Which is more scientific to invest in for a Retirement Portfolio: a Permanent Portfolio or a John Bogle style Index Funds (stocks & bonds) portfolio? (Sharpe, Sortino, Standard Deviation, CAGR to measure it?) (Not only US, International too)

I prefer the simple ratio of CAGR/Worst Annual Loss for portfolios which have a long track record (30+ years). The Sortino ratio is excellent as well. The Sharpe ratio which is based on standard deviation is useless since it doesn't differentiate between upside and downside volatility. The Trident Portfolio which I have created has achieved a 11.2% CAGR and worst annual loss of -6.2% for a simple ratio of 1.80, and a Sortino ratio of 1.49 since 1972. In specific terms, I found that the simplest way to get an efficient rate of return is to do the following: Open an online brokerage account (many are free) Transfer the savings into that account Buy these 3 ETFs in equal amounts: US Small-Cap Value Stocks (VBR) Gold (GLD) US Long Term Bonds (TLT) What you have just created is the Trident Portfolio that has shown remarkably stable performance for the last 40+ years: (Notice that the vertical axis is logarithmic not linear) CAGR vs Worst Annual Loss: If you just keep these 3 ETFs and rebalance them once a year, it will give you a 11% compound annual growth rate. This simple asset allocation will handily beat the stock market and most mutual funds. More importantly, the portfolio will have much smaller losses than a typical portfolio (the worst year since 1972 was -6.2%, most others are twice that or more). Doing it yourself will save you a lot of money from excess management fees. I use this strategy in my kids' college fund account with stress-free confidence that it will continue growing for many decades to come. To discover more about this portfolio, check out http://investwithstrength.com Honestly, this is the simplest way that I have seen to build wealth. In Canada, this can be used in RRSP, RESP, TFSA (tax-free savings account), and non-registered accounts. These are similar to 401(k), 529 plan, and Roth IRA in the US. Other countries have similar investment vehicles. I have studied (and traded) different stock investment strategies, complex multi-legged options strategies, individual stock picks, momentum strategies, etc. and I have found that the simplest strategies work best. I'm an engineer so I have gravitated towards objective and quantitative strategies that have shown proven results. PS. I would not suggest dynamic strategies (with buying and selling) unless you have a few years of experience in the markets and have learned to control emotional trading.

No method of financial analysis is particularly scientific, there is simply too much flux in, and blatant manipulation of data to make reliable scientific analysis possible. Essentially there is too much random fluctuation to make measurement meaningful over the long term. The USA's apparent outperformance is largely a statistical artifact. Historically the US appears to outperform because the US dollar is currently the principal standard of measurement used in comparisons. The United Kingdom once held the outperformance record in the days when the British Pound was the international standard. Conversely other countries appear to underperform because of fluctuations in their exchange rates over time. Overall I would add that I do not consider any method to be particularly scientific. There is just too much unreliability in the underlying data, and an awful lot of well intended manipulation of data and presumptions of reliability in the data sources, to be able to use the word scientific when dealing with anything in the financial field. The general problem is people's habit of gaming the financial system to their personal benefit. In Europe we have had the case of Greece falsifying its government statistics to defraud the European Union on a mind boggling scale. Of banks conspiring together to game LIBOR to favour themselves. In the US credit applications were blatantly manipulated and falsified so that agents could earn more in commissions.  The term NINJA (No Income No Job or Assets) mortgages was a joke amongst the financial industry well before the crunch arrived. People knew they were doing wrong, but presumed it was OK because everyone was doing it. One problem is that companies, knowing which tools are used by investors, will manipulate their financial data to suit the tools used and hence get pulled into the buying profiles of investors. I suppose there in no point in my drawing up a litany of abuses that occur, it is simply that in order to make a good living or even just to keep your job, sales have to be brought about. And getting a sale, often requires ignoring inconvenient facts. Even presuming that financial data is reliable, and in some way reflects reality, there are external factors that complicate comparisons. Political risk, currency inflation and deflation, and the tendency of the human brain to seek patterns where none exist. My own approaches to buy and hold a wide varieties of Exchange Traded Funds, endeavouring to ensure that they in turn are as widely managed as possible. In other words, I try not to let my stock investments become over exposed to any particular management group. I only cash out when I have a need for the money, never in order to buy a "better" investment. I simply regard stocks as an asset to be held. Now I come to the "nevertheless", part of my little dissertation. If you are a financial professional, responsible for other people's money; then there is an obligation to use the best "scientific tools" that are available, in order to justify your decisions. If nothing else you have an obligation to analyse what information is professed to be true, in order to minimise loss. I have no doubt that the managers of the ETF I hold do indeed use "scientific" tools, measurements,  and methodologies to manage the funds. Especially if a fund has to meet certain criterion in terms of index matching. I buy ETF to smooth volatility, my main concern being that my money stored in this manner at least keeps up with inflation in the Eurozone, the Euro being my currency of reference. If I felt I had sufficient funds to invest directly in stocks, I would probably use a randomised method of selection of stock, with my main concern being on minimising trading fees. I will not expound further on the matter, but the article link below from Forbes will give you some insight into my reasoning for such an approach. http://www.forbes.com/sites/rickferri/2012/12/20/any-monkey-can-beat-the-market/