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How To Produce Vastly Higher Returns With Less Than Market Risk
Porter's Journal Issue #83, Volume #2
Porter Stansberry
July 20, 2025
Understanding The “Magic” In Porter’s Permanent Portfolio
This is Porter’s Daily Journal, a free e-letter from Porter & Co. that provides unfiltered insights on markets, the economy, and life to help readers become better investors. It includes weekday editions and two weekend editions… and is free to all subscribers.
Porter’s Permanent Portfolio has way outperformed the S&P 500… Less than half the beta and an-unworldly 2.02 Sharpe Ratio… Older investors can sleep soundly at night… Add leverage and the performance gets even better… White House turns up the heat on Fed Chair Powell… |
Table of Contents
Last fall, when I unveiled Porter’s Permanent Portfolio, I promised that it would deliver stock market-like returns with far less risk.
And I told the attendees of our Porter & Co. Annual Conference that, although I couldn’t promise it, I believed that Porter’s Permanent Portfolio would far outpace the returns of the stock market. As you may remember, this strategy involves allocating capital into four buckets: stocks, bonds, gold, and cash (90-day U.S. Treasury bills).
With 50% of the portfolio invested in fixed income, how could I expect to beat the market and have less risk? First, by owning low-volatility, high-quality stocks. And secondly, by replacing the traditional bond market allocation, with high-quality property and casualty (P&C) insurance stocks.
So far, we’ve handily beat the market, with a return since inception of 20.9% and a year-to-date (“YTD”) return of almost 15.4%. That’s twice the stock market’s (S&P 500) return this year. And it dwarfs Berkshire Hathaway’s 4.4% return. That’s notable because Berkshire is a security many investors have used to beat the market for decades, but that I’ve warned will not beat the market going forward. Porter’s Permanent Portfolio is even beating our proprietary “Better Than Berkshire” Index, which is up 13.2% YTD.
Good returns are nice, but it might just be luck. What isn’t luck though is when you beat the market and take on much less risk. In fact, most finance professors would tell you that’s impossible.
But Porter’s Permanent Portfolio has less than half the volatility of the stock market (beta: 0.41, compared to the market benchmark of 1) while earning twice the S&P 500’s returns.
Producing massive excess returns with such little volatility is virtually unheard of in the markets. With higher returns and less risk, Porter’s Permanent Portfolio has Sharpe Ratio investors almost never see: 2.02.