Some quick hits tonight ahead of the Tyson fight, if I can stay up that long.
Meb Faber posted this quote.
The stock market goes up far more often than not. If an investor does nothing they will capture that long term inertia. The more trading an investor does, the more they fight against that inertia. That's not to say never make changes, occasionally changes need to be made and even the occasional change could turn out to be "right" or "wrong" which is fine, no one will get them all right and no one will get them all wrong but try to let the market work for you without fighting it.
Next
This is something I made up for possible inclusion in the end of quarter letter I send out to clients. The blue line is obviously very smooth, an unvolatile ride. It would be great to have the portfolio look like that in real life but as a goal, you can see that it will have years where it lags by a lot. Seeing short terms lags on a backtest is one thing but enduring one is another. Do you have managed futures exposure? That is going through a pretty lousy grind right now but that doesn't mean it should be given up on. However, if you own managed futures through a mutual fund it might be worth selling in a taxable account until after the year end distribution.
I saw the following on Twitter.
In his comments, Spencer replied to someone that he was specifically talking about the Risk Parity ETF (RPAR) not the strategy of risk parity. We've looked at risk parity many times. The concept is very intriguing but it has been difficult to own in a mutual fund or ETF wrapper. RPAR has done poorly and the Wealthfront Risk Parity Mutual Fund, which has done poorly too, just announced that it is closing. AQR had a risk parity mutual fund that struggled for a long time and then they changed the name of the fund and I believe they tweaked the strategy. AQR has other funds that maybe could be described as being a variation of risk parity but even if not, they appear to be influenced by risk parity.
Cliff replied later in the comments that "I have no idea what RPAR is doing." There was another comment that I thought was worthwhile too. @StolpyStolps said "risk parity with just stocks and bonds isn't risk parity."
I'm on Bluesky if you're on there https://bsky.app/profile/randomroger.bsky.social.
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.
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