Our New Portfolio SNR3

Smaller Falls, Not Bigger Wins

In seventeen years of backtest, SNR3, our active three-ETF portfolio, never lost more than 5.5% in a calendar year. With US stocks this expensive, that matters more than the average return.

SNR3 is the active half of our portfolios: three ETFs (exchange-traded funds), reviewed once a month and chosen by fixed rules. It goes live this month, in November 2026. Everything before that is a backtest, a simulation of the same rules on past prices. The figures below show how the rules would have behaved, not money anyone made.

According to our backtest on Yahoo Finance prices, SNR3 returned 10.3% a year from March 2009 to October 2026. Over the same period the S&P 500, held through the SPY ETF, returned 15.7% a year. A classic 60/40 portfolio (60% S&P 500, 40% US Treasuries) returned 10.4%. On average return alone, SNR3 is not the winner.

The difference is in the bad years. SNR3's worst calendar year in our backtest was 2018, at −5.5%. In 2022 the S&P 500 lost 18.2% and the 60/40 portfolio 16.7%. From peak to trough, SNR3's deepest fall was 17.4%, against 33.7% for the S&P 500 and 21.3% for the 60/40. SNR3 had three losing years (2011, 2018 and 2022), one more than the S&P 500, but none cost more than 5.5%.

This year shows how the rules work. SNR3 started 2026 holding gold, Japanese stocks and emerging-market stocks. At the end of June the rules swapped gold for a broad commodities fund. From January to October SNR3 gained 11.6% in our backtest, in line with the S&P 500's 11.7% and well ahead of the 60/40 portfolio's 6.4%.

Held in 2026
January–June: gold (GLD), Japan stocks (EWJ), emerging-market stocks (EEM)
July–October: commodities (BCI), Japan stocks (EWJ), emerging-market stocks (EEM)

Return, 1 January to 30 October 2026
SNR3 +11.6% · S&P 500 +11.7% · 60/40 +6.4%

Total returns from our backtest on Yahoo Finance prices.

According to Robert Shiller's data, the cyclically adjusted price-to-earnings ratio (CAPE) of the S&P 500 stood at about 40 in October 2026. That is close to its record of 44.2, set in December 1999, and more than twice its long-run median of 16.6.

High prices do not tell us when a fall will come, or whether it will come at all. They do tell us the cushion is thin. When stocks are this expensive, the useful question is how much a portfolio can lose, not only how much it can earn. That is the question we built SNR3 to answer. Its current holdings are on our portfolios page, which we update in the first days of each month.

What Matters Most

A portfolio that falls less is a portfolio you can keep holding.