Re:Senate Stock Watcher
by arcticbull on Friday April 10, 2020 @09:57PM
(#22839132)
You can easily protect your portfolio while being net long using uncorrelated asset classes like a blend of stocks and bonds, or even long inverse ETFs. Look into risk parity portfolios. No need to keep your foot on the gas and the brake at the same time.
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Inverse ETFs are shorts, let's be real for a second :). And I'm well familiar with risk parity.
Bonds+stocks only doesn't protect you from stagflation (inflation up, growth down) or a depression (inflation around zero, growth down).
Bonds+stocks+gold only doesn't protect you from a depression.
Both a depression and a stagflation can easily last for over 5 years, so it should be taken seriously, IMHO.
Related: https://www.artemiscm.com/ (see the paper linked below; note that this is also a sales pitch from a long vol fund, so possibly it's a little too optimistic about the strategy).
You're wrong. Bonds protect against depression and index-linked bonds protect against stagflation.
Risk parity has not fared well in this crisis.
Re:Senate Stock Watcher
by infinite8s on Saturday April 11, 2020 @02:38PM
(#22843264)
Risk parity doesn't come fare well when all correlations go to 1.