Do 30-Year Bonds Still Belong in a Permanent Portfolio? 🙀

[frugal]

Hi everyone,

Just wanted to bring up a point that caught my attention recently.

I was chatting with a Spanish investor who’s studied the Permanent Portfolio in depth, and he made a bold claim: that 30-year bonds no longer make sense in today’s environment.

His reasoning? Mainly that the duration risk is just too high for current market conditions. According to him, the structure of the bond market and the broader macroeconomic landscape have changed so much since the original PP was conceived, that sticking with 30-year Treasuries (or equivalent) might not be optimal anymore. Instead, he suggests that something closer to a 10-year bond could make more sense — offering a better balance between protection and flexibility.

As someone based in Europe, I find this idea both interesting and a bit controversial — especially since long-term bonds are meant to be one of the “safe havens” in the PP model.

So I’m curious to hear your opinions:
• Do you think 30-year bonds still serve their purpose in a classic Permanent Portfolio?
• Or is it time to rethink that component, perhaps with a shorter duration approach?
• Are any of you already adjusting this leg of your portfolio?

Looking forward to your thoughts!

[Kevin K.]

No idea if 30 year bonds make sense for a non-U.S. investor since I don't know which country's bonds you'd be using and what they're paying.

Here are current yields in the U.S.L

https://www.bloomberg.com/markets/rates ... t-bonds/us

I think Larry Swedroe's oft-cited rule of thumb - 20 basis points in additional interest for each year of additional bond duration - is still a great place to start in terms of looking at duration and interest rate risk. By that metric you'd want to stick with 0-5 year durations right now. Of course there's also bond convexity to take into account, and there, too, Tyler @ Portfolio Charts is super-helpful:

https://portfoliocharts.com/2019/05/27/ ... convexity/

Harry Browne's recommendation of LTT's was surely colored by the very high rates they were paying when he came up with the PP. Would he have recommended using them during the many years before 2022 when they were offering a negative real return? I doubt it. His other argument for them was that they provide deflation protection. While that is true, deflation has been a rare and short-lived event in U.S. history. IMHO (and in that of William Bernstein - see his excellent book "Deep Risk" which is essentially one long analysis of the PP) it's silly to allocate a full quarter of one's portfolio to address an economic circumstance which is both unlikely to occur and very expensive to insure against. The GB essentially puts Bernstein's analysis into practice by stacking the odds towards prosperity, which is the most likely of the four economic conditions the PP is designed to deal with.

The weighted average duration of the PP barbell of LTT's and cash is around 11-12 years, while a true intermediate term Treasury is 5 years (Vanguard's VGSH hews to this classic standard but many other bond funds have let duration drift towards 7-8 years in an effort to get extra yield). If you backtest the PP with all ITT's, or ITT's and 5-10% in T Bills for liquidity the returns are on par with the classic version but with much lower volatility and drawdowns.

Personally in my Golden Butterfly I've been using a barbell of short-term (~3 year) Treasuries recommended by Jonathan Clements: half VGSH, half VTIP. So half nominal, half inflation-protected.

[foglifter]

The GB essentially puts Bernstein's analysis into practice by stacking the odds towards prosperity, which is the most likely of the four economic conditions the PP is designed to deal with.
...

Personally in my Golden Butterfly I've been using a barbell of short-term (~3 year) Treasuries recommended by Jonathan Clements: half VGSH, half VTIP. So half nominal, half inflation-protected.

I share Kevin's thoughts, and I'm also using GB. I’ve still got some 20+ year LTTs from 2019 (all underwater ), but I’m not buying any new 30-years. I’ve picked up some 7, 10, and 20-year bonds in my HSA over the past few months to lock in those 4%+ rates (and to avoid CA state tax).

[frugal]

Nice answers!

So you recommend GB…

Please let me know more about what should I do to transform EU-PP into GB

I was already thinking on adding Small caps to the stocks portion.

Regards

[mathjak107]

i can’t see the long term bonds anymore but i can see something like

40% equities

20% gold

20% cash instruments

20% laddered 5 year bonds both regular and inflation protected , maybe a mix of iei and ief or something like LDDR the 10 year bonds etf that is actually laddered bonds out to 10 years

[foglifter]

Nice answers!

So you recommend GB…

Please let me know more about what should I do to transform EU-PP into GB

I was already thinking on adding Small caps to the stocks portion.

Regards

Sorry for not responding earlier, you actually responded to your own question in your last sentence - yes, GB is pretty much a PP with an enlarged equity bucket where you add small cap value stocks.

[dualstow]

I loved long bonds when I was 40
Don’t want to stick my wife with them.

[mathjak107]

we don’t even buy green bananas anymore

[dualstow]

[frugal]

I loved long bonds when I was 40
Don’t want to stick my wife with them.

What is your option and solution for LTB?

