Harry Browne’s 17 Golden Rules of Financial Safety (2013)

Re:Harry Browne’s 17 Golden Rules of Financial Safety (2013) by thunky on Sunday September 03, 2023 @12:06PM (#37371505)

> Holding 25% of your wealth in cash is planning to throwing away years of life.

You have to look at the portfolio as a whole. When stocks fall 50% you'll be glad to have some cash because:

1. You'll be down less than 50%

2. You'll be able to buy more stocks at a discount (via rebalancing)

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Re:Harry Browne’s 17 Golden Rules of Financial Safety (2013) by Rebelgecko on Sunday September 03, 2023 @09:35PM (#37376341)

I wonder if this has been back tested? The advantages of 1 and 2 don't seem to be a good trade for 25% fewer gains in the majority of years.

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Re:Harry Browne’s 17 Golden Rules of Financial Safety (2013) by thunky on Sunday September 03, 2023 @10:08PM (#37376480)

It's a well known portfolio so it has been analyzed quite a bit.

You can backtest it yourself:

- portfolio 1 is all stocks

- portfolio 2 is 75% stocks, 25% cash

- portfolio 3 is the "Harry Browne Permanent Porfolio" (selected from the "lazy portolios" option)

Take a look at the "drawdowns" tab.

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