No Need for Rebalancing

It's now four years since I sold my house in Asker, and two years since I last made a written assessment related to our financial progress since then. This is in tune with the general philosophy of long term investments, as outlined in my book, which holds that the key to success is to invest in mega-cycles that run for years or decades, and to stay passive for the duration of the run. True to this philosophy, our investments have not been rebalanced in any way over the four years. They have been kept entirely in gold and real-estate.

The Dow/Gold ratio was above 20 in 2018, and is now down to about 17, so our gold has outperformed the Dow. The price of our apartment in Porto has had the best run, up by 100% since 2017. Our cash holding is down due to consumption and missed pay outs from fixed income, but still sufficiently big to last us a few more years. As a result, our allocations have made the following relative moves over time:

• Jan 2017: 100 part real-estate, 200 part gold, 50 part cash - for a total of 350
• Jan 2019: 150 part real-estate, 200 part gold, 50 part cash - for a total of 400
• Jan 2021: 200 part real-estate, 300 part gold, 25 part cash - for a total of 525

Looking forward two years, I expect price inflation to move gold and real-estate up against cash, with gold outperforming real-estate. Stocks may continue up in nominal terms, but will lag gold. The Dow/Gold ratio is more likely to go down to 10 than up from present levels. In short, there's still no need for any rebalancing.

British gold sovereign

By Benedetto Pistrucci - Own work, Public Domain, Link