Key Takeaways:
- The Papa Bear Portfolio is a momentum-based investment strategy that selects 3 out of 13 diversified ETFs each month based on 6-month performance (136 trading days).
- It’s more aggressive than the Mama Bear Portfolio (holds 3 ETFs vs. 5), meaning more upside potential but more volatility.
- It is designed to be systematic and low maintenance, with no forecasting, emotional decision-making, or daily monitoring required.
- This strategy is good for long-term investors who prefer steady compounding over trying to “beat the market” daily.
- Uses cold data, not market opinions, to guide decisions
Introduction: Why “Papa Bear”?
When Brian Livingston unveiled the Papa Bear Portfolio in 2018, his goal was to provide everyday investors a playbook that could allow their accounts to grow in a bull market, yet hunker down like a grizzly when storms roll in. He wasn’t trying to invent another flashy trading system or beat the S&P 500 in every single year. Instead, he set out to help with a more practical problem. How can real people stay invested for the long term without letting volatility hijack their emotions? Porter Investments is passionate about constantly looking for ways that can help the individual investor do that.
Livingston saw that most portfolios live at one of two extremes. On one side are pedal-to-the-metal stock allocations that soar in good times but leave investors wide-eyed and sleepless in panics. On the other hand, there are ultra-defensive mixes that preserve capital yet barely outpace inflation. Papa Bear tries to split that difference. By ranking a diverse menu of asset-class ETFs each month and owning only the three with the strongest momentum, the strategy seeks to ride what’s working and sidestep what isn’t. There is no crystal ball, just cold market data and a pre-set rulebook.
This guide was written to unpack the “why” as much as the “how.” By reading this you should be able to understand the strategy’s aims, rebuild it for yourself, judge whether it suits your own temperament and tax situation, and perhaps most important, start to see why a little simplicity and regular routine can be the secret ingredient to long-term investing success.
What Is the Papa Bear Portfolio?
At heart, Papa Bear is a momentum-based investment strategy designed to deliver balanced growth while limiting deep losses. From a menu of 13 broad ETFs, the portfolio owns only the three with the best recent performance. Positions are equal-weighted and checked monthly.
The premise of the strategy can be quickly summarized as follows:
- Follow what’s working. Own assets that are already rising, whether they’re U.S. stocks, gold, or short-term Treasuries.
- Cut what’s not. If an ETF falls out of the top three momentum slot, sell it and buy the next one up the leaderboard.
- Stay diversified. The menu spans equities, fixed income, commodities, and REITs so the winners probably would not come from the same category twice in a row.
It is important to understand that many momentum strategies do not achieve their longer-term outperformance from the outsize gains during bull markets, but instead, they achieve it from losing less during severe bear markets than a more passive buy and hold approach. Papa Bear adheres to that approach, but its strong point is that it is a systematic, low maintenance investment approach.
The Philosophy Behind the Papa Bear Portfolio
Most portfolios are built for either offense (maximum growth) or defense (capital preservation). Papa Bear tries to split the difference. The logical argument behind the strategy is this:
You only get higher long-term returns if you stay in the game
Momentum is the engine. It is an evidence-based, quantitative finance principle showing that winners tend to keep winning for a while. Diversification and cash-like assets are the seat belts. Together, they create a smoother ride that investors are less likely to abandon in panic, reducing the impact of emotional biases like loss aversion or recency error.
The Papa Bear Portfolio differs from another strategy we have discussed before: the Mama Bear Portfolio. While both use the same momentum-based selection process from a diversified ETF menu, Papa Bear holds the top three performers each month, whereas Mama Bear holds the top five. This makes Papa Bear more concentrated and potentially higher returning, but also slightly more volatile. Mama Bear is designed for a smoother ride with broader diversification, appealing to more conservative investors.
