Newsletter end of May 2022

The month of May, was a very volatile month. The Enhanced Permanent Portfolio reference added 2.68%, while the World market (ACWI) was up 0.45% and the US S&P500 (SPY) up by 0.23%. Europe (VGK) added 2.41% however 2% of this performance was due to the strong Euro. Draw-downs of the Enhanced Permanent Portfolio have been less than half of the Equity market draw-downs.

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

Newsletter end of April 2022

The month of April, was a particularly bad month. The Enhanced Permanent Portfolio reference account lost -4%, while the ACWI world market was down -8.07% and the US S&P500 down by -8.8%.
There was simply no place to hide because all asset classes dropped. Treasuries by -9.6%, Gold by -2%, Silver by -8%, Copper by -7.3% and the Bitcoin lost even -15%.
This way also the broad diversification of our Permanent Portfolio did not help much, however we lost about 4% less than the market and on the long run this makes the difference as limiting losses is as important as posting gains.

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

Newsletter end of March 2022

During the month of March, world markets recovered from the February losses. The Enhanced Permanent Portfolio reference account posted a +0.3% gain, while the ACWI was up by +3.16% and Europe up by +0.47%. The Portfolio had a maximum drawdown of only -0.93% in March compared to -6% for ACWI and -8% for the Stoxx600 which shows the high volatility and risk of an equity only portfolio.

Defensive Treasuries were down -5.34%, Gold up +1.27% and Crude oil down -4%. Our short term inflation protected treasury ETF (VTIP) lost 1.3% which substantially reduced the overall March profit, as VTIP is by far the biggest position in our portfolio. However, with a yield which increased from 0.3 to 1.2% these first 3 months and on top of this a redemption for the actual US core inflation, we can be sure to get between 5% and 8% this year from this position.

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

Newsletter end of February 2022

During the month of February, world markets posted again losses due to Putins invasion of the Ukraine. The Enhanced Permanent Portfolio reference account however posted a small +0.22% gain, while the S&P500 lost -3.0%, ACWI lost -3.1% and Europe -3.4%. Defensive Treasuries were down -1.6%, Gold up +6.1% and Crude oil up +9.1%. Beginning of the month we decided to rather have a small position of crude oil instead of the Bitcoin because of the negative correlation of oil compared to equity. Negatively correlated assets are rare at the moment, but we need them to lower the volatility of the portfolio. Our short term inflation protected treasury ETF (VTIP) recovered the 1% loss from January which together with good premium income allowed us to post a positive monthly result.

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

Newsletter end of January 2022

The year 2022 started with a major market correction. The Enhanced Permanent Portfolio reference account lost -3.84% while the S&P500 lost -5.82%, ACWI lost -5.05% and Europe -4.31%. Defensive Treasuries were down -3.91%, Gold down -1.68% and the Bitcoin was down -16.4%. At the moment we have a unusual strong positive correlation over all asset classes so that portfolio diversification does not help much to reduce drawdowns and volatility. The simple cause is, that rising yields are equally bad for Treasury prices and for equity.
Nearly -1% of the -3.8% portfolio loss was due to our currency hedge, which includes a mayor position in short term inflation protected treasuries (VTIP ETF). The base yield of this ETF increased from 0.3% to 0.8% within a month, which resulted in a 1% loss of this position. This however is not really of great concern as to this 0.8% the actual inflation of about 5% are added, so that VTIP should pay about 6% of dividend this year or about 1.5% quarterly dividend by end of March.

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

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