The Permanent Portfolio in 2026

Harry Browne’s Permanent Portfolio offers a conservative framework for dealing with uncertainty, and it raises an interesting question about portfolio construction in 2026.

Today, I’m going to introduce you to a man called Harry Browne. Please don’t be offended when he doesn’t respond. Harry’s been dead for 20 years. I’m telling you about him because a key idea of his lives on. It could be useful in 2026. Read on to see why.

Harry was a respected financial adviser during his life. His key concept was something called the ‘Permanent Portfolio’. The idea was to place your money in four buckets: 25% shares, 25% bonds, 25% gold and 25% cash (Harry was American).

The logic behind the Permanent Portfolio

The gist of it was that you could handle pretty much anything that the world and markets threw at you – inflation or deflation, good times or bad times – without the heart-stopping fear of volatility when market selling hits badly and bleak economic news derails your long-term plan.

The Permanent Portfolio is designed to remain untouched, except for rebalancing once a year. Of course, there’s a trade-off. You’re unlikely to make a total motzah when shares skyrocket, but you won’t ride the market down 50% like in the GFC.

The four components are designed to work together so that when one is trailing, another is leading, and the remaining two balance the volatility. Harry’s Permanent Portfolio is quite conservative relative to a lot of Australian portfolios, which tend to be heavily weighted to the share market. We don’t quite have the same accepted and easy access to the fixed-income markets in the same way as the US, either.

Does it actually work?

Let me say that Harry’s Permanent Portfolio idea was a theory, but there is a fund based on it in the USA. Harry came up with it forty years ago too. Check out what The Economist reported in October 2025:

“Since the start of 2025, tracking America’s S&P 500 share index would have returned 14%, compared with 10% for the classic 60/40 split between shares and Treasury bonds. A permanent portfolio constructed with American shares and Treasuries, meanwhile, would have delivered a 16% gain, calculate analysts at Bank of America. Moreover, since the start of the 2020s, the permanent and 60/40 portfolios have generated roughly the same returns, of 9% a year. Broaden the scope to global assets, and the permanent portfolio has returned 8% a year, while the 60/40 has returned 6%.”

Not bad, Harry. Of course, this isn’t to say the PP will work next year, or ever again. Nobody can be certain of anything.

Why it matters from an Australian perspective

Why bring this up now? Let’s take it from an Australian perspective. We have a tougher gig than US investors. They have their high-flying tech sector and a myriad of industries and options across the gigantic American economy.

The ASX 200 index is less ideal. It’s a split of two distinct sectors: banks and mining. The big four banks and top miners make up a disproportionate share of profits too. In other words, the ASX 200 is neither diversified nor balanced. That’s one reason US stocks have been clear outperformers over the last decade.

Here’s the rub for today. Next year, it’s less clear that this will continue. There’s no doubt enthusiasm is leaking out of the AI trade that has driven the US market since 2023. Some say it’s the bubble popping. I tend to think it’s more a rotation into other areas of the market.

It does make the outlook for US stocks tricky to call in 2026. If you take the S&P 500, 40% of its weighting is from the top ten stocks. If they aren’t firing, the S&P 500 might struggle to lift substantially. That doesn’t mean US stocks are a complete dud. Perhaps the AI trade revives.

Another idea might be to use an equal-weight ETF to neutralise the drag from Big Tech if it continues. Or you could look at more niche sectors like US small caps or industrials. Or we could riff on the Permanent Portfolio idea. Let’s do it for fun now.

What a 2026 version might look like

What might that look like in 2026? If I had to make Harry’s idea a reality today, I’d consider the following:

• 25% Equal Weight S&P 500 ETF (the shares component)
• 25% Resource ETF (the “gold” or hard asset component)
• 25% Cash
• 25% Bonds ETF

In theory, this gives exposure to US shares, which are still the premier class of stocks the world over. I’m bullish resources, so a mining-related ETF should do well and tees off similar fundamentals to gold in Harry’s framework. Cash gives optionality. Bonds pay income. They’re also a counterweight if I’m wrong about resources and inflation going up.

Any objection at this point is going to centre on the fact that 50% is in cash and bonds. That looks boring. It is boring. But Harry was designing, as much as possible, a “fail-safe” system to deliver every year without a second thought. The Permanent Portfolio is designed for investors who don’t believe in, or don’t want to, time the market. As it happens, at Marcus Today, we believe the market can be timed, so wouldn’t deploy this strategy in our managed portfolio.

Discipline is the real challenge

The PP also takes heroic self-control and discipline. It’s easy to say you will rebalance every year. For example, gold was in a bear market for twenty years back in Harry’s day. In that case, the PP strategy would demand you buy it every year for two decades, while everyone looked at you as mad.

During this time, Harry said, “gold will have its day again”. He was right too, but he may have been the last man standing actually implementing the strategy. Twenty years is a long time to hold the faith.

Perhaps, too, Harry, were he alive, might put Bitcoin in there as well. We can’t know because he died before BTC hit the world. And would you really buy more shares when they’re depressed and the world looks like it’s going to hell? The history of investment markets says probably not. People buy good markets and sell bad ones.

Perhaps the biggest takeaway from the PP is that there’s nothing easy about positioning for an unknown future. Here at Marcus Today, we do it day by day, and take you with us on the journey all the way.