Robust & Resilient Portfolios

Bespoke Investment Group Tweeted out the following.

In the same period, the S&P 500 is up just under 11% so 15% looks pretty good. 

One big reason I avoid this part of the bond market is that it has equity like beta and I think the 15% gain supports that belief. The other reason is the vacillating correlation to equities. For the last couple of years I've been referring to all of this as unreliable volatility. 

If you want to trade duration products for capital gains, hell yeah, go and get some but that is equity beta. If you're trying to smooth out the ride versus being all in equities, duration is not the answer. 

Here's an interesting excerpt from Mark Rzepczynski.

Yet, if we are headed to a market slowdown or downturn, it may be worth looking at a subset of managers that may have timing skill at avoiding the downturn. Unfortunately, the sample size is very small for those managers. We just have not had that many bear markets. A middle ground approach is to add a strategy that does well in down markets. You are not directly investing in skill but playing the odds that the market will have characteristics that can be exploited by strategy action. For example, trend-following that is diversified across asset classes, investing both long and short, and follows trends that may be more likely to occur when there is uncertainty will likely do better in a period of downside transition.

This is what we talk about here constantly. If you read this blog regularly, you are already putting the time to understand the various strategies we talk about that do what Mark describes and so can draw your own conclusion on whether you believe in a given strategy, the appropriateness for your portfolio and whether you think it lives up to its billing. Not all of them do but one or two holdings that usually go up when stocks go down and a couple more that usually trade sideways with an upward tilt no matter what the broad market is doing can contribute to making a robust and resilient portfolio which is what all these posts are about, robust and resilient portfolios.

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.