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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: Dear Peter et al:

This is a big picture, non-personal question of a "fictional" account of a million dollars :)

From your answers to various subscribers over a period of years, I know that you have always said the portfolio construction is based on individual's personal needs and wants. Agreed!
Hence this general question!

If one wants to have 20% of the portfolio in NON correlated, steady as she goes kind of stocks or bonds, what should one buy?
I see that even though the stocks and bonds are not correlated, in 2022 they both were severely punished. Gold hasn't gone anywhere. Energy was down now but has gone waay up!

Even the ardent fans of Technical Analysis seem to be "confused" about non performance of their Intermarket Analysis approach. (John Murphy)

So, the question is how can one construct a portfolio with non correlated assets and come up with an asymmetrical barbell portfolio (Nessim Taleb?)
I have been looking at Utilities, Financials, Emerging markets, bonds, Gold........nothing seem to be appealing!

Any words of wisdom?
Many thanks in advance.

Mano.
Read Answer Asked by Savalai on September 27, 2023
Q: Hi, My questions is about the best way to hedge the current market and economy. I have a large portion of my money in the stock market, and I feel things are becoming over extended. I've thought about putting some money in the VIX, however I'm not sure if that's the best way to play a downturn. I'd appreciate if you could give me your opinion on the best way to hedge, in case of a heavy downturn in the market/economy. Thanks a lot.
Read Answer Asked by Brady on August 11, 2021
Q: I'm trying to understand the risk/reward on VXX. I know it's an ETN trying to mimic the VIX through futures. Where VXX/VIX are right now and based on history I see downside risk in 2021 of something like 20% and upside of more than 100%. The chances are good that we have a normal correction sometime in the next year. Am I missing something?
Read Answer Asked by Mike on February 08, 2021
Q: Hi Folks
I read in Bloomberg "investors are pricing in expectations of higher volatility around the elections ... In the stock market, investors have been purchasing volatility protection extending beyond November."
Can you please guide me what that volatility protection purchasing would actually be ? Is volatility protection only for investors who don't want to stomach the turbulence, or is there a broader interest in it? Many thanks for sharing your market wisdom.
Read Answer Asked by TOM on September 24, 2020
Q: Hello,
recently I was listening to an interview of a portfolio manager of Artemis Capital. He was discussing portfolio construction and allocations to different types of investment classes.
His firm did research over an extended period of time and they devised an allocation model which performed the best over the time frame. The main point of the interview was diversification which would be in line with what 5i keeps saying time and time again when reading replies to member questions.
Having said all that, there is one point they made which I did not follow to well and would like your view on. They indicated that they would allocate a portion of a portfolio to volatility. Anyway, I did not understand and would like to know what they meant by this. They were talking about options so is it basically using puts and calls?
If you can expand on what would constitute investing in volatility and perhaps give a few examples i would appreciate it to help my understanding of this concept.
Thanks,
Dan
Read Answer Asked by Daniel on July 27, 2020
Q: Hi,
I read an article on how a hedge fund made money during the coronavirus sell off. (https://www.wsj.com/articles/how-to-hedge-a-coronavirus-11583321400). Can you give a small primer on how this is done..or typical hedging strategies. Thanks. Shyam
Read Answer Asked by Shyam on March 05, 2020
Q: In finance or investing media there is often reference to portfolio insurance. I did not know such a thing even existed. The discussion often makes a passing reference to “... buy the VIX.... “ If this is correct, how would one do that? If insurance--- I assume that means mitigating risk--- is unrelated to VIX , is portfolio insurance even buy-able (OTHER than by use of options)? If options are the only way to mitigate risk, do you know some reliable sources one can go to? If I am going to pull my hair out worrying about “toppy markets” (a favorite phrase of some market commentators) I would like to be able honestly to claim I did make best efforts before the said hair-pulling.
Read Answer Asked by Adam on January 29, 2020
Q: I would like to purchase some protection against market volatility but am unsure of the best way to do this. VXX and HUV are a play on the futures but if I am correct there is a time/price decay involved in the price as well. Is there another way to to protect against market volatility other than holding cash? Thanks

Kenn
Read Answer Asked by Kenneth on January 12, 2018
Q: Other than currency what is the difference between these two products. I would like some insurance on market volatility but am unsure which product is best. Is there a better way to protect against volatility other than cash. Thanks

Kenn
Read Answer Asked by Kenneth on February 08, 2017
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