I thought I'd start a new thread because it looks like we had hijacked another thread but had some material that would be good to discuss in more detail.
I've always been interested in diversification, and had wandered on my own towards a strategy that turned out to be a lot like Browne's Permanent Portfolio which is equal weights of stocks, government bonds, gold, cash. I'm also interested in reading about other diversification approaches.
Here's some data I have for a permanent portfolio, Jan 2006 to today (10+ years) using 25% XIC, 25% XGB, 25% MNT, 25% XSB. Some of the numbers are imperfect because data wasn't available for the full range.
Performance for the full 10+ years: 5.8%, worst year -2.9%
Benchmark: 50/50 XIU and XBB: 4.3%, worst year -12.6%
This looks pretty appealing to me. Not only is the long term performance greater, but the volatility and risk is less.
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