Two emails from readers prompt a query: can using 2X Leveraged Gold ETFs improve a portfolio? If so, what to use in the created space? I get behind the wheel to backtest some possibilities. 1st take: 2X Leveraged Gold holds promise; 2nd take: Managed Futures are perhaps the best complement.
Heard on a podcast once that any idiot can run a portfolio backtest, but beware of their conclusions. Ladies and gentlemen, I resemble that remark, so here I am fiddling with a few leveraged 60/40s. No recommendations here, just testing some variations on a theme!
Short, provocative case in favor of a leveraged, balanced portfolio over an unleveraged, unbalanced portfolio. Should be read in context with Ray Dalio’s work about leveraged Risk Parity and Asness’s later piece (with Frazzini and Pedersen) about aversion to use of leverage.
Great analysis of Warren Buffett’s above-market returns. The authors find two reasons for his success: 1) stock selection tilted towards high-quality companies available at great prices, and 2) use of low-cost leverage. Not exactly a RP article, but helpful connections regarding leverage.
Not exactly RP, but adjacent to it. This is an industry white paper about one way to use leveraged funds to free up space in the portfolios to make them more balanced. Authors are influenced by Risk Parity principles, and provide ideas for implementation, even though they call it something else.