Core Components of the Papa Bear Portfolio
Asset
Symbol
Why it’s included
U.S. Total Stock Market
VTI
Broad mkt. exposure for uptrends
International Stocks
VXUS
Diversifies for geographic risk
IWM
Long Term Treasuries
TLT
Cash Proxy
In addition, you could include specific, focused ETFs within an asset class such as:
High Yield Bonds
JNK
Income with equity behavior
Income with equity behavior
VEA
Established FTSE opportunities
How the Papa Bear Portfolio Works
Generally, you follow the following steps:
- Step 1: Gather market data. At the month-end, calculate each ETF’s total return over the past 136 trading days (~6 months).
- Step 2: Rank them. Sort the 13 returns from highest to lowest.
- Step 3: Buy the top three. Allocate one-third of your capital to each.
- Step 4: Repeat next month. If today’s top three differs from last month’s, trade accordingly
That’s it. No inflation forecasts, no prediction about where to not invest today, etc. You do what the financial data tells you.
Why 136 Days?
Advantages of the Papa Bear Portfolio
- Potential for Small Drawdowns. In many historical bear markets Papa Bear lost about half as much as the S&P 500. Smaller holes require smaller shovels.
- Set-and-Forget Rhythm. Checking monthly is better than doom-scrolling daily, which is a tough habit to break, but necessary.
- Tax-Friendly for IRAs. The strategy’s modest turnover works best in tax-sheltered accounts where gains aren’t immediately taxable. If you lower your turnover, you will be exposed to higher drawdowns.
- Rules over Emotions. Systematic trading mitigates emotional biases that cause investors to buy high and sell low.
- Built-In Adaptability. When leadership changes from growth to value or from stocks to bonds, the portfolio follows without drama.
Potential Drawbacks of the Papa Bear Portfolio
- Tax Drag in Taxable Accounts. Momentum eventually sells winners and that can cause you to realize short-term gains.
- Underperformance in Roaring Bulls. When markets sprint, Papa Bear may lag pure stock portfolios. There is always a cost to defense. Like buying insurance, you need to be comfortable with that cost.
- Concentration Risk. Occasionally two or more ETFs can come from one asset class, like bonds or even a subset of an asset class. Diversification kicks in only when leadership rotates. If not diversified when leadership rotates, drawdowns can be quicker than a more balanced, fully diversified portfolio.
- Needs Discipline. You need to stay on schedule. You cannot skip a rebalance because “you just know” something is going to happen. On the other hand, drawdowns can potentially get larger due to the less frequent, monthly rebalancing.
Who Should Consider using a Papa Bear Portfolio
The Papa Bear Portfolio is a good fit for investors who value clarity, routine, and risk management over adrenaline-fueled market timing. It’s particularly well-suited for those who want to stay invested in the market but also sleep at night when volatility picks up. If you’ve lived through painful downturns like 2008 or 2020 and found yourself panicking or selling at the wrong time, a rules-based, momentum-driven strategy like this can offer guardrails. The steady cadence of monthly rebalancing gives you something tangible to do, without veering too far off course.
It’s also an ideal strategy for people who prefer a “set-it-and-check-it” approach rather than constant tinkering. Many DIY investors fall into the trap of second-guessing themselves, especially when headlines scream panic or euphoria. Papa Bear removes that temptation. If you’re the kind of person who wants a clear process to follow, doesn’t mind pulling up some return data once a month, and would rather follow a consistent system than try to outguess the market, then this portfolio may feel like the right kind of financial autopilot.
On the other hand, the strategy may not be ideal for investors who thrive on daily action or want hands-on control over every investment decision. If you’re someone who enjoys trading frequently, monitoring markets in real time, or believes you can consistently beat momentum-based models by using intuition or discretionary picks, Papa Bear may feel too passive and restrictive. It’s not designed to scratch the itch of short-term speculation. Instead, it’s a methodical process meant to operate on a monthly tempo.
It also may not be the best choice for investors operating entirely within taxable accounts, particularly if short-term capital gains are a concern. Because the strategy trades monthly, it can trigger tax consequences that a buy-and-hold investor wouldn’t face as often. And for those who need predictable income streams—like retirees relying on dividends or bond interest—Papa Bear’s focus on price momentum may not align with the goal of steady cash flow. In short, it’s built to grow wealth while avoiding deep losses, but not necessarily to generate consistent income or accommodate highly personalized views on market direction.
