What Happens Next?

Yesterday I wrote about the permanent portfolio having it best stretch in 40 years.

The inspiration behind this idea came from a conversation Josh and I were having on “What Are Your Thoughts?”

He asked what has happened historically after periods of outsized returns, so I had the brilliant Nick Maggiulli look into this.

I expected to see some mean reversion, but that’s not the case. It turns out that more often than not, strength begets strength, at least in the short-term.

The obvious difference between the past and the present is that 50% of this portfolio is in income producing assets, cash and bonds. Given that fixed income is now fixed near zero, you’re going to need stocks and gold to do the heavy lifting. We’ll see if they’re up for the task.