all.

00:13:21.760 | Yeah, okay.

00:13:23.240 | So let me back up a little bit before that, because I can go into say, "This is the portfolio

00:13:28.080 | and this is what it works," but just to explain the criteria for the portfolio.

00:13:31.480 | So there's very different approaches to investing.

00:13:34.200 | And like what you were just saying, some people may prefer to entrust their investment to

00:13:39.280 | somebody else to manage and so forth.

00:13:41.500 | Other people prefer to manage things themselves.

00:13:43.640 | And that's definitely with this approach, the permanent portfolio is more for people

00:13:48.720 | who are interested in managing their own investments.

00:13:51.380 | Then there are various approaches to investing as to whether or not you want to be an active

00:13:54.780 | investor and be trying to time the market and speculate on the next big thing, or whether

00:14:01.520 | you take the approach that it's really hard to get that right.

00:14:05.400 | It's an art, not a science.

00:14:07.140 | And you can't predict what's going to happen in markets, and therefore you need a more

00:14:11.040 | passive investment strategy.

00:14:12.440 | And that's true of the permanent portfolio.

00:14:15.040 | But unlike some of the passive investment strategies that are very focused on stocks,

00:14:19.740 | the permanent portfolio also tries to tackle another concern that many investors have,

00:14:25.720 | and that is to do with the fragility and the problems with the economy that comes from

00:14:33.920 | manipulation and the money supply.

00:14:35.760 | In particular, the problems that come from central banks controlling interest rates and

00:14:43.160 | the damage that that can cause, either in creating inflation or in creating depression.

00:14:48.720 | And we can go into maybe the details a bit more of that.

00:14:51.120 | But these are some of the concerns that are behind the permanent portfolio.

00:14:54.920 | And so as a strategy, the permanent portfolio is a passive investment strategy that involves

00:15:02.120 | splitting your investments into four different asset classes.

00:15:07.280 | And you split your investments into those four different asset classes in order to be

00:15:10.920 | able to do well or survive or not get completely hammered in any specific economic situation

00:15:21.200 | that you can envisage.

00:15:22.640 | And so the four asset classes are stocks, cash or short-term treasury bonds, long-term

00:15:33.200 | bonds or long-term treasuries, and gold.

00:15:38.560 | And so those are the four fixed categories that you invest in.

00:15:45.040 | And you basically split your portfolio equally, 25% between these four.

00:15:49.560 | And the idea is what you do is you rebalance periodically when any one of those investments

00:15:59.920 | reaches a rebalancing band.

00:16:02.000 | And people have different rebalancing bands.

00:16:04.560 | The one that most people use is if it drops to below 15% or if it goes to above 35% or

00:16:10.720 | some people use 40% of your total portfolio.

00:16:14.460 | So when you do that, what you're doing is you're saying, basically, I don't know what's

00:16:20.240 | going to happen.

00:16:21.320 | Maybe we're going to have hyperinflation.

00:16:23.280 | So I'm going to hold some gold.

00:16:24.880 | Or maybe we're going to have economic prosperity.

00:16:27.200 | So I'm going to hold some stocks.

00:16:28.880 | Or maybe we're going to have a tight money recession.

00:16:31.480 | So I'm going to hold cash.

00:16:32.480 | And I'm also going to have cash so that I can take advantage of any rebalancing opportunities.

00:16:38.560 | Or maybe we're going to have a long-term depression.

00:16:40.880 | So I'm going to hold long-term bonds.

00:16:43.080 | Because in each of those economic circumstances, those assets tend to be the ones that the

00:16:47.840 | money rushes into.

00:16:49.640 | So you kind of split your portfolio between those four asset classes.

00:16:53.040 | And then you basically just rebalance.

00:16:55.500 | So if you get to a point where it's like, wow, gold seems to have done really well.

00:16:59.620 | So there we go.

00:17:00.620 | Now I've got 40% of my portfolio in gold or 35% of my portfolio in gold.

00:17:04.600 | You sell that down and rebalance back to 25% each.

00:17:09.240 | And in doing that, what you're doing is you're basically selling the assets that are expensive.

00:17:17.000 | And you're buying the assets that are cheap.

00:17:19.680 | And much of the benefit of the permanent portfolio comes from what people term volatility harvesting.

00:17:29.000 | So you basically-- if the markets are going all over the place, and some stuff's going

00:17:35.320 | up and down, and people are finding it really hard to predict, if you take the approach,

00:17:38.720 | well, I just can't predict what's going to happen.

00:17:41.640 | Maybe long-term, there's going to be hyperinflation.

00:17:44.120 | But that could be five years, 10 years.

00:17:47.080 | Who knows?

00:17:48.360 | Maybe long-term, there's going to be prosperity.

00:17:50.360 | But we could stay in this kind of economic doldrums for years longer, like Japan did.

00:17:55.980 | So what you're doing is you're saying, I don't know what's going to happen.

00:17:58.480 | But I do know that whatever happens, I will have assets that will do well in any economic

00:18:03.960 | environment that I can envisage.

00:18:06.520 | And therefore, I'll basically use those to carry the portfolio through.

00:18:11.040 | And in doing so, you don't benefit from the big highs that, for example, stocks have in

00:18:18.000 | the 1990s, when you had years where you were getting 20%-plus growth in stocks in multiple

00:18:27.760 | years.

00:18:28.760 | You don't benefit as much from those big highs.

00:18:32.400 | But on the other side, you also don't get the big lows when you get a stock market crash.

00:18:38.880 | And you basically even out a lot of the volatility, whilst, in general, protecting yourself from

00:18:47.800 | any really significant economic catastrophes.

00:18:51.880 | It's a very humble approach to investing.

00:18:55.360 | And that's one of the things that I like about it, is that basically, the idea is, let me

00:19:00.680 | just admit that I'm not a genius, which, for many people who get involved in investing,

00:19:05.400 | is very challenging to make that admission.

00:19:07.440 | But let me admit that I'm not a genius.

00:19:09.480 | And let me see if I can design a system that will work no matter what.

00:19:17.080 | And I highlighted four paragraphs here, short paragraphs, at the end of Harry Brown's book,

00:19:22.120 | "Failsafe Investing."

00:19:23.960 | And to me, I think it displays exactly what you're talking about, as far as just this

00:19:29.120 | idea of, I'm a human.

00:19:31.880 | I can't know it all.

00:19:33.220 | So let me design a plan that works no matter what.

00:19:35.760 | And these four paragraphs say this.

00:19:37.640 | The beginning of investment wisdom is to accept that we live in an uncertain world, and that

00:19:42.600 | we can never have enough information to know for certain why the market went up or down

00:19:46.960 | today, let alone what it's going to do tomorrow.

00:19:51.240 | We only know a little about the present and much less about the future.

00:19:55.320 | No one can tell you when the stock market will peak, how far it will fall, or which

00:19:59.420 | market group will lead the way back up.

00:20:01.960 | Human beings aren't able to foresee the future in any useful way.

00:20:05.740 | For every example cited of an investment forecast that came true, I can point to five that didn't,

00:20:11.280 | some of which may have come from the same forecaster.

00:20:14.360 | Only when you abandon the hope that some advisor, some system, some source of inside tips is

00:20:19.600 | going to give you a shortcut to wealth do you gain control over your financial future.

00:20:24.480 | And when you give up the search for certainty, an enormous burden is lifted from your shoulders.

00:20:29.340 | You can begin to invest realistically, and that's much easier than the search for certainty.

00:20:35.280 | Yeah.

00:20:37.640 | And just a couple of words on that.

00:20:39.280 | I mean, you know, I think there is a humility there in what Harry Brown's approach is.

00:20:44.000 | And also, it's also a question of taking economics seriously.

00:20:48.160 | You know, in economics, you know, there is a very clear understanding, especially the

00:20:53.840 | Austrian School of Economics, there's a very clear understanding that human action is not

00:20:59.640 | predictable.

00:21:00.640 | It's not systematically predictable.

00:21:02.840 | It's an art to try and work out what's going to happen in the future with people.

00:21:06.520 | It's not a science.

00:21:07.960 | You can make predictions, and you can luck out, but it's not systematic.

00:21:13.600 | And if you take that to heart, as all the passive investors do who invest in index funds

00:21:19.800 | for stocks, they all kind of have taken that to heart in one respect, in that they've said,

00:21:24.160 | like, look, we can't predict which stocks are going to work, so we're just going to

00:21:26.960 | take an index fund, and we're just going to sit it out and basically not speculate.

00:21:32.840 | And I think that approach is great, and that's exactly what the permanent portfolio does

00:21:37.120 | in stocks, is it holds an index fund of stocks across the whole stock market.

00:21:42.960 | But the permanent portfolio takes that approach even further and says, OK, so we can't predict

00:21:48.000 | which individual stocks are going to go up and down, but we also can't predict whether

00:21:51.600 | or not stocks as an asset class are going to suffer for, you know, a decade like they

00:21:58.360 | did in the 1970s or in the 2000s.

00:22:01.820 | And so as well as being passive in terms of your allocation of stocks, it also takes a

00:22:07.600 | much broader look at the economy and says, I want to be out not just in one asset class,

00:22:14.000 | because even though if you only have stocks you can do really well in decades like the

00:22:18.280 | '90s, who knows whether another decade like the 1970s or the 2000s is coming along where

00:22:23.680 | you could spend 10 years not keeping up with inflation.

00:22:27.520 | And that's tough.

00:22:28.720 | That's a long time to basically be losing money from your investments.

00:22:33.960 | And so that's the other sort of side of that humility is it's a humility in that you don't

00:22:40.640 | sort of think that, you know, you know the future and you're a wizard.

00:22:45.920 | But it's also just simply realistic about economics.

00:22:52.440 | I like that it brings in a discussion of the problems of central banking and the control

00:22:59.320 | of the central banking system and the central bankers try to influence on the economic system.

00:23:04.800 | I assume that that, although I haven't researched it, and correct me if I'm wrong, I assume

00:23:09.320 | that this was a big, big factor in Harry Brown's, you know, in his background coming as a libertarian

00:23:16.720 | and then, you know, eventually running for president as a libertarian candidate a couple

00:23:20.480 | of times in the end of the 20th century.

00:23:24.640 | And so kind of trying to say how can I design an investment approach that will take this

00:23:28.800 | into account and function?

00:23:31.280 | Because all of those four aspects, all of that is based, those things are not the four

00:23:36.840 | scenarios that we can have, whether depression, inflation, deflation, you know, tight money

00:23:42.360 | recession.

00:23:43.360 | None of that is based upon, none of that is based upon an individual company's performance.

00:23:48.040 | That's all based upon the business cycle and based upon trying to counteract what the central

00:23:54.720 | banking system is going to do.

00:23:56.000 | And I like the permanent portfolio, especially for people who are very concerned about those

00:24:01.560 | aspects.

00:24:02.560 | You know, I've had a number of people, a lot of people are constantly asking questions.

00:24:05.320 | What do we do with the dollar?

00:24:08.360 | And the dollar is getting weaker and so therefore isn't the right move to sell all my stocks

00:24:13.320 | and buy gold and silver coins.

