Craig Rowland and J.M. Lawson are the modern thought leaders on the Permanent Portfolio. Both have been gracious enough to engage in public discourse concerning the topic.
J.M. Lawson on the Permanent Portfolio
” I think that one of the important things to understand about the PP is the types of scenarios under which each of the four asset classes would do well. I have focused on gold because that seems to be the one that is least understood as part of a diversified portfolio of non-correlated assets.
The idea with the PP is to be able to read the newspaper without stress.
Those who plan only for good times will be disappointed some of the time, as will those who only plan for bad times. The PP simply plans for an unpredictable future in which humanity will invariably showcase both its brilliance and its stupidity (the amount of each varies with the times).
One of the most common causes of investor hand-wringing that I see is when the government does something and people say to themselves “oh no, the government is doing something stupid, that really worries me.” No prudent investor should EVER be surprised by the government doing something stupid. In fact, long periods of utter incompetence among politicians and central bankers should be incorporated at the granular level into any long term investment plan. Think about how many people have basically lost half of their life savings because they believed the Wall Street and Fed claptrap about the health of the economy, the value of long term investing, and the amazing globalized world economy.
Think about the following comment by Voltaire: “The rich require an abundant supply of the poor.” Understanding the implications of this statement makes it clear how many of the ideas people hold about investing CAN’T be true, since if they were it would only be a matter of time and compound interest until every single person in the U.S. was rich and living off of their dividend checks.”