Performance & Risk Metrics (2016-2026)
| Metric | All Weather Portfolio | Larry Portfolio |
|---|---|---|
| CAGR (10-Year Annualized Return) | 7.2% | 9.1% |
| Max Drawdown | -11.9% | -24.5% |
| Sharpe Ratio (Risk-Adjusted Return) | 0.60 | 0.52 |
| Strategy Type | Passive Portfolio (Risk Parity) | Passive Portfolio (Factor Tilted) |
| Rebalancing Frequency | Annually (fixed target weights) | Annually (fixed target weights) |
All Weather Philosophy
Ray Dalio's All Weather portfolio uses risk parity to balance four economic environments: rising/falling growth and rising/falling inflation. By heavily weighting long-term bonds alongside stocks, commodities, and gold, it aims to perform reasonably across all market regimes without requiring any market timing or active decisions.
Larry Portfolio Philosophy
Larry Swedroe's factor-tilted portfolio concentrates equity exposure in small-cap value stocks globally, while holding only safe short-term bonds. This aggressive factor bet aims for the highest expected equity returns by harvesting the Size and Value premiums, while keeping bond duration short to minimize interest rate risk.
Key Differences Explained
These portfolios represent opposite passive philosophies. All Weather diversifies broadly and weights for risk parity, producing smooth returns. The Larry Portfolio concentrates in small-cap value for maximum factor exposure, accepting much higher volatility. The Larry Portfolio's higher CAGR (9.1% vs 7.2%) comes at the cost of drastically deeper drawdowns (-24.5% vs -11.9%).
- Strategy Type: All Weather is a passive, buy-and-hold approach. Larry Portfolio is a passive, buy-and-hold approach.
- Return vs Risk: All Weather delivered 7.2% CAGR with -11.9% max drawdown (Sharpe: 0.60). Larry Portfolio delivered 9.1% CAGR with -24.5% max drawdown (Sharpe: 0.52).
- Maintenance: All Weather needs only annual rebalancing. Larry Portfolio needs only annual rebalancing.
Side-by-Side Pros and Cons
All Weather Strengths & Limits
- Lowest volatility and smoothest equity curve
- Performs well during deflationary crises
- Zero market timing — truly passive
- Heavy bond allocation drags returns in rising rate environments
- Underperforms in strong equity bull markets
- Negative real returns possible when bonds and stocks fall together (2022)
Larry Portfolio Strengths & Limits
- Highest expected returns from documented factor premiums
- Short-term bonds eliminate interest rate risk
- Academically grounded in Fama-French research
- Deep drawdowns from concentrated equity factor exposure
- Value factor can underperform growth for decades
- Requires strong conviction to hold through long underperformance
Which Strategy is Right For You?
Choose All Weather if: You want the smoothest possible passive portfolio with minimal drawdowns. All Weather is ideal for investors who can't stomach significant losses.
Choose Larry Portfolio if: You have a very long horizon and deep conviction in the size and value premiums. The Larry Portfolio's concentrated factor bet aims for the highest passive equity returns.