Over the last 10 years, the "permanent portfolio" strategy made popular by libertarian investor Harry Browne several decades ago has had quite a heyday, earning insane amounts more than any U.S. stock market index.
The goal of the strategy was to essentially give the investor the ability to mess with his or her portfolio once per year, and then ignore it from that point onward. The idea was that a portfolio that has certain assets would be able to survive just about anything.
Although a little arbitrary, Browne decided to keep the portfolio incredibly simple and made it 25% stocks, 25% cash, 25% bonds, and 25% gold.
More recently, financial author Craig Rowland revisited the permanent portfolio. He allocated his portfolio the way he should have: 25% stocks, 25% long term treasury bonds, 25% gold bullion, and 25% cash.
He believed this portfolio would be optimal through what he considered all possible market conditions: prosperity, inflation, deflation, and recession.
The results, measured from 1972 through 2008, show that the permanent portfolio wins the race against holding 100% stocks. A 100% stock-invested portfolio had a compound annual growth rate of 9.2% over the period studied, while Rowland's permanent portfolio had a compound annual growth rate of 9.7%.