This is a trading blog, however, I will sometimes write about long term money in general terms. I found an interesting discussion about a "permanent portfolio" at Random Rogers blog.
http://randomroger.blogspot.com/2010/05/etf-permanent-portfolio.html
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The original idea, I believe, came from Harry Browne in the 1970s allocating 25% each to gold, long term bonds, stocks and cash. Per Browne the mix should be able to weather anything that might come along.
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For those that know something about the markets, the temptation is strong to tinker with the allocations based on perceived valuations in each market, but in the comments that is often a way to decrease performance.
The fear is also noted in the comments, that it may stop working. As I noted 4/26/2010, a few posts back in "Everything seems risky" bonds, stocks and gold all look like they are vulnerable to steep declines. Historically, it is unlikely that all three classes crumble during the same time period and that is the strength of the idea.
I've been doing a short term trading version of the permanent portfolio by selling puts on GLD, SPY, TLT and continuing to have some exposure, no matter how overbought a particular market gets.
Long BRKB, GLD, SPY, TLT
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