Hug

[mathjak107]

when you go back thru time frames the last two decades it’s like equities and gold beat equities and bonds over most time frames .

i am retired and really have no use for bonds at this stage . i keep a minimal amount but i can’t really say why . call me old school .

equities gold and cash instruments seem to do very well , even thru the tough spots we had.

after a fabulous year last year booking over 600k in gains i am a mere 20% equities right now with what is going on and the bulk in tbills with a full 10% of assets position in gold . my top fund i had fidelity blue chip growth doubled over 2023 and 2024 so it was an exceptional year so now i can kind of stop running for now and just kind of coast until things get sorted out

my bonds are down below a 5% allocation and are under 5 years in duration

[dualstow]

I loved long bonds when I was 40
Don’t want to stick my wife with them.

What is your option and solution for LTB?

Hug

I have quietly opted for what a lot of others here have chosen: shortening the overall duration.
I have some long bonds, the oldest of which mature in 2050. But, I don’t buy new ones. I still buy treasurys, but only ones with far sooner maturities.
So, what do I have to subtitute for that missing protection? Nothing. But I do own a lot of treasuries.
I can no longer say I have a true hbpp.

[frugal]

when you go back thru time frames the last two decades it’s like equities and gold beat equities and bonds over most time frames .

i am retired and really have no use for bonds at this stage . i keep a minimal amount but i can’t really say why . call me old school .

equities gold and cash instruments seem to do very well , even thru the tough spots we had.

after a fabulous year last year booking over 600k in gains i am a mere 20% equities right now with what is going on and the bulk in tbills with a full 10% of assets position in gold . my top fund i had fidelity blue chip growth doubled over 2023 and 2024 so it was an exceptional year so now i can kind of stop running for now and just kind of coast until things get sorted out

my bonds are down below a 5% allocation and are under 5 years in duration

Hi mat !

Congrats

So what is your connection with HB PP ?

[frugal]

I loved long bonds when I was 40
Don’t want to stick my wife with them.

What is your option and solution for LTB?

Hug

I have quietly opted for what a lot of others here have chosen: shortening the overall duration.
I have some long bonds, the oldest of which mature in 2050. But, I don’t buy new ones. I still buy treasurys, but only ones with far sooner maturities.
So, what do I have to subtitute for that missing protection? Nothing. But I do own a lot of treasuries.
I can no longer say I have a true hbpp.

Hello dual !

Can you please explain in detail your choice?

I am HB PP follower… but need to be updated

Regards

[dualstow]

Just shorter-term bonds. No new 20-year or 30-year bonds for me, and very few 10-years.

[mathjak107]

damn , typed a reply to frugal and accidentally hit report instead of send

frugal i always loved harry and his books since the 1980’s .

but in my accumulation stage he was way to conservative for me .

i wanted pedal to the metal growth.

i tried the pp in retirement but it wasn’t a good choice at that time .

i always said with lower rates those long term bonds were going to be kryptonite to the pp .

that is just what happened .

so i found better choices .

but i still like harry’s investing philosophy.

but i doubt there are many that are comfortable with 25% in long term bonds anymore .

you likely still have some but i think. more have left for more conventional investing , especially if they got burned with those bonds alearedy

[dualstow]

I figured that was a mistake and closed the report.

[boglerdude]

Long bonds are the hated asset. You're supposed to buy that. EDV at 5.18% has room to fall and the government cant afford rates higher.

Unless they forget long bonds exist and the Fed funds the government with short term only as the new normal. Then only private citizens will trade long bonds and rates will be 9%

Fannie and Freddie are still buying I think, holding mortgage rates down

[mathjak107]

the govt does not control bond rates , investors do .

as we saw in april when the world pulled back from our auction and banks were on the verge of getting a margin call if trump didn’t reverse his tariffs , it’s investors that determine rates .

that is why we get the inverted yield curve and investors go against fed policy and win

the 30 year is at 4.89% the peak this year was 5.023.

tlt is down 1% this year including all interest and down 4.52% the last year , still down 10% the last 5 years with all interest

[dualstow]

Long bonds are the hated asset. You're supposed to buy that. EDV at 5.18% has room to fall and the government cant afford rates higher.
…

EDV is my great regret. Just sits in my IRA down nearly 50%

[mathjak107]

yeah , the last few years saw devastating damage to long term bonds .

i remember someone here posting how i called long term bonds wrong and i was eating my words a few years ago when tlt hit i think 165 . well i dont remember who it was but i hope they enjoyed the 50% drop .

it was so obvious playing around with long term bonds with rates so low was playing with fire.
For years all you read was how many in the pp were in it because they wanted to avoid. a 50% drop in stocks .

well instead of stocks falling that much which was the big fear , it was bonds

[seajay]

50/50 short/long dated barbell combines to a central bullet. In both cases you're lending to someone who has a money printing press (and as such has no real need to borrow), and post 2008 the directional push has been more towards bail-in rather than (taxpayer funded) bail-outs. Not good. A distinct paradigm shift away from the 1970's when Harry was devising the PP. You can shift bond risk over to the stock side, 33/67 stock/T-Bills for instance might broadly approximate 100% bond rewards. Applied to the PP and that's 42 stock/25 gold/33 T-Bills.

