The best portfolio of the past 50 years was 36% your own houseWhat Was the Best Portfolio Over the Last 50 Years?

The author compared US stocks, international stocks, REITs, corporate bonds, 10-year Treasuries, 3-month T-bills, gold, commodities and US homes over 1972 to 2025, looking for the mix with the highest return per unit of risk.

Every champion comes with a catch

Gold was the flashiest: it posted the top return in 13 of 54 years, roughly once every four. It was also the wildest, up 106% in 1979 and down 37.6% in 1981, with annual volatility of 24.7%, the highest in the group.

One dollar put into the S&P 500 in 1972 was worth 35.90 in real terms by 2025, far ahead of gold at 12.89, REITs at 12.26 and international stocks at 11.27.

Commodities were the worst, turning a dollar into 0.42 while still swinging 14% a year — no growth and plenty of noise, which is why the author avoids them.

The optimum is a third house

On a risk-adjusted basis the optimal mix is 36% US homes, 27% S&P 500, 18% gold, 16% 10-year Treasuries and 3% REITs.

Homes earn that weight because they are rarely repriced, so they look calm on paper while still delivering. Their worst drawdown was about 13%, against 48% for the S&P 500.

Housing also comes with leverage nothing else offers: a 30-year fixed mortgage cannot be margin called. The median American homeowner holds 51% of net worth in their home, so many households are already running a soft version of this portfolio.

Change the dates and the answer changes

Solve using only 1972 to 1998 and the optimum becomes 68% S&P 500, 24% gold, 6% international stocks and 2% corporate bonds. The 36% in housing vanishes entirely.

Portfolio optimisation, the author says, is a cruel art: you get the perfect solution to a problem that no longer exists. You can only ever compute it backwards.

Which leaves the plain conclusion — the best portfolio is the one you never have to switch.