Loading....
The Couch Potato portfolio is a very simple, passive portfolio created by Scott Burns, a personal finance columnist. He first wrote about it in the following article from 1991(!): On the Importance of Being a Dull Investor.
The idea behind the portfolio was to keep it as simple as possible, with regards to maintenance, while also reducing the volatility caused by stock market downturns but still achieving stock-like returns, much above a full bond portfolio. It's half stocks and half bonds, that's it.
Its allocation consists of 2 asset classes which are equal weighted, each 50/50:
The backtesting period is limited by the inception date of S&P 500 (US Large Cap) (SP500.X): Jan 31, 1871.
A quick overview of the assets within the portfolio, its performance and main metrics.
The portfolio consists of 2 asset classes, which are all equally weighted.
| Name / Ticker | Type | Currency | Inception | Weight |
|---|---|---|---|---|
S&P 500 (US Large Cap) SP500.X | Asset Class | USD | Jan 31, 1871 | 50% |
Intermediate-Term Treasury MTTREASURY.X | Asset Class | USD | Dec 30, 1870 | 50% |
The backtest spans over a period of 154 years. With an annual return of 7.2% for Scott Burns Couch Potato Portfolio, the cumulative return over that period amounts to 4428854%.
| Portfolio Score | Scott Burns Couch Potato Portfolio |
|---|---|
| Portfolio Score |
| Returns | Scott Burns Couch Potato Portfolio |
|---|---|
| Month-to-Date | 1.9% |
| Year-to-Date | 13.22% |
| 3M | 2.24% |
| 6M | 7.55% |
| Annualized Return (3Y) | 4.15% |
| Annualized Return (5Y) | 7.89% |
| Annualized Return (10Y) | 7.29% |
| Annualized Return (20Y) | 7.09% |
| Annualized Return (All, 153.8Y) | 7.2% |
| Risk | Scott Burns Couch Potato Portfolio |
|---|---|
| Annual Volatility | 4.9% |
| Max Drawdown | -50.83% |
| Sharpe Ratio | 1.41 |
| Sortino Ratio | 2.03 |
| Adjusted Sortino Ratio | 1.44 |
With a projected annual return (CAGR) of 7.2% and an initial investment of $10,000, Scott Burns Couch Potato 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 | $10,720 | $720 | $60 | 7.2% | |
| 5 | $14,157 | $15,176 | $1,019 | $85 | 51.8% |
| 10 | $20,042 | $21,485 | $1,443 | $120 | 115% |
| 15 | $28,374 | $30,417 | $2,043 | $170 | 204% |
| 20 | $40,169 | $43,062 | $2,892 | $241 | 331% |
| 50 | $323,399 | $346,684 | $23,285 | $1,940 | 3,367% |
A detailed look at the returns of the portfolio.
| Portfolio | All (153.8Y) | 20Y | 10Y | 5Y | 3Y | 1Y |
|---|---|---|---|---|---|---|
| Scott Burns Couch Potato Portfolio | 7.2% | 7.09% | 7.29% | 7.89% | 4.15% | 18.11% |
| Year | Scott Burns Couch Potato Portfolio |
|---|---|
| 1871 | 7.12% |
| 1872 | 7.68% |
| 1873 | -1.42% |
| 1874 | 12.39% |
| 1875 | 4.74% |
| 1876 | -2.32% |
| 1877 | 0.96% |
| 1878 | 9.22% |
| 1879 | 26.27% |
| 1880 | 14.62% |
| Portfolio | Positive Years | Negative Years | Positive Ratio | Best Return Years | Worst Return Years |
| Scott Burns Couch Potato Portfolio | 123 | 31 | 79.87% | 154 | 154 |
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 |
| -50.83% | 1929-10-01 | 1932-06-30 | 33 | 1936-01-16 | 43 | 76 | |
| -24.8% | 2007-12-11 | 2009-03-09 | 15 | 2010-03-16 | 12 | 27 | |
| -20.81% | 1937-04-01 | 1938-04-29 | 13 | 1943-02-01 | 57 | 70 | |
| -19.24% | 1987-08-26 | 1987-10-19 | 2 | 1989-04-10 | 18 | 20 | |
| -18.25% | 1973-02-01 | 1974-09-30 | 20 | 1975-05-30 | 8 | 28 | |
| -18.25% | 2021-12-28 | 2022-10-14 | 10 | 2024-01-29 | 16 | 25 | |
| -17.01% | 1906-10-02 | 1907-11-29 | 14 | 1908-08-21 | 9 | 23 | |
| -15.95% | 2000-09-05 | 2002-07-23 | 23 | 2003-09-18 | 14 | 36 | |
| -14.94% | 1916-12-01 | 1917-12-31 | 13 | 1919-03-20 | 15 | 28 | |
| -14.58% | 2020-02-20 | 2020-03-23 | 1 | 2020-06-08 | 3 | 4 | |
Scott Burns Couch Potato Portfolio took approximately 58 months on average to recover from major drawdowns of 20% or more. The largest drawdown reached -50.83% and the longest drawdown period lasted 76 months.