In Foreclosure Investing, It Is Who You Know

While I’m certainly not a marketing or advertising expert, I find such business decisions intriguing, and if you invest in individual companies, you probably want to pay attention to how the company is perceived by its intended clients. Thus, if you apply yourself, develop a business plan for trading/investing, and really work to understand what trading success is all about, you have the potential to be hugely successful. Using this simple approach often leads to a significant outperformance of perhaps the more enthralling trading that many people partake in. At the very least, it minimizes the risk involved in investing and the possibility of stratospheric losses that occur occur when investing on emotion or day trading. Finally, cash serves as a buffer for losses during recessionary periods and also performs well during deflation. Morningstar gives it a conservative allocation category as well as 5-star ratings (the highest) based on its return in the trailing 3-, 5-, and 10-year periods as well as overall.

Its return is categorized as “high,” while its risk level is “above average.” (Note that it’s comparing the fund to other conservative allocation funds). Note that investing in gold bullion directly can be somewhat of a logistical challenge depending on the particular circumstances. Finally, note that while the calculated average gain based on the 25/25/25/25 strategy and Browne’s reported returns are quite similar, PRPFX certainly has somewhat varied results although they definitely mimic both strategies. As they say, past performance is no guarantee of future results and those employing this strategy should not expect outperformance over the long-term similar to what occurred during the past 10-year bear market. Essentially, it seeks to increase purchasing power over the long-term through all economic cycles by dividing assets in four equal parts: gold, bonds, stocks, and cash. Its current allocation is 7.4% cash, 39.47% stocks, 34.76% bonds, and 18.31% other. Not only do I fear the risk they will be confiscated like they were in Argentina, Bulgaria, Poland, and more recently Cyprus, but I also plain just refuse to pay the current prices being demanded in today’s stock market. These four asset classes respond to each market condition differently and perhaps offer a more diversified portfolio allocation than the traditional stock/bond mix that most financial advisers espouse.

This assumes a 25% split among all four asset classes and rebalancing at the end of each year. There is no discernible pattern as to which of the four categories will be best and worst in a given year and thus it is best to spread your assets amongst all the classes to reduce risk and volatility. Just as Browne suggested, it’s impossible to predict economic cycles from year-to-year and the asset class that outperformed one year, can just as easily be the worst performer the next. The worst asset class for a given year will be highlighted in Red (red font doesn’t mean it’s necessarily negative, just the worst performing), while the best performing asset class will be in Green. Down years overall will be highlighted in Red. In more recent years, I have become a convert to income investing and find the returns overall have been better and more consistent.

To determine if ETFs or mutual funds make more sense for you, please refer to this post. Ok, next we talk about something more mind-boggling. An even simpler (and typically preferable) method to reduce risk would be to simply increase one’s bond allocation. The basic premise behind the Permanent Portfolio is to preserve and increase purchasing power over the long-term through any economic cycle: prosperity, inflation, deflation, and recession. After reading various articles, texts, and performing my own individual analysis, I still think that the vast majority of people are best served by dollar-cost averaging into a low-cost index fund over time. The expense ratio of 0.84% is certainly much higher than index funds, but is reasonable (it’s probably on the lower end) for an actively managed fund. As with most aspects of investing, the expectations of how each of the above factors will behave in the future have as much impact on the value of the currency as their current levels. Your reason is actually receiving as much people to your website as possible, isn’t it?

Our strategy is not for people who intend on doing Real Estate full time. Acorns is the best option for those who want to contribute on regular basis instead of lump sum one time investments. Yet we know from many studies that returns of heavy traders, on average, lag behind the returns of light traders, and the returns of light traders, on average, lag behind the returns of those who buy, hold and rarely trade. It is extremely rare for a company of any standing to trade below NCAV or have a strong balance sheet with low debt while posting good profits. It’s important to notice that this fund (and this strategy in general) has a very low dividend yield (0.71% vs. Whereas in Graham’s day, low cost index funds were non-existent, now they are clearly abundant. The three stock indexes mentioned (Canadian, American, international) pay dividends out yearly, while the Bond index pays out monthly.