All Weather Portfolio Summary

All Weather Portfolio Summary

January 7, 2019 0 By Jeremy


Rules-Based Strategy Summary: Ray Dalio’s All Weather Portfolio

Now that the site has been up for awhile, I thought it was a good time to add a new strategy to track: Ray Dalio’s All Weather Portfolio.

The All Weather Portfolio was introduced to the world by Tony Robbins in his book, MONEY Master the Game: 7 Simple Steps to Financial Freedom.

The intent behind the portfolio, as Dalio discusses in the book, is to be able to weather any market type including bulls, bears, trending, non-trending, etc.

It is a simple portfolio – set it and forget it until it is time to rebalance.  It is similar in structure and intent to the Coffeehouse Portfolio or Harry Browne’s Permanent Portfolio.

Assets in the All-Weather Portfolio

The All Weather Portfolio holds five assets, each designed to provide diversification and both return potential as well as capital preservation.

The five assets in the portfolio include:

  • 40% – Long-Term Bonds
  • 30% – Equities
  • 15% – Intermediate -Term Bonds
  • 7.5% – Gold
  • 7.5% – Commodities

All Weather Portfolio Asset Type Chart

According to Dalio, each asset type serves a specific purpose.  There are four things that can affect the price of an asset, which leads to four different “seasons” the market can go through.  By investing in each of the five different assets, the investor is set up to protect capital and capture gains when they are available.

So what are the four things that can impact asset prices, and the subsequent seasons?  They are listed below:

The Four Things that Impact Asset Prices

  1. Inflation
  2. Deflation
  3. Rising Economic Growth
  4. Declining Economic Growth

The Four Seasons

  1. Higher than expect inflation (rising prices)
  2. Lower than expected inflation (deflation)
  3. Higher than expected economic growth
  4. Lower than expected economic growth

What is interesting about this portfolio is that it holds commodities.  None of the other strategies tracked at Robotic Investing have that in place.  I look forward to seeing what that does.

The All-Weather Portfolio Rules

This is a very easy portfolio to set up.  There are only two rules / steps:

  • Buy the required percentage of an ETF that tracks each of the five assets.
  • Each year, rebalance the portfolio back to the target allocations

Robotic Investing has set up a portfolio going back to the start date of July 2, 2018 (similar to the other portfolios tracked on the site) to see how it performs.

The ETFs that will be used to track the portfolio include the following:

  • 40% – Long-Term Bonds – TLT
  • 30% – Equities – VTI
  • 15% – Intermediate -Term Bonds – IEF
  • 7.5% – Gold – GLD
  • 7.5% – Commodities – DBC

If you want to be notified when new posts about the All Weather Portfolio goes up (once a month), please consider subscribing to the newsletter.

Disclaimer: The information provided on this site is for education purposes only. The author is not a registered financial adviser and the ideas discussed on the site are just trading analysis and not recommendations. Robotic Investing doesn’t endorse any of the comments that might appear on the discussion threads. There is no guarantee for those comments to be accurate. By reading this site you automatically agree that Robotic Investing is not responsible for any of your trading decisions. Remember not to risk money that you cannot afford to lose. and all its products are Copyright© by Robotic Investing and property of Robotic Investing. All Rights Reserved.

Featured Image: Greenwich, Connecticut by Doug Kerr