Performance & Risk Metrics (2016-2026)
| Metric | Permanent Portfolio | Larry Portfolio |
|---|---|---|
| CAGR (10-Year Annualized Return) | 6.8% | 9.1% |
| Max Drawdown | -8.2% | -24.5% |
| Sharpe Ratio (Risk-Adjusted Return) | 0.65 | 0.52 |
| Strategy Type | Passive Portfolio (Strategic Buy & Hold) | Passive Portfolio (Factor Tilted) |
| Rebalancing Frequency | Annually (fixed target weights) | Annually (fixed target weights) |
Permanent Portfolio Philosophy
Harry Browne's Permanent Portfolio splits capital equally (25% each) among stocks, long-term government bonds, gold, and cash (T-Bills). Each asset class is designed to thrive in one of four economic states: prosperity, deflation, inflation, and recession. The quarterly rebalancing to equal weights captures mean-reversion gains across these structural allocations.
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 represent the extremes of the passive spectrum. The Permanent Portfolio is ultra-defensive (25% each in stocks, bonds, gold, cash) with only 6.8% CAGR but a mere -10.5% drawdown. The Larry Portfolio is ultra-aggressive (concentrated small-cap value + short bonds) with 9.1% CAGR but a punishing -24.5% drawdown.
- Strategy Type: Permanent Portfolio is a passive, buy-and-hold approach. Larry Portfolio is a passive, buy-and-hold approach.
- Return vs Risk: Permanent Portfolio delivered 6.8% CAGR with -10.5% max drawdown (Sharpe: 0.58). Larry Portfolio delivered 9.1% CAGR with -24.5% max drawdown (Sharpe: 0.52).
- Maintenance: Permanent Portfolio needs only annual rebalancing. Larry Portfolio needs only annual rebalancing.
Side-by-Side Pros and Cons
Permanent Portfolio Strengths & Limits
- Ultra-defensive — very low maximum drawdowns
- Gold provides inflation hedge and crisis alpha
- Simple to implement with only 4 ETFs
- 25% cash drag significantly reduces long-term returns
- Underperforms badly in strong equity bull markets
- Long-term bonds can lose heavily in rising rate environments
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 Permanent Portfolio if: You prioritize capital preservation and can't stomach deep drawdowns. The Permanent Portfolio's structural design protects against all four economic regimes.
Choose Larry Portfolio if: You have a very long time horizon and want maximum passive returns through documented factor premiums. The Larry Portfolio's drawdowns are severe but historically temporary.