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Having had my formative years during the 80s, there were several, sometimes conflicting, influences at work. For example, I started flirting with the Gothic Scene although it took me many years before I more openly associated myself with those romantic and independent-minded people. On the other hand, I felt drawn to the investment world. While I made some embarrassing forays into the shallow Yuppie way of dressing, what really fascinated me behind all this pastel-coloured nonsense was the idea of independence.

Basically, you can sit at home in your pyjamas and do your research and come to lonesome decisions. The quality of which, of course, will be decided upon by that strangely whimsical and powerful machine out there, the Market. In all money matters it seems advisable to speak to as many people as possible and have your opinions tested again and again. It is a continuing process of learning and, over the years, you develop a system of where to look for what and when to listen to people and when not to listen to them. You don´t have to be an investment banker to do it and the only job interview you have is the daily development between green and red of the figures on your computer screen. I have grown rather fond of this.

A second aspect I like is the research. Naturally, it incorporates reading balance sheets and trying to gauge a company´s possibilities through figures, which is a part most people don´t like. Actually, I see this as a mere technical part of the job that has to be done as well as possible. The more interesting part for me is something that I think is very much like sound journalistic work. It is about trying to form a model extrapolating from the present into the future, a model that has to have certain ground lines while at the same time being flexible enough to adjust to unforseen changes. Doing this on the level of a single company, an industry or the economy as a whole is another 3D chess game and, of course, quite a huge task, for which I can´t really claim being knowledgeable enough. But as the motto of Carlsberg A/S states: "semper ardens".

I have been talking so far about "investing", which I see as opposed to "speculation". I found out very early that I am not interested in buying shares one day to sell them the next. I always liked the idea of owning a share in a company. As, for lack of adequate firepower, I have mostly been dabbling with investment funds and not direct share ownership, I always loved looking at a fund´s portfolio and trying to get to know the single companies that I now owned a microscopic piece of. But there´s also a saying: Never fall in love with the companies you own shares in. I find this very hard to do and it has proven again and again to take a huge bite out of my performance.

Still, I try to follow the school that´s called value investing. Although I do have to put a big stress on "try". Maybe another point that fascinates me about this particular way of doing things is that people like Warren Buffett and Charlie Munger have developed a style that transcends mere business decisions but also holds lessons for other parts of life. Thus, I sometimes see them as Zen Masters or Yedi Knights doing things or not doing things as a result of a process born out of silence. That really gets me.

If I had put my money where my mouth is, I would probably not find it so hard to renovate my house these days. As things are, however, all my "investment" endeavours have simmered on a very small flame. Luckily, "social trading" has come along and offered a playground for penniless would-be investors like me. Naturally, I was quick to invent a flamboyant trader name. As a result you can have a look at how MonsfortCapital is bungling along on: https://www.wikifolio.com/de/de/p/monsfortcapital

I also set up a corresponding facebook site, which I use to post some articles and links of things I´m currently occupied with: https://www.facebook.com/MontSylvain.eu/

There are two more things I would like to mention. As stated in the "legal notice", I can only advise against doing anything I positively comment on (although I´m not allowed to advise anything which has to do with financial matters). The second thing is about ethical and environmental concerns. Throughout this website you might have seen that both issues are important to me. While I have used ethical-environmental investment funds for a number of years, I´m no longer convinced that this approach (alone) satisfies me. For a number of reasons. One, for example, is that I believe that precious metals and the mines producing them are absolutely necessary parts of a future-oriented portfolio. And those companies can´t excactly be called a boon for the environment. While I do have a blacklist of companies and industries I don´t invest in, quite a number of portfolio positions I hold wouldn´t make it into an environmentally responsible fund. This is still an ongoing internal discussion I have with myself and a contrast to many links and topics on this website.

While I´m very interested in shares as individual investments and also other investment variants, I have been wrecking my brain for quite some time about designing the "Perfect Portfolio", which means answering the question of how do single investments move against each other within a portfolio to create, ideally, additional return. Of course, everyone does that, and there are many approaches. Here´s my own interpretation: https://www.justetf.com/de/portfolio/a2a1d This approach differs somewhat from what I do on wikifolio.com as that social trading platform doesn´t offer all the instruments I need for this specific portfolio.

