Quote for the Week
If you’re going to seek out volatility because that’s where opportunity is, you don’t want your entire portfolio to be volatile, you only want to make volatile bets within it. You have to be sure that there’s some systematic arrangement of the bets that you make so that the portfolio risk in the total portfolio is not as volatile as the individual components. One of Markowitz’s great insights was precisely that. That you can take a lot of high-risk bets—as long as they’re not correlated—and come out fine. I don’t see what’s fraudulent about trying to do that…
As I said, the markets are macro-inefficient. They can go haywire. That is a matter that you deal with through your asset allocation in the first place, so that you don’t get killed if the totally unexpected hits you in the face…
My own affairs are run that way because I know that extreme outcomes can happen and I don’t want to get killed. But that doesn’t mean that I’m not making bets in the middle of the portfolio somewhere. — Peter Bernstein (source)
From the Archives
Last Call
- Forecasting Follies 2025 – Better Letter
- Ten Lessons the Market Taught Us in 2025 – L. Swedroe
- The Power of Constraints – T. Lamade
- Fast and Unsteady – Basis Pointing
- Dopamine Markets: 2025 Annual Letter – Dopamine Markets
- The Investing Framework You’ll Need to Survive the AI Decade – Safal Niveshak
- When Good Intentions Fail: The $4 Million Estate Planning Mistake – Savor Financial
- The 4% Rule Resurgence – Panoptica
- The Modern Peril of the Availability Heuristic – Behavioral Economics
- American Visionary: Daniel Hudson Burnham – ABHC