The preppers’ portfolio for doom and gloom

http://www.telegraph.co.uk/finance/personalfinance/investing/gold/11685592/The-table-that-shows-you-should-always-hold-gold.html

I like this idea. Low-risk strategies are the way to go if you’re edging retirement and can’t risk high exposure.

Diversification, as a strategy, is all but dead, in that everything is both dangerous and correlated.

Thanks, bailouts.

As a result of this bleak world view, Personal Assets offers a glimpse as to how a portfolio might be constructed to best weather the ultimate in uncertainty.

If inflation resurfaces with a vengeance, 10pc of the portfolio is in gold and 20pc in UK and US index-linked government bonds.

Don’t trust gilts.
Governments can default, hello Greece.

If the menace is deflation, there’s a 30pc cash pile. If shares crash there is comfort in a current exposure to global equities of only 40pc – plus the fact that the stocks held are super-quality defensives such as Nestlé and Coca-Cola.

ah, blue chips
but their nominal value must be part of the overvaluation trend? when did they buy?

If the stock market tanks on a truly stunning scale, there’s the £170m cash hoard with which to go buying.

…such a holding within a portfolio otherwise made up of British shares and bonds in a 60:40 split would have affected returns over the past four decades.

The research was undertaken by gold investor service BullionVault – so not disinterested – and puts a price on owning gold in terms of its hedging benefits on one hand and loss of long-term returns on the other.

A 10pc holding, for example, would have roughly halved portfolio losses in the worst year of the past 40. The price paid would have been the reduction, by almost two percentage points, in the average annual growth over a five-year period….

I have heard good things about Bullion Vault.

Gold is the only valuable currency. No tarnish, low chemical reactivity, hard to fake.

1. Be civil. 2. Be logical or fair. 3. Do not bore me.

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