Permanent Portfolio Strategy: All-Weather Asset Allocation
Permanent Portfolio Strategy
Origin
The Permanent Portfolio was proposed by American investment writer Harry Browne in 1981. Its core idea: since nobody can accurately predict economic cycles, the best strategy is to prepare for all economic environments.
Asset Allocation
| Asset Class | Allocation | Economic Environment |
|---|---|---|
| Stocks | 25% | Prosperity |
| Long-term Bonds | 25% | Deflation/Recession |
| Gold | 25% | Inflation |
| Cash/T-Bills | 25% | Tight money/Crisis |
Why It Works
The logic: in any economic environment, at least one asset class will perform well:
- Prosperity → Stocks rise
- Inflation → Gold rises
- Deflation → Bonds rise
- Crisis → Cash preserves value
Low correlation between the four asset classes ensures portfolio stability.
Historical Performance
Since 1972, the Permanent Portfolio has delivered approximately 8-9% annualized returns with a maximum drawdown of about 12-15%. While it won't beat a pure stock portfolio in bull markets, its drawdowns in bear markets are significantly smaller.
How to Implement
- Divide capital equally among four asset classes
- Rebalance annually or quarterly
- Adjust when any asset deviates more than 5-10% from target
Track on AlphaDesk HK
- 📊 Dashboard [blocked] — Track HSI (stocks), gold, USD, etc.
- 🥇 Gold Analysis [blocked] — AI gold price analysis
- 📈 Market Monitor [blocked] — Track all asset classes
Disclaimer: Past performance does not guarantee future returns. This article is for educational purposes only.
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