RSSY

scm66

Diversification. Between my 401k, Roth IRA, and taxable brokerage accounts, I have about 130% leverage via return stacked ETFs (mostly RSSB, RSSX, RSST, and RSSY). Those ETFs give me exposure to global equities, S&P, T-bonds, managed futures, futures yield, gold, and BTC.

Embarrassed_Time_146

The main point of the book is that the expected risk premia for stocks and bonds is very low right now which probably means that they won’t perform as well moving forward. You can react to this phenomenon in three ways: 1) taking more risk in stocks and hope for the best; 2) just endure it, or 3) diversify beyond a buy and hold equity/bond portfolio. He says that, market timing being really difficult, the best strategy is to have a portfolio that works during all scenarios, even when stocks and bond world badly. So he proposes investing in a buy and hold portfolio of stocks, fixed income, commodities, long/short market neutral risk premia, coupled with trend following and maybe tail risk protection. He also thinks that you should build a well diversified portfolio and then use leverage if you want to increase the risk/expected returns (that’s not an original argument, but a consequence of modern portfolio theory). The kind of portfolio that he proposes is hard to implement only with ETFs. Maybe you can use something like DBMF or KMLM for trend following, or RSST or RSBT if you want to use leverage. However it’s hard to find a properly leveraged long/short ETF because of regulations. BTAL is a risk neutral long/short fund, and RSSY and RSBY are leveraged funds that include a long/short carry factor strategy.