Portfolio 5 of 6
Cautious
Half the money in bonds and gold, 15% in a fund that holds stocks and trend following at once, and the rest in the full lean's stock funds. For someone who wants smaller falls and will accept slower growth.
Maybe Smaller falls in these simulations. Whether it beats a plain stock-and-bond mix is uncertain.
What you buy
Ten funds. Forty percent is SCHP, inflation-protected US government bonds whose principal adjusts with inflation, though their market value can fall. Five percent is VGLT, long US government bonds, which can help when prices fall and rates are cut. Five percent is gold, for the kind of disaster where money itself loses value. Six stock funds hold 35% together: the full lean's larger lines, with its three smallest (US small value, foreign momentum, emerging-market value) folded into them, because at one or two percent each they were too small to matter and too small to be worth a tax lot. RSST holds 15% and gives a dollar of US stocks plus a dollar of a trend-following strategy for each dollar in it. So about half the portfolio is stocks, 15% is trend, and half is bonds and gold.
The two bond lines and the gold are paid for from each other, never from stocks. Each covers a different disaster: inflation-protected bonds hold their value when prices rise, long bonds when they fall, gold when the currency itself is doubted. None of the three earns much on its own, and 2022 was the year all three fell together.
Ten percent in gold, paid from the inflation-protected bonds, read a little better on both simulated histories, by about a tenth of a percent a year, with the worst fall within a fraction of a point. The simulations cannot tell the two apart, so five is the published weight and ten is a fair choice for someone who trusts gold more than bonds in an inflation.
| Fund | What it holds | Share | Fee on $10,000 | Account |
|---|---|---|---|---|
| SCHP Schwab U.S. TIPS ETF | Inflation-protected US government bonds | 40% | $3 | Pre-tax retirement account |
| RSST Return Stacked U.S. Stocks & Managed Futures ETF | US stocks and a managed-futures strategy | 15% | $99 | Pre-tax retirement account, first |
| VTI Vanguard Total Stock Market ETF | The whole US stock market | 12% | $3 | Taxable account |
| AVLV Avantis U.S. Large Cap Value ETF | Large US companies that are cheap and profitable | 5% | $15 | Taxable or retirement |
| VXUS Vanguard Total International Stock ETF | Every stock market outside the US | 5% | $5 | Taxable or retirement |
| DFIV Dimensional International Value ETF | Large foreign companies that are cheap and profitable | 5% | $27 | Taxable or retirement |
| AVDV Avantis International Small Cap Value ETF | Small foreign companies that are cheap and profitable | 5% | $36 | Retirement account, Roth first |
| VGLT Vanguard Long-Term Treasury ETF | US government bonds of ten years and longer | 5% | $3 | Pre-tax retirement account |
| GLDM SPDR Gold MiniShares Trust | Gold in a vault | 5% | $10 | Retirement account |
| SPMO Invesco S&P 500 Momentum ETF | The hundred large US companies whose shares have been rising | 3% | $13 | Either |
What $10,000 did
- $10,000 became
- $280,000
- 1990 to 2025, simulated
- Growth
- 9.9% a year
- Against 10.3% for a plain world stock index
- Worst fall
- −18.1% $8,190
- May 2008 to February 2009, back to even in 18 months
- Costs a year on $10,000
- $22
- 0.22% fee, most of it RSST's 0.99%
| Series | Start | Finish |
|---|---|---|
| Plain world stock index | $10,000 in 1990-10 | $314,164 in 2025-12 |
| Plus trend | $10,000 in 1990-10 | $763,532 in 2025-12 |
| Cautious | $10,000 in 1990-10 | $279,794 in 2025-12 |
A plain 60/40 mix, 60% stocks and 40% US government bonds, became $188,000 over the same years and fell 27.2% at its worst. Since 2009 this portfolio grew 8.5% a year against 12.8% for the index: a bond-heavy mix lags through a long stock bull market, and that is the price of the smaller fall.
The worst fall
−18.1% $10,000 fell to $8,190 and took 18 months to get back.
| Series | Worst fall |
|---|---|
| Cautious | −18.1% |
| Plain world stock index | −52.7% |
It was back above $10,000 in November 2009, 18 months after the May 2008 peak. The plain world stock index fell to $4,730 and took 63 months. In calendar 2008 the portfolio lost 8.6% against 39.6% for the index. In 2022, when stocks, bonds and gold all fell, it lost 11.9%, against 17.8% for the index and 16.7% for the 60/40 mix. That year is the one this portfolio is least built for: nothing in it went up except the trend part.
What it beat, and by how much
In the simulation above, Cautious grew 9.9% a year against 10.3% for the stock index and 8.7% for a plain 60/40 mix. On the longer 1932–2025 history, built from US data, it grew 9.9% against 11.3% for all US stocks.
Holding fewer stocks can cut the falls, and it costs you growth. Which way that lands depends on future stock returns, on bond yields, and on how the defensive holdings behave together. These simulations do not show that bonds, gold and trend will earn their keep in every period.
Would foreign bonds help?
BNDX holds bonds from outside the US and hedges their currencies back to dollars. That spreads interest-rate risk across countries. It does not protect you from US inflation the way SCHP does.
One exploratory test swapped half of Cautious's SCHP for BNDX and left the other targets alone. Over October 2023 to March 2026 the difference in growth was small and uncertain, and the worst month-end loss was slightly larger. The same money was also tested in US government bonds and in cash.
Annual log-growth difference from actual fund returns, including fund costs and annual trading, before investor taxes. The 95% range includes a gain and a loss. At 80% power, the smallest detectable difference was 0.63% a year of log growth. This is a short, exploratory portfolio comparison; whole-portfolio losses are monthly.
as of 2026-09-06 International bonds in Cautious
A record this short cannot settle the best bond holding. A separate, longer comparison of the bond funds takes in 2022, when BNDX and the inflation-protected funds both lost money. It does not rebuild this portfolio for the years before RSST existed. The current holdings are a reference choice. What you need to spend, how exposed you are to inflation, and a longer fund record could each change the answer.
Who it is for
Someone whose spending plans, or whose stomach for losses, call for fewer stocks. The past falls are examples, not limits. What you need to withdraw, the cash you keep aside, and the risk of falling behind inflation all matter as much as the average growth.
How to hold it
What could go wrong
The smaller fall is measured on the past, and the worst past year for this mix was 2022, when bonds and stocks fell together as inflation rose. Inflation-protected bonds fell 12% that year despite being built for inflation: adjusting the principal does not stop a bond fund's price from falling. Long bonds fell 30%. Gold was flat. If that happens again with a deeper stock fall alongside it, the fall here would beat anything in the 1990 history. The long simulation also uses ordinary bonds in place of the inflation-protected ones, so it cannot tell you how today's protection would have behaved back then.
RSST carries the risks described on the Plus trend page, at 15% rather than 25%. Long bonds fell 40% in the late 1970s and again in 2022; five percent is sized for that.
The long history
Over 1932 to 2025, with foreign market and stock-style exposures mapped to US data, a trend rule sized from earlier observations with assumed costs, a plain government bond in place of SCHP, and gold earning the cash rate until 1968, $10,000 at the February 1937 peak fell to $7,280 by March 1938, a fall of 27.2%, and took 71 months to get back; all US stocks fell 50.3% and took 52 months, and a plain 60/40 mix fell 30.3%. Over that window the portfolio grew 9.9% a year against 11.3% for all US stocks and 9.1% for the 60/40 mix. The window begins after the trend rule's initial sizing history and excludes the 1929–1931 decline. Smaller losses in a model put no floor under future ones.