Investments

Investing during the Transitional Economy will present unique challenges

The iTulip.com buy-and-hold portfolio developed between 2000 and 2001 for the final decade of the FIRE Economy that produced two asset bubbles, one in stocks and another in housing, is composed of gold and Treasury bonds. 

Below we compare the performance of a mythical iTulip portfolio manager running a hypothetical iTulip investment portfolio, or HIP, allocated as follows:

• From 2000 to 2001, 25% cash, 75% 10-year Treasury bonds
• From 2001 to Aug. 2010, 10% cash, 15% gold, 75% 10-year Treasury bonds

The following analysis was performed by Twin Focus Capital Partners, who entered this portfolio into a modeling tool called Zephyr StyleADVISOR and compared it to two benchmarks, the Morningstar Moderate Allocation and the Balanced Fund Index composed of 60% S&P 500 Index and 40% Barclays Capital Aggregate Bond Index.

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For a full description of the performance of the portfolio, see iTulip Portfolio Strategy – Section 1, Part I: The Past Ten Years.

The investment implications of the Transitional Economy as explained in The Postcatastrophe Economy are discussed in detail on iTulip.com.