Building the 100-Year Portfolio

Published on
February 20th, 2020
Duration
54 minutes


Building the 100-Year Portfolio

The Interview ·
Featuring Christopher Cole and Danielle DiMartino Booth

Published on: February 20th, 2020 • Duration: 54 minutes

Imagine being furnished with generational wealth under one condition – you must choose only one asset allocation for your portfolio and stick with it for 100 years. Where would you even start? Chris Cole, CIO and founder of Artemis Capital Management, returns to Real Vision to answer that very question. He sits down with Danielle DiMartino Booth of Quill Intelligence to discuss the optimal portfolio construction for the long run, regardless of market condition. With uncertainty everywhere despite all-highs in the market, Cole discusses how to navigate Charlie Munger’s "death of the efficient frontier." He explains the allegory of the Hawk and Serpent and breaks down the construction of his 100-year portfolio. Cole and Booth provide viewers with the tools to traverse the "incremental death of alpha," and markets that are increasingly subject to the amplified volatility of increasingly passive investments. This piece is a much-watch for the pension fund or endowment that has no long-volatility exposure in their portfolio. Filmed on February 7, 2020 in Austin, Texas. To find Chris's report: https://docsend.com/view/taygkbn

Comments

Transcript

  • AG
    Alan G.
    17 May 2020 @ 18:21
    how can one find a commodities trend strategy?
  • KS
    Kathleen S.
    28 February 2020 @ 17:36
    Buy bitcoin. Done
    • DG
      Danko G.
      20 April 2020 @ 19:56
      Until it's banned
  • SJ
    Sean J.
    9 April 2020 @ 22:34
    Would have liked to see the backtesting include the Roaring 20’s. He starts in 1928, which seems like cheating.
    • DG
      Danko G.
      20 April 2020 @ 19:54
      Same as 2010s
  • JL
    Jack L.
    20 February 2020 @ 22:57
    This is less an interview, more a discussion with wonderful synergy between equals. One of the top 20 or RV segments yet produced. DDMB, relaxed, patient, focused active listening & on-point responses. The hair on the back of my neck rose slightly at "...the markets have actually learned to _play the Fed_." Spooky. Chris Cole's thesis well-constructed against a well-defined set of investment goals & time horizons, well-backed with creative research, well-narrated with the powerful themes of ouroboros, hawk, dragon, powerfully concluded with reference to sociopolitical outcomes and emotions flowing through all of it. Like a few other select RV pieces (for ex., Grant Williams talking with Anthony Deden,) I will re-watch this several times over the coming weeks and months. Amid all the people saying "this time it's different" AND all the wise skeptics saying "it's *never* different this time*, in fact there are a few differences "this time" that may be cause for a bit of hope. What we have this time around is historically unprecedented ease, speed, depth, and clarity of communication at all levels, from the top 0.1% all the way through the bottom 85-90% of most industrialized nations. In combination with other research, in watching RV the past year or so I've gained a level of macroeconomic understanding that would simply not be possible in earlier times unless I was a high-level professional investor with not only experience but access to deep networks of current data, analysis, & respected opinion from pros. Might RV's top-tier commentary & well-maintained posture of honesty toward national & global macroeconomic trends and structures, absorbed by a comparatively broad audience (still a tiny fraction of the general population, but by I would guess huge by comparison with 15-20 years ago before age of streaming television,) help take the edge off the long-brewing crisis that seems imminent? Who among the Fed watches RV? Anyone in the US Senate?
    • DB
      Danielle B. | Contributor
      20 February 2020 @ 23:26
      Your comment may qualify as the most thoughtful ever submitted.
    • SC
      Sam C.
      16 April 2020 @ 13:19
      Anthony Deden Is an absolute GEM.
  • BS
    Bill S.
    26 February 2020 @ 17:42
    Not on point but the product shift demands a response How many purchased a product prior to today and are feeling unfairly treated by the 5/wk video limit that didn't exist until today? How many feel they should be grandfathered until their subscription runs out and then make the decision to continue at the lower (actually increased by 50+) or accept the "upsell" at 3x the price??
    • SJ
      Sean J.
      9 April 2020 @ 22:22
      AMEN, brother! RV pulled a bait & switch. Not cool.
  • PW
    Patrick W.
    12 March 2020 @ 18:25
    The gold exposure is a range with this portfolio of 19% to 21%. According to the footnote in his paper, from 1933 to 2019, they simulated CTA exposure using the Bloomberg Commodities Index which had a 12.24% allocation to gold, so 12.24% of 18% CTA is another 2.2% of gold if the trend justifies exposure.
    • FC
      Fran C. | Contributor
      28 March 2020 @ 13:58
      Not exactly - exposure to gold trend is different than exposure to long gold. Gold trend can go long and short
  • gh
    graham h.
    28 March 2020 @ 00:05
    So what instruments can be used to get exposure to commodity volatility?
  • KB
    Kirk B.
    22 February 2020 @ 20:36