00:24:16.320 | And so to me, this is a more rational approach where if you're concerned about that, instead

00:24:21.800 | of saying that you know exactly what's going to happen, instead of saying that you know

00:24:26.600 | that the dollar is definitely doomed, that stocks are definitely going to crash because

00:24:30.180 | your latest prognosticator has said so, and that gold is definitely going to be the thing

00:24:37.320 | that goes up in value, you can take a more modest standpoint.

00:24:45.480 | And now you're prepared if we have a time of prosperity, you're prepared if we have

00:24:48.200 | a time of inflation, you're prepared if we have a time of recession, and you're prepared

00:24:52.400 | if we have a time of deflation.

00:24:54.440 | And so I think this is a more rational, for people that are very concerned about central

00:24:58.960 | bank activities and things like that and their influence on the economy, I think this is

00:25:02.600 | a really rational approach for them to consider.

00:25:04.800 | Yeah, and that's absolutely stuff that Harry Brown was very, very much thinking about when

00:25:12.000 | he designed this.

00:25:13.000 | I mean, this is really an investment strategy that is designed for a world of fiat currencies.

00:25:19.440 | And when Harry Brown, I mean, he made his money on betting against the American dollar,

00:25:24.160 | on betting about the American dollar being devalued when it went off the last remnants

00:25:29.320 | of the semi-gold standard in the early '70s.

00:25:32.000 | That's actually how Harry Brown made his fortune.

00:25:33.720 | This is the funny thing is that he was a speculator.

00:25:36.840 | He actually lucked out, so to speak, in terms of his timing to a certain degree.

00:25:41.760 | But he also saw enough of what's going on in the market to realize that you can't find

00:25:48.680 | opportunities to time the market like the way that he did in the early '70s with gold.

00:25:53.960 | So yeah, he was very much aware of the problems of fiat currencies that we've had since the

00:25:59.680 | early 1970s.

00:26:01.640 | And there are lots and lots of people who look at fiat currencies and look at the ability

00:26:07.480 | that banks have to just type new zeros into their accounts in a way that if you or I did

00:26:12.680 | that, it would be fraud and it would be unbelievable to anyone that we could be taken seriously.

00:26:20.680 | It's such an obvious crime.

00:26:22.080 | But central banks can do that, and that's just the way that it works.

00:26:27.540 | And Harry Brown was very, very aware of the negative effects that that can have on the

00:26:31.400 | business cycle.

00:26:33.200 | But the difference is that whereas there are some people who look at fiat currencies and

00:26:39.720 | look at what central banks can do, what the banksters can do, as they're called, and they

00:26:44.640 | say, right, I'm going to invest all my money into hard assets because any day now, the

00:26:53.200 | West is just going to crumble and we're going to have a total meltdown, hyperinflation.

00:26:58.800 | It'll be like Germany in the 1920s.

00:27:01.840 | And the thing is that I can understand that mathematically, you know, the ever-increasing

00:27:09.760 | government debt and so forth, that something's got to give at some point.

00:27:14.920 | But there is no way to see whether or not that's going to be this year, next year, or

00:27:21.760 | whether or not something will happen in the energy sector that will suddenly give a new

00:27:25.680 | boost to the economy and so forth, or whether or not we could go into a sort of moribund

00:27:32.200 | phase of very, very low economic activity, a bit like what happened to Japan in the '90s.

00:27:40.640 | So you just can't tell.

00:27:42.280 | And the good thing about the permanent portfolio is that, you know, whereas sometimes people

00:27:47.800 | who focus just on stocks just kind of, in a sense, don't think about the risks of hyperinflation

00:27:55.200 | and the kind of problems that stocks had in the '70s, it takes that into account.

00:28:02.040 | But it also is realistic enough to say, yeah, the currency could be seriously devalued,

00:28:09.400 | there could be some kind of economic meltdown, but there might not be.

00:28:13.360 | So best to be in a situation where you don't have to be sort of thinking that you haven't

00:28:21.080 | put all your eggs in one basket, basically.

00:28:22.880 | And the danger is, if you think there's going to be an economic meltdown, you're going to

00:28:26.360 | start seeing confirmation bias, and you're going to start reading the news and say, oh,

00:28:29.520 | look, look, there's the first signs of it.

00:28:31.400 | And you start having this kind of doom mentality, where everything looks like the economy's

00:28:38.440 | about to totally melt down.

00:28:41.000 | And I mean, it really looked like that in 2008.

00:28:44.640 | And then who would have thought that one of the asset classes that would do really well

00:28:48.520 | in the years following 2008 would have been long-term treasuries, as they did in 2011.

00:28:54.280 | It was one of the asset classes that carried the portfolio.

00:28:59.360 | That's not something that anybody who expected meltdown was talking about before.

00:29:05.240 | And they were all talking about getting your money out of currency and into precious metals.

00:29:10.080 | And funnily enough, since then, gold has actually gone down.

00:29:13.440 | So you just can't tell what's going to happen.

00:29:17.200 | And so that's why this approach is the one I like.

00:29:19.400 | Because the other thing is, I don't want to have a new job as a full-time investor.

00:29:23.760 | I want to live life and enjoy myself and get out there and do fun things that I find fulfilling.

00:29:29.200 | I don't want to have to be reading financial news all the time.

00:29:31.680 | And I don't want to have to be worrying about whether or not my investment strategy is vulnerable

00:29:38.640 | to the latest problems in the economy or government actions.

00:29:42.400 | And this is the great thing about the permanent portfolio approach.

00:29:45.000 | I very rarely check my portfolio these days.

00:29:47.240 | When I first started investing, I checked it every single day.

00:29:50.520 | And then I started checking it every week or so.

00:29:52.640 | And then I started checking it every month.

00:29:55.080 | And now I check it probably every quarter, because I actually have an action to update

00:30:00.040 | my portfolio once a quarter.

00:30:03.200 | So I consciously check it, but I don't check it every day.

00:30:07.680 | So my problem with it, and I'm interested in what your thoughts are about this, is that

00:30:11.760 | I recognize the beauty of the design.

00:30:16.360 | I recognize the beauty of, like you said, just the ability to read the newspaper and

00:30:22.080 | not worry about it.

00:30:23.080 | You know, to say, "Well, okay, I'm pretty well covered no matter what that is."

00:30:27.400 | But the problem is that I'm one of these guys where I would just be so uncomfortable owning

00:30:36.840 | that much gold.

00:30:38.600 | And the problem is that this portfolio is designed to provide for somebody who is -- the

00:30:52.240 | portfolio is designed to take advantage of the changes in economics and the economic

00:30:56.960 | cycle and the business cycle.

00:30:58.960 | But when I look at it, I look at it and say, "Okay, cash, if I'm allowed to take cash out

00:31:04.240 | and I'm allowed to use cash for my own purposes, then it's smart for me to have cash."

00:31:09.560 | But usually when I assess an allocation in an investment portfolio, for me to have 25

00:31:14.960 | percent of an investment portfolio in cash, unless I'm counting personal reserves, cash

00:31:21.400 | reserves, emergency funds, opportunity funds, things like that, if I'm trying to keep some

00:31:25.760 | cash in case I stumble across a good investment opportunity, I usually wouldn't count that.

00:31:31.040 | So for me to say I'm going to keep 25 percent of the portfolio in cash, that's a little

00:31:35.160 | hard to stomach.

00:31:36.640 | Then to say I'm going to buy gold, and to me, 4,000 years of economic history notwithstanding,

00:31:45.040 | basically if I buy gold coins, I'm buying something that the only thing that contributes

00:31:49.520 | to the price is supply and demand.

00:31:52.680 | And so the only thing that drives the price of the gold is supply and demand.

00:31:56.760 | There's no intrinsic value to it.

00:32:01.000 | All the people may disagree with me, but what am I going to do with a brick of gold sitting

00:32:05.440 | in my living room?

00:32:06.920 | There's maybe a value to it from a jewelry perspective in other cultures, in India or

00:32:12.040 | China where they actually use gold jewelry, but I don't own any gold jewelry.

00:32:15.760 | I don't wear it.

00:32:16.760 | I'd be swindled in an instant if I were trying to buy or sell gold jewelry.

00:32:21.840 | So the only thing that it's driven by is supply and demand.

00:32:25.400 | And then bonds, I get so uncomfortable about the movement of that.

00:32:31.880 | I get so uncomfortable about the change in value as interest rates adjust, and plus I

00:32:37.280 | just don't see any value for them for me.

00:32:39.640 | So I would feel more comfortable owning shares of 10 great companies.

00:32:45.920 | I'd feel more comfortable if I had a $100,000 portfolio or a million dollar portfolio, whatever

00:32:50.920 | the number was, I'd feel more comfortable just owning one company, Coca-Cola stock or

00:32:55.280 | Walmart stock or Exxon or something like that.

00:32:59.920 | And I would diversify probably into more than one company, but if I had 10 companies, I

00:33:05.160 | would feel more comfortable with the ability of those companies to get through an economic

00:33:09.760 | crisis and readjust.

00:33:10.760 | And so I'd be curious if you comment on that.

00:33:13.760 | Yeah, I'll comment on, because you said a few things there.

00:33:16.240 | So let's talk about gold first.

00:33:18.520 | And this is definitely one of the assets that a lot of people, especially if they haven't

00:33:22.560 | invested in precious metals before, think like, why would I want 25% of my portfolio

00:33:26.560 | in gold?

00:33:27.560 | Firstly, I mean, I think it's worth backtesting.

00:33:32.120 | It's always worth looking.

00:33:33.120 | What are you going to use to make these decisions?

00:33:35.760 | One of the things that's interesting is the empirical evidence.

00:33:38.840 | And gold has played a really important part in the portfolio a few times.

00:33:43.480 | And it's played a really important part in the times when everyone else was toast.

00:33:48.200 | One of the interesting things is the 1970s and the 2000s, if you were all in stocks,

00:33:53.040 | you would have had a really bad time.

00:33:55.320 | And funnily enough, the only time that I would have really-- I mean, I'm not a speculator,

00:33:59.840 | but if I could use the knowledge of the future and we went back to 2000, I would be fully

00:34:05.980 | in gold.

00:34:06.980 | And I'd ride that decade out in gold, because it was an amazing decade for gold.

00:34:12.440 | Really, really strong growth.

00:34:14.420 | On the other hand, in the 1980s and the 1990s, it was a really bad time for gold.

00:34:19.080 | So there is that.

00:34:21.600 | You've got to look at the evidence of what's actually happened.

00:34:24.920 | And the interesting thing is that in times when your favorite asset class, if you like,

00:34:29.560 | the stocks, would have done really badly, gold did really well.

00:34:33.480 | But the other thing about gold-- and this is a very interesting thing-- it's actually

00:34:38.400 | the non-paper asset in the portfolio.

00:34:40.420 | And there is something about this part of the permanent portfolio that is really, really

00:34:47.040 | helpful and useful.

00:34:48.040 | And that is it has a certain amount of asset protection built in.

00:34:50.680 | Because the idea is that all your paper assets are vulnerable to the black swan event of

00:34:59.040 | who knows what happens.

00:35:00.040 | There's some kind of civil unrest.

00:35:02.000 | There's-- I don't know-- the government goes crazy.

00:35:05.360 | In the 20th century, bad things happened in Europe many, many times.

00:35:09.680 | And the government suddenly turned it into totalitarian regimes in Germany.

00:35:15.000 | And really bad stuff can happen.

