What is the Ray Dalio “All Weather Portfolio” for individual investors?


I imagine you landed on this page because you read the Ray Dalio interview in the Tony Robbins book, Money: Master the Game, and you’re trying to remember what percentage (%) of stocks, treasury bonds, gold, and commodities are in the All Weather Portfolio – adapted for individual investors.

Here are my notes:

The investment hypothesis behind the All Weather Strategy is that the economy has different seasons. Those seasons are tied to the debt cycle. Ray put together a 30-minute animated film that explains these four seasons:

  1. Leveraging – Credit freely available. Borrowing increases. Spending & incomes rise.
  2. Deleveraging – Credit dries up. Debt repayments rise. Spending & incomes fall.
  3. Deflation – Creditors restructure debts. Asset values drop. Employment drops.
  4. Inflation – Central bank prints money to purchase government bonds & fuel stimulus. Spending increases.

Against the backdrop of the four economic seasons, here is the investment mix of the All Weather portfolio adapted to individual investors:

30% Stocks Addresses leveraging season
15% Intermediate-term Treasury Bonds (7-10 yr) Addresses seasons of deleveraging & deflation
40% Long-term Treasury Bonds (20 – 25 yr)
7.5% Gold Addresses inflation season
7.5% Commodities

The idea is to rebalance this portfolio annually so that investments fall back into this mix at least one a year.

According to Money: Master the Game, this asset allocation, when back tested all the way from 1927 until 2013, has resulted in sizable growth with less volatility.

This is not investment advice. For more information, see terms of use.

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