    After listening to this interview again and rereading the comments, I concluded that. while Chris's comments are brilliant, complete adoption of his Dragon Portfolio is most appropriate for institutional investors. The recommended allocations to Equity Linked, Fixed Income, and Gold assets are readily achievable by retail investors. However, I discovered that there really is no suitable way for a retail investor to invest in Long Vol strategically. The IVOL ETF suggested by a couple of commenters is underwhelming. For a retail investor to tactically invest Long Vol is a fine way to have ones head returned on a platter. It also is problematic for a retail investor to buy a Commodity Trending Investment (interestingly google won't even recognize the term). Yet, there are many vehicles for retail investors to invest in a wide variety of commodity funds and ETFs. Retail investors, who can be far more nimble than institutional investors, can readily create or expand allocations to commodities when they start becoming attractive again. (Commodities appear to currently be more likely to continue to decline in value than to suddenly reverse the downward trend.) Nevertheless, this interview provides profound insights on how to create a truly diversified portfolio. Other fully diversified portfolios that are worthwhile reflecting on are the so-called Butterfly portfolio. the All Weather portfolio, and the Permanent portfolio. Google will quickly provide information about these portfolios.
    • DS
      David S.
      23 February 2020 @ 00:04
      Kirk B - Excellent comment. One suggestion by Mr. Cole may make it a little more practical to invest in volatility. I believe he said he does not keep the trade on all the time. He waits for the initial volatility increase to pan out. He then makes the trade for the rest of move. I guess he keeps powder dry for this trade. I may have part of this wrong. I hope Mr. Cole will jump in and help us. DLS
    • PW
      Patrick W.
      12 March 2020 @ 18:19
      Check out DIREXION AUSPICE BROAD COMMODITY STRATEGY ETF (COM). Chris mentions in his paper that there are ETPs that replicate CTAs, so I did a search, and I believe this product comes close.
  • rw
    rory w.
    7 March 2020 @ 00:04
    With all of the zero interest rates and negative interest rate capital sloshing around. I firmly believe normalized interest rates will bring inflation. Normalized rates will no longer be allowed companies to turn loss's for years to decades, it will no longer incentivize investors to pile money into unicorns. It may even force companies like google to charge for their services. As unintuitive as it sounds, normalized interest rates will bring inflation in to a technological world.
  • AB
    Arawata B.
    4 March 2020 @ 05:03
    I wonder how the Dragon would work in an orderly (low vol) unwind or selling of equities and bonds? An unlikely scenario but central banks may try to slowly deflate the bubble....
  • LF
    Luiz F.
    3 March 2020 @ 12:28
    Great interview. Can we see a Chris Cole + Hari K talk on volatility?
  • RL
    Roel L.
    1 March 2020 @ 20:37
    Great way ( and easy) for a small investor to limit risk by constructing a 20:20:20:20:20 portfolio. CHAPEAU
  • TD
    Thiago D.
    28 February 2020 @ 23:10
    Great interview! Will watch it a couple more times! Congrats to both!
  • GC
    Gregory C.
    23 February 2020 @ 19:06
    Everyone needs to run a portfolio that works best for their situation. For me - I have no safety net, little to no inheritance coming my way. My capital is irreplaceable, precious and I can't take a big loss - it would be devastating. I am more concerned about the downside than upside. No matter how insane I think the world is today, I remain fully invested as saving your way to prosperity is unlikely. I am now a 38 yr. old investor (accredited but still consider myself retail) and after reading, watching, studying, trial and error, etc, I have executed on the following framework for a time. Again, this is my framework for my situation and is under constant review. For example, I am now trying to understand CTAs and if they fit within the framework. Take a step back, a long walk alone, and think what works for you. I would love to hear how retail investors are executing their portfolio given their situations. 65% permanent portfolio: - 25% cash - physical notes on hand, cash in multiple banks, GABXX money market US T-bill only) - 25% long term bond - 30 year US treasury bond direct (sell when it gets down to 20 yrs and but more 30s) - 25% stocks - (80%) US total market index and (20%) emerging markets index - 25% gold/silver - physical only, diversified overseas accounts and on hand - Only rebalance if something goes to 15% or 35%). 15% real assets: - direct multifamily/commercial real estate (note: this is my profession) - farmland (through a farm private equity fund) - exploring direct oil investments - Minimal selling (difficult to find deals/operators and tax reasons) 15% Pure Alpha: - Name taken from Ray Dalio - this is where I focus most of my time. I look for asymmetrical bets in virtually anything. I am very influenced by the book Antifragile and the writings/memos of Howard Marks. I revisit the decisions I made and focus less on the outcome. 5% Long Vol. - As Chris says, a true diversifier. (note: I personally invest in an Artemis fund with Chris). No single investment makes up 5% of my overall portfolio and I diversify accounts within and outside US. Greg
    • DH
      Daniel H.
