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The Desert Portfolio was proposed by the user Desert on the Gyroscopic Investing forums as a way to combine the simplicity of a classic stock/bond allocation. It consists of just 3 asset classes and is similar to the Permanent Portfolio's barbell bond because of its 60% intermediate-term bond allocation.
The backtesting period is limited by the inception date of US Total Stock Market (TOTSTOCKMKT.X): Jun 30, 1926.
A quick overview of the assets within the portfolio, its performance and main metrics.
The portfolio consists of 3 asset classes.
| Name / Ticker | Type | Currency | Inception | Weight |
|---|---|---|---|---|
Intermediate-Term Treasury MTTREASURY.X | Asset Class | USD | Dec 30, 1870 | 60% |
US Total Stock Market TOTSTOCKMKT.X | Asset Class | USD | Jun 30, 1926 | 30% |
Gold GOLD.X | Asset Class | USD | Dec 30, 1791 | 10% |
The backtest spans over a period of 100 years. With an annual return of 7.21% for Gyroscopic Investing Desert Portfolio, the cumulative return over that period amounts to 103005%.
| Portfolio Score | Gyroscopic Investing Desert Portfolio |
|---|---|
| Portfolio Score |
| Returns | Gyroscopic Investing Desert Portfolio |
|---|---|
| Month-to-Date | 1.39% |
| Year-to-Date | 1.39% |
| 3M | 2.97% |
| 6M | 9.44% |
| Annualized Return (3Y) | 11.98% |
| Annualized Return (5Y) | 6.16% |
| Annualized Return (10Y) | 7.26% |
| Annualized Return (20Y) | 6.74% |
| Annualized Return (All, 99.5Y) | 7.21% |
| Risk | Gyroscopic Investing Desert Portfolio |
|---|---|
| Annual Volatility | 3.87% |
| Max Drawdown | -32.7% |
| Sharpe Ratio | 1.8 |
| Sortino Ratio | 2.7 |
| Adjusted Sortino Ratio | 1.91 |
With a projected annual return (CAGR) of 7.21% and an initial investment of $10,000, Gyroscopic Investing Desert Portfolio would have the following projected capital growth over the next 50 years.
| Year | Starting Capital | Ending Capital | Total Gain | Avg Monthly Gain | Cumulative Return |
|---|---|---|---|---|---|
| $10,000 | $10,721 | $721 | $60 | 7.2% | |
| 5 | $14,164 | $15,185 | $1,021 | $85 | 51.8% |
| 10 | $20,061 | $21,507 | $1,446 | $121 | 115% |
| 15 | $28,414 | $30,462 | $2,049 | $171 | 205% |
| 20 | $40,244 | $43,146 | $2,902 | $242 | 331% |
| 50 | $324,911 | $348,337 | $23,426 | $1,952 | 3,383% |
A detailed look at the returns of the portfolio.
| Portfolio | All (99.5Y) | 20Y | 10Y | 5Y | 3Y | 1Y |
|---|---|---|---|---|---|---|
| Gyroscopic Investing Desert Portfolio | 7.21% | 6.74% | 7.26% | 6.16% | 11.98% | 18% |
| Year | Gyroscopic Investing Desert Portfolio |
|---|---|
| 1926 | 4.25% |
| 1927 | 13.13% |
| 1928 | 11.1% |
| 1929 | -0.82% |
| 1930 | -3.86% |
| 1931 | -14.48% |
| 1932 | 4.7% |
| 1933 | 20.76% |
| 1934 | 9.47% |
| 1935 | 16.26% |
| Portfolio | Positive Years | Negative Years | Positive Ratio | Best Return Years | Worst Return Years |
| Gyroscopic Investing Desert Portfolio | 89 | 12 | 88.12% | 101 | 101 |
Let's analyze how much risk the portfoliohas.
A drawdown represents the period of decline an investor experiences between a portfolio's peak (new high) and its subsequent low, also known as the valley (before it begins to recover). The table below highlights the five largest drawdowns encountered by the portfolio.
| Drawdown period | Recovery period | Total | |||||
|---|---|---|---|---|---|---|---|
| Max drawdown | Start | Valley | # Months | End | # Months | # Months | Chart |
| -32.7% | 1929-09-03 | 1932-05-31 | 33 | 1934-11-13 | 29 | 62 | |
| -16.14% | 2021-11-10 | 2022-10-20 | 11 | 2024-03-07 | 17 | 28 | |
| -15.36% | 1937-04-01 | 1938-03-31 | 12 | 1939-09-20 | 18 | 30 | |
| -13.1% | 2008-05-21 | 2008-10-27 | 5 | 2009-08-13 | 10 | 15 | |
| -12.63% | 1980-01-22 | 1980-03-31 | 2 | 1980-06-04 | 2 | 4 | |
| -11.78% | 1974-02-27 | 1974-09-26 | 7 | 1975-02-07 | 4 | 11 | |
| -8.84% | 1987-09-03 | 1987-11-27 | 3 | 1988-10-17 | 11 | 13 | |
| -8.76% | 2020-02-21 | 2020-03-18 | 1 | 2020-05-20 | 2 | 3 | |
| -7.94% | 1993-10-18 | 1994-05-11 | 7 | 1995-03-27 | 11 | 17 | |
| -7.87% | 1946-06-03 | 1947-05-30 | 12 | 1949-08-22 | 27 | 39 | |
Gyroscopic Investing Desert Portfolio took approximately 62 months on average to recover from major drawdowns of 20% or more. The largest drawdown reached -32.7% and the longest drawdown period lasted 62 months.