The Three Stages of Investing
The hardest part about implementing a truly diversified approach that can do well across economic regimes is that it requires a change in how most investors think about their role. Most investors I’ve met think of ‘investing’ as synonymous with ‘picking high returning assets’ and so the way they spend their time tends to reflect […]
The Unreasonable Effectiveness of the Permanent Portfolio
The year is 1945, and you are a 25-year-old World War II veteran looking to settle down and establish a family. Your parents lost everything in the Great Depression, including their home. Despite a three-year rally, the stock market has yet to recover losses from the last 17 years. Friends and family were routinely tricked […]
Herschel Walker Syndrome
In our experience, investors tend to focus too specifically on seeing a single investment in isolation, as opposed to the overall portfolio. They want to identify individual assets with high returns (and ideally low drawdowns as well): a complex we refer to as Herschel Walker Syndrome. Herschel Walker was a formidable running back in the […]
Sequencing Risk: Why The Expected Value Is Not What You Should Expect
Expected value (EV) is a popular and often cited concept among investors. However, it’s a bit of a misnomer and has a few serious limitations. To briefly recap, expected value is a calculation made by multiplying the probability of something happening by the magnitude of the outcome. Let’s say you give me a bet on […]
Stocks for the Long Run?
“Stocks for the Long Run” is the mantra of many investors today. The U.S. stock market’s stellar performance, especially post 2008, and its rarity of long-term losses have become something of a gospel. Renowned experts like Eugene Fama and Ken French support this belief, estimating high probability of substantial gains over extended horizons. Indeed, the […]
Why Offense Wins Games, But Defense Wins Championships
We are excited to introduce a new addition to our suite of investment strategies – The Defense Strategy. It combines Mutiny Fund’s Volatility Strategy and Commodity Trend Strategy. The Volatility Strategy is designed to act as a so-called ‘black swan’ investment, achieving asymmetric gains in times of high volatility or tail risk (e.g. March 2020). […]
Against Cargo Cult Diversification: How The Illusion of Diversification Could Undermine Your Financial Future
During The Second World War, the U.S. armed forces began to fly large resource packages of food and other cargo to small islands in the Pacific. The US military shared some of the cargo — manufactured clothing, medicine, canned food, and tents — with the island’s residents. Many of the inhabitants of these islands had […]
The Best Strategies for Inflationary Times (Paper Review)
– HENRY NEVILLE, TEUN DRAAISMA, BEN FUNNELL, CAMPBELL R. HARVEY, and OTTO VAN HEMERT1 As talk of inflation is all the rage these days, it’s worth asking: what assets perform in an inflationary regime? That was the subject of this paper which looked at passive and active strategies across a variety of asset classes for […]
Diversifying Diversification: Downside Risk Management with Portfolios of Insurance Securities (Paper Review)
– Vineer Bhansali Diversification is the most important topic in investing. (Illustrations such as The Farmer’s Fable are really helpful.) It’s also the topic to which most investors pay lip service without actually doing much about it. At a very basic level, I tend to think that all investments can be categorized as offensive or […]
Beware The White Moose
There are certain books that hit you at just the right time and became a big part of how you see the world. For me, one of those books is Nassim Taleb’s The Black Swan. The Black Swan has become a widely used (and oft misused) term, but Taleb’s intended definition was simple: A black […]