00:35:17.560 | And when that does happen, paper assets are risky.

00:35:22.560 | Because you may not get your money back.

00:35:23.840 | And you may not even retain ownership.

00:35:26.160 | And one of the interesting things about the permanent portfolio is that you hold gold.

00:35:30.280 | And the recommendation is that you hold it outside your country of origin.

00:35:35.280 | And the idea with that is that if something really weird happens-- let's say that there's

00:35:39.720 | some kind of terrible civil unrest or things get really bad-- then you have physical assets

00:35:45.440 | that are not paper assets.

00:35:47.680 | And that's-- even in the case of a kind of really unusual black swan meltdown event,

00:35:54.780 | you still have an asset that is physical, tangible.

00:36:00.200 | And yeah, you're right.

00:36:01.200 | It's based on supply and demand.

00:36:02.200 | But it's considered precious by humans.

00:36:05.840 | And it has been for thousands of years.

00:36:07.680 | And it may-- who knows?

00:36:11.200 | There's no guarantees with the permanent portfolio.

00:36:13.460 | This could stop working if suddenly there was some other way of creating gold.

00:36:20.860 | Or if suddenly Bitcoin really takes off and people don't need gold anymore.

00:36:25.520 | There's lots of things that could happen.

00:36:27.600 | But that's one of the reasons, I think, that it's really useful to have gold.

00:36:33.280 | Because from all the evidence that we have of the past, it's a very useful asset for

00:36:38.160 | certain periods in the economic cycle when other assets do really badly.

00:36:43.600 | Nothing else has held up in periods of really strong inflation and negative real interest

00:36:50.920 | rates in the way that gold has.

00:36:53.440 | And stocks haven't.

00:36:56.320 | And obviously, neither has cash and bonds.

00:36:58.600 | But gold has.

00:37:01.040 | And not only that, you get that kind of built-in asset protection.

00:37:04.840 | And you said some stuff about bonds.

00:37:06.360 | But does that-- before getting onto that, does that sort of answer your question about

00:37:09.880 | gold?

00:37:10.880 | Yeah, it does.

00:37:11.880 | And what you said about portable money makes all the sense in the world to me.

00:37:14.160 | So I'm very sympathetic to that.

00:37:15.560 | And I'll give you a couple examples.

00:37:16.640 | I live in Florida.

00:37:17.720 | We have hurricanes.

00:37:18.980 | And so I've always thought it was important.

00:37:20.520 | I've told clients and told people in the past, make sure you have some cash with dollar bills

00:37:26.160 | that's not that you can get at in case there's a hurricane coming and the ATM is out of money.

00:37:30.640 | I feel the same way about gold.

00:37:32.040 | Now, this would be dependent upon where somebody is.

00:37:35.600 | But as far as where they are in the wealth building, if you've got $1,000 to your name,

00:37:39.200 | it's probably not a good idea.

00:37:40.520 | I wouldn't say go buy gold coins with $250 of it, because you're going to need that money

00:37:44.760 | to do something else that's more tangible.

00:37:47.360 | But if you're in the phase of your wealth building where you've built wealth, then having

00:37:51.940 | some gold coins on hand where you can get to them or outside of the country, put it

00:37:57.800 | this way, the Jews that got out of Germany were probably those who could buy their way

00:38:02.560 | out.

00:38:03.960 | And you can walk into any country in the world and a couple of gold American Eagles or Kruger

00:38:08.320 | Rands or whatever it is that you have, and you can get done what you need to get done.

00:38:13.520 | And it seems smart for me, for somebody who has wealth, you never know when something

00:38:17.400 | could happen.

00:38:18.400 | You never know when a government could go crazy.

00:38:20.080 | You never know when you might be sued into oblivion completely out of the blue.

00:38:26.940 | You never know when you might be accused of a crime that you didn't commit.

00:38:30.940 | And so it seems intelligent for me to build backup plans.

00:38:35.420 | And gold coins, I mean, there's not a more tangible intent -- what's the word?

00:38:41.580 | Meaning there's not a more tangible, compact way to move large amounts of wealth than with

00:38:47.620 | gold coins.

00:38:48.620 | It just makes all the sense in the world to me.

00:38:50.280 | It's just when I come to thinking about it from a portfolio perspective and saying, "Ugh,

00:38:54.520 | 25%" -- and here would be the other thing.

00:38:56.960 | What do I want this portfolio to do for me?

00:38:59.260 | Is this a portfolio that's going to be my wealth that I just want to make sure is always

00:39:03.300 | there?

00:39:04.300 | Or is this a portfolio that's going to support me?

00:39:07.560 | And I'm kind of close as far as how much I can pull off the portfolio based upon my numbers.

00:39:14.380 | And I want you to go on to bonds, but this is why, for me, the thing that annoys me about

00:39:19.760 | most financial conversations is the answer is it's personal.

00:39:23.420 | It's personal.

00:39:24.420 | I'm at one stage of my wealth building.

00:39:26.280 | You're at another stage of your wealth building.

00:39:28.660 | You've built a company and sold it and traveled the world.

00:39:32.620 | I have not yet done that.

00:39:34.400 | So the financial advice for me is going to be very different than the financial advice

00:39:38.640 | for you.

00:39:39.800 | And that's where this approach to the permanent portfolio may be perfect.

00:39:43.920 | Like we said in the beginning, it may be perfect for one person and may be absolutely the worst

00:39:48.580 | advice in the world for the second person.

00:39:51.160 | So it's intensely personal.

00:39:52.680 | But I agree with you.

00:39:53.680 | What you say makes all the sense in the world about gold from that perspective.

00:39:58.200 | So I get it.

00:39:59.200 | Keep going on the bonds or feel free to respond.

00:40:01.160 | Yeah.

00:40:02.160 | I mean, just another quick thing on gold.

00:40:04.860 | You mentioned what would happen if you were Jewish in Nazi Germany and trying to escape.

00:40:09.920 | But also think of like, what if you had some means in Russia before the revolution?

00:40:15.800 | Let's say that you owned a factory and you owned a business or whatever.

00:40:19.040 | If you fled, that's it.

00:40:21.280 | If you had some money in the stock exchange in Russia, that would have been it.

00:40:24.920 | That would have been all gone.

00:40:26.520 | But if you had kept some gold abroad, then you would have had something to go to.

00:40:31.800 | And the same if you were trying to escape from fascist Germany or any of the other crazy

00:40:37.980 | regimes that have sprung up in the last 200 years.

00:40:41.600 | So I think that's the key thing, is that it offers a protection against the events that

00:40:50.040 | you don't have to worry about happening and plan for going to live in the woods.

00:40:56.440 | Because even if the worst things happen, then you still actually have a really good built-in

00:41:01.640 | protection for those type of events.

00:41:04.120 | But you don't have to devote your life to it in terms of becoming a survivalist and

00:41:09.280 | changing your whole lifestyle just in case the world falls apart tomorrow.

00:41:15.680 | So that's the gold part.

00:41:17.320 | And hyperinflation is definitely something that happens all the time.

00:41:22.880 | Currencies devalue to nothing all the time.

00:41:24.840 | It's happened very recently in Zimbabwe.

00:41:26.600 | I've actually got some Zimbabwean currency on my wall behind me.

00:41:31.280 | I'm just looking and so I am a 100 trillionaire from the currency.

00:41:39.640 | That's worthless.

00:41:40.640 | And that's just one example that can happen to any currency.

00:41:45.360 | So that's what gold protects you for.

00:41:48.560 | The thing about bonds...

00:41:49.560 | Real quick before you go on to bonds, I want to make another comment.

00:41:53.960 | The stuff we're talking about with gold coins, and then I'm going to go on to cash, and we

00:41:58.840 | can go on to bonds, but this is the stuff that I wish more people spent time thinking

00:42:04.440 | about from the perspective of their own financial plans.

00:42:08.680 | Because for the exact same reasons you said why gold can be a valuable asset class for

00:42:12.920 | people to consider, I'm going to skip ahead of bonds and go to cash.

00:42:19.240 | I was just speaking with somebody recently, and this person is fairly wealthy, and they

00:42:24.360 | made a comment that they keep several tens of thousands of dollars of cash at home in

00:42:31.080 | physical bills that they can physically access.

00:42:34.080 | And the reason, they said, was because that's how you get a deal, is that just the opportunity.

00:42:39.720 | You're driving down the road, somebody's selling a boat or a car, someone's selling a car for

00:42:44.240 | 20 grand, but you can walk up to them and say, "Listen, I'll give you 10, and I'll give

00:42:49.480 | it to you right now."

00:42:51.480 | The ability to get your hands on 10,000 bucks, to be able to buy a car at half price, is

00:43:01.800 | going to make a much bigger difference in your personal financial plan than is the fact

00:43:06.480 | that your large cap, you know, gross stock portfolio grew at 11% this year.

00:43:12.840 | You're going to get a lot more of a savings from the half-priced car.

00:43:17.800 | And so the key is to view these things as integrated.

00:43:20.520 | So if we can, you know, if the gold can be, "Okay, I've got this plan in place.

00:43:24.140 | If this happens, and hey, if the prices go up, that'd be great.

00:43:27.140 | If this protects me and my portfolio, and I can view this comprehensively, that's awesome."

00:43:31.360 | And if the cash is cash that's sitting on the reserve, you know, it's dry powder in

00:43:34.960 | case of starting a business, or it's money so that you can make that real estate deal

00:43:39.860 | when the widow next door is selling the house, and you've got the cash to do it, I think

00:43:45.760 | that would be permitted and would be a really valuable part of having these asset classes

00:43:50.640 | available.

00:43:51.640 | Viewing this as comprehensively, you know, viewing this as comprehensively and not just

00:43:56.880 | saying, "Well, my mutual fund is going to give me a 10% return, so that's going to make

00:44:00.240 | all my wealth."

00:44:01.600 | No.

00:44:02.600 | All the wealthy people that I've talked to and worked with, there's usually some of this

00:44:06.440 | wheeling and dealing when they see an opportunity, as in the house next door is going to go on

00:44:10.720 | the market, but if I make them a cash offer, and I can give a $20,000 down payment, right

00:44:15.520 | now I can get it for substantially below market and figure out the financing later, you've

00:44:19.960 | got an opportunity.

00:44:20.960 | So, go ahead.

00:44:21.960 | Yeah, just on cash.

00:44:22.960 | Yeah, yeah.

00:44:23.960 | Just on cash.

00:44:24.960 | So, it's certainly true that, I mean, I'll give you an example of the way that this has

00:44:29.160 | worked for me.

00:44:30.400 | So, shortly after I really got into investing, the stock market crashed in 2008, and the

00:44:41.280 | price of shares dropped really significantly in the UK, and as they did in the States and

00:44:45.280 | so forth.

00:44:46.280 | And so, I then rebalanced following, in I think early, I can't remember exactly, but

00:44:53.920 | I think it was early 2009, when the price was very low, and I was able to do that because

00:45:01.480 | I had cash.

00:45:02.480 | Obviously, I don't keep the cash, I actually do keep short-term treasuries, so you don't

00:45:08.440 | actually have to literally keep cash, you can put it into short-term treasuries and

00:45:14.480 | get some interest on it, although admittedly, these days, it's not enough.

