Fun Little Breakthrough

Finding A Home For Risk Parity?

When I first started blogging in 2004, one way I described it was to be able to look over my shoulder for anyone who was interested as my investment process evolved.

ETFs first came to be in the 1990's but there were very few of them. Then, after 2000 they began to proliferate with basic exposures with the occasional sophisticated product coming along. It was very obvious that the space would evolve to provide more sophisticated strategies in retail investor accessible funds. This is exactly what has happened over the last 5 years or so at an accelerating rate.

To me this development is a net positive. Investors and advisors who invest the time to learn how to use these strategies correctly will benefit immensely. It is human nature though to misuse this sort of thing. There's a potentially hormetic effect here where a little exposure to something sophisticated and complex is a good thing but too much becomes a negative.

In writing yesterday's post I thought back to that obvious point and realized, the future is here on this front, the opportunity to build very sophisticated portfolios has arrived. I'm not claiming that I got a prediction correct because if you were there 15 or 20 years ago, this outcome really was obvious.

I've used that phrase on another front too related to successful aging. On quite a few lists here and posts elsewhere I've talked about people making just a couple of good lifestyle decisions when they're young, doing their future selves a favor. Then they get to an age where they start to benefit from those favors. I say all the time, being in your 50's, healthy and having a little money in the bank is a great place to be.