It makes me think of the "efficient frontier" idea that hedge funds are based on that make a case that proper use of leverage really can improve the risk/reward distribution of a portfolio but you can just as easily get into a trap where you juice a failing strategy by applying more leverage to cover up the fact it isn't working anymore, see the "Market Neutral" funds that blew each other up in the summer of 2007.

Note Harry Browne ran as the libertarian candidate for US president more than once and is really famous for

https://www.amazon.com/Permanent-Portfolio-Long-Term-Investm...

In my mind it is quite similar to Diallo's "All Weather" strategy where inflation protected bonds play a role similar to gold in Browne's portfolio.

I don’t follow the Harry Browne portfolio advice, but I have read Craig Rowland’s very good book about it [0], and I disagree. The Permanent Portfolio has had pretty good overall returns extremely consistently despite its low (25%) stock allocation because it holds four assets with poor correlation and rebalances between them, and because one of them is cash.

These assets each do well under different economic conditions. The cash asset does well during periods of sharply rising interest rates since it retains its principle and gets higher rates, while all the other assets get wrecked. Because cash’s correlation with the rest of the portfolio assets is 0% or negative, you tend to store some gains from the other assets in the cash section during up years, and then use the cash section to buy other assets once they have down years - in effect buying low and selling high. This is why the permanent portfolio gets pretty good returns with a low standard deviation: the cash protects the downside, but doesn’t significantly hamper portfolio performance due to the rebalancing effect. (It also helps that your cash should be in short treasuries per Harry Browne’s advice, which almost always have better yield than bank accounts with basically no risk).

You could remove or titrate down the cash portion, but then you’re left with three risky assets in stock, gold, and 25- to 30-year bonds. (Anyone who doesn’t think long bonds are risky doesn’t understand interest rate risk). Does this raise the expected return? Yes! But it also raises the risk of extended periods of poor performance, or acute periods of terrible performance. The Permanent Portfolio made 1.8% in 2008. It didn’t have a 10-year rolling period since 1972 with real returns below 3%, with all of them falling between 3 and 6.1%. A 60/40 portfolio achieved better returns but with much higher risk, including full decades of negative real return [0].

Ultimately I think your objection to the portfolio is because you think it’s advantageous to take on more risk. For a young investor with high risk tolerance I agree with you, but for older investors and retirees who need to be mindful of sequence of returns risk, and young investors who can’t stomach volatile portfolios, I think it’s an underrated choice.

Even if you’re not convinced by the rest of the argument, consider that holding half your fixed income in cash and the other half in very long bonds tends to produce similar performance to holding it all in intermediate bonds, which is often the recommended duration for an investor’s bond holdings.

[0] https://www.amazon.com/Permanent-Portfolio-Long-Term-Investm...

Though I am not there yet, the Permanent Portfolio [1] makes sense to me. The key insight is that for the money you have lost, you can never recover the energy/time/life you have spent in earning it. So, capital preservation (wrt inflation) is more important than chasing higher returns - which frankly are not under your control.

[1] https://www.amazon.com/Permanent-Portfolio-Long-Term-Investm...