Author Topic: The All-Weather Portfolio (Magic Bullet or BS?)  (Read 619 times)

Chris C

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The All-Weather Portfolio (Magic Bullet or BS?)
« on: June 22, 2019, 07:34:56 AM »
So I'm new to investing and I've been reading about the benefits of this All Weather Portfolio.

From my research, it seems like the way to go but when I talked to my fiduciary advisor he told me to stop trying to find silver bullet solutions and just buy a mix of vanguard 80% stocks 20% bonds.

Do any of you have experience with this asset allocation?

Is it worth looking into any further?


The All Weather Portfolio is a diversified asset mix first introduced by hedge fund manager Ray Dalio and popularized in Tony Robbinsís book MONEY Master the Game: 7 Simple Steps to Financial Freedom.

The asset allocation of the portfolio is broken up like this:

40% long-term bonds
30% stocks
15% intermediate-term bonds
7.5% gold
7.5% commodities

A few more fast comparisons:

When back-tested during the Great Depression, the All Weather Portfolio was shown to have lost just 20.55% while the S&P lost 64.4%. Thatís almost 60% better than the S&P.

The average loss from 1928 to 2013 for the S&P was 13.66%. The All Weather Portfolio? 3.65%.

In years when the S&P suffered some of its worst drops (1973 and 2002), the All-Weather Portfolio actually made money.


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Re: The All-Weather Portfolio (Magic Bullet or BS?)
« Reply #1 on: June 22, 2019, 08:03:20 AM »
Not enough allocated to stocks and heavily weighted to bonds, not a fan of that strategy.  I agree with your adviser which aligns with JL Collins book the Simple Path to Wealth.  Excellent book, highly recommend.

If you are more risk adverse then you go with a higher allocation to bonds, 30 or 40%


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Re: The All-Weather Portfolio (Magic Bullet or BS?)
« Reply #2 on: June 22, 2019, 08:51:56 AM »
When I first read about it I found this article helpful:
Especially the comparison at the end to backtest results from a variety of fixed assets allocations.  You can notice that the performance of different allocations varies year by year but after 40 years they all look pretty much the same.  I heed Faber's warning that the portfolio does the worst in rising-rate environments, and of course the interest rate doesn't have much room to go down currently. 

Overall this line of thinking caused me to delve into what Bogleheads would call Lazy portfolios.  The all weather / season is just one of many allocations that have been designed to reduce volatility while minimizing impact to total return.  Using I got comfortable with gains and losses over a variety of past environments, and selected a portfolio with 40% bond allocations and a small cap / value tilt.


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Re: The All-Weather Portfolio (Magic Bullet or BS?)
« Reply #3 on: June 22, 2019, 02:39:13 PM »
Not a fan of the Tony Robbins Portfolio. A better discussion is here:
You can read and play around here:
and here:

I recommend
At least 50% stocks, but not more than 50% (of total) in any single country
At least 10% bonds/cash but not more than 40%
Significant international stock/currency exposure (at least 10% of total, 25% preferred, world stock weight probably max)
A "real" asset might be good if you are about ready to stop earning money from your job

Buffalo Chip

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Re: The All-Weather Portfolio (Magic Bullet or BS?)
« Reply #4 on: June 22, 2019, 04:23:14 PM »
Iíd go to portfoliocharts and take a look for yourself. IIRC, thatís one of the portfolios that Tyler backtested. Seeing the various portfolios is very eye opening. The conclusion that I came to was that NONE of the popular financial gurus have it optimized to my satisfaction. Including JL Collins who seems to be pretty much venerated in these parts (though I think heís got a strong and very simple portfolio).

So I developed my own portfolio. Which Iíd characterize as Paul Merriman, JL Collins, and the spirit of John Bogle meet Godzilla in an epic financial smack down. 😁

Chris C

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Re: The All-Weather Portfolio (Magic Bullet or BS?)
« Reply #5 on: June 24, 2019, 12:16:58 PM »
@Buffalo Chip - Would you mind sharing your asset allocation and a little behind your thinking?