Calculated Risk 185 Overview

Calculated Risk 185 is the middle tier of the Calculated Risk family, and the first one built for an investor who genuinely wants leverage rather than a cautious amount of it. It holds Catalyst 200 at 45%, Triad at 35% and Global Navigator 300 at 20%, and rebalances back to those weights each January.

Two of the three blocks lever. One of them reaches 3x. Unleveraged Triad drops from half the portfolio to just over a third. The result is a maximum notional of 185%, meaningfully more aggressive than the entry tier and still well short of the top of the family.

What the Name Means

The number is exact arithmetic, not a label.

Component	Weight	Maximum notional	Contribution
Catalyst 200	45%	200%	90%
Triad	35%	100%	35%
Global Navigator 300	20%	300%	60%
Total	100%		185%

That 185% is the notional maximum. It is reached when Smart Leverage is deployed, which is a minority of months, the average leverage for this strategy is 121%.

Catalyst 200 reaches 2x through QLD and Global Navigator 300 reaches 3x through UPRO.

How the Leverage Works

Smart Leverage is a single mechanism, used by every leveraged strategy on this site. It sits dormant by default and arms only after the broad U.S. equity market has fallen at least 10% from its high. From armed, it deploys when the market's own momentum turns back up.

Leverage therefore arrives after a decline, when more of the fall has already happened and the expected forward return is better. It is never applied at a high, and one drawdown event produces one deployment: after leverage comes off, a fresh 10% decline is required before it can arm again.

Because both levered blocks here run that same mechanism off the same market trigger, they tend to be deployed at the same time rather than taking turns. The portfolio is mostly unlevered, and when it is levered it is levered across the board. That is the honest way to read the ceiling: not a number the portfolio hovers near, but the level it reaches during the windows when Smart Leverage is live.

Leverage still cuts both ways. A conditional rule is not a safety net. Smart Leverage has a strong record, and a record is not a promise. This tier should be sized as though the leverage could hurt, because eventually it will.

Why These Three Blocks

Catalyst 200 at 45%

The largest block in the portfolio and the main source of its return. Catalyst compounds faster than anything else available to this family, and the 2x variant has historically matched unleveraged Catalyst's worst decline, since Smart Leverage was not deployed during that episode. Treat that as a historical fact about how the trigger behaved rather than a structural guarantee.

At 45% it contributes 90 points of the 185, which is half the portfolio's notional ceiling coming from a single block. That concentration is the defining feature of this tier and the reason it sits above the entry tier rather than beside it.

Triad at 35%

Triad is the stabilizer in every member of this family and the only block that never levers. Its weight is the dial that sets each tier: 50% in Calculated Risk 150, 35% here, 25% in Calculated Risk 250.

Moving it from a half to just over a third is most of what separates this tier from the entry one. It lifts the ceiling, and it removes ballast that was there to hold the floor.

Global Navigator 300 at 20%

The 3x version, and the one that makes this a different animal from CR 150, where the same slot is filled by a 2x sleeve at a smaller weight.

Global Navigator is the weakest of the three on standalone risk-adjusted terms, as the table below shows. It is here for what it does when conditions break, going defensive on a dual momentum signal that is independent of both Catalyst's macro regime read and Triad's sleeve momentum. A modest weight in something that fails at a different time contributes more to the blend than its solo record suggests.

No passive sleeve

The crisis protection in these portfolios comes from the active blocks going defensive, not from a hedge sleeve. This blend takes that protection directly from Catalyst, Triad and Global Navigator rather than paying for a basket of diversifiers to deliver it.

Rebalancing

Calculated Risk 185 resets to 45/35/20 in January, and only in January. Between resets the weights drift with each block's returns, so a strong year for Catalyst 200 leaves it above 45% until the following January.

Annual rebalancing keeps top-level trading low. Each component still rebalances its own holdings monthly, and Smart Leverage arms and deploys on its own schedule throughout the year.

Why the Record Starts in 2003

Catalyst's regime classification depends on market-implied inflation expectations, and that data series begins in 2003. Since Catalyst 200 is the largest component here, the portfolio's history begins there too.

The other blocks have much longer records on their own pages. Comparisons with strategies whose histories reach back to 1980 are comparing different eras as well as different designs, so the tables below hold every row to the same window.

