Calculated Risk 185 Overview
| CAGR | 28.8% |
|---|---|
| Maximum drawdown | -17.2% |
| MAR ratio | 1.67 |
| History | 23 years (281 months) |
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 Catalyst 300 at 20%, and rebalances back to those weights each January.
Two of the three blocks lever, and both are Catalyst: one at 2x, one at 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% |
| Catalyst 300 | 20% | 300% | 60% |
| Total | 100% | 185% |
That 185% is the notional maximum. It is reached when Smart Leverage is deployed, which has been roughly a quarter of all months, and average leverage has run around 119%. Because weights drift between January resets, a strong run for the Catalyst blocks can carry actual exposure somewhat above the ceiling until the next reset; the highest on record is 205%, in September 2020.
Catalyst 200 reaches 2x through QLD and Catalyst 300 reaches 3x through TQQQ.
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.
Both levered blocks here are Catalyst, so they share the same trigger and deploy in the same months. The portfolio is either unlevered or at its full 185%, with nothing in between. 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 Blocks
Catalyst at 65%, in two pieces
Catalyst is the main source of return in this portfolio, and it appears twice. Catalyst 200 and Catalyst 300 follow exactly the same rules and hold exactly the same investments; the only difference is how far each one levers when Smart Leverage is deployed, 2x through QLD or 3x through TQQQ.
Splitting the Catalyst share 45/20 between the two is how the portfolio reaches exactly 185% at full deployment. It works out to a blended leverage of about 2.3x on the Catalyst share: more than Catalyst 200 alone, less than Catalyst 300 alone. The 2x variant carries the larger piece because it 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.
The honest reading is that this is a concentrated bet on Catalyst. Nearly two thirds of the capital, and all of the leverage, rides on one strategy's read of the macro regime. That concentration is the defining feature of this tier.
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, and none at all in Calculated Risk 250, which holds the leveraged Triad 135 instead.
Triad also reads a completely different input from Catalyst, relative momentum within its own sleeves rather than a macro regime, so it is the part of the portfolio most likely to be doing something different when Catalyst is wrong.
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 and Triad 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.
The Mix Can Change
Calculated Risk 185 is a portfolio of DMS strategies, and the DMS lineup is not frozen. New strategies are added and existing ones are refined over time, and when a new or updated strategy would make for a better risk-adjusted portfolio, the strategies and weights used here may change. Changes take effect at the start of a new month, never partway through one.
When the mix changes, the history shown on this page is recalculated as if the current mix had been held throughout. The record describes today's portfolio, not the path an investor following it would actually have taken, which is one more reason to read it as a backtest rather than a track record.
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 makes up most of the portfolio here, the portfolio's history begins there too.
Triad has a much longer record on its own page. 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 | +28.8% | -17.2% | 3.71 | 7.34 |
| Catalyst 200 | +32.8% | -17.9% | 4.74 | 6.57 |
| Catalyst 300 | +40.9% | -27.2% | 5.65 | 6.96 |
| Triad | +15.6% | -8.7% | 2.34 | 5.95 |
| S&P 500 | +11.3% | -51.0% | 11.72 | 0.82 |
The Ulcer Index measures how deep the portfolio went and how long it stayed there, so lower is better. The last column is the Ulcer Performance Index: return above cash divided by the Ulcer Index. Max Drawdown reports the worst single moment; UPI reports the experience of holding it. Higher is better.
Read the top row against the rows below it. The blend scores higher on UPI than any of its components. Catalyst 200 and Catalyst 300 each earn more on their own and do it with deeper declines; Triad is calmer and earns far less. Holding Triad beside two sizes of Catalyst keeps most of the growth while the ride stays meaningfully calmer than the levered Catalyst variants on their own.
Against the index, this tier earns roughly two and a half times the annual return with a worst decline around 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 | +16.2% | -7.2% | 2.12 | 6.89 |
| Calculated Risk 150 | +24.5% | -12.7% | 3.11 | 7.34 |
| Calculated Risk 185 | +28.8% | -17.2% | 3.71 | 7.34 |
| Calculated Risk 250 | +34.3% | -23.6% | 4.46 | 7.32 |
| 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: the three leveraged tiers land between 7.32 and 7.34.
CR 185 and CR 250 post the highest UPI of the four over the full history, level to two decimal places, with CR 150 a couple of hundredths behind, 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 in the high teens 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 at target weights, reached during the windows when Smart Leverage is deployed. Both levered blocks deploy together. Average notional has run around 119%.
- One 3x block. Catalyst 300 reaches 3x through TQQQ; Catalyst 200 reaches 2x through QLD.
- Concentrated in one engine. Catalyst holds 65% of the capital across its two blocks and supplies all of the leverage.
- 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.
- Two independent engines. Macro regime positioning and rotational 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 high-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.
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