“The Permanent Portfolio isn't designed to make you rich; it's designed to keep you from being poor.” ~ Harry Browne, American Libertarian and Finance Author

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2024 will go down as the ‘Year of the Election’, as voters across the world cast their ballots, introducing new governments, prime ministers, and presidents. Each new administration arrives with fresh ideas and new promises. Alas, as French writer Jean-Baptiste Alphonse Karr observed, “plus ça change, plus c'est la même chose,” or “the more things change, the more they stay the same.”

In markets, the cycles of opportunities and risks, and booms and busts, will endure. As we enter 2025, we would argue the need for a resilient approach to portfolio construction has never been greater.

Despite new promises, geopolitical uncertainties are likely to persist. Whilst new US president-elect Donald Trump claims he could end the Ukraine war “in a day,” our base case remains one of continued geopolitical friction. Such tensions can disrupt trade and amplify the risks inherent in global markets. As major economies navigate these delicate waters, aggressive negotiation tactics and tariffs will likely hinder global cooperation, exacerbate cost pressures and further intensify market volatility.

Simultaneously, fiscal policies across major economies reveal a relentless commitment to public spending, aggravating risks posed by rising levels of public debt. The fiscal path we embarked in 2020 has created a precarious trade-off. Cease spending, and growth may plummet. Yet continued spending fuels inflation, exposing long-term vulnerabilities. As we continue on this fiscal path policymakers chose, the difficulties in managing the trade-off between economic growth and financial stability will become evident.

However, for every ying, there is a yang. Whilst the risks are significant, so is the opportunity driven by transformative trends. Electrification, digitalisation and infrastructure development, alongside the rapid evolution of Artificial Intelligence, offer avenues for immense growth. AI promise a profitability surge in corporate profits for companies poised to leverage these advancements. But capturing this opportunity requires portfolios that are both resilient and adaptable.

Our approach leverages the Permanent Portfolio framework, maximising the benefits of diversification, allocating to assets that perform well in inflationary regimes, such as those marked by reflation or stagflation, alongside equity portfolios that will benefit from these emerging trends.

A comprehensive understanding of the value of the assets in one’s portfolio will be crucial as we enter 2025. Moreover, understanding downside risks alongside a dynamic approach to execution will allow investors to strike a balance between capitalising on growth and managing risks.

This philosophy comes to life in our systematic multi-asset approach, which integrates trend-following techniques to capture opportunities across diverse economic regimes. As we head into 2025, a well-prepared, flexible, and diversified portfolio is more crucial than ever to weather volatility and risks whilst harnessing the potential of emerging opportunities.

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Harry Browne was an American financial author and libertarian who developed the Permanent Portfolio framework in the 1980’s. This balanced investment strategy allocates equally to four asset classes — equity, bonds, gold, and cash — designed to perform well in all economic environments: prosperity, recession, inflation, and deflation, providing resilience and long-term stability.

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