Harry Browne was both a successful investor, writer, and libertarian politician. He introduced the “Permanent Portfolio” in his book Fail-Safe Investing in 1999.

His approach is based on the  assumption that the economy, at any time, can possibly evolve withing of these 4 states:

  • Prosperity
  • Inflation
  • Deflation
  • Recession

Any of these 4 states can appear successively, in any order, depending of the growth of the economy and depending of the quantity of money in circulation in the economy.

The economy is either expanding (we experience Prosperity) or contracting (we experience Recession). Then relatively to the economy expansion/contraction, the quantity of money can grow faster than the economy expansion (we will experience Inflation), or can grow slower than the economy expansion (we will experience Deflation).

These are absolute laws of our modern economies. At any time, the economy will be within one of these four states or will be transiting from one state to another. Any state can last as short as a few months and last as long as a decade.

For each of these four states, an asset class is appropriated to perform well:

  • Prosperity: good for stocks
  • Recession: good for cash
  • Inflation: good for gold
  • Deflation: good for bonds

Thus, Harry Brown recommands holding each of these 4 assets, in equal proportion:

  • 25% Stock
  • 25% Cash
  • 25% Gold
  • 25% Bond

The beauty of this allocation is that it does not try to predict how economy will perform in the future to select assets. It just keep a “permanent” allocation all the time within these 4 assets, thus at least one of them will perform well, whatever happens in the economy.

For a US Permanent Portfolio, I would recommand the following ETFs:

  • Stock: VTI
  • Cash: SHY
  • Gold: IAU
  • Bond: TLT

Expense ratio for VTI, SHY, IAU, TLT are respectively 0.05%, 0.15%, 0.25% and 0.15%. The cost of maintaining a US Permanent Portfolio is extremely low as (0.05+0.15+0.25+0.15)/4 = 0.15% per year.

Back-Test Performance TablePP.Table

Back-Test Statistics


Equity Curve



This first allocation is the backbone of the NLX Portfolio:

Easy to implement

Cheap to maintain

Will resist to almost any economic crisis and market shock


Permanent Portfolio Historical Performance

Permanent Portfolio Monthly
Monthly data since 1992

Permanent Portfolio Yearly
Yearly data since 1971


Recommanded reading for the Permanent Portfolio of Harry Browne

The Permanent Portfolio: Harry Browne’s Long-Term Investment Strategy
by Craig Rowland and J.M. Lawson, 2012

Fail-Safe Investing
by Harry Browne, 1999


GestaltU Studies

Permanent Portfolio Shakedown Part I
Permanent Portfolio Shakedown Part II
The Permanent Portfolio Turns Japanese