Permanent Portfolio (Harry Browne)
Created by Harry Browne
Four equal slices built to survive any economic season, not just to grow the fastest in good times.
What is it?
The Permanent Portfolio, designed by investment advisor and political writer Harry Browne in the 1980s, splits a portfolio into four equal 25% slices: US stocks, long-term Treasury bonds, gold, and cash. Each slice is chosen to dominate during a different economic regime, so that at any given time at least one part of the portfolio is thriving.
The philosophy
Browne's starting premise was that no one — including professional economists — can reliably predict which of four broad economic conditions (prosperity, inflation, deflation, or recession/tight money) is coming next. Rather than forecasting, he built a portfolio deliberately robust to all four: stocks do well in prosperity, gold does well during inflation, long bonds do well during deflation, and cash protects capital and provides optionality during tight-money recessions. The name "permanent" reflects his intent that an investor sets this allocation once and holds it through every kind of market, without trying to time or predict the cycle.
How it works
The 25% stock sleeve captures growth during good economic times. The 25% long-term Treasury bond sleeve benefits the most when interest rates fall sharply, such as during deflationary shocks. The 25% gold sleeve is the portfolio's inflation and crisis hedge, historically surging when confidence in currencies or the financial system erodes. The 25% cash sleeve (short-term Treasuries or equivalents) cushions the portfolio during recessions and tight monetary policy, and gives the investor dry powder to rebalance into whichever of the other three assets has become cheap.
Who is it for?
This strategy is built for highly risk-averse, capital-preservation-focused investors who care more about avoiding a catastrophic drawdown than about maximizing long-run returns. It suits someone who wants an allocation they genuinely never have to adjust based on their macro views, and who is willing to accept a lower expected return in exchange for a historically much shallower worst-case decline than a stock-heavy portfolio.
Key strengths & trade-offs
Its central strength is resilience: because only 25% is in equities, historical drawdowns have been dramatically smaller than a 60/40 or all-stock portfolio, and it has rarely had a severely negative year. The trade-off is a meaningfully lower long-run compound growth rate, since half the portfolio (gold and cash) does not generate strong long-term real returns on its own. It also tends to lag badly during sustained bull markets in stocks, which can test an investor's discipline to stay the course.
Risk Level
Rebalancing
annual
Number of Assets
4
Best For
Capital preservation, low tolerance for drawdowns
Current Allocation
| US Large Cap | 25% |
| US Long-Term Bonds | 25% |
| Gold | 25% |
| Cash | 25% |
Performance: 19-Year Backtest
Data for Cash starts 2007. Simulation covers 19 years.
$10,000 initial investment → $35,101
Annual Returns
| Strategy | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Permanent Portfolio (Harry Browne) | +11.8% | -6.0% | +7.9% | +12.0% | +17.9% | +3.2% | -2.4% | +12.0% | -4.8% | +6.5% | +10.5% | -0.1% | +16.2% | +10.7% | +4.5% | -5.9% | +5.9% | +15.3% | +23.3% | -2.6% |
Key Metrics
ETFs in This Strategy
Based on historical data. Past performance does not guarantee future results. This site is for educational purposes only and does not constitute investment advice.