Silver as an investment

Is Risk Parity Driving The Market? / by Brean Capital’s Peter Tchir via / May 14, 2017 6:50 PM

I am have more and more discussions about Risk Parity.

While Bridgewater is the best known and largest advocate of Risk Parity – it can be implemented in a simple form by virtually anyone.

Sophisticated Risk Parity strategies involve balancing multiple asset classes (global bonds, global equities, commodities, FX, etc.) in the ‘correct’ proportions to achieve a desired level of portfolio risk while still have positive expected returns.

At its most basic level – it is buying stocks AND buying bonds under the assumption (hope) that when one goes down, the other goes up, dampening volatility while generating positive returns over time.

There is an appeal to buying bonds as a ‘hedge’ against equity risk rather than buying options or buying VIX based ETFs and ETNs.  In an ‘ideal’ world, buying treasuries as a hedge generates income while offering some ‘risk-off’ protection; whereas, buying options tends to just drain money time and again.

One big question is ‘why are treasuries doing so well and stocks not reacting?’


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