You work hard. You save. You finally have a little extra every month. So you invest it.
Then the market crashes. Your portfolio drops 20%. You panic. You sell. The market recovers. You missed it. You start again. It crashes again. Sound familiar?
Because here's what nobody tells you when you start investing: how much you LOSE matters just as much as how much you earn.
Last February 28, The US and Israel struck Iran. Iran closed the Strait of Hormuz. The peso weakened. Oil prices spiked. And you're sitting there thinking: "What am I supposed to do with this information?"
The honest answer? Nothing. Because if your portfolio requires you to react every time the world goes crazy, it was never built to survive. Wars happen. Recessions happen. Pandemics happen. Inflation happens. The question isn't if the next crisis is coming. It's whether your money will still be there after it passes.
Before We Go Further. Let's take a pause
If you have Php10,000 to invest for 10 years. Which one would you choose? 👇
- Portfolio A (10% yearly growth, can fall 50%)
- Portfolio B (5% yearly growth, can fall 20%)
- Portfolio C (2.5% guaranteed yearly interest)
Most people will pick Portfolio A because of the 10% return, some will pick Portfolio B. But 1 out of 10 people will only pick Portfolio C. But here's the shocking result.
Portfolio A ended at P11,790. It grew fast, but that 50% crash at year 5 wiped out 4 years of gains in one hit. Many investors would have panic and sold right there. Those who held recovered, but barely broke even with Portfolio C.
Portfolio B ended at P12,411. Slower growth, smaller crash. Less anxiety. More predictable. This is closer to how a real diversified portfolio behaves.
Portfolio C ended at P12,801. No crashes. No panic. Slow and steady. What looks boring in year 1 quietly wins by year 10, no sleepless nights included.
Portfolio C ended at P16,387. No crashes, slow 2.5% per year and it still beats Portfolio A over 20 years. The math of avoiding losses is more powerful than the math of chasing gains.
Most people pick Portfolio A. The high growth sounds great. But in real life, crashes don't just hurt your numbers, they hurt your decisions. When your portfolio drops 50%, most people panic and sell. Then they miss the recovery. A crash doesn't just cut your money in half. It often cuts your investing journey in half too.
And crashes aren't rare. They happen over and over. Here's an historical proof:
Look at those numbers. The 2008 Global Financial Crisis wiped out 57% of stock market value. The dot-com crash: 49%. And these aren't ancient history. 2020 happened just a few years ago. The PSEi fell 37% in weeks. Millions of Filipino investors saw years of savings cut in half almost overnight.
The question is... what was protecting them while stocks crashed? For most people, nothing, worst majority panic and sell. That's the problem this strategy solves.
Meet the man who solved this in 1981.
Harry Browne was an American investment analyst who lived through stagflation, oil crises, market crashes, and recessions (what a lucky dude) all the economic chaos that defined the 1970s and 80s. He noticed something important: nobody can consistently predict what's coming next.
Not banks. Not economists. Not your Tito who says he has a contact at the BSP. So instead of trying to predict the future, Harry asked a different question: what if I just built a portfolio that's ready for all four possible economic seasons?
This strategy is designed to perform in four distinct economic environments.
He built a portfolio that never needed to guess which one was coming. The strategy is called "The Permanent Portfolio". Simple yet elegant portfolio:
25% in stocks which should do well in growth
25% in cash which should do well in a decline
25% in bonds which should do well in deflation
25% in gold which should do well in inflation
The Permanent Portfolio is like a well-rounded team of experts in your long investing journey. Each suited for different challenges, it could perform well in periods of low, growth or high inflation.
But here's the part that trips people up. Every year, one of your four buckets will look like the worst investment on the planet. And you'll be tempted to ditch it. Please don't.
"The goal isn't to pick the winner every year. The goal is to stay in the game long enough for compounding to do the work." as Charlie Munger famously said " The first rule of compounding: Never interrupt it unnecessarily"
The "Stock Envy" chart brilliantly illustrates this emotional rollercoaster. In good years for stocks (like 2009-2017)
Check at the "Best Performing Asset" column - it's always changing. Sometimes it's bonds, other times gold or stocks. This is where the disappointment creeps in. You might think, "Why didn't I just pick the star performer each time?" It's tempting to wish your whole team was made up of today's hero. But remember, tomorrow's challenge is unknown.
In good years for stocks (like 2009-2017), you feel like you're missing out. In bad years (like 2008), you're relieved but might still feel like you're losing money.
This is exactly why sticking with a Permanent Portfolio is tough. It's not easy to trust the process. You might constantly feel like you're underperforming or missing out. But look at the total return at the bottom. Despite the emotional ups and downs, the Permanent Portfolio outperformed World Stocks significantly. This is the power of diversification over the long haul. Remember, it's not about having the best performance every single year. It's about making it through the entire journey successfully. The Permanent Portfolio approach requires patience and trust in your strategy, even when it feels disappointing in the short term. The strategy reminds us that investing isn’t about winning every year. It’s about staying steady, surviving the ups and downs, and growing your money over time. That takes patience and trust.
The investing industry will never say this out loud: nobody knows what's coming next.
Not the fund manager with the fancy suit. Not the financial coach posting their "winning portfolio". Not the bank relationship manager who keeps calling you about their newest UITF. Not the trading group admin who charges P3,000 a month for "exclusive tips."
And here's the part that should feel liberating: everything you need is already available.
Here's how you can build your own version of the permanent portfolio
Thats it. Nothing fancy just simple diversified investment portfolio. And the way you rebalance it is up to you, could be every end of this year or when your birthday comes.
Let's dig deeper to you options:
For your stocks bucket, the easiest way to invest in S&P500 is through banks. They are called feeder funds, here are the list:
- RCBC Peso S&P 500 Feeder Fund - starts at Php1,000 · peso-denominated · tracks IVV (iShares)
- 2. BPI US Equity Index Feeder Fund - ₱10,000 (PHP class) or $1,000 (USD class) · tracks SPY
- BDO US Equity Index Feeder Fund - starts at $500 · tracks IVV
- RCBC US Equity Index Feeder Fund - starts at $200 · lowest USD entry in PH
- Metro$ US Equity Feeder Fund - starts at $500 · Metrobank · tracks IVV
- EastWest S&P 500 Feeder Fund — $500 (USD) or ~₱5,000 (PHP version available)
PS: If you’re using Claude, feel free to message me and I will share the prompt I used that you can include in your project.
Good luck on your investing journey and enjoy the process.
Disclaimer:
Everything here reflects my own personal investing journey, not financial advice. What works for me may not work for you. Due to regulatory guidelines in the Philippines, I'm also not able to recommend specific brokers or platforms. Where you open your account is entirely your call.
Do your own research. Always.