Revealed: Harvard University’s failsafe investment strategy

With the Dow Jones scaling new heights, and other markets not far behind, investors face a dilemma. Is this a time to buy? Or, for those who have suddenly found themselves sitting on a profit for the first time in a decade, is it time to sell? This is the question that faces most investors in good times and bad, but in 2013 the anxiety seems particularly acute. Many have been burned so badly in recent years that they have given up, preferring to keep their cash in bank accounts. But in the era of negative real interest rates, even this is dangerous.

In 1981 the investment analyst Harry Browne introduced the world to his ‘Permanent Portfolio’. His idea was very simple: if you own well-distributed assets, you should always have something that performs. Mr Browne’s portfolio was broken evenly four ways between stocks, cash, gold and long-term treasury bonds. Since 1972, his portfolio has returned more than 10 per cent a year, with impressively low volatility.