The Persian Portfolio

Executive summary: If you have excess savings that you want to grow and compound with minimum drawdowns, you should put half of it in global stocks, a quarter in long-term US treasury bonds, and the last quarter in gold. Rebalance yearly and go to the beach.

Long version:
I present to you, the Persian Portfolio, my own asset allocation. It consists of:
– 50% Global Stocks
– 25% Long Term Treasury Bonds
– 25% Gold

The Persian Portfolio investment

The vast majority of my savings are in this portfolio. It is simple because it only contains three assets, and it is robust because it can withstand catastrophes with very little drawdowns.

While normal people are afraid of heights or spiders, I am afraid of “lost decades”, which refers to a timeframe of ten years in which stocks only went down or sideways. The stock market has suffered many lost decades throughout history, and it’s mentally difficult to stay invested in an asset class that’s not performing well. The good news is that, when stocks go down, there’s always other assets that go up (usually bonds and/or gold). For this reason, it’s a good idea to diversify across asset classes. The ride upwards will be much smoother, with minimal drawdowns. This allows investors to sleep well and focus their attention on more interesting things.

Before investing in the Persian Portfolio, I was doing a mix of random things. Everything from selling Cash Secured Puts, to degenerate leveraged derivatives. Since moving almost all my savings into the Persian Portfolio, I have barely checked my brokerage account or read financial news. It doesn’t affect me anyways.

Finance has become boring. I just want to make 7 or 8% per year with very little drawdowns. This portfolio allows me to do just that without giving it any thought. Just rebalance once a year and that’s it.

Conclusion: Have some cash and don’t know what to do with it? Put it the Persian Portfolio.

Frequently Asked Questions:
Why did you name it the Persian Portfolio?
Because I am Persian by ethnicity. And I like alliterative names.

Why Global Stocks? The S&P 500 outperformed in the last twenty years
Just because US stocks outperformed yesterday, does not mean they’ll do so tomorrow. We don’t know the future. America has a lot of huge companies that dominate the world. But that’s priced in. Those companies are expensive and are trading at high multiples. Meanwhile, international stocks are very cheap. And they could easily outperform during times when the S&P 500 declines for a couple of years. Apple is a three trillion dollar company. For that same three trillion, you could own thousands of different companies around the world. That seems more robust to me. Imagine owning a bakery chain in Japan, shoe factories in Vietnam, German glass manufacturers and other things. That seems pretty cool too.

Why have any bonds? They are boring
Stfu. You’re an idiot. Long term bonds are exceptionally well suited for portfolios designed to reduce drawdowns. When the economy goes to shit, interest rates go down and the price of long term bonds go to the moon. This helps stabilize the portfolio and thereby prevents a common human error of selling stocks at the bottom.

Okay I’m convinced. Which stock tickers should I buy?
I recommend VT, TLT, and IAU.

Credit: This portfolio is heavily inspired by @ValueStockGeek.

January 16, 2024

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follow me on Twitter: @eftegarie.

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