The Gone Fishin' Portfolio

We have already talked about the concept of permanent portfolio. Basically it is an investment portfolio which mixes different asset classes to get maximum diversification. It doesn't try to "time" the market, any moment is as good as another to start with it. Also, at least once a year, it requires rebalancing to set up the percentages as they were at the beginning.

Today we are going to talk about one permanent portfolio in particular: the Gone Fishin' Portfolio. We are going to build it with Vanguard ETFs because of their low fees. The percentages are:

- Vanguard Total Stock Market Index (VTSMX) – 15%

- Vanguard Small-Cap Index (NAESX) – 15%

- Vanguard European Stock Index (VEURX) – 10%

- Vanguard Pacific Stock Index (VPACX) – 10%

- Vanguard Emerging Markets Index (VEIEX) – 10%

- Vanguard Short-term Bond Index (VFSTX) – 10%

- Vanguard High-Yield Corporates Fund (VWEHX) – 10%

- Vanguard Inflation-Protected Securities Fund (VIPSX) – 10%

- Vanguard REIT Index (VGSIX) – 5%

- Vanguard Precious Metals Fund (VGPMX) – 5%

If we analyze this portfolio we see US stocks 30%, international stocks 30%, bonds 30%, REITs (Real Estate Investment Trust) 5% and precious metal mines 5%. Obviously we prefer our own portfolio explained in the book Against the tide, however any permanent portfolio is worth checking out and this one is one of the most interesting. You can find the portfolio's track record here: gonefishinportfolio.com This web is an excellent source of information. On the left you can see the annual returns of portfolio (click over to make bigger) using the S&P 500 as benchmark. Last year the GFP was a little bit down while the S&P was a little bit up, but the difference was negligible.