Stacking, Diversifiers and Responders
Tags: Finance · Investing · Economics
A neat thought experiment: 100% ACWI, 50% trend following and a 100% notional tail hedge. Here I summarise the paper, explain the tail risk hedging strategy of buying one-year 10-delta SPX puts, critique the assumptions, and show why convexity and net risky asset exposure matter. I also cover practical challenges of accessing SPX tail hedges in a UCITS world.
Rolly's Take
For the discerning investor who understands that survival often trumps sheer performance in tumultuous markets. They seek a blend of strategy and caution, embracing the delicate dance of trend-following and tail risk hedging — a mindful approach to navigating uncertainty. Here, they find a thoughtful exploration of resilience, where each decision echoes the wisdom of playing the long game.