Victor Haghani – The Last of the Tactical Allocators (S7E13)

Bullish:

• $RISKADJ - Investors should focus on maximizing risk-adjusted returns as they are the most important metric for investment performance.

  • “Risk adjusted returns are the ultimate thing that we care about. I think investors should be trying to maximize risk adjusted returns.”

    Victor·55:47
• $DYNAMICINDEX - Dynamic asset allocation based on expected return and risk is beneficial for all investors, allowing portfolios to reflect current market conditions.

  • “Dynamic asset allocation based on expected return and risk is not zero sum. Everybody can do the right thing at the same time, just have their portfolios reflecting the return and risk that the market is affording at each moment in time.”

    Victor·39:00
• $INDEXFUNDS - Indexing offers benefits such as low-cost diversification and tax efficiency, making it an attractive investment strategy.

  • “I love the idea of indexing, low cost diversification, tax efficiency.”

    Victor·6:48

Bearish:

• $ACTIVEMGMT - Actively managed stock-picking portfolios tend to have higher risk on average compared to the market portfolio, potentially leading to underperformance.

  • “We can prove with really simple algebra that the average dollar invested in non-market portfolios, the average actively managed stock picking dollar, has higher risk on average than the market portfolio.”

    Victor·1:07:40
• $TACTICALALLOC - Many tactical allocation funds have struggled or disappeared, potentially underperforming simple US equity exposure.

  • “I can't really speak to how they were doing the asset allocation, but I think what is pretty clear is choose 2010 and just look at what was the earnings yield on US Equities.”

    Victor·1:01:26