Goldman Sachs: “The Permanent Portfolio” beats S&P500 by wide margin (yes, we know!)

In his latest Monthly Insight, “A Simple Alternative Asset Allocation Framework”, GSAM Chairman Jim O’Neill introduces an asset allocation portfolio he calls a macro portfolio. It is a portfolio of stock, gold, cash and bonds.

His analysis shows that an equal weighted portfolio (i.e. 25% in each asset) beats the S&P500 by a wide or very wide margin for every period he studied (see Table 2 in the linked pdf below). The risk-adjusted return is so much higher.

Interestingly, most of my clients already know this portfolio, many of them being invested in this way. I have followed this approach for years, inspired by the late Harry Browne (

I find it odd that such an experienced man as O’Neill hasn’t discovered this before or that he doesn’t give credit to Browne.

I also find it interesting that ha can suggest a big chunk of an asset allocation portfolio in gold. This is the first time I have seen a mainstream, big bank guy like O’Neill do that. Maybe he is allowed to think out of the bankster box now that he’s retiring?

Anyway, I see this as something positive.

Here is the full report: