Tactical Permanent Portfolio (GestaltU / ReSolve)

May 2007 – Sep 2026	Strategy	SPY
Annual return (CAGR)	8.5%	10.7%
Worst drawdown	-19.6%	-55.2%
Sharpe ratio	1.00	0.62
Volatility	8.5%	19.7%
Annual return since publication (Sep 2012)	6.9%	14.8%

Feb 1969 – Sep 2026	Strategy	SPY
Annual return (CAGR)	8.7%	10.8%
Worst drawdown	-36.3%	-55.2%
Sharpe ratio	0.95	0.68
Volatility	9.3%	17.2%
Annual return since publication (Sep 2012)	6.9%	14.8%

The Tactical Permanent Portfolio is a trend-following version of Harry Browne's Permanent Portfolio, tested in 2012 by Adam Butler, Michael Philbrick, and Rodrigo Gordillo, then writing as GestaltU and now at ReSolve Asset Management. Each month it holds US stocks, intermediate Treasuries, and gold only while each trades above its 200-day average, weighted so the calmer assets get more, and holds Treasury bills when none qualifies.

The idea#

Browne split his Permanent Portfolio equally between stocks, long-term bonds, gold, and cash, one asset for each economic climate: prosperity, deflation, inflation, and tight money. Whatever the economy does, one of the four should do well. The weakness is that the losers are held at full weight through long declines.

The GestaltU authors kept the diversified core and added two changes. A trend filter drops any asset in a downtrend, so a long bear market in one of them costs less. Risk-parity weights size each holding by its volatility, so gold and stocks, which swing more than Treasuries, do not dominate the portfolio's risk. They also tested a cap on overall volatility, which the version Allocate Smartly tracks from ReSolve sets at 7% a year.

How it works#

At the close of the last trading day of each month:

Check US stocks (SPY), intermediate Treasuries (IEF), and gold (GLD) against their 200-day moving averages.
Hold every one that closes above its average, weighted by inverse 21-day volatility: each weight is proportional to one divided by the asset's recent volatility.
If none is above its average, hold Treasury bills (BIL).

This follows the rule set Allocate Smartly tracks from ReSolve's later version; the 2012 post used a 10-month average. There is one omission. That version estimates the portfolio's volatility from 60 days of covariances and, when it exceeds 7% a year, scales every position down and holds cash for the rest. Tactfolio's builder cannot scale a portfolio by its estimated volatility, so this version leaves the cap out. It is fully invested whenever any asset qualifies, and when only one does, such as gold, it holds that asset at 100%, where the capped version would hold part in cash. Expect somewhat higher volatility and deeper drawdowns than the source's results.

What the backtest shows#

The ETF test runs from mid-2007. Over that period the strategy compounded about 8.5% a year, a little more than a 60/40 portfolio and less than the S&P 500, with a worst drawdown of about 20% against more than half for the S&P 500. Its risk-adjusted return was the best of the three by a wide margin.

It showed its value in 2008, gaining 16% while the S&P 500 lost 37%, and again in 2011, gaining 16% when stocks were nearly flat. Its weak spot was rising interest rates. In 2022 stocks, Treasuries, and gold all dropped below their averages at different times, and it lost 17%, about as much as the S&P 500. That drawdown, from November 2021 to November 2023, was its worst, and it recovered by September 2024. Since the 2012 publication it has compounded about 7% a year with a solid risk-adjusted return.

With simulated history the test starts in 1969. Over the full period it compounded near 9% a year with a much better risk-adjusted return than the S&P 500, and it gained in each of 2000, 2001, and 2002 while stocks fell. Its worst simulated drawdown, about 36%, came in 1973 and 1974, when stocks and bonds fell and gold swung sharply; it took until 1977 to recover. That is the kind of episode the missing volatility cap was designed to soften.

When it struggles#

Rising interest rates. Stocks, Treasuries, and gold can all weaken together, as in 2022.
A single asset left standing. Without the volatility cap, the portfolio can sit entirely in gold or stocks.
Quick reversals. A 200-day average turns late after a sharp drop or a sharp rebound.

Using it on Tactfolio#

The live strategy above runs the trend filter and inverse-volatility weights without the 7% volatility cap. Copy it to add a fixed sleeve of Treasury bills, closer to Browne's quarter in cash, or to try long-term Treasuries (TLT) in place of IEF.