Naturally, I have been quick to find a pretty name for my approach. Thus, I call it „The Caerlaverock Portfolio“. Caerlaverock Castle is a castle in Scotland, which has the particular feature of being triangular. And, of course, it´s situated in Scotland, which gives bonus points.

The Caerlaverock Portfolio is a Permanent Portfolio based on the work of Harry Browne. The basic tenets of Harry Browne´s portfolio are that the future can not be predicted and that a fixed diversification across asset classes, which should be upheld at all times, protects against unforeseen developments. Browne´s classic allocation calls for 25% in stocks, 25% in gold, 25% in bonds (long-duration bonds) and 25% in cash (short-duration bonds). This allocation is aimed at performing equally well during the four economic conditions of prosperity, inflation, deflation and recession or possible combinations.

My variant, however, changes a few things about this idea. Actually, no matter what flamboyant name I invent for my portfolio, it is very close to what a person with the pseudonym Tyler proposed on https://portfoliocharts.com/. Tyler´s portfolio is called „The Golden Butterfly Portfolio“ and my own Caerlaverock is more a variant of that approach than of Harry Browne´s portfolio. So, to be very clear about this, my portfolio is more Tyler´s brainchild than it is my own. If you´re interested in portfolio composition, Tyler´s website is an absolute must-go-to. It is visually and theoretically clear and fascinating. Still, I made some changes to that Golden Butterfly approach.

Through the weekly podacst on https://www.macrovoices.com/ I first heard about Chris Cole´s work at Artemis Capital and his research on permanent portfolio approaches. You can find his work here: https://www.artemiscm.com/welcome#research „The Allegory of the Hawk and Serpent“, which you can download from that source, strengthened some misgivings I had long held about the current financial era drawing to a close. With lots of turmoil lying ahead. Based on my own attempts and the Artemis Capital research, I decided to use volatility as an asset class in place of cash. Also, I chose an etf for the bond section, which covers global bonds of all durations and doesn´t concentrate on a specific duration.

Most permanent portfolios work with three or more asset classes and allot differing portions. I want to take several steps back and try for a very abstract view to address the question of which assets to include. For me, the starting point is money. What can you do with money ? You can hoard it, you can spend it and you can lend it. Also, you might consider spending some of it on insurance to safeguard all of the other three. So, here we already have our asset class definitions. Spending, lending, hoarding and insuring. These would translate into stocks, bonds, gold and volatility. Another way of looking at this portfolio would be to concentrate on abstract aims, that this, or a vaguely similar allocation, could reach. These are productivity, continuity, independence and liquidity. These points could align with the asset classes I use, but actually I see this approach as a kind of superordinate level of viewing at investments, with all assets realising these aims to a greater or lesser degree. Admittedly, productivity is the central factor here, and gold and volatility will be rather hard put to make a claim to achieving this aim. Yet, they are strong in the other three aspects respectively.

With these abstract considerations in mind, there should also be a set of rules for the portfolio alongside the asset definitions and their distribution. First, I want the portfolio to be as liquid / fungible as possible, meaning that it should be possible to change or liquidate it with a few mouseclicks at any time. Second, I want it to be as internationally actionable as can be, which means no positions which only work within a single legal environment or are specifically tied to a special fund company. Third, and this is a rule used in almost all permanent portfolio approaches, no market-timing or shorting of securities (admittedly, the volatility position might use shorts within its strategy, but only to realise the overreaching long-volatility target). Forth, I want to be in control of what I invest in; this means using ETFs, which realise the various asset representations as closely as possible, and where a degree of management is only included by maintaining the indices. And fifth, a recalibration should be independent from a timed schedule and should only be done when a position diverges more than 10 % from the set quota, where the 10 % are meant in portfolio-terms, not with respect to a single position. For example, if gold soars and uses up 32% of the total portfolio, that might be a good time to prune it back to its 20 % portion and use the money for the less successful assets.

