Example #4,080,875 in the re-hashing of the 4% rule’s drawbacks and reviewed as an example of what my last post ranted against. Neglects portfolio construction, asset selection, rebalancing, and more. Ends where the industry pieces always seem to end up: private annuities.
A headline recently caught my eye: “Why Risk Parity Investors Have Lost Faith.” I haven’t certainly, but, with my interest piqued, I wondered about the reasons. Well actually, it turns out it’s just one pension manager in Europe, but still: why oh why are people jumping off the RP ship?
If investing were like dessert, would you find diversification with the 31 varieties of ice cream at Baskin-Robbins? or merely variety? What about at the supermarket? Hmmm.... Thoughts on a powerful word with two confusing meanings.
Bad times for bonds lately, for sure. The extent (-12.3% for BND since November) is certainly not nothing, but has produced howls and hyperbole far outstripping what would accompany a similar loss for equities. Why do bond losses produce such outsized panic?
I'm a big Paul Merriman fan, but noticed something on one of his recent podcasts that points to why Risk Parity may lead to better outcomes than traditional portfolio approaches. Basically, it's not just total risk that investors should focus on.
