05 June 2013

Why I cancelled Bitcoin for the Permanent Portfolio (for now)


  1. Hello Marc,

    thanks for the video's. It's nice to see your thought process. I already noticed some months ago you incorporated bitcoins and I was wondering why.

    What is the link of the PP forum?

    1. Hi, thank you so much for your appreciation :) Really great to hear from people who follow my work :)

      Here the link to the discussion on Permanent Portfolio Forum about implementing bitcoin: http://gyroscopicinvesting.com/forum/index.php?topic=4710.0

    2. Hi Frugal, please note that I do am sorry for the people that lost money. I'm not saying it's good that they lost money, ofcourse it's not good. What I want to say is that I find it good that they did not get bailed out with printed money like most other bailouts before. But that the savers needed to pay for their own mistakes (finally).

      On the bitcoin forum you can find more similar opinions as mine in the thread where a bank account holder in Cyprus accused the state of stealing his money: "My bank account's got robbed by European Commission. Over 700k is lost.": https://bitcointalk.org/index.php?topic=160292.0

  2. What is this guy in fact talking about?
    Can't make head or tails out of it...

  3. Hello MARC,

    I am living in Portugal, that is in bad financial situation.

    I have now a EU-HB-PP that is unfortunately falling.

    Craig's book, says you should avoid other currencies and counterparty risk of governaments...

    I don't know if I shall keep my savings to add + rebalance the EU-PP or open a new account in USD ( at SCHWAB ).

    Please give me your advices.

    Kindest regards.

    1. Hi Frugal,

      I'm sorry for your losses in your PP. :(

      Choosing between putting your extra savings in your PP or instead in USD depends on:

      1. Do you want to speculate with these extra savings? Taking a higher chance to win but also a higher chance to lose? Or do you want to protect those extra savings? Taking a lower chance to lose but also a lower chance to win?

      In case protection is more important a PP it should be. But if you see a great opportunity and are willing to risk the extra savings and accept that you can also lose them, than putting them in your Variable Portfolio makes sense.

      2. Whether the USD is a good speculation today? My personal opinion is not. I think gold is a much better bet to take than the USD. Chances for gold to go up in purchasing power the coming years is much higher than chances for the USD to go up in purchasing power. Just my opinion.

      Also a remark on the PP. The PP sometimes performs below true inflation and sometimes above true inflation. It does not happen a lot though that the PP performs strongly below true inflation as it has done this year. Currently the PP's performance is around -6% for the year, whereas true inflation has been already 2% this year, so you lost 8% purchasing power with the PP. Pretty bad indeed! In the past however this situation has always been strongly corrected in the years after where the PP would perform higher than true inflation making up for the losses of an exceptional bad year.

      In short: this is not the time to take out money of your PP, but a good time to add to it! However if the PP has again two years in a row a good performance of +10% or more and you are considerably ahead of true inflation, it's a good time to take some out of your PP and do other stuff with it that you value too.

    2. Dear MARC,

      sorry I didn't explain well.

      But thanks for your nice answer.

      My doubt is to make a NEW US-HB-PP or ADD fresh money to my existing EU-HB-PP.

      Can you please advice.


    3. Sure Frugal, why would you want to make a US-PP since you are living in Spain?

      A US-PP for a European can be considered as a USD speculation, unless you plan to move to US or have considerable future expenses in USD? In which case you are just trying to protect the USD value of your assets for future expenses.

      What is your situation? Why would you want to invest in a US PP ?

  4. Marc,

    you are right we have currency risk.

    Since Europe is a bit confusing now, I thought it would be a good diversification.

    I'm now 100% on EUPP and I would like to have a VP.




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