Tyler uses a 40% portion for stocks („spending“). I really like that, because I feel that investing mostly centres around putting money into good businesses. Which includes, by the way, real estate. I would much rather opt for holding (liquid) real estate shares than physical burdens. Actually, I try to design the portfolio with as much regard to liquidity and international interchangeability as possible. Who knows, maybe I will emigrate to Sweet Alba after all. The remaining 60% then go to equal portions each for gold, bonds and volatility. Which gives you a nice fat castle keep in the middle (stocks) with three towers guarding the defence work (gold, bonds, volatility). A triangular castle, Caerlaverock.

The centre of my considerations is the castle keep, which also means that I prefer smart-beta ETFs over broader approaches, which might not be satisfactory in quality terms. This means that the stock portion has two components: quality and megatrends. For quality, I use a dividend as well as a value ETF. The thoughts about megatrends are a bit more complicated. One of the most important fascinations of spending time with financial markets is that they try to look into the future. For me, this is the „journalistic“ component of analysis alongside the accounting portion of work needed to set up and maintain a portfolio. Once you allow for that, megatrends tend to crop up everywhere. Some of them might have legs, the invention of others, however, might be motivated by mere marketing considerations. I see only two „true“ megatrends, however: Science Fiction and the Middle Ages. In my view, advanced technology as well as oldfashioned stuff like real estate, precious metals and agriculture are the places where I want to put my money.

A pandemic like COVID-19 is an external occurence, the likes of which will happen repeatedly over time. It simply can´t be planned for. But there are two negative developments, which are clearly visible on the horizon and which, in my perception, are still not adequately factored in within most portfolio allocations. These are climate change and the conglomerate of problems arising from debt excesses and money debasement. The first, at least to some extent, can be tackled by the Science Fiction megatrend, the second, by the Middle Ages megatrend mentioned above. Also, the shift towards a digital economy accelerates by the minute, which makes the Science Fiction investment obvious.

In oder to keep position numbers down, one ETF for each of the two topics is part of the portfolio. A technology ETF, maybe something like the Nasdaq-100, alongside a very medieval choice like the Arca Gold BUGS index. Instead, you might also want to consider timber, agriculture, REITs or infrastructure. The VanEck Vectors Natural Resources ETF might also be a good choice as it covers a large range of "medieval" assets. This gives us four positions for the stock portion and one position each for the three towers. Seven positions are more than enough, considering that you have to readjust positions over time or might be forced to withdraw money, if your personal situation so demands. It might also be noteworthy that I try to prefer ETFs for the stock and bond allotments, which pay out dividends / interest in order to have the portfolio also be a source of income if need be. Although, I do realise that it might need upwards of a million fiat currency units invested in the total portfolio to generate the semblance of a halfway meaningful income stream.

The "secret sauce" of every permanent portfolio is that you hold the asset allotments steady over time by recalibrating. This means, essentially, that you sell stuff expensive and buy stuff cheap. You can give this an additional kicker by doing so during extreme market situations. The more a market crashes, the better. Volatility is your friend. Not only because of the volatility position, but also because all the positions will move against each other up and down over time and recalibrating means reaping a volatility arbitrage. Another nice feature of this is that you don´t try to time the market, you react to it. And you do so within a quantitative frame, largely free from human error. This is the true magic of the permanent portfolio.

The portfolio should reflect your financial means. Obviously, you could limit yourself to four investment funds / ETFs only, corresponding to the four asset classes. You might instead want to stay closer to Tyler´s portfolio and use a broad stock index alongside a small cap etf for the stock portion, which would give you five positions in total. The seven positions mentioned above are already an advanced level of building your investment castle. If your financial firepower allows you to take things even further, you could, of course, consider putting some artillery onto the roof of the castle keep and also invest in some buy-and-hold good old value direct stock positions. Just mentioning.

It should also be noted that despite using "passive" investment instruments, the portfolio will still need some attention now and then. It is not for the hyper-active trader and it is also not for the passive "invest & forget about it" investor. Beyond that, making up your mind about the stock portion, maybe thinking about value and megatrends or some other distribution more promising to you, all of that requires some knowledge and effort. And, as you can see from the preceding paragraph, this can still be scaled up.

There are, of course, quite a number of questions arising from these deliberations. For the sake of this website giving an overview only, I will so far stick to outlining just the broad groundwork needed for my castle in Scotland.