Step-by-Step: Building Your Own Papa Bear
- Open a brokerage account that offers commission-free ETF trades.
- Fund the account—lump sum or monthly contributions.
- Pull the 6-month returns for each ETF (your platform may display them).
- Rank and buy the top three, equal-weighted.
- Set a calendar reminder for the last business day each month to repeat the process.
- Document your rules in writing, so in the future you can’t invent new ones after a scary headline.
- Review annually to ensure the ETF list still tracks its intended asset class and expense ratios remain competitive.
Try to automate everything you can. Even checking returns can be scripted in Excel or Google Sheets.
Comparing Papa Bear to Other Investment Choices
At its core, the Papa Bear Portfolio is built to keep you in the compounding game by side-stepping the worst losses without giving up the upside needed for meaningful long-term growth. By concentrating on the three strongest momentum-driven ETFs each month, it willingly takes a bit more short-term noise in exchange for the ability to cut bear-market drawdowns roughly in half—an edge that lets many investors stay the course when headlines turn frightening.
Compared to the Mama Bear Portfolio, Papa Bear is more concentrated and therefore quicker to follow leadership when markets rotate. That extra focus can translate into higher peaks—but also slightly bumpier valleys—so Papa Bear is often more effective for investors comfortable trading a touch more volatility for a better shot at long-run returns. On the other hand, Mama Bear suits those who prize an even smoother ride.
Against the classic 60/40 stock-bond mix, Papa Bear tends to defend capital far better in deep selloffs because momentum can exit equities altogether, whereas 60/40 is locked into its equity sleeve no matter the weather. In roaring bull markets, however, 60/40 may outpace Papa Bear because the static allocation keeps more chips on the table even when momentum signals caution.
When lined up next to the ultra-defensive Permanent Portfolio, Papa Bear’s willingness to chase strength gives it a higher ceiling for growth; the Permanent Portfolio’s equal weighting of stocks, bonds, cash, and gold rarely outruns inflation by much but almost never scares anyone either. If your primary goal is capital preservation with minimal drawdowns, Permanent may feel safer. However, if you can stomach modest fluctuations in pursuit of better long-term wealth creation, Papa Bear is likely the more effective choice.
Adapting the Papa Bear Portfolio to Your Needs
Life isn’t static, so your portfolio shouldn’t be either. Consider these adjustments:
- Young & Aggressive? Include some focused, sector-based ETFs.
- In Retirement? Add specific short-term bonds or cash-equivalent ETFs.
- Higher Inflation Outlook? Include more commodities or inflation-based ETFs.
Whatever tweaks you make, protect the algorithmic core. The magic lies in the monthly momentum reset, not in your latest market hunch.
Conclusion: Is the Papa Bear Portfolio Right for you?
The Papa Bear Portfolio stands out by blending the disciplined logic of momentum investing with a deep respect for risk management. It doesn’t try to predict markets, it simply reacts to them, methodically shifting toward strength and away from weakness based on measurable data. This approach helps investors capture long-term growth while reducing the emotional toll of large drawdowns. For those who want a thoughtful, rules-based system that doesn’t rely on gut feelings or daily guesswork, Papa Bear offers a compelling balance of simplicity, resilience, and steady performance. It’s not about timing the market perfectly; it’s about staying in the game intelligently.
Please remember, what worked for your neighbor or coworker does not mean it will work for you. Before making any changes, preparation and approaching it with realistic expectations is the key. After interviewing and consulting with thousands of investors, we have found they all eventually fall into the same trap: their investments did not match their expectations, causing an emotional reaction. We will present you with a fuller, more reliable expectation picture of your investments. This allows you to confidently navigate down whatever investing path you decide.
Spend a few minutes with us to see if we are a good fit for each other.
The Porter Investments Strategies were developed by our President and founder, Bob Porter. His prior work at Fidelity Investments allowed him the opportunity to advise and study a diverse group of investors.
