Connecting the best of the old & new investment world! Founder & manager of the Blokland Smart Multi-Asset Fund, a future-proof portfolio investing in a smart combination of scarce assets, Quality Stocks, Gold, & Bitcoin
Imagine an investment universe holding three asset classes: #Equities, #Bonds, and #Gold. Historical data reveal that having a traditional 60-40 portfolio (60% Equities, 40% Bonds) would have roughly the same Sharpe ratio as a 60-40 portfolio consisting of 60% Equities and 40% Gold. In recent years: - Gold has outperformed Bonds - The #correlation between Equities and Bonds has turned positive (as it has been for most of history) - The correlation between Equities and Gold is low and relatively stable - The #volatility of Bonds relative to Equities is rising. - The volatility of Gold relative to Equities is relatively stable. Based on these hard data, having at least all three asset classes in a strategic mix seems straightforward. However, in practice, nearly every strategic asset allocation includes a massive weight in Bonds and ZERO in Gold. I expect this to change during 'The Great Rebalancing.' No doom scenarios required!
Executive Director | Head of Risk Management
5moHistorically, gold has constituted a solid hedge against inflation and powerful complement for stocks and bonds for a balanced portfolio which aims to maximise sharpe (volatility vs return). Modern portfolio theory (Markowitz) and Bernsteins' "Four Pillars of Investing" explain the rationale too. This is reassuring, good post!👍