Papa Bear Portfolio
The Papa Bear Portfolio was created by Brian Livingston, author of Muscular Portfolios (BenBella Books, 2018), and is one of two primary strategies featured on his MuscularPortfolios.com site. It is closely based on a 2013 whitepaper by Mebane Faber and is an extension of Faber's Ivy Portfolio concept, which has been tracked with real money since 2006. The core idea is straightforward: each month, hold the three funds with the strongest recent momentum from a diversified menu of 13 asset classes.
Average Allocation
Based on historical average weights across all rebalance periods.
Performance Snapshot
Rolling Returns
| Period | Low | Average | High |
|---|---|---|---|
| 1 Year | -16.2% | +13.2% | +61.4% |
| 3 Year | -1.3% | +12.5% | +33.9% |
| 5 Year | +2.0% | +12.5% | +27.4% |
| 10 Year | +5.4% | +12.1% | +19.0% |
Growth of $10,000
Historical Drawdown
Percentage decline from the portfolio's peak value at each point in time.
Rolling Returns
Annualised return for each rolling period ending on that date.
Annualised return for each 1Y period ending on that date.
Investment Philosophy
The Papa Bear was built around a specific investor fear: the catastrophic bear market that shows up roughly every eight years and causes many investors to panic-sell at the worst possible moment. Livingston identifies a "behavioral pain point" around a 25% loss threshold -- the level at which many investors abandon their strategy and lock in permanent damage. By rotating into whichever asset classes are trending strongest, the portfolio aims to sidestep the worst of those drawdowns, accepting underperformance during bull markets in exchange for a smoother ride across a full market cycle.
Who It's For
This portfolio suits a self-directed investor who is comfortable with monthly monitoring, willing to make occasional position changes, and more concerned with avoiding large losses than with capturing every dollar of a bull market. It works best in tax-deferred accounts given the potential for frequent short-term trades.
Pros
- Broad diversification across 13 asset classes, including equities, bonds, real estate, and commodities, means the strategy can rotate into almost any environment
- Designed to keep drawdowns below 25% even during severe market dislocations
- Requires only about 15 minutes of attention per month
Cons
- In strong, sustained bull markets, holding only three positions out of 13 means you will often lag a simple buy-and-hold approach
- The top-three selection method can result in the portfolio being concentrated in a single asset class, despite the large menu
- Frequent position turnover creates mostly short-term gains, making it tax-inefficient in taxable accounts
Technical Notes
Momentum is calculated as the average of each asset's 3, 6, and 12-month total returns. The three highest-ranked assets receive equal weighting. Livingston recommends checking the portfolio once a month on a consistent date, and suggests skipping a rebalance unless a position is more than 20% off its target dollar amount. The current rankings are published for free on the MuscularPortfolios.com Papa Bear page. For a related strategy with a simpler momentum calculation and smaller asset menu, see the Mama Bear Portfolio.
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