The author argues that these four types of investments are very unlikely to go down at the same time - if one loses a lot, the other types grow.
" It might seem that a Permanent Portfolio
containing these four contradictory investments would
be neutralized: As one element rose, another would fall
and nothing would be gained.
On a day-to-day basis, that can be true.
But over broad periods of time, the winning investments
add more value to the portfolio than the losing
investments take away."
He gives some numbers in the book, from 1970 till 2002 the portfolio lost money only in four years: 6.2% in 1981, 0.7% in 1990, 2.4% in 1994, and 1.0% in 2001. Three of these four years were followed by double-digit gains. The average gain was 9.5% per year.