00:45:18.840 | Your friend who actually carries that amount of cash around, that's a little bit racy for

00:45:24.320 | my blood.

00:45:25.320 | I wouldn't really want to be carrying big bags of cash around.

00:45:28.480 | But nonetheless, the point being that you can get it out of the bank or out from your

00:45:33.280 | investment broker without incurring capital gain, because it's not, you know, if you're

00:45:38.680 | all locked up in assets, then if an opportunity comes along and you have to sell something,

00:45:44.360 | you know, you can incur capital gain tax liabilities because you're rebalancing, whereas if you

00:45:53.440 | have cash, then you have a lot of flexibility to react when you need to rebalance, because

00:46:00.200 | you have that significant part of the portfolio that is cash.

00:46:04.960 | And as you said, you know, you also need to have cash available for emergencies, for stuff

00:46:11.520 | to happen and so forth, and for me, that's all part of the cash allocation.

00:46:16.360 | So you can -- basically, you can put it into short-term treasuries or short-term gilts,

00:46:24.840 | as they're called in this country, and get some interest on them, and also that gives

00:46:29.880 | you a certain amount of additional protection from holding it in a bank, because the problem

00:46:33.440 | is that the bank actually, you know, essentially, you're only guaranteed up to a certain amount

00:46:41.480 | by the government, and the bank actually takes ownership of your cash when it's not your

00:46:44.840 | cash when you have it in a bank account.

00:46:46.720 | So you're lucky to get it back.

00:46:48.480 | If the bank has problems, you may not do.

00:46:51.080 | It's a little different if you hold it in gilts with a broker, because then it doesn't

00:46:57.080 | quite fall under the same situation as cash being transferred into their ownership.

00:47:02.560 | It doesn't make it 100% safe, but it's safer than putting money directly into a bank.

00:47:07.360 | And that's another of the sort of protection mechanisms built into the permanent portfolio

00:47:14.200 | that I think are really interesting.

00:47:16.520 | Harry Brown was very aware of the problem of banks collapsing, and he was -- you know,

00:47:23.160 | he really looked carefully at what are you going to do if that happens?

00:47:27.160 | How will that affect you?

00:47:28.160 | And so he actually advises not to keep money in literal cash in a bank, but to put it into

00:47:33.600 | short-term treasuries and hold it in that form.

00:47:38.760 | Right.

00:47:39.760 | And that's -- I love that method of thinking.

00:47:42.680 | I love the redundancy, the redundancy, the redundancy.

00:47:46.000 | To me, a well-built financial plan takes into account as many of these things as possible

00:47:52.440 | in a way that's appropriate to an individual.

00:47:55.240 | So you can get to the point where, you know, there are many ways -- there might be many

00:47:59.380 | ways that you would have cash.

00:48:01.400 | You may keep $100 in your wallet or 100 pounds in your wallet.

00:48:04.920 | You may keep 1,000 bucks at home.

00:48:07.160 | You may keep a little bit of money in a hidden away somewhere, and then you may keep some

00:48:13.560 | of it in the bank for ease.

00:48:15.440 | You may keep some of it with your broker so that you can quickly rebalance the portfolio

00:48:19.640 | in some kind of cash account there, and you may keep some direct with the treasury in

00:48:23.360 | T-bills.

00:48:24.680 | And you may diversify some -- you know, that's what I love about this way of thinking is

00:48:29.440 | when you plan, as Harry Brown did, when you plan for the doomsday scenarios, it brings

00:48:34.640 | such a strength -- it can bring such a strength into your portfolio that your financial plan,

00:48:40.680 | if everything goes perfectly well, your financial plan is in great shape.

00:48:43.760 | And then if everything goes crazy, your financial plan is in great shape.

00:48:47.440 | And the likelihood is it's probably somewhere between those two extremes.

00:48:51.160 | It's probably not a black swan event and probably not all peaches and roses.

00:48:55.720 | And so then you're well taken care of so that you can continue your lifestyle, you know,

00:49:01.400 | no matter what happens.

00:49:02.400 | >>Yeah.

00:49:03.400 | And you know, there are definitely some people who would look at some of these scenarios

00:49:06.720 | and think like, "Oh, that's not going to happen.

00:49:08.800 | I'm not worried about, you know, civil unrest.

00:49:11.960 | I'm not worried about the banks going under.

00:49:14.360 | I'm not worried about some kind of crazy economic meltdown."

00:49:19.560 | >>Look what happened in London a couple years ago, right?

00:49:21.720 | >>Yeah, but the point I would make is, the point I would make is, this approach may not

00:49:26.360 | be for them.

00:49:27.360 | You know, if you really don't -- obviously, I personally think that, you know, even if

00:49:31.600 | I'm not particularly -- even if I don't rate the likelihood of any of these things happening

00:49:35.880 | to be particularly high, I just really enjoy the peace of mind of knowing that I'm prepared

00:49:41.600 | for any economic condition.

00:49:43.600 | And that gives me a lot of peace of mind.

00:49:45.480 | Some people might say, "I'd rather not be prepared for any economic condition because

00:49:50.000 | I rate the probability so low, and I'm just going to bet everything on stocks because

00:49:54.440 | I think that's going to give me the biggest return, or I've got another favorite asset

00:49:57.840 | class, or I've got a particular speculation.

00:49:59.440 | I'm going to throw all my money into that," and so forth.

00:50:02.080 | There are people who do that, right?

00:50:03.360 | And this approach wouldn't be right for them.

00:50:05.840 | They wouldn't -- you know, this definitely -- there's -- if you're trying to even out

00:50:11.560 | volatility and you're trying to limit catastrophic risk as much as you can, which is what the

00:50:18.240 | permanent portfolio is all about, then you're going to miss out on some big wins, which

00:50:23.760 | is the cost of, you know, missing out on the big losses as well.

00:50:28.240 | And so that's definitely what -- who this approach is going to appeal to more, is people

00:50:32.720 | who are considering their investments as being something that they want to keep safe and

00:50:36.800 | that they want to be able to keep ahead of inflation with and give them, you know, a

00:50:42.160 | return that the market can give them.

00:50:44.680 | Then they're not trying to beat the market.

00:50:47.040 | That's what this approach is all about, whereas other people might think that they can beat

00:50:50.720 | the market and they might have a totally different approach.

00:50:53.200 | And so it really depends on your philosophy and your approach.

00:50:57.760 | Yeah, I agree.

00:50:59.680 | Well said.

00:51:00.800 | You had some comments about bonds, because I'm not a bond lover.

00:51:03.960 | I'm going to -- at some point on this show, I'm going to have some bond traders and bond

00:51:07.200 | managers on, because I do think it's a useful asset class, but you had some comments you

00:51:12.000 | wanted to make about bonds.

00:51:13.400 | Yeah.

00:51:14.400 | Well, I mean, the thing about bonds is -- the way I think about bonds is that, again, this

00:51:19.240 | is a portfolio that's been designed for a world in which central banks can just change

00:51:24.040 | the interest rate by manipulating the bond market, essentially, is the way that they

00:51:27.760 | do it.

00:51:29.080 | And what that means is that you can be -- all of a sudden, you know, the interest rate can

00:51:34.400 | just be totally changed on you, and that can have huge effects on your savings and so forth.

00:51:40.960 | But the interesting thing about long-term bonds is that the longer the length of the

00:51:48.720 | duration of the bond, the more they respond to interest rate changes.

00:51:52.960 | And that's actually what Harry Brown was designing in.

00:51:56.000 | And the reason for that is that, you know, what happens if the interest rate drops or

00:52:03.920 | is pushed down, as it does and is held down in times of sort of economic depression, then

00:52:11.160 | the capital value of long-term bonds goes up, because the market overall is giving you

00:52:17.680 | a smaller return, individual return on investment, so a smaller percentage.

00:52:22.560 | Therefore, if you hold a fixed-interest bond with a higher interest, then the capital value

00:52:27.440 | of that bond goes up.

00:52:29.300 | So you are essentially kind of hedging yourself against what could happen in any scenario

00:52:36.840 | with the currency, basically, with manipulation of interest rates.

00:52:42.520 | If there's a tight money recession, then you have a large proportion of your money in cash,

00:52:48.400 | and the interest rates are going to shoot up, and you're going to be able to be benefiting

00:52:52.720 | from that, even though it's going to damage the capital value of your long-term bonds.

00:52:57.040 | But if the other thing happens and interest rates are held down, capital value of your

00:53:01.220 | long-term bonds goes up.

00:53:03.160 | So this is sort of -- and the interesting thing is that there's something called bond

00:53:10.560 | convexity, which is like basically the lower interest rates get, then the more effect that

00:53:17.200 | a little push on interest rates has on that capital value, too.

00:53:22.300 | So basically, that's the idea behind why the bonds are in there.

00:53:26.840 | They're to protect you in any economic circumstance, and there are some conditions, particularly

00:53:32.560 | like a long-term sort of depression-type thing, where bonds have been basically the best asset

00:53:37.980 | to hold.

00:53:39.540 | So yeah, that's basically the rationale behind that part of the portfolio.

00:53:44.820 | And they give you some income.

00:53:45.960 | Not a lot in the moment, it has to be said, but they're another interest-producing asset.

00:53:51.720 | >>Did he ever talk about how to keep the duration of the portfolio long?

00:53:56.880 | So for example, did he -- so he recommended holding long-term national bonds.

00:54:05.920 | So in the U.S., that would be U.S. Treasury bonds.

00:54:08.960 | And the idea is eliminate the risk -- eliminate the repayment risk, eliminate creditor risk

00:54:19.600 | by not buying corporate bonds, and then buy long-term U.S. Treasuries, about 30-year terms,

00:54:26.480 | so that you have a very long-duration bond so that it will be very sensitive to interest

00:54:32.640 | rates.

00:54:33.640 | But did he ever talk through practically what the -- if your duration starts to get shorter,

00:54:39.040 | or if your duration starts to get to 25 years, 20 years, at some point in time, you're supposed

00:54:44.320 | to lengthen your duration?

00:54:45.320 | Do you know of anything about that?

00:54:47.680 | >>Yeah, I mean, you can apply the permanent portfolio to basically any country.

00:54:53.040 | And so I happen to be in the U.K., and it will be different in the States and so forth.

00:54:56.840 | But I mean, the basic idea is get the longest bonds that you can get, get fixed interest

00:55:01.880 | and the longest bonds that you can get, if you're pursuing the strategy, obviously, of

00:55:06.000 | the permanent portfolio.

00:55:07.200 | And then if, you know, after a while, if it starts to get too short, then you just sell

00:55:12.720 | them and get longer ones again.

00:55:14.940 | And so for the long-term bonds, it's fairly straightforward.

00:55:18.800 | You just -- if the duration starts -- I mean, I haven't been investing that long that it's

00:55:23.400 | really going to make a huge difference.

00:55:25.520 | But if it starts to get too close to a shorter term, then you just sell those and buy the

00:55:32.920 | treasuries or the gilts that are currently available at the longest term.

00:55:36.960 | For short-term bonds, for the cash element, it's a little different.

00:55:41.640 | And you build basically a ladder.

00:55:44.160 | So the way that you do that is you buy a few that mature in a year -- sorry, you buy a

00:55:50.120 | certain proportion that mature in a year and then another proportion that matures in two

00:55:53.280 | years and then three years.

