Does The Hedgeye Quads (GIP macro model) actually work?

MARGINAL

Real but small -- not worth what it costs to run.

The claim

Read the growth + inflation 'quad' and tilt your asset allocation to the regime — Hedgeye (GIP / 'quad' macro model)

What we did

Tested against 60/40 (SPY+TLT) and buy & hold SPY, 2011-2026 monthly, all dividends counted, 2011-2026 monthly; INDPRO growth x CPI inflation rate-of-change, prescribed asset rotation.

The result

Result: 0.78 vs 0.98 Sharpe (perfect-foresight rotation vs 60/40)

As an allocation model it trailed a plain 60/40 -- and even a PERFECT quad forecast only reached Sharpe 0.78 -- though the only window we can test is an equity bull, its hardest case

Verdict

A genuinely useful lens for THINKING about regimes -- different assets lead when the economy reflates versus slows, and that's real. As a tradeable allocation system, though, the prescribed rotation (growth/tech in Quad 1, energy/materials/financials in Quad 2, gold/commodities in Quad 3, long bonds/utilities/gold in Quad 4) trailed a plain 60/40 over the years we can measure -- and even granting it a PERFECT forecast of the next quad, removing the hard part, it reached only Sharpe 0.78 versus 0.98 for 60/40 and 1.06 for buy-and-hold (dividends counted on every asset, both sides). The fair caveat, in its favor: 2011-2026 was one long equity bull -- the toughest possible test for any strategy that holds bonds, gold and commodities part-time. A regime model is built for the stagflation or deflation decade our macro data can't reach, so call this unproven on its home turf, not debunked. The one durable nugget is real: stagflation -- growth down, inflation up -- is the single regime that genuinely bites equities. The catch is you'd have to predict it.

What the test did and did not do

tested out of sample
checked for look-ahead
net of real costs
point-in-time data

Almost nobody publishing a backtest says which of these they did. We list the ones we failed as well as the ones we passed.

Tested 2026-06-23. The same treatment, applied to every other system, is on the test bench.

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Written with AI assistance from our own test database. The numbers are computed, not composed.
General market commentary for education, not personalised investment advice. Backtested results are hypothetical. Trading carries a real risk of loss.