All weather Portfolio vs 80-20 Portfolio.

Person A: Invest in a diversified portfolio—equities, short-term bonds, stocks, REITs, money markets, gold, and commodities.

Person B: Go 80% US equities, 20% short-term bonds (to buy the dip).

Both compete in the stock market beauty contest from 2007 to 2024. Who wins? No one-size-fits-all answer exists. Here’s why.

2007–2024 Performance

- 80/20 Portfolio (S&P 500 + Bonds): Annualized return of 10–14%. Big upside, but brutal crashes—think 20%, 30%, even 50% drops in bear markets.

- All-Weather Portfolio: 4–6% annualized return. Lower volatility, smaller drawdowns (10–15% max), but less fireworks on the upside.

At first glance, 80/20 seems the clear champ. More return, more glory. But it’s not that simple.

The Real Question: What’s Your Goal?

- Love the Ride? If you can stomach 40% crashes, shrug off volatility, and believe in long-term growth, 80/20—or even 100% stocks— historically crushes it. Peter Lynch’s Magellan Fund averaged 30% annually for 13 years, but it endured gut-punching drops: 56%, 42%, 32%. High risk, high reward— inseparable twins.

- Hate Roller Coasters? If a 10% dip makes you panic-sell, or you’re retired and can’t risk the farm, the All-Weather mix is your lifeline. You trade some upside for peace of mind.

Neither is “wrong.” It’s about fit—your temperament, your needs.

The Catch

The best strategy fails if you can’t stick with it. Great investors don’t flinch at 20% or 50% drops—they hold, even buy more, trusting their homework. Panic-sell at 15%? A balanced portfolio that caps losses at 10% might keep you in the game. Steel nerves for 100% stocks during a crash? That’s the path to the biggest wins.

Verdict

- 80/20 Wins if you’re disciplined and can weather storms.

- All-Weather Wins if you value sleep over chasing every last percent.

Pick the portfolio that matches your spine, not just your spreadsheet.