Summary Part 1:
Why I think redesigning the Permanent Portfolio into 20% stocks, 20% bonds, 20% gold, 20% cash and 20% bitcoins makes sense.
1. Explaining that Bitcoin is very volatile and will make the Permanent Portfolio much more volatile too. This is a disadvantage I am willing to accept.
2. Debunking counterargument that Bitcoin can go to zero, in contrast to the other assets. This is not true. Bitcoin cannot go to zero, though it can lose 99% of it's value, just like the other assets.
3. Why implementing bitcoin should be at the expense of all other assets, not just gold.
4. Arguments of esthetics, beauty and simplicity in favor of a 20% allocation to bitcoin, just like the others.
5. Why the permanent portfolio will become irrelevant if bitcoin succeeds in becoming a mainstream currency.
6. The Permanent Portfolio was initially designed to not just be a protector of capital but also be a grower of capital. However after deducting true inflation and costs the Permanent Portfolio is barely growing your purchasing power. Adding bitcoin to it can change that.
Summary Part 2:
1. Why I am confident Bitcoin, just like Stocks, Bonds, ..., cannot go to zero (decentralization).
2. Why I think the right time to implement bitcoin into the Permanent Portfolio is now (eventhough short term the price is relatively high today at $130)
Summary Part 3:
Strong counterarguments against implementing bitcoin into the permanent portfolio for 20%:
1. Priority of PP is safety. 5% bitcoin is sufficient to achieve safety. Symmetry is of less importance than safety.
2. Market cap of other assets is much bigger than bitcoin. Bitcoin should first prove that it is important via market cap, before it can get an important allocation in the PP.
Summary Part 4:
Why giving bitcoins an equal standing to the other assets (20% x 5) does make sense. Lack of market cap and lack of track record for bitcoins are not valid counterarguments. Also the fact that bitcoins are risky is not a valid counterargument.
1. Harry Browne also allowed assets to have a much larger allocation in the Permanent Portfolio than the market cap of that asset would allow. For instance the market cap of gold is at least 10 times smaller than stocks but still he chose to give it an equal standing.
2. Although the Permanent Portfolio today has strong track records, when Harry Browne initially designed it it did not, as track records could go back only 10 years. Harry Browne did not design the Permanent Portfolio based on track records, backtesting or proven performance, but designed it based on logic and simplicity. We can do the same today.
3. It is true that bitcoins are risky, but so are stocks, bonds, gold and cash.
Summary Part 5:
Why NOT implementing Bitcoin is risky.