Tuesday, October 19, 2010

Harry Browne Comes Out on Top

The last time I discussed Harry Browne, it was to point out that Browne was way ahead of of everyone in warning about banking with a Swiss Bank that has too big of an exposure in the United States.

Well, not surprisingly, that's not the only thing Browne was right about. It turns out that despite his passing, Browne is the best money manager around.

MyPlanIQ recently compared the performance of fifteen buy and hold portfolios. Each of the portfolios was measured for performance and volatility over various time periods.

Harry Browne's Permanent Portfolio beat out all others. Here are the growth rates MyPlanIQ found for Browne's Permanent Portfolio:

12.49 (one year growth)
7.40 (3 year growth)
8.99 (5 year growth)
7.31 (since inception)

Here's what MyPlanIQ said about the results:

•The Harry Browne portfolio is the clear leader in both categories and immediately makes it through [for further study]
Curiously, MyPlan throws in a neg:
•Harry Browne’s permanent portfolio is the clear winner of the lazy portfolios but there should be concern as to whether the conditions that has enabled it to deliver such sterling results will continue
This is odd because Browne's permanent portfolio is as balanced a portfolio as you can get. MyPlan apparently misses Browne's point re not trying to time the market, which the neg suggests should be done.

I regularly recommend that conservative investors follow Browne'a advice. Recently, I wrote:
Thus, there is a lesson for us all here. Never put all your eggs in one basket. In fact, I recommend, for most, that at least 50% of all money be put aside for investment in four separate categories as outlined in the book by Harry Browne, Fail-Safe Investing. After you have half your assets set up the way Browne suggests, then it is fine to try other investments, but even in this half of your portfolio you should have at least four completely different investments
It should also be noted that Harry Browne always viewed the economy from an Austrian perspective. During a recent conversation with Lew Rockwell, Lew told me that he felt Browne's first book, How You Can Profit the Coming Devaluation, contains the best easy to understand explanation of the Austrian business cycle. Lew, who edited the book, says Browne was among the best when it comes to clear writing.

(Thanks to Paul Rice)


  1. Regarding "...but there should be concern as to whether the conditions that has enabled it to deliver such sterling results will continue", they realize that the reason Browne kicked everyone else ass was because he recommended 25% in gold. They can't help but look down there nose at that and think that there is no way gold can repeat it's 10 year run.

    Gold... hated by Central Bankers everywhere for nearly a century.

  2. Four-way diversification=silver, gold, platinum, and lead

  3. The late, great Harry Browne was so right about investing, economics and countless other pertinent political and social issues. I will always consider Harry to be essentially responsible for my graduate education in libertarian studies. Hardly a day goes by without reading the headlines and asking, "What would Harry say?" His radio program should be held up as the standard for all libertarian and non-libertarian commentators to follow. Always the cordial and consummate host, Harry routinely treated contrarian callers with the utmost dignity and respect, no matter how absurd their comments and criticisms. If pressed to pause for a station break, Harry would ask the skeptical caller to hold the line so they could return to complete the heated topic. Harry always said that many were just one suggestive idea away from changing their long held political viewpoints. He felt libertarians should be bold enough to introduce these principles in a way that would show the individual how they would personally benefit from less government, more individual liberty and greater autonomy coupled with personal responsibility. Harry, we continually miss you.

  4. I subscribed to Harry Browne's Special Reports in the 70s. I'll never forget his Farewell to Silver article just a few months before the great gold/silver crash. I read all his books. What a guy.

  5. First off you can still get Harry Browne's Failsafe investing on a .pdf. I still read it once a year. I've been following it for the last 10 years and it has saved my retirement. The quick version is.
    25% in Cash (100% Treasury Money Market backed)
    25% in Gold (Bullion Coins)
    25% in S&P 500 (Low cost fund like Vanguard)
    25% in Bonds (Actual 30 year Treasuries not a bond fund)

    Then rebalance once a year or if any one category changes by more than 10% (below 15% or above 35% of your total portfolio).

    By following this strategy I had to sell bonds near the height in late 2008. I had to buy S&P 500 at around 750. I have been selling gold every once in a while as it continues to climb.

    What is great is that it is automatic. You don't have to worry about a crash in anything since even if there is a 50% crash in something the most it can do to your total is minus 12.5%. Even then when something crashes people typically run to something and you get gains there. The rebalancing helps you cash in your gains while still leaving enough in action.

  6. I voted for HB for president at least once, maybe twice, and very much admired him. It was his book Why Government Doesn't Work that woke me up. I bought HB's Failsafe Investing in 2001 or 2002, and intended to invest according his advice, but never got around to it. I could kick myself now, as gold was about $250 at the time. I wish he were still around to comment on current economic conditions, and revise his advice as required, or if necessary. What a guy.