Permanent Portfolio (Browne)
Harry Browne's Permanent Portfolio allocates 25% each to stocks, long-term bonds, gold, and cash. Its simplicity is its strength: four uncorrelated assets, rebalanced annually.
Allocation
What if you add Bitcoin?
Adding Bitcoin changes the risk-return profile. Here is how different allocations compare, reducing other positions proportionally:
| Portfolio | Return | Volatility | Sharpe |
|---|---|---|---|
| Base (Permanent Portfolio (Browne)) | 4.90% | 6.54% | 0.28 |
| With 5% Bitcoin | 5.41% | 7.10% | 0.33 |
| With 10% Bitcoin | 5.91% | 8.13% | 0.35 |
Returns are geometric (compound). Sharpe ratio uses 3.10% risk-free rate (US Cash, JPM LTCMA 2026). Forward-looking estimates, not predictions.
Harry Browne's four-way bet
Harry Browne designed the Permanent Portfolio in the 1980s around a simple insight: at any moment the economy is in one of four states — prosperity, recession, inflation, or deflation — and you can't reliably predict which is next. So instead of forecasting, you hold one asset that thrives in each: stocks for prosperity, long-term bonds for deflation, gold for inflation, and cash for recession. Twenty-five percent each, rebalanced once a year.
The elegance is the absence of decisions. There's no view to get right, no tactical timing, no schedule to obsess over. Whatever the world does, a quarter of the portfolio is positioned for it, and the annual rebalance quietly sells what's expensive to buy what's cheap.
What the Permanent Portfolio returns now
Forward-looking returns are moderate by design. With half the portfolio in gold and cash — neither of which compounds the way equities do — the expected return shown above sits below a balanced 60/40, but with notably lower volatility and shallower drawdowns.
That 50% in gold and cash is both the strength and the cost. It's what gives the portfolio its calm in a crisis, and it's what drags the long-run return in normal times. You're explicitly paying for insurance you may not need in any given decade.
Where it shines and where it disappoints
The Permanent Portfolio's best moments come in turmoil: inflation shocks, when gold carries the load; deflationary scares, when long bonds rally; equity crashes, when cash and gold hold firm. Its gold allocation is also the cleanest answer to the 2022 problem that hurt the 60/40, since gold doesn't move with the stock-bond correlation.
Its disappointing stretches are long, calm bull markets, where 75% of the portfolio isn't in the asset that's working. Investors who hold it need conviction precisely when it's lagging — which, as with All-Weather, is exactly when most give up on it.
Who the Permanent Portfolio is for
It fits an investor who values simplicity and resilience over maximum growth: someone who wants a hands-off allocation, distrusts forecasting, and would rather never experience a 40% drawdown than capture every percentage point of a bull market. The once-a-year rebalance makes it genuinely low-maintenance.
It's a weaker choice for long-horizon accumulators who can ride out volatility — they're likely better served by more equity — and for anyone uncomfortable holding 25% in gold, which can go through long stretches of doing nothing. As with any of these models, a small Bitcoin sleeve is one way to add a fifth, modern source of non-correlation; the table above shows the effect on the numbers.
How these numbers are calculated
Expected returns and volatilities come from J.P. Morgan's 2026 Long-Term Capital Market Assumptions (30th edition). Portfolio risk is computed using the full 27x27 correlation matrix, not simple weighted averages. The Sharpe ratio uses 3.10% (US Cash) as the risk-free rate.
For full methodology details, see the methodology page.
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