4-3-2-1 Dragon at a glance
4-3-2-1 Dragon is a fixed-allocation portfolio by Community Research across US Equity, US Small-Cap Value, Managed Futures, Long Zero-Coupon Treasuries, rebalanced quarterly. Backtested 1986-06-30 to 2026-06-08 (39.9 years): 10.8% CAGR, 1.29 Sharpe, -19.6% max drawdown, 7.9% volatility.
- Type
- Fixed Allocation
- Author
- Community Research
- Rebalancing
- Quarterly
- Risk
- Moderate
- Period
- 1986-06-30 to 2026-06-08
- CAGR
- 10.8%
- Sharpe
- 1.29
- Max Drawdown
- -19.6%
- Volatility
- 7.9%
4-3-2-1 Dragon — Fixed Allocation Portfolio
The 4-3-2-1 Dragon is the community's retail-friendly distillation of Chris Cole's Dragon Portfolio (Artemis Capital, 2020). Cole's original allocation is 24% Equity, 18% Fixed Income, 19% Gold, 18% Commodity Trend, and 21% Active Long Volatility. The Active Long Volatility sleeve uses long-dated equity options and tail-risk strategies that are not available in a retail ETF wrapper, so the community substituted a larger managed-futures sleeve and a small-cap value tilt that approximates the regime diversification at the cost of giving up the explicit long-vol exposure.
This implementation runs 30% SPY, 10% AVUV (small-cap value), 30% KMLM (managed futures for crisis alpha), 20% ZROZ (long zero-coupon treasuries), and 10% GLD. Quarterly rebalance. Variants include a 1.5x capital-efficient version using NTSX/GDE substitutions, and a 2x leveraged version using UPRO/TMF/UGL.
Backtest Performance (1986-06-30 to 2026-06-08)
| Metric | 4-3-2-1 Dragon |
|---|---|
| Compound Annual Growth Rate (CAGR) | 10.8% |
| Maximum Drawdown | -19.6% |
| Sharpe Ratio | 1.29 |
| Sortino Ratio | 1.90 |
| Annualized Volatility | 7.9% |
| Calmar Ratio | 0.55 |
| Total Return | 5890.8% |
| Backtest Period | 39.9 years |
Strategy Details
- Type
- Fixed / Strategic
- Rebalancing
- quarterly
- Risk Level
- moderate
- Variants
- 3
- Author
- Community Research
- Source
- Cole, C. (2020). The Allegory of the Hawk and Serpent. Artemis Capital Management.
Asset Classes
- US Equity
- US Small-Cap Value
- Managed Futures
- Long Zero-Coupon Treasuries
- Gold
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