      24 February 2020 @ 04:59
      You might want to look at the portfolio I offered a link to below. The permanent portfolio may not work as intended in stagflation. The Dragon portfolio and the 100 year portfolio I offered below offer a different solution when there is regime change.
    • GD
      Ghassen D.
      26 February 2020 @ 10:17
      Hi Greg, I like your allocation, I do it a little differently though :) I would agree on the precious metals exposure, real assets exposure (except real estate). I disagree with the bonds exposure as I see little upside compared to the possible downside. as for equities, I prefer a concentrated portfolio around high quality value stocks (picked) overseas (Russia, India, UK) and I do not index. Take care and good luck :)
    • CW
      Carolin W.
      26 February 2020 @ 12:56
      Greg what is your way to go Long Vol?
    • WM
      Will M.
      27 February 2020 @ 01:47
      Thanks Greg. Good info and not dramatically different from my own thoughts. I haven't acted on the farmland yet though but am looking out for options.
    • GC
      Gregory C.
      28 February 2020 @ 03:16
      Thanks for the replies, always love to hear constructive thoughts. Interesting time to operate the portfolio I described above during a week like this. Capital preservation is working for the moment for the permanent portfolio and I'll see how long vol has provided true diversification end of month when I get my statement. Going from 15 to 40 on the VIX I'm thinking I should see nice protection. Carolin, I am investor with Chris Cole and Artemis for vol exposure. Chris has mentioned IVOL in the past for something that may work. I would look into it. Ghassen, I mentally struggle with the 30 yr treasury allocation but I stick with my process and framework. Add to the bucket if they grossly underperform. Inflation, deflation who knows anymore. The real question is - will we see upside from treasuries like we did in 2008/9? Likely not and I agree the permanent portfolio side may not protect as well as it did then. Same for the cash side as well which yields zero. That's why everyone needs to look into true diversifers like long vol and CTAs.
  • ET
    Ed T.
    26 February 2020 @ 21:23
    Great interview. One point however struck me as perhaps unlikely; that is if only institutions and individuals could change their asset allocations, we might avoid some of the societal upheaval that would accompany significant loss or stagnation in stocks and bonds. I don't see that as a possibility however. There would be no way to make a transition to portfolios allocated like the ones Chris talks about on any significant scale, without bringing about a collapse in the prices of those stock and bond assets being sold. The numbers are too big. Who would buy those assets at anything close to today's price? The Fed and central banks have created a situation where it seems nearly all meaningful money is on the same side of the trade. And if you aren't there, you were probably fired for under-performance some time ago. I believe that the losses and probably societal upheaval is baked in the cake.
    • MA
      Mark A.
      27 February 2020 @ 10:27
      Isn't that, from an investor point of view, likely to be balanced by a demand-driven increase in price in the assets being brought into.
    • ET
      Ed T.
      27 February 2020 @ 16:18
      Mark, Without question, a demand driven price increase would happen. But it is a matter of scale. When you consider that the combined market cap of the entire precious metals producer stocks is only a fraction of the market cap of just one of today's top large cap stocks, how does 20% of individual and institutional money fit into a space that tiny? The gold price would need to be in the hundreds of thousands of dollars an ounce. There will certainly be a first mover advantage, because the bow wave created by the movement of that much money would push the price to the moon before a fraction of that 20% allocation could be reached. It is like the Titanic, but with just a single lifeboat. It is good to have your seat already, because someday those good people still dancing will pay a king's ransom for it.
  • MA
    Mark A.
    27 February 2020 @ 11:02
    Great listening to this. I'm nowhere near as deep into the pool as these two but so much of what they are saying and the questions they are asking ring true. We reallocated toward real assets in late 2017 after a portfolio optimisation exercise conducted using mean-variance portfolio optimisation. We took 20 years of historical performance, standard deviation, and correlations of returns by asset class. What that demonstrated was that stocks were over brought. Folk were too deep into bonds. We went looking for some smart data led trading opportunity but what kept coming back was private real assets investments' potential to improve the risk-adjusted returns of a portfolio consisting of stocks and bonds. It also showed us that it'd diversify risks associated with publicly traded commodities and REITs. I wrote about this in Feb 2018. Since then we have got into physical precious metal and upstream into other commodities. https://www.redstoneap.com/post/let-s-get-real-about-real-asset-investment
  • BT
    Brett T.
    25 February 2020 @ 07:30
