In 2013, gold is down 18%; bonds as measured by the iShares Barclays 20+ Year Treasury Bond ETF ( TLT), are down 14%; cash is, of course, flat while the S&P 500 is up 17%. With two of the permanent portfolio asset classes down double digits for the year, it is not a surprise that PRPFX is down 2.5% for the year and PERM is down 6.5%.

PERM's larger decline is at least partially attributable to having to hold more of the bond allocation in longer-dated bonds in order to adhere to the fund's underlying index, and to lesser extent, the small exposures to materials and resources-related equities that have also struggled this year.

Often we talk about the extent to which no single investment strategy can be the best for all markets and that long-term investing, as opposed to short-term trading, must involve patience. The 10-year result for PRPFX is outstanding. While there is no way to know whether it can turn in a repeat performance over the next 10 years, it has proven itself to be a valid strategy which means there will be periods where it does do well but there will also be future years similar to 2013 where it struggles.

This is where patience becomes crucial to long-term investment success. As an investor, you know that there will be some years where your preferred strategy will work very well and some in which it will not. If you understand that ahead of time, then you will be less likely to get frustrated and throw in the towel. Frustration and impatience are impediments to long-term investment success.

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