Steep Hill To Climb

We had a very challenging wildfire yesterday. Walker Fire trucks are red and the Forest Service are green.

It was very close to the road which made it easy for us to find but it was down an insanely steep hill. I've never done any sort of fire activity on such a steep hill.

We got there just a couple of minutes before PNF 633, it was on federal land so they had command of the incident which was probably a good thing, no obvious obstacles to ordering up air support. 

Now, on to today's post. Alpha Architect has put out a lot of content and information lately promoting its High Inflation And Deflation ETF (HIDE) as a substitute for managed futures. There is some amount of trend following in the HIDE process and part of the pitch is HIDE can be a way to avoid the fallout when managed futures struggle or otherwise do poorly. The most recent incidence of this was the few months going into the Tariff Panic in early 2025. 

You can see from the drawdown chart that when DBMF and QMHIX get colds, HIDE barely gets the hiccups. 

The tradeoff is that in 2022, HIDE might have been down based on replicating it. A reasonable expectation for managed futures is that it will hopefully go up when markets have longer, slower declines. HIDE seems like it is setting a different expectation. 

Here's a fun idea.

The funds will take any dividends earned by the underlying equity portfolio and use them to buy Bitcoin. Or you could just buy Simplify US Equity PLUS Bitcoin Strategy ETF (SPBC). Or you could just buy a Bitcoin ETF. 

What will be the yield of the equity portfolio? A little over 1%? Maybe? I don't know why this would be someone's best choice to add Bitcoin. 

A couple of weeks ago, we looked at a portfolio from Finomial that they called Leveraged Equity + Diversifiers Portfolio. Today I got an email about their review of Leveraged Equity + Diversifiers Portfolio II. The differences between the two is slight.

Version 1 has pulled away the last couple of years, I think the difference can be attributed to the position in FEGIX which includes mining stocks. Gold miners tend to have bigger moves in both directions than just plain gold. 

The results are compelling. The Finomial portfolios have had quite a bit more growth with about the same volatility as putting 100% in the S&P 500 often with smaller drawdowns. The Finomial portfolios are 100% equities with alts on top. 

There's never been any sort of hideous path for SSO versus the S&P 500 but it's not impossible going forward, 50% in SSO could be difficult at times. That said there a couple of concepts here that I think are useful and overlap with what we talk about and do here. One is the willingness to include traditional mutual funds in the mix. ETFs are generally the better wrapper but not in every instance. I don't think it is logical that one wrapper must always be best and I don't think ETF-only models make the most of what is out there. In building or managing your own portfolio, if a mutual fund is the best way to capture some exposure, use the mutual fund. 

The other thing is that I'm learning from a project I am working on for the Del E. Webb Foundation is that these are "institutional caliber" portfolios. That doesn't guarantee results and that doesn't mean portfolios like this can't be poorly assembled but these sorts of things really are sophisticated concepts that are accessible for individual in their brokerage accounts.

The information, analysis and opinions expressed herein reflect our judgment and opinions as of the date of writing and are subject to change at any time without notice. They are not intended to constitute legal, tax, securities or investment advice or a recommended course of action in any given situation.