00:55:54.960 | And some people go a bit further out, like maybe four or five.

00:55:57.680 | But with the cash element, it needs to be relatively short periods.

00:56:03.560 | And then you just -- when one set of bonds matures, you then just buy at the top of your

00:56:08.880 | little time ladder of three to five years again.

00:56:11.960 | So you just keep cycling through in that way.

00:56:14.840 | With the long bonds, it's really straightforward.

00:56:16.400 | You just don't do anything.

00:56:17.400 | You just buy the longest term that you can.

00:56:19.280 | You let them sit there.

00:56:20.640 | And then maybe after 10 years or so or whatever, you sell them and buy another really long

00:56:26.040 | set.

00:56:27.040 | >>Right.

00:56:28.040 | Right.

00:56:29.040 | Do you know anything -- do you remember or have any knowledge of what the actual returns

00:56:34.120 | would have been for this portfolio?

00:56:36.760 | >>Well, I'm based in the U.K.

00:56:40.000 | So I did my own back testing.

00:56:42.880 | And before I got into investing -- and I think I did that for 10 years -- I don't remember

00:56:50.280 | now because it was way -- I think it was like 2005.

00:56:53.280 | And I tested it back for the 10 years previously.

00:56:56.820 | And it was just under 10%, I think, was the nominal return.

00:57:01.860 | And it was ahead of -- keeping ahead of inflation as well.

00:57:05.200 | So comfortably ahead of inflation with 10% nominal.

00:57:11.720 | Obviously less inflation adjusted.

00:57:13.880 | And that, I think, is -- I mean, you can look this up on Craig Rowland's site.

00:57:19.360 | Craig's written a great book about the permanent portfolio.

00:57:22.560 | And his site is crawlingroad.com, I think.

00:57:27.040 | And he has a whole series of data for the American permanent portfolio.

00:57:32.160 | And I'm really speaking from memory here.

00:57:34.120 | But I think it's somewhere in the range of 8 to 10% nominal.

00:57:38.200 | And then that means inflation adjusted, you're still maybe 2 or 3% ahead of inflation.

00:57:45.840 | So basically, you know, it keeps up with inflation.

00:57:50.560 | It gives you a relatively decent return.

00:57:54.640 | But it doesn't give you the same volatility that you get from being invested in one individual

00:58:00.840 | asset class.

00:58:02.200 | But as I say, if you want the exact numbers, I don't have them off the top of my head.

00:58:05.120 | You have to have a look for American ones on his site.

00:58:07.840 | Yeah, that's about what I remembered.

00:58:09.600 | And I'll check that out.

00:58:10.840 | It doesn't give you the same returns.

00:58:12.600 | And it'll be interesting to see, you know, in the world that we live in.

00:58:16.160 | That's the thing with investment, is you never -- it's easy to look back and say, this is

00:58:19.560 | what this has done historically.

00:58:22.560 | But you know, there may be many reasons for that.

00:58:25.680 | And I like this strategy.

00:58:26.680 | I think it's a well-built strategy to try to understand what the reasons may be.

00:58:30.880 | It'll be interesting to --

00:58:31.880 | >>Sorry, there's one more thing I was just going to add to that.

00:58:36.440 | The key thing is also that it hasn't had the catastrophic losses that stocks have suffered

00:58:44.200 | when the business cycle turns.

00:58:46.600 | That's the interesting thing about the permanent portfolio, is it doesn't give you super big

00:58:49.840 | growth.

00:58:50.840 | It gives you a decent growth.

00:58:51.840 | But it doesn't give you super catastrophic losses.

00:58:54.440 | There's been a couple of years when you've had losses more than 5%, I think.

00:59:03.400 | But most years, there's really very little loss.

00:59:07.400 | Again, have a look at the actual data for America, because I can't remember it.

00:59:11.960 | But Craig's got it all on his website.

00:59:14.600 | >>Right.

00:59:15.600 | And that's -- to me -- and feel free to comment on this.

00:59:18.680 | But that's one of the ones where -- that's an example of some of the things that -- where

00:59:25.920 | individual investors' temperament and individual investors' situation is so important.

00:59:30.240 | If I woke up tomorrow and stocks had declined in value by 50%, I would be thrilled.

00:59:36.040 | Because what that would say is, unless there was some structural thing that had occurred

00:59:39.680 | overnight, I can get a major discount.

00:59:41.960 | And then the only way to experience the loss is if I sell.

00:59:46.560 | So if I have the stomach for that, to sit through the losses, yes, the gains do have

00:59:53.600 | to come back.

00:59:54.600 | So if you have a 50% loss in one year, you have to have far more than a 50% increase

01:00:00.080 | to bring the values back.

01:00:03.440 | But I have the -- but if I have the stomach for it, I can sit through it.

01:00:06.800 | If I don't have the stomach for it, then I need to make sure that my strategy is one

01:00:10.720 | that's going to allow me to not -- that's going to allow me to get through that.

01:00:16.880 | And that's one of the things that's always -- it's kind of a struggle getting back through

01:00:20.080 | -- coming out on this side instead of being in the investment advisor space where -- I'm

01:00:28.840 | not sure exactly what I'm trying to express, but just that losses -- you only lock in your

01:00:33.400 | losses if you sell.

01:00:34.900 | And so the key is to avoid the need to ever sell during a loss period.

01:00:39.280 | And to me, the way that you accomplish that is -- the way that you accomplish that is

01:00:43.360 | with good financial planning and good cash flow planning and good anticipating what the

01:00:48.440 | needs would be.

01:00:49.960 | And so it may be perfectly fine to have a very speculative portfolio if there's no

01:00:55.360 | need for the cash and you know that I can allow this portfolio to sit out here and wander

01:01:00.560 | around in value for the next 10 years and I don't need to pull money from it.

01:01:05.920 | It's a very different thing than if I'm 70 years old and I'm systematically liquidating

01:01:10.920 | 5% of my portfolio.

01:01:12.720 | Well now in this -- and I don't have any cash reserves -- now the losses could be devastating

01:01:17.360 | to me.

01:01:18.360 | >>Can I comment on that?

01:01:19.360 | >>Go ahead.

01:01:20.360 | Feel free.

01:01:21.360 | >>Yeah, because I think that there's some really interesting things there.

01:01:24.440 | First of all, you're absolutely right that -- I've talked to a lot of people who invest

01:01:28.680 | solely in stocks.

01:01:31.320 | And their attitude is, "I don't really care if there's 10 years of rough going because

01:01:36.480 | then there's going to be some times where it's going to be super boom times and they

01:01:40.160 | will more than make up for it in the very long term."

01:01:43.480 | And I think in the very long term, you know, with stocks, that -- the evidence seems to

01:01:48.160 | support that, right?

01:01:50.520 | But 10 years is a long time for me.

01:01:55.200 | I don't want to see my portfolio lose money for 10 years.

01:01:59.360 | And I'm not -- I don't have the stomach also for an overnight 50% drop.

01:02:05.920 | I don't want to see that.

01:02:07.200 | And that's partly because of my -- I'm actually quite -- I'm a conservative investor in the

01:02:13.040 | sense that I focused on entrepreneurship as a way of creating my wealth.

01:02:20.240 | And the investment for me, I want that to be safe.

01:02:24.520 | I want that to give me a decent return given what the market can bear, so to speak.

01:02:31.600 | And I want to be able to get on with my life and do other things.

01:02:36.560 | Other people have a totally different approach.

01:02:38.240 | They are -- as you say, I mean, if you're early on in your investments and you really

01:02:42.400 | want to get into stocks, then if the prices fall significantly, then it's buying time.

01:02:47.800 | And that's great.

01:02:48.800 | The one thing I would disagree with you on, or that I've never been able to get behind

01:02:52.240 | that idea that, you know, you only lock in losses if you sell.

01:02:58.320 | Because I view the portfolio at any specific time -- people say this about their houses

01:03:04.400 | as well when they consider their houses to be investments, even though the house that

01:03:07.760 | you live in is a consumption item, not an investment.

01:03:10.000 | But if the property value falls, they think, well, I'll only actually lock in the loss

01:03:14.520 | if I sell.

01:03:15.520 | But in any investment, the way I think about it is, like, you know, at any particular moment

01:03:20.400 | in time, your portfolio is worth what your portfolio is worth.

01:03:24.400 | And just because you don't sell it, it doesn't change the fact that you've just effectively

01:03:28.320 | had a huge opportunity loss if you're in a stock that's fallen.

01:03:33.560 | That's value that's gone, right?

01:03:36.080 | So although I understand the approach, I view it from the perspective of I don't want to

01:03:44.040 | experience those catastrophic losses because I want to just get on with focusing on the

01:03:48.680 | rest of my life.

01:03:49.680 | I don't want to be an investor all day, every day, and worry about it.

01:03:54.920 | And psychologically, it's certainly true that losses -- just from the way that we're built,

01:04:00.680 | evolution has made losses hit us harder than gains cheer us up, if you see what I mean.

01:04:06.640 | People psychologically suffer more.

01:04:10.360 | And you can psych yourself out of that in some ways and rationalize your way out of

01:04:14.600 | that.

01:04:15.600 | But to a certain degree, it affects everyone.

01:04:17.500 | And so I don't want to experience that.

01:04:19.080 | But also, it seems to me like the attitude that, well, even if stocks do badly for multiple

01:04:26.720 | years, they'll pick up in the end, I can't get behind that because I kind of think, yeah,

01:04:31.640 | but you just had 10 years of bad losses.

01:04:34.160 | That doesn't make any sense to me.

01:04:36.920 | Or not bad losses, but 10 years not keeping up with inflation.

01:04:40.840 | And that to me, that's a real loss.

01:04:43.600 | Even if you haven't sold, the value is still lower.

01:04:47.400 | >>Right, and I think -- and it's a good question.

01:04:50.800 | And if you don't mind, let's just stop here and talk about it for a minute.

01:04:54.320 | Because these are the kinds of questions that I think many people have.

01:04:57.320 | And I'll give you my answer.

01:05:00.400 | And I think that -- and I'm interested in your thoughts.

01:05:02.920 | I think where this comes from, you are 100% right about all of the behavioral evidence

01:05:07.280 | that I have read points to the fact that losses are -- we feel losses substantially more than

01:05:13.920 | we enjoy gains.

01:05:15.200 | We feel the pain of losses substantially more than we enjoy gains.

01:05:21.400 | And so we're very loss-averse as individuals.

01:05:26.280 | The problem comes down to how well do we know what we're investing in.

01:05:30.080 | So if we use terms like stocks, which are useful for the purpose of this conversation,

01:05:35.680 | if we use terms like stocks, that's a very general term.

01:05:38.960 | That's something where we don't actually know what we're referring to.

01:05:42.960 | We don't know whether we're referring to a group of three companies or we're referring

01:05:47.320 | to a total market in general in a conversation like this.

01:05:52.760 | You and I are referring to just the general stock market as measured by something like

01:05:56.760 | a total stock market index or a major -- an S&P 500 index, something like that, or a European

01:06:05.680 | index -- we'll pick one of the European indexes.

01:06:08.440 | And here would be the example.

01:06:09.440 | >>Just to be clear, and that is -- and when I say stocks, that is actually the approach

01:06:13.800 | to permanent portfolio.