Year by year

Year	Strategy	SPY
2026*	-0.6%	14.0%
2025	20.5%	17.7%
2024	13.6%	24.9%
2023	6.5%	26.2%
2022	-16.9%	-18.2%
2021	16.5%	28.7%
2020	15.6%	18.3%
2019	10.8%	31.2%
2018	1.3%	-4.6%
2017	12.4%	21.7%
2016	5.3%	12.0%
2015	-1.2%	1.2%
2014	2.6%	13.5%
2013	17.3%	32.3%
2012	6.3%	16.0%
2011	15.9%	1.9%
2010	13.3%	15.1%
2009	7.7%	26.4%
2008	15.6%	-36.8%
2007*	8.3%	-3.4%

Year	Strategy	SPY
2026*	-0.6%	14.0%
2025	20.5%	17.7%
2024	13.6%	24.9%
2023	6.5%	26.2%
2022	-16.9%	-18.2%
2021	16.5%	28.7%
2020	15.6%	18.3%
2019	10.8%	31.2%
2018	1.3%	-4.6%
2017	12.4%	21.7%
2016	5.3%	12.0%
2015	-1.2%	1.2%
2014	2.6%	13.5%
2013	17.3%	32.3%
2012	6.3%	16.0%
2011	15.9%	1.9%
2010	13.3%	15.1%
2009	7.7%	26.4%
2008	15.6%	-36.8%
2007	11.6%	5.1%
2006	11.5%	15.8%
2005	4.8%	4.8%
2004	1.5%	10.7%
2003	12.0%	28.2%
2002	15.0%	-21.6%
2001	6.5%	-11.8%
2000	10.5%	-9.7%
1999	4.8%	20.4%
1998	14.5%	28.7%
1997	15.0%	33.5%
1996	9.3%	22.5%
1995	25.4%	38.0%
1994	-8.2%	0.4%
1993	13.4%	9.7%
1992	5.4%	7.6%
1991	14.7%	30.3%
1990	-3.8%	-3.2%
1989	20.8%	31.5%
1988	3.8%	16.4%
1987	8.2%	5.1%
1986	20.2%	18.6%
1985	24.6%	31.6%
1984	9.0%	6.2%
1983	7.6%	22.4%
1982	36.0%	21.6%
1981	-0.1%	-4.9%
1980	14.3%	32.4%
1979	23.4%	18.3%
1978	-17.5%	6.5%
1977	4.0%	-7.2%
1976	19.0%	23.8%
1975	7.3%	37.1%
1974	-6.9%	-26.5%
1973	-8.8%	-14.7%
1972	15.6%	18.9%
1971	11.5%	14.1%
1970	10.6%	3.9%
1969*	-1.3%	-4.0%

* Partial year.

The rules as implemented

This is the exact tree Tactfolio runs, rebalanced monthly with signals and trades at the close. Open it to inspect or copy it.

Sources and caveats

The source caps estimated portfolio volatility at 7% a year, from a 60-day covariance matrix, and holds cash for the excess; the builder has no covariance or volatility scaling, so the cap is left out. Without it this version is fully invested whenever any asset qualifies and can hold a single asset, such as gold or stocks, at 100%.
Follows the rule set Allocate Smartly tracks from ReSolve: SPY, IEF, and GLD above their 200-day average, weighted by inverse 21-day volatility, with cash (BIL) only when none qualifies. The 2012 post filtered on a 10-month average and held cash as the fourth Permanent Portfolio asset.
The trend check uses the same close as the trade; Allocate Smartly checks the previous day's close.
Signals and trades use the close of the last trading day of each month, as in the source.

Common questions#

What is the Tactical Permanent Portfolio?#

It is a trend-following version of Harry Browne's Permanent Portfolio from GestaltU (now ReSolve Asset Management). It holds stocks, Treasuries, and gold only while each is above its 200-day average, weighted by inverse volatility, and Treasury bills when none is.

How is it different from the Permanent Portfolio?#

Browne's Permanent Portfolio holds four assets at 25% each at all times, including a quarter in cash. The tactical version drops any asset in a downtrend, sizes the rest by volatility, and uses cash only as a fallback.

What ETFs does the Tactical Permanent Portfolio use?#

SPY for US stocks, IEF for intermediate Treasuries, GLD for gold, and BIL for Treasury bills.

Does the Tactical Permanent Portfolio still work?#

Since 2012 it has compounded about 7% a year with a much smaller worst drawdown than stocks, though rising rates in 2022 hit all three of its assets. The live record on Tactfolio shows how it is doing now.