Ray Dalio’s All-Weather Portfolio is very similar to Harry Browne’s Permanent Portfolio. I am not sure who came up with this concept first. I guess it doesn’t matter. Bridgewater (Ray’s Fund Management company) wrote about the story of All-Weather Portfolio and it is available here. If you are lazy to read the entire article, I have extracted the important points which apply to both All-Weather and Permanent Portfolio.

The Origin of Investment Returns

“The reality is that the return of that product, or any product, is a function of a) the return on cash b) the excess return of a market (beta) above the cash rate and c) the ‘tilts’ or manager stock selection (alpha)… In summary: return = cash + beta + alpha”

In other words, cash returns is the interest earned from bank savings account and fixed deposits. Beta returns are asset class returns. For example, long term ......