01:06:14.800 | It is an index fund-based approach that you go for total market.

01:06:18.880 | There's no speculation on individual stocks.

01:06:20.360 | So sorry, but carry on.

01:06:21.360 | But that's -- when I say stocks, that's what I mean.

01:06:24.280 | >>Perfect.

01:06:25.280 | So under the total -- so to me -- let me use two different examples.

01:06:29.720 | So under the total market scenario, you don't really know what you own except for the fact

01:06:34.720 | that you own all of the companies.

01:06:36.860 | And so in that scenario, what you're essentially -- under this investing philosophy, you're

01:06:42.360 | basically assuming that over time, good companies will always grow in value.

01:06:51.160 | Because if they're not growing in value, then their shareholders, their board of directors

01:06:57.560 | are gonna replace the company management and they're gonna figure out how to grow in value.

01:07:01.360 | Companies just don't sit around and do nothing.

01:07:04.640 | They're not just flat.

01:07:05.640 | They have to be growing, which leads into the perpetual growth conversation.

01:07:11.000 | But companies have to be growing over time.

01:07:14.660 | And so we're assuming that the market is efficiently priced.

01:07:19.440 | We're assuming that there's lots of players.

01:07:21.280 | And so every individual's company stock price is an accurate reflection of that company's

01:07:26.360 | value.

01:07:27.360 | And as such, the prices on the whole of the general stock market is an accurate reflection

01:07:31.600 | of the value of all of these companies.

01:07:33.580 | And so if those prices are going up and down in value, it's because there's some other

01:07:38.280 | ancillary, there's some reason for it.

01:07:41.040 | Now the example -- and that's a rational approach.

01:07:44.780 | But if you were back running your company, doing pedestrian consulting, and I don't know

01:07:50.120 | what you sold your company for, so let me just make up some numbers.

01:07:53.000 | And let's just say one day you were sitting down looking at your assets on the company

01:07:57.160 | balance sheet and you were saying, "I think this company is worth at least $100,000."

01:08:02.080 | And if I came in and offered you $40,000 one day and then $140,000 the next day, and then

01:08:08.040 | came in and offered you $40,000 the next day, that wouldn't necessarily affect how you -- the

01:08:13.640 | actual value of the company.

01:08:15.160 | That would just affect the price of the company.

01:08:17.160 | And so you probably wouldn't lose that much sleep over the offer that I had made you.

01:08:22.400 | 'Cause I'm clearly a schizophrenic investor if I'm offering you these two very different

01:08:27.880 | -- two very different values.

01:08:30.140 | And so this is where I think you have an advantage if you're not in the total market world.

01:08:34.600 | If you are someone where -- let's say that you were managing the Walton Family Foundation

01:08:40.640 | and as such you had hundreds of millions of dollars of Walmart shares.

01:08:45.400 | Just because Walmart shares decline in value by 30 or 40 percent overnight doesn't mean

01:08:51.320 | that necessarily the value of Walmart is affected by that 30 or 40 percent.

01:08:55.960 | But that's where you have an intuitive connection to the company.

01:08:59.120 | Now if you don't have an intuitive connection to the company where you just have this general

01:09:02.680 | asset class called stocks, then it really is concerning.

01:09:07.840 | And so most people don't know what companies they actually own.

01:09:11.540 | Most people don't know what -- they don't know what companies they're actually invested

01:09:17.480 | in.

01:09:18.480 | Like we just simply don't know.

01:09:19.480 | And because we don't know, we can't feel comfortable of the fact that even though the price that's

01:09:24.580 | being offered today has declined, that the value of this company is still good.

01:09:29.280 | Or we don't know that, hey, the value of this company just got destroyed because -- I posted

01:09:34.280 | a link on Twitter the other day about Blockbuster -- all the traders betting on Blockbuster

01:09:39.660 | ten years ago when Netflix was coming out.

01:09:42.560 | So I guess what I'm trying to say to wrap up and let you respond is I don't know how

01:09:46.240 | to solve this problem.

01:09:47.800 | And I've struggled with this mentally for a while.

01:09:50.200 | Excuse me.

01:09:51.200 | That's thunder outside if you can hear that.

01:09:52.920 | I've struggled with this -- it wasn't a gunshot.

01:09:55.040 | It was pretty close thunderclap.

01:09:57.900 | I've struggled with this problem trying to figure out how do we solve this problem.

01:10:01.760 | Because there's very little connection for people -- the connection that you had as an

01:10:06.620 | entrepreneur to your company, you don't have with the stocks in your portfolio.

01:10:10.780 | So you're viewing -- most people, you may not be, but most people are viewing the stocks

01:10:14.900 | in their portfolio very differently than how they view their own company.

01:10:20.140 | And that's why then people are much more likely to bail all of a sudden.

01:10:24.380 | Whereas if your house -- and that's why people will sit through their house and they'll take

01:10:27.780 | the point of, well, my house declined in cost by 50% because they'll say, well, it's my

01:10:32.460 | house.

01:10:33.460 | It's where I live.

01:10:35.300 | So I feel like I'm being a little bit wordy.

01:10:37.920 | So I'll shut up and let you respond.

01:10:38.920 | But I just haven't figured out how to solve this problem of connecting people to the assets

01:10:43.440 | that they actually own.

01:10:44.780 | >>Yeah.

01:10:45.780 | Okay.

01:10:46.780 | A couple of thoughts on that.

01:10:48.700 | When you say people bailing when values go down, I mean, the interesting thing is that

01:10:54.060 | what we're talking about with a strategy like the permanent portfolio is that if stock prices

01:10:59.860 | go down significantly, then -- I mean, obviously, it will depend on where your particular portfolio

01:11:05.180 | is, but you will most -- in almost any circumstance, you will be investing into stocks.

01:11:11.660 | So the great benefit of having a strategy like this is you don't have to worry and think

01:11:19.580 | about, like, oh, I don't know, maybe I shouldn't be buying stocks because they've just gone

01:11:23.100 | down.

01:11:24.100 | You just -- you rebalance into the asset classes that are low from the asset classes that are

01:11:31.420 | high.

01:11:32.420 | And that takes out a lot of that sort of, you know, fretting over stuff that you can't

01:11:37.900 | control or do anything about.

01:11:39.220 | So that's a nice feature which I just wanted to highlight of this approach is that whereas

01:11:44.580 | some people see a stock market crash, for example, and get totally freaked out and they

01:11:48.140 | start selling, the funny thing about a strategy like the permanent portfolio is you will automatically

01:11:55.100 | buy into cheap assets in the sense that you'll automatically be rebalancing in.

01:12:00.380 | And that's exactly what happened to me.

01:12:02.060 | I actually was forced to buy into stocks in -- as I said, after the crash of 2008 because

01:12:09.900 | I needed to balance -- rebalance my portfolio.

01:12:12.100 | And at the time, it didn't feel great, you know.

01:12:14.580 | It didn't feel great buying stocks when they were really down because, oh, what do I know?

01:12:18.140 | They might go down again.

01:12:19.140 | And that's all -- obviously, that's also possible, too.

01:12:21.780 | As it turns out, stocks then went up.

01:12:24.500 | And there you go.

01:12:25.500 | So that's one thing just on that aspect.

01:12:28.100 | But the other thing I wanted to say, though, is you're absolutely right that I did view

01:12:30.780 | my company totally differently to the way that I view my investments.

01:12:35.740 | And that is the difference, I think, of -- I felt like I really -- I can influence the

01:12:44.140 | business that I run.

01:12:45.340 | I can have an impact on it.

01:12:46.980 | I know the ins and outs of its true value, if you like.

01:12:51.780 | I mean, that's a bit of a big discussion of what that actually means.

01:12:55.420 | But I know that it's a value-generating machine that is going to continue to be able to produce

01:13:02.460 | things that people want, even if today, because everyone's freaked out about the market, the

01:13:07.700 | price may be low.

01:13:10.020 | But that was -- I'm talking about a company that I built from scratch, upwards.

01:13:16.260 | And even then, you know, I was also subject to changes in the economy as a whole and so

01:13:21.900 | forth.

01:13:22.900 | But if you're not building that company, if you're an outsider looking in, then you need

01:13:30.860 | to have a lot of insight, I think, to be able to really understand opportunities for value

01:13:37.340 | investing, so to speak.

01:13:39.340 | And some of the problems, I think, with value investing, with the approach overall, is the

01:13:44.100 | idea that you can determine where the market's not valuing stocks properly and that you're

01:13:50.220 | going to have better knowledge on that than other people.

01:13:52.860 | To me, that's tricky, because if you're not involved, if you're not inside and you don't

01:13:56.500 | really understand what's going on, then I think it's -- in some senses, I think it's

01:14:01.100 | more realistic if you want to be able to just get on with your life to not even try, which

01:14:07.060 | is the approach that I take as an index investor for stocks and as a sort of passive investor

01:14:12.180 | overall in terms of following an approach like the permanent portfolio.

01:14:16.220 | >> Yeah.

01:14:17.700 | And what you point out as far as the sense of ownership -- well, not just the sense of

01:14:21.660 | ownership, but the actual ownership and the ability to influence things.

01:14:26.900 | One of the things that I've struggled with and I've observed -- and I don't think I ever

01:14:31.020 | really figured this out when I was working as an investment advisor -- is I think people

01:14:35.340 | sometimes are looking for stocks to do things that they can't -- that they're not able to

01:14:39.500 | do.

01:14:41.060 | And two examples pop to mind, one exactly what you just said, and then another one as

01:14:47.700 | far as what they can actually do in your portfolio.

01:14:49.860 | Let me go with the number two first.

01:14:52.300 | You didn't make your money with the permanent portfolio.

01:14:55.820 | The fact that your ability to sit back and relax and enjoy life and travel to Mexico

01:15:03.720 | and work on your books and work on your projects because you're financially independent, that

01:15:07.940 | didn't come from the permanent portfolio.

01:15:11.000 | Your lifestyle may now be afforded by the portfolio -- your strategy may now be the

01:15:15.340 | permanent portfolio, but that came because you built a business and because, you know,

01:15:20.340 | I assume that you were able to get far higher rates of return than 10 percent.

01:15:26.060 | Because 10 percent rates of return, unless you have a very long period of time, just

01:15:31.540 | doesn't get you financially independent unless you have either a very high savings rate or

01:15:37.420 | a long period of time.

01:15:38.720 | It doesn't get you financially independent in a short term.

01:15:42.800 | But building a company that does have value, that you can basically create money -- I mean,

01:15:47.500 | that's how I think of building companies is you create money, you create assets out of

01:15:51.020 | nothing through the application of human skill and ideas and effort and energy.

01:15:55.500 | You turn human capital into something that can ultimately be sold and turned into financial

01:15:59.780 | capital and that's so tangible when you build a business.

01:16:03.660 | So that's the point is that you built the business and then you had the lump sum of

01:16:09.440 | money that you say, "I now need to invest so that I can sustain my lifestyle and protect

01:16:13.500 | this asset."

01:16:14.560 | The second thing is that sense of ownership.

01:16:16.960 | A lot of people are looking for that and it may not be in stocks.

