On January 2020 I posted a proposal for combining the Permanent Portfolio with a small 5% allocation to Bitcoin. The main argument was that by risking 5% of the portfolio we could almost double returns.
- What would happen if you took $5,000 out of your $100,000 permanent portfolio and allocated it to Bitcoin?
- From 3.6% annual to 15% annual returns?
Fast forward – 2 years later
Two years later I am revisiting the portfolio to see how it did. The rules were very simple and easy for anyone to reproduce. The so called BPP (Bitcoin Permanent Portfolio) allocated:
- 25% to SPY
- 25% to TLT
- 25% to GLD
- 5% to Bitcoin
Real test forward 2020-2022
The BPP returns from January 1 2020 until January 1 2022 are
Profit : 40.5%
Maximum Drawdown: 13.28%
Sharpe: 1.40
Equity assuming $100,000 starting capital
The traditional Permanent Portfolio for the same period:
Profit : 19.35%
Maximum Drawdown: 10.13%
Sharpe: 0.85
Conclusion
If you allocated just 5% of your Permanent Portfolio tp Bitcoin you would indeed double your returns while keeping a similar risk profile.
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