First, a wild chart about Nvidia's market cap.
Who knows if it will actually catch up the the entire Japanese stock market but that really is something. Historically, this sort of thing tends to be unsustainable but interesting all the same.
We've talked before about the Alpha Architect 1-3 Month Box ETF (BOXX). The short version is that it replicates T-bill exposure with a four legged SPY option combo. The fund price accretes a penny or two just about every day that annualizes out to equal the yield of a T-bill. The advantage here is that there is no interest paid, you get the interest equivalent in the penny or two every day, so there is no ordinary income tax. There should only be a capital gain (a loss is theoretically possible of course) when you sell. Note there there was a small capital gain distribution from the fund for 2024 but not the other years it has traded. BOXX is a client holding.
With that as a preamble, in December they launched the Alpha Architect Aggregate Bond ETF (BOXA). In a similar manner to BOXX, BOXA uses an option combo to replicate the benchmark Aggregate Bond Index such that BOXA should pay no dividends, accreting in price ever so slightly to give hopefully the same total return as a fund tracking the Aggregate Index but in a more tax efficient manner.
Obviously to even consider BOXA, you have to want Aggregate bond exposure which I do not and we'll see if BOXA works as intended but BOXX has. Alpha Architect has filed for several other funds of this nature. For all the options based funds that have come out in the last few years, this little corner of the that space seems to be very productive bit of innovation.
This chart comes from Torsten Slok and his Daily Spark blog.
I've never seen a four quadrant portfolio referred to as a Barbell and I've never seen the "Replacement" portfolio anywhere either. Both seem to be Permanent Portfolio inspired. Where Slok works for Apollo I would take anything even tangentially related to private equity or private credit with a grain of salt.
Maybe portfolios at the institutional level, were 25% fixed income and 25% alts going into 2020 but it's difficult to envision retails sized accounts (with an advisor or do-it-yourselfers) having anywhere near 25% in alts even today.
Finally, a fire department story from last night. On Monday, we had our first real snow storm this winter. It was only a few inches but the driving here can be trickier in the snow than you might intuitively think and only the main roads are plowed.
We got called out for a medical call at 8:30pm to just about the worst road here imaginable. We put snow chains on about half the fleet on Sunday including our ambulance. When the call came in, it was snowing lightly but for the duration of the incident, very heavy snow came and went. We had to drive a long way up a main road that isn't plowed by the county (long story) and then we had to turn off to drive what I think is about 1/3 of a mile on a road that looks like the following. I kid you not.
The road had been plowed earlier but at this point snow had built back up. The road ends at the patient's house. The ambulance company's vehicle would not make it there, we had them go to our station house, had them hop in our ambulance and off we went with our ambulance and then three of us were in my pickup truck which had all four chained up.
In addition to the road looking like this, there are a couple of switchback like turns that require a 3-4 point turn to negotiate. Fortunately, we knew there would be no one driving out while we were driving in.
The ambulance had all the medical personnel that the incident required, so not knowing how much room there would be for multiple vehicles to turn around at the end, I staged in my pickup before the Bolivian Death Road portion started with two other firefighters on standby in case something bad happened on the road to the ambulance or if somehow more people were needed at the house.
The ambulance made it and I thought I was home free not having to drive that road. Ten minutes later, the incident required that we go to the house which we did. Then the circumstance of the incident required that I go back out not quite all the way, do a task and then go back to the house. I went from not having to drive that road at all to having to do it four times.
Four wheel drive low, lowest gear on the transmission and snow chains was fortunately pretty bullet proof, nothing hairy happened.
We get so few calls for service and the temperature is supposed to go way up in a few days so I didn't chain up the department Suburban that we keep at my house. I mean what are the odds that we have to drive on the worst road in partial whiteout conditions?
The Suburban is pretty heavy but I knew the road we were going to so I went with my pickup plus it was better for loading up equipment in case the ambulance had a problem. There are a lot of calls for service that I don't remember but this one will stick with me.
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