01:16:21.740 | And my encouragement to many people is that you may want -- if you don't understand, if

01:16:27.160 | you don't like investing in stocks, if you don't like investing in publicly traded companies

01:16:31.360 | that you cannot influence, you're not going to be an activist shareholder unless you are.

01:16:39.160 | But if you don't like that, it's okay to say, "I'm not going to purchase this asset class.

01:16:43.760 | I'm going to walk away."

01:16:45.240 | And what's happened over the last 30, 40, 50 years is we've gotten to the point where

01:16:50.240 | now a majority of the population is invested in stocks and a majority of the population

01:16:57.440 | is exercising control over their portfolios.

01:17:02.000 | And we've done that without providing any -- and there's no education.

01:17:06.000 | There's no formal schooling or education on investment markets or how they work, capital

01:17:10.920 | markets, how they function.

01:17:12.540 | And so we've got a world of amateur investors, none of whom are comfortable with the subject,

01:17:17.640 | but yet in the 401(k) system we have in the States -- and I don't know what your system

01:17:20.480 | is there in the UK -- but now instead of professional investors, everyone is forced to do it.

01:17:25.660 | And so we've got to make up some ground with the education, with new investment strategies

01:17:31.200 | to help people and give them the tools that they need to be able to manage their portfolios.

01:17:39.320 | And it's okay to say, "I don't want to own stocks."

01:17:41.640 | If you're uncomfortable with it, it's probably better to go away and build a small local

01:17:46.340 | business that you can have that sense of ownership and sense of control where you're not worried

01:17:51.340 | about what the banker thinks it's worth.

01:17:53.380 | You know what it's worth because it prints your paycheck and it prints your dividends

01:17:57.760 | and you can feel confident of the fact that that business has a market, that business

01:18:02.440 | can be passed on, that business can fund your retirement.

01:18:05.480 | So those are just two points that I don't think we talk about enough when we talk about

01:18:09.120 | investments.

01:18:10.120 | >>Yeah, and I just want to say I really agree with you.

01:18:12.920 | One of the things, in fact, that Harry Brown emphasized in his book is not to consider

01:18:17.000 | investing as the source of your wealth.

01:18:20.840 | And he basically emphasizes the point that what you do in terms of your work, that's

01:18:26.160 | how you're going to make your money for the vast majority of people.

01:18:29.840 | And yeah, there are a couple of exceptions, but the vast majority of people, it's what

01:18:34.080 | you do in terms of your skills are what are going to make you money.

01:18:39.640 | And in my case, that was entrepreneurship, building a business, and so forth.

01:18:44.400 | And that's exactly how I view the permanent portfolio as the place to park that, keep

01:18:49.540 | it safe, and so forth, not as a get-rich-quick scheme.

01:18:53.640 | It's really not.

01:18:55.160 | And it's the last of the -- you should never consider it now, because it's actually designed

01:19:00.560 | not to have volatility.

01:19:02.520 | So I absolutely agree with you that the key, I think, is to focus on what your individual

01:19:08.840 | skill sets are, what you can do that is rare and valuable, what you're able to do to generate

01:19:14.280 | value in the world.

01:19:15.760 | And for me, it was entrepreneurship, and that's how I made my money.

01:19:20.880 | And the investment, and that's one of the reasons why I'm such a conservative investor

01:19:24.240 | is because I created it elsewhere, and now I just don't want to blow it, basically.

01:19:30.760 | And that's the reason I take that approach.

01:19:33.600 | And as you say, there are real limits to any paper asset appreciation and value.

01:19:39.160 | And you really have to do something where you can create significant value and significant

01:19:45.880 | change in the world, like building a business, in order to kind of get to a point where you

01:19:52.280 | have financial independence.

01:19:53.800 | And it would be -- I think it would be wrong to expect the permanent portfolio to create

01:19:58.120 | that for you.

01:19:59.120 | That's not what it's for.

01:20:00.200 | It's to protect you against all of the economic circumstances that can happen, and to give

01:20:05.520 | you a return that's above the rate of inflation.

01:20:08.560 | And you mentioned that 8 to 10 percent that I was talking about historically, that's not

01:20:14.080 | even -- I mean, that's actually before inflation.

01:20:15.840 | That's not taking into account inflation.

01:20:18.000 | There's less than that in terms of a real return.

01:20:20.760 | It's like 3 or 4 percent or something.

01:20:22.280 | For the American one, again, you'd have to check the actual numbers.

01:20:26.160 | But that's the general approach.

01:20:27.760 | So I hope that that gives people a perspective on my personal take on why this has been a

01:20:33.760 | useful approach for me to adopt.

01:20:36.240 | And there is also one more thing I'd like to say about the approach, which is that,

01:20:40.280 | you know, although the permanent portfolio is a really -- one of those set it and forget

01:20:45.640 | it type investment strategies, where you can get on with your life and do other things,

01:20:50.920 | Harry Brown also gave some great advice about speculating.

01:20:54.760 | And he basically said, look, if you want to -- if you think that something interesting

01:20:58.760 | is happening in the markets and you want to speculate, and you think you might know about

01:21:03.400 | something or understand something that could give you an insight into how things are going

01:21:07.600 | to develop, then if you want to do it, just do it.

01:21:11.440 | Create a speculative portfolio.

01:21:13.120 | He calls it the variable portfolio.

01:21:16.640 | And just be clear with yourself about exactly how much of your money you're going to devote

01:21:20.720 | to that, and be clear with yourself and conscious about why you're doing it, what your sort

01:21:26.840 | of boundaries are in terms of not kind of refunding it from your permanent portfolio,

01:21:32.680 | not subsidizing any losses from the -- in your speculations from the PP.

01:21:37.440 | But his approach was very flexible in that, you know, he recognized that people do like

01:21:43.400 | to invest in specific things that they may know about as a speculation.

01:21:49.760 | But he just had a very clear idea that you should be honest with yourself about saying,

01:21:55.640 | this is me having a go.

01:21:58.200 | I reckon this might be a good thing to invest in.

01:22:00.400 | Who knows?

01:22:01.400 | I'm going to go for it.

01:22:02.400 | I reckon I've got an insight into where the market's going.

01:22:07.480 | So I'm going to invest in Bitcoin or I'm going to invest in precious metals or I'm going

01:22:12.320 | to invest in property or whatever it is, whatever particular thing that you think you have some

01:22:18.720 | insight in.

01:22:19.720 | And the idea in doing that is you don't keep morphing your overall strategy when the next

01:22:25.960 | big thing comes along.

01:22:27.040 | You have kind of like a walled playground for your speculation, which is called your

01:22:32.600 | variable portfolio.

01:22:34.200 | And you dedicate only a specific amount of money that you're willing to lose, that you're

01:22:38.800 | happy that you could just -- that could go to zero.

01:22:42.000 | And for the money that you're not happy to lose, for the stuff that you want to protect,

01:22:46.800 | you use a strategy with the built-in protections like the permanent portfolio side.

01:22:53.520 | So that's another bit of built-in flexibility.

01:22:56.560 | And even then, there's no guarantee, even with all of those built-in protections, there

01:23:03.600 | could be circumstances where the permanent portfolio could do really badly.

01:23:10.560 | That's another aspect about not being able to predict the future.

01:23:12.880 | But in terms of what we do know and what we can predict, I think it's a great approach

01:23:16.200 | for giving you that less volatility and lots of safety features.

01:23:23.200 | I think it is, and I want to comment on a couple of things you just said, and then we'll

01:23:27.000 | kind of wrap up.

01:23:28.840 | The two things you said, number one, about speculating, I'm glad that he put that in

01:23:34.120 | there, because it is always interesting to me that in general, my observation is many

01:23:39.720 | people who write books usually made their money based upon some aspect of speculation

01:23:46.200 | or based upon some aspect of providing or building a company, not necessarily on building

01:23:54.160 | wealth -- excuse me, not necessarily on what they have said.

01:23:57.800 | So Harry Brown, he speculated on the decoupling of the dollar from the gold standard.

01:24:04.360 | He made a pile of money, and then he had that problem of how do I protect this money?

01:24:09.800 | And I think that -- so then it's easier once you have a pile of money to then say -- look

01:24:17.560 | at it and say, you know, here's the money that I'm not willing to -- here's the money

01:24:22.360 | that I'm not willing to lose.

01:24:23.920 | I think especially for entrepreneurs, this is an important point.

01:24:29.160 | Your experience with being a conservative investor is similar to my experience in working

01:24:34.040 | with clients.

01:24:35.040 | I have found that entrepreneurs are among the more conservative of investors.

01:24:40.400 | Generally it seems like employees are more aggressive than entrepreneurs are, and I don't

01:24:45.320 | know why, although I have some hypotheses that it may be due to the need to take -- the

01:24:51.560 | responsibility that an entrepreneur -- where it weighs on their shoulder, the observation

01:24:57.840 | of the risks that exist, whereas maybe an employee is not exposed to those risks every

01:25:02.320 | day, it's more of like I come here, I do this job, and I'm done.

01:25:05.280 | But I found most entrepreneurs to be very -- to be very risk averse.

01:25:12.440 | >>Can I give you my take on that?

01:25:14.760 | >>Sure.

01:25:15.760 | Go ahead.

01:25:16.760 | >>So, I mean, for me, there was so much risk in entrepreneurship.

01:25:21.240 | You know, there's so much kind of roller coaster risk involved in starting a business and growing

01:25:30.880 | it, and I think for entrepreneurs -- I mean, this is my experience.

01:25:35.720 | That was such a huge risk, and I borrowed a lot of money to do it, and it could have

01:25:39.680 | all failed, and it was a big set of unknowns, and I had to deal with all those unknowns

01:25:46.000 | the whole time.

01:25:47.000 | But I think for me, that was where all my risk taking went, was into entrepreneurship.

01:25:52.200 | That was my big -- my budget for risk taking got used up in the venture.

01:25:58.800 | And so once I actually made money with the venture, it was like, look, I don't want to

01:26:02.680 | take any more risks.

01:26:03.680 | That's it.

01:26:04.680 | That's great.

01:26:05.680 | It worked.

01:26:06.680 | Now I just want to be safe, and I don't expect this to be like winning the lottery in terms

01:26:12.160 | of investments, but I think that's partly is that entrepreneurs are already taking very

01:26:17.280 | significant risks, whereas I think maybe if you're in an employee situation, it's more

01:26:22.440 | like, well, I'm not really taking any big risks, so, you know, let's see whether or

01:26:26.200 | not I can take a punt and maybe make some big returns on more risky investments.

01:26:32.360 | Maybe that's one of the sort of reasons for that mindset.

01:26:34.740 | But I do find it interesting, your experience of dealing with the two client types.

01:26:37.840 | That's really interesting to hear.

01:26:39.040 | >>Right.

01:26:40.040 | And entrepreneurs also get very frustrated at the lack of control and are quicker to

01:26:45.700 | bail and say, that's it.

01:26:47.480 | I can't control what these stock prices are going to do, so I'm going to go and take my

01:26:52.680 | money and invest it with my buddy and his business where at least I can have a little

01:26:57.040 | bit more of an inside line.

01:26:59.080 | And many people have made money on that.

01:27:02.840 | The other aspect of what you were saying just about the portfolio is I think that's where

01:27:10.720 | I always come back to is the financial planning perspective.

01:27:13.640 | And a lot of people may not understand what I mean by that, but what I mean is that investment

01:27:17.320 | management is only one part of it.

