Newsletter end of December 2021

The month of December 2021 closed with a huge year-end rally. Altogether, the Enhanced Permanent Portfolio reference account added +3.77% while the ACWI added +3.12% and Europe +5.12%. Defensive Treasuries were down by -2.01% and Gold up +3.3%. The Bitcoins was down by -18% but because we installed this small position by writing one month ATM put options and even hedged this position partially by writing ATM covered calls, the huge premium decay of more than 10% of these options did offset any losses of this position.

All together the portfolio performed well in 2021 with a very low volatility or risk. The option based premium income could completely offset the bad -4.2% performance of Gold and the -4.6% performance of Treasuries. So even if we do not think these positions will post big gains in 2022, these positions are still very important to reduce the overall volatility of the portfolio to our 7% goal which is 2-3x less than the volatility of a pure equity portfolio. Another way to reduce the risk of our portfolio are permanent staggered stop loss orders using the highly liquid nearly 24h traded S&P500 ES Futures. These stop loss orders can reduce huge losses of a sudden market crash to less than 5-10%. Such a market crash could for example happen if China attacks Taiwan or if Terrorists attack a major city using chemical, biological or atomic weapons. These stop loss orders already worked well during the first Covid market crash in March 2020.

We all wish you and your families a very good year 2022!

Your Rational Invest Team
Walter Baumann / Frank Grossmann / Thomas Ritter
Tel +41 79 306 11 60 / Email

Newsletter end of November 2021

The month of November 2021 closed on a down note with high volatility because of the new Omicron Covid variant. Altogether, the Enhanced Permanent Portfolio reference account lost -0.38% while the ACWI lost -2.31% and Europe lost -2.64%. Defensive Treasuries were up +2.77% and Gold down -0.69%. As a complement to our small Gold position, we decided to add small amounts (<5%) of Bitcoins to the portfolio. Instead of buying Bitcoins right away we sell 1 month ATM BITO Put options. The premium of these options is about 10% per month, so this way we can get Bitcoins within one month with a 10% discount or we get a nice premium. We think that keeping a small percentage of Gold and Bitcoins makes sense because of the low correlation to the other assets and as a protection against inflation. The main asset to fight inflation is VTIP a short-term inflation protected Treasury which should return about 5% per year.

Your Rational Invest Team
Walter Baumann / Frank Grossmann / Thomas Ritter
Tel +41 79 306 11 60 / Email

Newsletter end of October 2021

The month of October 2021 was an extremely good month for world stock markets. A surprise was also the good performance of our defensive hedging assets Treasuries and Gold. All together, the Enhanced Permanent Portfolio reference account added +4.6% while the ACWI was up +5.4% and Europe up +4.55%. Defensive Treasuries were up +2.47% and Gold up +1.48%. The Sharpe Ratio (risk adjusted performance) topped 10 for this month which is an extremely occasion. It means that also market volatility was very low for the month of October.

Your Rational Invest Team
Walter Baumann / Frank Grossmann / Thomas Ritter
Tel +41 79 306 11 60 / Email

Newsletter end of September 2021

For the month of September 2021, the Enhanced Permanent Portfolio reference account lost-2.28% while the S&P500 was down -4.7%, ACWI was down -4.23% and Europe down -3.41%. Unfortunately, also our defensive hedging assets lost -2.91% for Treasuries and -3.22% for Gold.
The only relieve came from good option premium income, which contributed with about+2% within a month. The effect can be seen in the below chart.

With the month of September we also ended the 3rd quarter of 2021 with a profit of +3.88%. Even with the bad month of September the portfolio achieved a particularly good 3 month Sharpe ratio of 1.78%.

Going forward we think that the recalibration of Treasury yields should soon come to end and from then on, Treasuries should again offer a good protection to our portfolio.

From this month on, we calculate currency adjusted SI (Since Inception) performances for our benchmark indexes which are the USD denominated ACWI (All Country World Index) and the DJ Stoxx 600 Index which is EUR denominated. These currency adjusted performances are also used in the performance chart to allow an unbiased comparison to our CHF (Swiss Franc) denominated reference portfolio.

Your Rational Invest Team
Walter Baumann / Frank Grossmann / Thomas Ritter
Tel +41 79 306 11 60 / Email

Newsletter end of August 2021

For the month of August 2021, the Enhanced Permanent Portfolio strategy-account added +2.58% while the 100% equity ACWI index (All Country World Index) was up by +2.17% and Europe (Euro Stoxx 600 index) added +1.98%. Treasuries lost -0.4% and Gold -0.1%

Your Rational Invest Team
Walter Baumann / Frank Grossmann / Thomas Ritter
Tel +41 79 306 11 60 / Email

Newsletter end of July 2021

For the month of July 2021, the Enhanced Permanent Portfolio strategy-account added +3.4% while the 100% equity ACWI index (All Country World Index) was up by 0.9%. Europe added 1.97%.
As it can be seen in the below monthly chart, the EPP (blue line) only had about half the volatility than major equity indexes, because of the again negative correlation of the defensive US Treasury component (yellow line).

Your Rational Invest Team
Walter Baumann / Frank Grossmann / Thomas Ritter
Tel +41 79 306 11 60 / Email

Newsletter end of June 2021

For the month of June 2021, the Enhanced Permanent Portfolio strategy-account added +0.84% while the 100% equity ACWI index (All Country World Index) was up by 1.26%. While Equity and Treasuries performed well, Gold was down -6%. Volatilities came down to low pre-covid levels indicating that investors don’t see any immediate market risks during this summer.

Your Rational Invest Team
Walter Baumann / Frank Grossmann / Thomas Ritter
Tel +41 79 306 11 60 / Email

Newsletter end of May 2021

For the month of May 2021, the Enhanced Permanent Portfolio strategy-account added +1.74% which was better than the 100% equity ACWI index (All Country World Index) which was only up by 1.47%. The significant difference however was the much lower volatility of the EPP strategy with a max drawdown of 1.34% versus 3.83% for the ACWI on May 12. Fortunately this intermediate drawdown was only of short duration.

Your Rational Invest Team
Walter Baumann / Frank Grossmann / Thomas Ritter
Tel +41 79 306 11 60 / Email

Newsletter end of April 2021

For the month of April 2021, the Enhanced Permanent Portfolio strategy-account added +2.48%.
In April, Gold (+3.5%) and Treasuries (+2.5%) finally stopped their huge decline they had since last summer. Equity had a good month with the S&P500 up +5%.

Your Rational Invest Team
Walter Baumann / Frank Grossmann / Thomas Ritter
Tel +41 79 306 11 60 / Email

Newsletter end of March 2021

For the month of March 2021, the Enhanced Permanent Portfolio strategy-account lost -0.61%.
In March, Gold (-1.15%) and Treasuries (-5.25%) continued to decline. Equity had a very good month with the S&P500 up +4.5%. Year to date Treasuries are now down by -13.9% and Gold down -10.35% while the S&P500 is up +6.35%.
It is important to point out, that the goal of this strategy is not to outperform the stock market during rallies, like we see it since some months, but the goal is to achieve long term returns with 2x to 3x lower risk (volatility).
It looks like Treasuries have reached a bottom after consolidating 20% since their August 2020 culmination. Due to again quite attractive yields they should from now on act again as a reliable hedge against market downturns and again add a positive contribution to the strategy performance.

Your Rational Invest Team
Walter Baumann / Frank Grossmann / Thomas Ritter
Tel +41 79 306 11 60 / Email