Couch Potato 50/50
Couch Potato Portfolio
Where it stands today
Our calculation, 1926-07 – 2026-09
Growth of $10,000
Where it came from
Scott Burns (a pen name of Robert Burns) was a personal finance columnist: Boston Herald from 1977, national syndication from 1981, Dallas Morning News from 1985. He had been writing about personal finance since the late 1960s and concluded from interviews and fund tracking that most actively managed funds underperform. Index funds had existed about 15 years but were little known to ordinary investors.
He introduced the Couch Potato Portfolio in his Dallas Morning News column on 29 September 1991 with a tongue-in-cheek pitch. The portfolio split money evenly between equities and fixed income. His argument was that it would beat the S&P 500 in a bear market and lag only slightly in a bull market, and he compared the 1970s (bear) and 1980s (bull). The name stands for the effort: the portfolio needs almost none. Burns said anyone who could 'fog a mirror' could do it. The sources I read do not give a more detailed explanation of the name.
Fund choice is reported differently in secondary sources. Wikipedia says the original used the Vanguard 500 Index and an intermediate bond index fund (Vanguard Total Bond Fund Index). A personal-finance blog says VFINX and VTBMX. Bogleheads wiki cites Burns's follow-up piece of 1 October 1991 ('Exactly How To Be A Couch Potato Portfolio Manager') as describing the Vanguard Index 500 and the Vanguard Fixed Income Short-Term Government Bond Fund. Over the years Burns changed the bond half to inflation-protected securities: the usual modern form is 50% total US stock market and 50% TIPS.
Burns left the newspaper staff in 2006 and co-founded AssetBuilder (August 2006, with Kennon Grose), which applies the idea to portfolios of low-cost passive funds. He published a ladder of extensions: Margaritaville (3 funds), Four Square, Five-Fold, Six Ways from Sunday, Seven Value, Nine Emerging and Ten-Speed. In 2012 he told MoneySense that early resistance came largely from brokers and fund salespeople.
Canadian Couch Potato is a separate branch: Dan Bortolotti's blog and MoneySense columns adapted the idea to Canada with a few ETFs, for example 20% each in Canadian, US and international equities and 40% fixed income. It is a different portfolio from Burns's 50/50 and is not part of this model.
What is in it
| Equity index fund: Vanguard 500 Index (S&P 500) | 50% | original 1991 form, as reported by Wikipedia and a personal-finance blog |
| Bond index fund: Vanguard Total Bond / intermediate bonds | 50% | fund identity differs by source; Bogleheads wiki says short-term government bond fund |
How we model it
| US large companies (S&P 500) | 50% |
| US bond market (aggregate) | 50% |
For a euro investor
How to build it with European funds
| Part | Share | Example funds (ISIN) |
|---|---|---|
| US large companies (S&P 500) | 50% | iShares Core S&P 500 UCITS ETF USD (Acc) IE00B5BMR087Vanguard S&P 500 UCITS ETF (USD) Distributing IE00B3XXRP09 |
| US bond market (aggregate) (closest match) | 50% | iShares Core Global Aggregate Bond UCITS ETF EUR Hedged (Acc) IE00BDBRDM35iShares Core Global Aggregate Bond UCITS ETF USD (Dist) IE00B3F81409 |
The idea
Cut cost and effort: two index funds, equal halves. Bond half cushions bear markets so the portfolio can match or beat the S&P 500 there while lagging only modestly in bulls.
How people buy it
Original: Vanguard 500 Index plus a Vanguard bond index fund. Today: a total US stock ETF (VTI) plus TIPS (e.g. VTIP) per AssetBuilder, or an S&P 500 index plus aggregate bond fund.
Rebalancing as published
Keep the two halves equal and rebalance regularly (the Couch Potato approach is described as holding index funds and rebalancing to targets). Exact interval in the 1991 column not confirmed.
Variants
- 75/25 stock/bond 'sophisticated couch potato' (Wikipedia).
- Modern AssetBuilder form: 50% total US stock (VTI) / 50% TIPS.
- Burns's family: Margaritaville 1/3 US, 1/3 international ex-US, 1/3 TIPS; Four Square 25% each US stock, international, TIPS, non-US bonds; Five-Fold adds REIT; Six Ways from Sunday adds energy; Seven Value adds large value; Nine Emerging adds small value and emerging markets; Ten-Speed 10% each (portfolioeinstein.com list).
- Bogleheads wiki lists a 'Couch Potato' three-fund 33/34/33 (TIPS, total stock, total international) attributed to Burns/Andrew Tobias.
- Canadian Couch Potato (Bortolotti): different model, Canadian, US and international equity plus bonds.
Criticism
- Low stock allocation and no adjustment for age or risk over time (mymoneyblog comments).
- No international exposure and no REIT fund in the original (mymoneyblog).
- The original claim that it would beat the S&P 500 in bear markets rests on a bond half that did well when rates fell; its historical edge depended on the rate path.
- Index investing requires faith that business creates more value than it destroys, in Burns's own words (MoneySense interview, paraphrased).
