The permanent portfolio loves volatility

The drop in equity markets in Q4 of 2018 has hurt a lot of peoples portfolios. Strangely enough, the permanent portfolio loves these periods of high volatility. In itself it will not decrease in value dramatically because that’s what it is designed to do: when markets are nervous, money flows from equity to gold and/or bonds. When things return to normal money flows back but for some reason you end up with a higher value for your permanent portfolio. Even without rebalancing. I have seen this phenomena many times and my best explanation is that in the first round gold and bonds are bid up by the so called weak hands fleeing out of stocks, and in the second round additional money flows from smart money, that was parked on the sidelines, into stocks again.

Whatever the cause, I’ve now seen this happening so many times that I rejoice when markets drop. It doesn’t make me a popular guy at parties but I’ll accept that!

Hello world!

So here it is, my first post on this blog. First of all, thank you for visiting. If you didn’t get here by chance we are probably connected, sharing some similar interests or views. That’s also the reason for putting up this blog: I would love to get in touch with like-minded spirits.

Right now the content is very limited, but I have plans! I’ll discuss my own flavors of great portfolios, will have a couple of things to say about MIFID and PRIIPS, or regulation in general, add a couple of games from behavioral science and will write about my projects du jour.

Feel free to join the discussion in the comments. If you want to reach out to me personally, email smeets <at> marksmeets <dot> nl.