Asymmetric Finance

Asymmetric Finance

Share this post

Asymmetric Finance
Asymmetric Finance
Generational Wealth Is Created When You Know How To Manage Volatility
Copy link
Facebook
Email
Notes
More

Generational Wealth Is Created When You Know How To Manage Volatility

With 3.33% in this asset, you can beat the index by more than 12% over 20 years.

Mar 23, 2022
∙ Paid

Share this post

Asymmetric Finance
Asymmetric Finance
Generational Wealth Is Created When You Know How To Manage Volatility
Copy link
Facebook
Email
Notes
More
Share
Source: Pexels

The stock market can be one of the most irrational places for the longest period possible.

Since 2012 and through the end of 2018, we have seen the volatility index remain at extremely low levels.

This makes portfolio protection extremely cheap. Irrationally, investors in this situation prefer to follow the masses and have a higher asset allocation towards eminently long positions. These assets have a VERY high correlation in periods of high volatility and cause our portfolio to suffer large drawdowns.

Cathie Woods has experienced this in her own ETFs when she has seen the largest inflows of capital coming into her funds the days before, making record highs (February 2021). Since then, her ARKK fund has declined by 60%.

"What the wise man knows before, the fool knows after."

This is well known to the fund managers, and we have seen how, since March 2020, they have started launching Tail Risk ETFs and Hedge Funds. But do they do the same job as good volatility management?

Man…

This post is for paid subscribers

Already a paid subscriber? Sign in
© 2025 Asymmetric Finance
Privacy ∙ Terms ∙ Collection notice
Start writingGet the app
Substack is the home for great culture

Share

Copy link
Facebook
Email
Notes
More