Sorry if this is dumb so beta is effectively 25% weight into VTI BND GLD and then some commodity etf (idk which one, oil or a mix?) is that weighting true and would that be a way to track beta with actual etfs? Also what would be the commodity etf comparison or are any of mine wrong?
It’s not dumb. We like a combination of SPY, TLT, DBC, IAU. The weights need to account for individual risk. Something like like 20% stocks, 30% bonds, 15% commodities, 15% gold. That’s just off memory so may be imprecise. But the more risky things have less weight.
It’s not bizarre at all really. Liquidity is just the quantity & quality mix of the macro balance sheet. In an economy that pulls forward futures income via borrowing it is only natural for balance sheets to expand over time.
The entire premise of assets offering returns above cash or spending is the premise on top of which the financial system runs. A balanced beta portoflio takes no bet on the economic outcomes, but bets on an expansion of the financial system over time.
That's a great way to put it! I guess in an ideal Keynesian regime, we'd have figured out a long term neutral application to countercyclical fiscal policy, to smooth out boom bust cycles as originally designed.
Would you characterize said balanced beta portfolio approach as a response to our collective failure to implement ideal macroeconomic policy? Or more of a natural impulse to the elements?
Underrated article. Ty
Thank you 🙏🏽
Sorry if this is dumb so beta is effectively 25% weight into VTI BND GLD and then some commodity etf (idk which one, oil or a mix?) is that weighting true and would that be a way to track beta with actual etfs? Also what would be the commodity etf comparison or are any of mine wrong?
It’s not dumb. We like a combination of SPY, TLT, DBC, IAU. The weights need to account for individual risk. Something like like 20% stocks, 30% bonds, 15% commodities, 15% gold. That’s just off memory so may be imprecise. But the more risky things have less weight.
RPAR is a very good way to track beta.
Awesome I’m going to keep reading your stuff it’s great!
Isn't it truly bizarre that the core of a good portfolio strategy involves prioritizing rising liquidity?
It’s not bizarre at all really. Liquidity is just the quantity & quality mix of the macro balance sheet. In an economy that pulls forward futures income via borrowing it is only natural for balance sheets to expand over time.
The entire premise of assets offering returns above cash or spending is the premise on top of which the financial system runs. A balanced beta portoflio takes no bet on the economic outcomes, but bets on an expansion of the financial system over time.
That's a great way to put it! I guess in an ideal Keynesian regime, we'd have figured out a long term neutral application to countercyclical fiscal policy, to smooth out boom bust cycles as originally designed.
Would you characterize said balanced beta portfolio approach as a response to our collective failure to implement ideal macroeconomic policy? Or more of a natural impulse to the elements?