U.S. equities and gold: A portfolio performance analysis across economic cycles

Abstract

This study empirically analyzes the risk-adjusted performance, volatility, and interdependencies of the Magnificent 7, the S&P 500 (SPY), the Nasdaq-100 (QQQ), and gold (GLD) across distinct economic regimes from 2008 to 2025. Using daily adjusted closing prices, the analysis calculates total and annualized returns, Sharpe ratios, volatility, value at risk (VaR), and asset correlations to assess how these instruments perform under changing macroeconomic conditions. The results show that the Magnificent 7 deliver superior long-term returns, but their risk-adjusted performance deteriorates sharply during downturns, reflecting their cyclical nature. SPY and QQQ exhibit strong correlations with the Magnificent 7, limiting equity-only diversification. Gold offers partial hedging benefits during crises but performs inconsistently in stable markets. These findings underscore the limitations of passive equity strategies in concentrated markets and highlight the importance of dynamic, regime-aware asset allocation.