Performance Highlights

Over the full available history, alongside its own components:

May 2003 through September 2026, net of trading friction:

	CAGR	Max Drawdown	Ulcer Index	UPI
Calculated Risk 185	+24.3%	-14.7%	3.28	6.90
Catalyst 200	+32.2%	-17.9%	4.84	6.31
Triad	+14.6%	-8.6%	2.43	5.32
Global Navigator 300	+21.6%	-20.2%	6.58	3.04
S&P 500	+11.3%	-51.0%	11.72	0.82

The third column is the Ulcer Performance Index: return above cash divided by how deep the portfolio went and how long it stayed there. Max Drawdown reports the worst single moment; UPI reports the experience of holding it. Higher is better.

The blend scores higher on UPI than any of its three components. Catalyst 200 earns considerably more on its own and does it with a deeper decline; Global Navigator 300 earns less than the blend with a decline nearly half again as deep. Combining three engines that fail at different times produced something better than any of them individually, which is the same result the rest of this family shows.

Against the index, this tier earns more than double the annual return with a worst decline under a third of the index's.

The family ladder

The same window, showing where this tier sits among its siblings:

May 2003 through September 2026, net of trading friction:

	CAGR	Max Drawdown	Ulcer Index	UPI
Quiet Compounding	+15.5%	-8.2%	2.17	6.41
Calculated Risk 150	+21.3%	-11.7%	2.86	6.89
Calculated Risk 185	+24.3%	-14.7%	3.28	6.90
Calculated Risk 250	+27.9%	-21.2%	3.95	6.67
S&P 500	+11.3%	-51.0%	11.72	0.82

Return climbs steadily as you move up the ladder, drawdown climbs with it, and the risk-adjusted column barely moves: every tier lands between 6.2 and 6.8.

CR 185 happens to post the highest UPI of the four, and that margin is too small to mean anything. Treating a few hundredths of a ratio as a reason to choose this tier would be reading noise. The real reading is that moving up the ladder buys more return in exchange for more pain at roughly a constant exchange rate, and the right tier is the one whose worst decline you would actually hold through.

For this tier, that means being able to sit through a decline around 15% without flinching, and accepting that the worst decline ahead may be larger than the worst one behind.

Two cautions apply here as everywhere. These records are backtested, and a levered portfolio assembled from components chosen after their histories were known deserves more skepticism than a single unlevered strategy does. And a single figure covering two decades says nothing about the order the returns arrived in, which is most of what an investor lives through, particularly with leverage involved.

Portfolio Characteristics

• Leverage with a ceiling. Maximum 185% notional, reached during the windows when Smart Leverage is deployed.
• One 3x block. Global Navigator 300 reaches 3x through UPRO; Catalyst 200 reaches 2x through QLD.
• Concentrated in one engine. Catalyst 200 at 45% supplies half the notional ceiling on its own.
• A third of the portfolio never levers. Triad at 35% is the structural brake, and a smaller one than in the entry tier.
• Conditional, not constant. Leverage deploys after a market decline rather than being carried permanently.
• Three independent engines. Macro regime positioning, rotational momentum and dual momentum, each reading different inputs.
• Annual rebalancing at the top level. Weights reset each January and drift in between.
• Substantial underlying turnover. The portfolio trades rarely; its components do not.
• Best suited to tax-deferred accounts. Component-level turnover generates short-term gains. In a taxable account, plan accordingly.
• Shorter history than most strategies here. The record begins in 2003 because of Catalyst's data dependency.
• Fully mechanical. Every allocation and every leverage decision follows from published rules with no discretionary override.

Who It's For

Calculated Risk 185 is designed for investors who want:

• A genuinely leveraged portfolio rather than a lightly leveraged one.
• Leverage applied after declines rather than carried at all times.
• High returns and the tolerance to sit through a mid-teens decline to get them.
• Diversification across strategy types rather than across asset classes alone.
• A clear ceiling on total exposure, stated as arithmetic rather than described in adjectives.

It is a poor fit for investors who would be shaken by a decline larger than the historical worst, who are investing money they will need soon, or who want no leverage at all. Those investors should look at Calculated Risk 150, which holds half the portfolio in unlevered Triad and uses no 3x sleeve, or Quiet Compounding, which uses the same portfolio-of-strategies approach with no leverage anywhere. Investors who want the most aggressive tier should look at Calculated Risk 250.

A general caution about this family: leverage magnifies whatever happens next, including the parts nobody modeled. Size the position accordingly.

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Past performance, including backtested results, is not indicative of future results. Backtested performance is hypothetical, does not reflect actual trading, and benefits from hindsight in the selection of strategy rules and component weights. Portions of the history rely on reconstructed proxy data for funds that did not exist for the full period. Leveraged exchange-traded funds carry risks beyond those of their unleveraged counterparts. Investors should carefully consider their risk tolerance and consult with a financial advisor.

For the latest details, visit www.DualMomentumSystems.com