Through the eras
| Era | Dates | Total | Per year | Worst drop | S&P 500 |
|---|---|---|---|---|---|
| Roaring Twenties boom | 1926-07 – 1929-08 | +73.2 % | +19.0 % | −2.8 % | +153.7 % |
| Wall Street crash and Great Contraction | 1929-09 – 1932-07 | −47.6 % | −19.8 % | −53.5 % | −78.2 % |
| New Deal recovery | 1932-08 – 1937-02 | +120.7 % | +18.8 % | −13.9 % | +268.7 % |
| Recession within the Depression | 1937-03 – 1938-03 | −25.1 % | −23.4 % | −25.1 % | −49.5 % |
| Rearmament and World War II | 1938-04 – 1945-09 | +96.8 % | +9.4 % | −14.0 % | +205.8 % |
| Postwar expansion | 1945-10 – 1965-12 | +396.1 % | +8.2 % | −12.4 % | +1212.9 % |
| Golden age of the 1950s | 1950-01 – 1959-12 | +160.8 % | +10.1 % | −7.6 % | +438.8 % |
| Go-go years and nifty-fifty | 1966-01 – 1968-12 | +19.7 % | +6.2 % | −8.7 % | +34.0 % |
| The Great Inflation (stagflation) | 1969-01 – 1982-07 | +101.7 % | +5.3 % | −24.2 % | +84.6 % |
| 1973-74 oil shock and bear market | 1973-01 – 1974-12 | −18.9 % | −10.0 % | −24.2 % | −41.7 % |
| Second oil shock and the Volcker disinflation | 1979-01 – 1982-08 | +43.1 % | +10.3 % | −9.8 % | +59.2 % |
| Great bull market in stocks and bonds | 1982-08 – 1999-12 | +1077.8 % | +15.2 % | −16.5 % | +2060.4 % |
| Black Monday | 1987-08 – 1987-12 | −11.2 % | — | −16.5 % | −21.8 % |
| Savings-and-loan crisis and 1990 recession | 1990-07 – 1991-03 | +8.7 % | — | −7.4 % | +7.4 % |
| 1994 bond market massacre | 1994-02 – 1994-12 | −3.6 % | — | −6.3 % | −3.2 % |
| Asian and Russian financial crises | 1997-07 – 1998-10 | +18.6 % | +13.7 % | −8.1 % | +22.4 % |
| Dot-com bubble and crash | 2000-03 – 2002-10 | −8.6 % | −3.3 % | −15.8 % | −37.2 % |
| Recovery and housing boom | 2002-11 – 2007-09 | +56.5 % | +9.5 % | −2.6 % | +97.0 % |
| Global financial crisis | 2007-10 – 2009-03 | −19.6 % | −13.5 % | −24.4 % | −44.7 % |
| The decade after the crisis | 2009-04 – 2019-12 | +186.1 % | +10.3 % | −6.9 % | +411.2 % |
| Fourth-quarter 2018 sell-off | 2018-09 – 2018-12 | −6.9 % | — | −6.9 % | −14.4 % |
| Covid crash and stimulus boom | 2020-02 – 2021-12 | +27.3 % | +13.4 % | −9.5 % | +53.6 % |
| Inflation shock and rate hikes | 2022-01 – 2022-12 | −16.5 % | −16.5 % | −19.6 % | −19.9 % |
Calendar years
Any N-year period
| Any N-year period | Worst | 10 % worse than | Median | 10 % better than | Best |
|---|---|---|---|---|---|
| 1 y (1192) | −35.7 % | −4.8 % | +9.3 % | +21.2 % | +64.5 % |
| 3 y (1168) | −20.6 % | +0.4 % | +8.1 % | +15.2 % | +26.4 % |
| 5 y (1144) | −6.7 % | +3.2 % | +7.8 % | +13.8 % | +23.5 % |
| 10 y (1084) | +0.6 % | +4.6 % | +7.7 % | +13.4 % | +16.4 % |
| 15 y (1024) | +2.5 % | +5.5 % | +7.9 % | +12.9 % | +15.5 % |
| 20 y (964) | +3.3 % | +6.0 % | +7.9 % | +12.1 % | +14.7 % |
| 30 y (844) | +5.7 % | +6.9 % | +8.4 % | +10.7 % | +11.8 % |
How it behaved in history
- 1970s vs 1980s. Burns's first column compared the 1970s bear market, in which the bond half should have helped, with the 1980s bull market, in which the portfolio would trail only slightly. canadiancouchpotato.com
Published results (by others)
- Burns's original claim: 50/50 would beat the S&P 500 in the 1970s bear market and lag slightly in the 1980s bull market (1970s-1980s): qualitative, no figures given canadiancouchpotato.com
- A post of 2007 says the portfolio had beaten most balanced funds over the preceding 15 years (about 1991-2007): qualitative mymoneyblog.com
What we could not verify
- Which bond fund Burns named in the 1991 column: short-term government (Bogleheads wiki citing the column), intermediate (Wikipedia) or Vanguard Total Bond (blogs). I did not reach the column itself.
- The origin of the name 'couch potato' beyond effort/laziness.
- The Bogleheads wiki cites the follow-up date as 1 October 1991 vs 29 September 1991 for the first column.
- No dated published returns with numbers found.
Sources
- en.wikipedia.org
https://en.wikipedia.org/wiki/Scott_Burns_(newspaper_columnist) - canadiancouchpotato.com
https://canadiancouchpotato.com/2012/02/20/an-interview-with-the-original-couch-potato/ - www.moneysense.ca
https://www.moneysense.ca/columns/an-interview-with-the-original-couch-potato/ - www.bogleheads.org
https://www.bogleheads.org/wiki/Three-fund_portfolio - mymoneyblog.com
https://mymoneyblog.com/model-portfolio-1-couch-potato-portfolio.html - www.portfolioeinstein.com
https://www.portfolioeinstein.com/scott-burns-the-8-other-couch-potato-portfolios/ - www.whitecoatinvestor.com
https://www.whitecoatinvestor.com/150-portfolios-better-than-yours/ - www.moneysense.ca
https://www.moneysense.ca/columns/retired-money/canadian-investing-book-about-etfs
Calculated on historical data. Past results do not predict the future. Models before the 1990s use stand-ins for classes that had no index yet; fees, taxes and fund costs are not included. This is mathematics, not an investment recommendation.