Permanent Portfolio Backtesting with Daily Data
August 22, 2013
Over on the forum, user Peak2Trough put up a website that uses daily market data for the Permanent Portfolio going back several decades through today:
Peak2Trough Permanent Portfolio Backtesting Tool
His tool allows for a number of configurable allocation and rebalancing options and will show a chart and table of the results. Since his data uses daily results, it can show a more granular view of maximum drawdowns than what is typically done for annual comparisons.
Standard backtesting warning: The past doesn’t repeat. Backtesting is a good way to disprove ideas, not to prove anything going forward. Keep that in mind if the tinkering engineer in you takes over and wants to optimize based on what happened 40 years ago.
If the daily data showing maximum drawdowns scares you, then I suggest using a technically advanced and quantitatively proven secret technique to manage it:
Stop Looking At Your Portfolio
And no, that’s not a joke. That’s actually what I do. And the less I look at my portfolio, the less I get bothered and the more likely it is to grow because I’m not messing with things. That advice applies to any investment strategy you follow whether or not it’s the Permanent Portfolio!