01:27:19.800 | And here you have an investment philosophy and an investment approach that can work very

01:27:24.360 | well.

01:27:25.360 | But then at the end of the day, rationally, we have to go back to financial planning.

01:27:29.560 | And so you say, well, how do I figure out what is the money that I can afford to lose?

01:27:35.960 | Well, if you're an entrepreneur and you've worked hard to build a company and you sit

01:27:39.760 | down and you say, here's the lifestyle at which I would like to live, here's the income

01:27:43.280 | that I need to make sure, do I have enough money that I could carve off some of it and

01:27:49.280 | make sure that I would never, at least never, have to go back to work again if I didn't

01:27:52.520 | want to?

01:27:54.040 | That's the number.

01:27:55.040 | And so you've got to focus on those financial planning calculations and allow those to influence

01:28:00.680 | your other decisions.

01:28:02.320 | For a young person just getting started, I think it is reasonable to take more risk,

01:28:07.600 | not because theoretically you have time for stocks to recover, but because if you haven't

01:28:13.960 | spent a lifetime building something, if you haven't invested 10 years into building a

01:28:17.600 | company, then it's okay to go ahead and take a risk.

01:28:20.880 | But once you've invested 10 years into something and you've sold that company out, you may

01:28:24.960 | do it again, but you may want to go ahead and make sure that you never have to do it

01:28:29.240 | again if you don't want to.

01:28:31.360 | And so, and then the last thing on the speculation, it'll be interesting to see what happens as

01:28:38.080 | time goes on.

01:28:39.560 | I was reading over the weekend, I read a piece by William Bernstein, who is a respected academic

01:28:45.720 | on the subject of investing, has written a lot on index funds and developed the theory

01:28:50.260 | of index funds from the academic perspective.

01:28:53.540 | And he wrote an essay on Harry Brown's permanent portfolio, and he was acknowledging and he

01:28:58.680 | was tracking the flows in and out of the permanent portfolio mutual fund that is available as

01:29:07.960 | a proxy for investor behavior.

01:29:10.440 | And he was talking about the problem and the benefit of the permanent portfolio, and this

01:29:15.160 | has been my experience with every investment philosophy, it all comes down to the behavior

01:29:19.160 | of the investor, is that people will run to, he was in his essay, and I'm not sure if you've

01:29:24.720 | read it, Jake, but he said people will run to the permanent portfolio in times that are

01:29:29.200 | bad, and then they will be attracted to the next fancy object when the times are better.

01:29:37.600 | And as such, they will never reap the benefits of the permanent portfolio, and it's quite

01:29:41.400 | sad.

01:29:42.400 | Right, that's interesting.

01:29:44.880 | And I would also say that I personally, obviously this is a personal decision, I wouldn't be

01:29:50.640 | interested in the permanent portfolio fund for a couple of reasons.

01:29:53.840 | One is that it's not exactly the permanent portfolio.

01:29:56.240 | I mean, the structure of the fund is from a slightly earlier variation.

01:30:00.400 | I believe that it holds some silver and various other things.

01:30:02.720 | I don't know the exact, I'm not certain of the exact composition, because we don't have

01:30:06.680 | it here anyway, it's only in the States, as far as I know.

01:30:10.360 | But I wouldn't, so it's not quite the same strategy as the one that I really know and

01:30:15.720 | understand.

01:30:16.720 | There are some things in there that don't make 100% sense to me.

01:30:18.800 | But also, I guess this is maybe a personal thing too, I think part of the benefit of

01:30:24.560 | the permanent portfolio is the control that you get from managing it yourself.

01:30:28.480 | And the very, some of the things like holding gold abroad and stuff, I'm not quite sure

01:30:33.480 | how that would work if it was in a fund.

01:30:35.040 | You wouldn't get the same protections that you do if you manage it yourself.

01:30:40.560 | So that's just my personal take on that.

01:30:42.880 | Right, and I agree with you 100%.

01:30:45.240 | That's where the permanent portfolio, from the perspective of a little bit of gold here

01:30:50.360 | and there, a little bit of cash here and there, all those other advantages, and the low cost,

01:30:55.440 | the ability to strip out all your cost, to me, that's very attractive.

01:31:01.320 | But when you turn it into a mutual fund and you say, "Okay, I'm going to pay, I think

01:31:06.680 | it's 70 or 80 basis points of fees so that they can hold cash and gold, and it's still

01:31:12.880 | locked up in a mutual fund, so it's still a paper asset.

01:31:15.840 | So yes, the gold market may go up or down, but it's still a paper asset now."

01:31:20.160 | It just doesn't make as much sense to me as doing it yourself.

01:31:25.080 | So I agree with you.

01:31:26.080 | Jake, if someone were interested in knowing more about the permanent portfolio, where

01:31:29.640 | would you send them to do their research and educate themselves?

01:31:35.200 | So the first thing that I would really recommend is to read Failsafe Investing by Harry Brown.

01:31:40.240 | It's a super easy read.

01:31:41.840 | It's a short book, and it's a great introduction to the permanent portfolio.

01:31:46.600 | If you're interested in a more in-depth treatment and a more up-to-date treatment, then the

01:31:52.400 | book called The Permanent Portfolio by Craig Rowland and J.L. Lawson is a very good sort

01:32:04.680 | of detailed treatment of how do you buy gold and where should you hold it and how do you

01:32:11.560 | buy bonds and so forth.

01:32:13.680 | It's really, really good, but it's much more technical and much more in-depth.

01:32:17.560 | I would say that the Harry Brown book is a good starter.

01:32:20.320 | There's also Craig's website, thecrawlingroad.com, I think, has got articles about the permanent

01:32:28.520 | portfolio, and you can find links there to the Permanent Portfolio Discussion Board,

01:32:33.840 | where various people who are taking this approach, individual investors, talk to each other about

01:32:38.240 | things that they find and problems that they've dealt with, and they are a very nice bunch

01:32:43.200 | and they help each other, so that's another resource.

01:32:46.320 | I also have a number of discussions about the Permanent Portfolio on The Voluntary Life,

01:32:51.680 | so if you look under the tag "investing," then you can find that.

01:32:58.840 | I can give you that for the show notes, too, Joshua.

01:33:01.160 | Yeah, that would be great.

01:33:04.520 | I will echo Harry Brown's book, Fail Safe Investing is Excellent, and it's simple.

01:33:10.000 | One thing he did in that book, he actually divided the book into two sections and wrote

01:33:14.280 | part one and gave his, what was it, 11 or 12 or 13 rules of investing, something like

01:33:20.080 | that, and then he said everything he had to say, and then he gave a part two and said

01:33:26.920 | more on each of them, so if you want the deeper version, you can read the whole book, but

01:33:30.320 | if you're not much of a reader, you can just read the first half.

01:33:33.960 | I really liked a lot of what he had to say in there, and it's good, good rules to keep

01:33:39.800 | in mind.

01:33:40.800 | And then a warning on the Permanent Portfolio book, it's excellent.

01:33:43.760 | It's not light.

01:33:45.200 | The authors have put a lot of time into it, and so don't, unless you've spent some time

01:33:50.440 | just thinking about this, don't expect us to wade through it.

01:33:54.920 | It's very much a how-to, and this is a compliment, it's not a criticism of the book, but it's

01:33:59.000 | very much a how-to, and it's a how-to implement the portfolio across platforms, so if you're

01:34:04.800 | looking for just a mutual fund, an exchange-traded fund solution, if you're trying to figure

01:34:09.100 | out how to buy gold with a Swiss banker or with the Australian Mint or the Perth Mint,

01:34:14.640 | things like that, it's not a light read, but it is well done.

01:34:19.320 | And I haven't spent much time in there for him, but I'll have to go over there and read

01:34:21.800 | some of the articles.

01:34:22.800 | I would enjoy that.

01:34:23.800 | So, Jake, thanks so much for being with us.

01:34:26.320 | I've really enjoyed this conversation, and I hope that it's a helpful resource for our

01:34:31.560 | listeners.

01:34:32.560 | Thanks, Joshua.

01:34:33.560 | It was great chatting to you again.

01:34:38.880 | And that's our show.

01:34:39.880 | Hope you enjoyed that.

01:34:40.880 | Jake, thank you for coming on.

01:34:42.080 | I enjoyed having you.

01:34:43.080 | I feel like we have lots of stuff to talk about, and an hour was plenty for today, but

01:34:48.760 | we certainly could have gone on and chatted about lots of other stuff.

01:34:51.280 | I think you did also an excellent job representing the permanent portfolio and some of the ideas

01:34:55.280 | and the concepts in it, and I want to thank you for doing that.

01:34:58.280 | And I want to thank you for everything you're doing over at Voluntary Life as well, promoting

01:35:01.440 | the causes of personal liberty and freedom and voluntarism and all of those types of

01:35:08.000 | things.

01:35:09.000 | So thank you for coming on.

01:35:10.000 | I appreciate it.

01:35:11.000 | And I hope you enjoyed today's show.

01:35:12.480 | This is just the first of many of these types of shows that I'd like to bring you.

01:35:16.000 | I feel like we don't do a good enough job of bringing in-depth, investing content to

01:35:19.680 | the public, so I'd like to bring many, many more kinds of these shows to you of interviews

01:35:25.560 | with various people, as well as bring you in-depth, more and more of this in-depth teaching

01:35:31.280 | content to build on so that you have a firm grasp of knowledge to understand a lot of

01:35:35.880 | concepts that maybe you've just heard the words and haven't been able to understand

01:35:38.640 | before.

01:35:39.760 | Thank you for listening today.

01:35:40.760 | Give me some feedback.

01:35:41.760 | Let me know what you thought of the show.

01:35:42.760 | Joshua@radicalpersonalfinance.com via email or on Twitter @radicalpf.

01:35:49.360 | If you haven't left a review, I'd be thrilled if you leave an iTunes review.

01:35:52.240 | And even what's even better today, I've got an email newsletter set up.

01:35:56.680 | I know we're bringing you a lot of shows.

01:35:58.560 | Every single day there's new content.

01:36:00.240 | You'd be surprised if you were able to listen to all of the shows.

01:36:05.800 | So the best way to keep pace on the shows and figure out the content that you are interested

01:36:10.640 | in is come by the blog at radicalpersonalfinance.com and enter your email address and sign up for

01:36:15.720 | the email newsletter.

01:36:17.160 | And every day I will send you the complete show notes for the show, not just even a blurb

01:36:21.520 | where you got to click over the site, but the complete show notes so you can tell right

01:36:24.320 | in your email if it's a topic that you're interested in listening to and you can just

01:36:27.600 | pop over and listen to the episode from there.

01:36:29.940 | So that would be my recommendation for you so that you can keep pace.

01:36:32.320 | We're here every single day, Monday through Friday, with in-depth financial content like

01:36:36.400 | this.

01:36:37.400 | So hope you enjoyed it.

01:36:38.400 | Have a lovely Tuesday, everybody.

01:36:39.400 | Peace out.

01:36:39.740 | Peace out.

01:36:40.240 | [music]

01:36:42.240 | [music]

01:36:44.240 | [music]

01:36:46.240 | [music]

01:37:08.460 | [music]

01:37:31.660 | Cheers, y'all.

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