If instead of large cap stock you hold mid cap stock then that also somewhat aligns with the Golden Butterfly and its large cap/small cap value barbell of stock funds. For ease on memory rounding to 4-3-2 might help. 4/9th's midcap stock (44.4%), 3/9ths cash/T-Bills (33.3%), 2/9th's gold (22.2%). US data since 1932 and .. near the exact same reward as the GB, but with a little more volatility, similar 30 year Max Withdrawal rates for 30 year periods.

[flyingpylon]

What would signal a good time to start buying 30-year bonds again? What's the likelihood that it would occur in the medium-term future? What's the likelihood that a less-active investor would recognize and act on it soon enough to profit from it?

Seems like there are always some things being left out of these conversations related to investor profiles and time frames. Perhaps the question needs to be rephrased as "Do 30-Year Bonds Still Belong in YOUR Portfolio?"

[mathjak107]

my feeling is never .

the fed is so committed to not having a deflation or depression that i fail to see the reason anymore .

they do more harm then good for the last two decades as gold and equities did a far better job than bonds and equities .

as of friday i own no bonds and increased gold to 10% of liquid assets not just the portfolio value .

equities are still very low for me at 20% but after such a great year last year and locking in 6 figure gains this year i can s it back a bit

but i am not a fan of any bonds until this tariff mess straightens out and then very short duration ones. under 5 years

[frugal]

Hey everyone,

This is a question I’ve seen come up quite often — and it's one I’ve wrestled with myself as someone exploring and refining Harry Browne’s Permanent Portfolio (PP):

“If the PP is meant to work over decades, why include long-term bonds, which are so vulnerable to rising interest rates? Aren’t they just dead weight over the long run?”

Let’s break this down with nuance and a full macroeconomic lens.

Quick Overview: What’s in the PP?
Harry Browne’s original allocation (25% each):

Stocks – for economic growth.

Long-Term Government Bonds – for deflation and falling rates.

Gold – for inflation and monetary turmoil.

Cash (or short-term Treasuries) – for recessions, rising rates, and stability.

The portfolio’s goal is not maximum return, but maximum resilience across all economic conditions.

The Case For Long-Term Bonds
Long bonds (20–30 years maturity) aren’t there for yield. They serve a specific purpose:

Deflation protection: When rates fall during crises, long bonds surge.

Non-correlation: They move opposite to stocks/gold in specific regimes.

Shock absorber: In severe recessions or panics (2008, early 2020), they can spike when everything else is down.

Historical context: From 1980 to 2000, long bonds did very well as interest rates dropped steadily.

The Case Against Long-Term Bonds (Modern View)
Many now question their long-term utility, especially after 2022–2023’s bond carnage:

1. Massive Interest Rate Risk
Rising rates → big losses due to high duration.

Recovery may take years, especially if rates stay elevated.

2. Low Real Returns
Long bonds often underperform stocks/gold over 20–40 years.

Once you factor in inflation, returns are often barely positive.

3. Structural Macro Concerns
With record debt, fiscal pressures, and sticky inflation, we may not see falling rates again soon.

If we’re in a new long-term rate regime, long bonds may never serve their traditional role again.

So... Are Long-Term Bonds Really Needed?
It depends on your philosophy:

If You Follow Browne’s Original Logic:
Keep them. It’s about hedging macro risk, not chasing yield.

The PP is designed to survive all seasons, including rare deflationary winters.

If You’re More Pragmatic:
You might adapt. Some common tweaks:

Replace with intermediate bonds (5–10 year maturity).

Use TIPS for inflation-adjusted fixed income.

Reduce bonds and increase stock/gold weights.

Try a Golden Butterfly variant (40% stocks, 20% gold, 20% cash, 20% intermediate bonds).

What Happens If You Drop Long Bonds?
Let’s say you redistribute their 25% into the other three assets:

Less protection in deflation/panic scenarios (e.g., 2008, early COVID).

Higher overall volatility.

You lose part of the non-correlation magic that defines the PP.

Backtests show that the PP’s stability comes from balance and lack of correlation — not from betting on strong individual performers.

Final Thoughts
Long bonds aren’t there to make you rich — they’re there to protect your portfolio when everything else is falling apart.

If your goal is long-term resilience through all economic cycles, you probably do need them.
If your goal is to optimize for return or adapt to current macro trends, you might skip them — but that means you’re moving away from Browne’s vision.

Let me know what you’re doing in your portfolio. Anyone still holding long bonds? Using intermediates instead? Or ditching bonds altogether?