More Good News

I’ve relied on the efficiency of non correlated assets especially stocks v bonds to buoy up my risk profile. What that means is I buy a certain amount of return and pay for it with a certain amount of optimized risk. Over decades the correlation between stocks and bonds has been zero. What happens if that correlation becomes positive? The answer is nothing good. There are portfolios out there that better capture non correlated diversity for example the Ray Dalio All Weather, or the Golden Butterfly, or the Harry Browne Permanent Portfolio. I’ve written about these, most recently here .

This morning I ran across this video, which describes the possible changing risk involved in owning a 60/40 if correlations change from non correlated to moderately or very correlated. It’s something to think about. I’m not saying it will happen, but we see central banks vigorously fiddling with the knobs, in a time were this amount of debt has never existed, and pretending to have “control” of the rudder. I’m not sure they control the rudder. I’m not sure they even control the narrative.

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