The Rich Invest in ‘Catastrophe Portfolios’

From a WSJ article today on catastrophe portfolios among the rich, the thing that caught my eye is the one-third (!) in gold. Assuming that’s the case, these portfolios are already having their catastrophe, what with gold being off 12% from its early September peak. Very zen to bring the catastrophe inside one’s portfolio.

According to an article in Reuters, some of the most fearful rich are creating “catastrophe portfolios.”  Ivan Adamovich of the Swiss bank Wegelin said that the catastrophe portfolio is one-third gold, one-third blue chips and one-third debt in safe, developed countries  (whatever those are).

via The Rich Invest in ‘Catastrophe Portfolios’ – The Wealth Report – WSJ.


  1. seen a bunch of these "protector" portfolios. another example is 50% US treasuries, 25% gold and 25% USD vs. Euro exchange rate.

    sold to investors as a hedge against armageddon

  2. ' these portfolios are already having their catastrophe, what with gold being off 12% from its early September peak'
    Some perspective needed Paul.. S+P is back to its 12/1998 level, gold is back to the level it first touched in August?!

  3. Absurd that this is called a catastrophic portfolio. Adding gold to a portfolio simply broadens diversification. It is a rediscovery that the traditional so-called conservative stock/bond only portfolio is lacking in diversification.

    The fact that gold has volatility is irrelevant. It is not meant to act like cash. Gold's role is to be part of a truly diversified portfolio so that the portfolio can weather any type of economic climate.

    In looking at this, I am reminded of Harry Browne's Permanent Portfolio – 25% gold, 25% Total US Stock Market, 25% LT Treasury Bonds, 25% Cash. This time tested portfolio construction has annual returns of 9% over the last 40 years. It was actually up 2% in 2008. And even with the recent haircut in gold and the stock market, this portfolio is up almost 9% in 2011. Not too shabby in the short, intermediate and long term.

    The rich have waken up to this – the financial community has not. It takes a long time to change conventional wisdom. Gold is not just for doom and gloom types, it's for proper diversification.

  4. A genuine Catastrophe Portfolio has to include a few dozen flawless diamonds. Their value density is much greater than gold; your valet can sew them into the waistband of your favorite trousers. When evacuating one step ahead of angry hoards, they are all but undetectable. They won't be revealed by a metal detector and only the sharpest body-scan-reading TSA officer would be able to spot them since they are (except for some refraction) all but transparent. If really desperate, you can swallow them if necessary and, ahem, "retrieve" them later…