    Great interview. This aligns precisely with the work I've been doing for the last few years (for all the same reasons Chris mentions) - developing alternative portfolio construction that is unconventional, uncorrelated and it delivers higher returns for less risk - and has done so for longer than the last 40 years (the easy years). As is said at the conclusion, the institutional players won't think outside of convention - the crisis is coming in part because of this. Phrases such as recency bias and moral hazard etc - it's like they're reading my mail. Having said that, both Danielle & Chris are more articulate than I'll ever be.
    • MA
      Mark A.
      27 February 2020 @ 10:40
      I echo this. We reallocated toward real assets in late 2017 after a portfolio optimisation exercise conducted using mean-variance portfolio optimisation, based on 20 years of historical performance, standard deviation, and correlations of returns by asset class. That demonstrated private real assets investments' potential to improve the risk-adjusted returns of a portfolio consisting of stocks and bonds. It also showed us that it'd diversify risks associated with publicly traded commodities and REITs. I wrote about this in Feb 2018. Since then we have got into physical precious metal and upstream into other commodities. https://www.redstoneap.com/post/let-s-get-real-about-real-asset-investment
  • LW
    LESLIE W.
    24 February 2020 @ 11:47
    Is there a place that can "RATE" the quality/ % of funding (?) of pensions that my wife and I have? We are trying to decide too 'take' them and when. If they are underfunded or of low quality, I would start receiving them ASAP. THANKS
    • FC
      Fran C. | Contributor
      24 February 2020 @ 15:05
      You have to delve into their annual financials. This is where you can find funding ratios, but more importantly, the assumed discount rate and asset allocation. A system that is 60% funded with a 6.5% expected return, may be safer than a system that is 90% funded with a 9.50% expected return loaded up in Equities and PE.
    • WM
      Will M.
      27 February 2020 @ 01:50
      I can pull up the Pension Fund report for my multination energy company and see the splits. Its actually roughly 60/40 bonds/equities BUT appears to assume a relatively low return rate of way under 7%. Its currently 100% funded.
  • CT
    Crispim T.
    21 February 2020 @ 17:49
    Bitcoin (BTC). This is the way. 11 years. Destroyed everything. Preserved value. Absolute self-sovereign hard money. Anyone who keeps ignoring it or shorting it will again lose this decade. Mere facts.
    • WM
      Will M.
      27 February 2020 @ 01:43
      You will learn as you get into your 30s things are often not as they seem. Government will not permit Bitcoin to escape their grasping claws and the IRS will hunt down those who thought they had found a way to make tax free profits. But I do agree its a great speculation.
  • CT
    Crispim T.
    21 February 2020 @ 20:36
    Chris Cole is stuck past in time. Very good arguments but this is a man who still hasn't figured out how retweets work on Twitter. And seems to be mostly ignoring the best, most solid asset of them all for this decade - BTC. Be careful if you leave that one out of your portfolio. The next decade will be the decade of Bitcoin - again.
    • RE
      Renato E.
      22 February 2020 @ 11:37
      Why do you have to be so rude? Not everybody wants to join the “shitstorm generation” on social media platforms or knows all the functions and features like you seem to. If you don’t like his views and ideas, fine. But there is more than BTC in this world. Jesus...
    • AH
      Andrew H.
      22 February 2020 @ 15:31
      He discusses BTC in his paper if you read it... and in fact speaks positively on it. "Cryptocurrencies such as Bitcoin have similar characteristics to Gold as there is a limited supply, they exist outside the system, and in theory, can be valued using a stock-to-supply model. Despite this fact, while Gold has performed over the past 4,000 years, the verdict is still out on Bitcoin or other currencies like it. The value of these currencies is either infinite or nothing. There are substantial questions regarding custody, security regulations, and liquidity, but the benefits outweigh the risk when sized appropriately. The prudent investor may consider owning Cryptocurrencies speculatively and sized appropriately to the high risk." "The benefits outweigh the risk when sized appropriately." He literally is pro bitcoin. No or minimal high net worth individual is going to go full bitcoin nor should they. A small allocation for them will do the trick like Chris says.
    • EO
      Elena O.
      22 February 2020 @ 17:39
      Yes. Read the report. BTC might be the only asset standing after government declares physical gold ownership illegal. So makes sense to hedge against that.
    • WM
      Will M.
      27 February 2020 @ 01:40
      Guess you just didn't pay enough attention Crispim? Well said Renato and Andrew above.
  • AL
    Aureo L.
    26 February 2020 @ 20:53
    About Active Long Vol (21% of Dragon Port): I did (10% of portifolio). Bought SPY out-of-the-money (SPY 19 Jun 20 299 P) today. What I know: SP500 is ~8% down. If mantain below -5%, I hold my position. What I dont know: When I roll my position? monthly? What is the signal to undo this part of portifolio: 63 trading days without break below that? And there is a price/percentage of SPY movin up before it I should quit position? Someone can help me?
  • EK
    Edward K.
    26 February 2020 @ 16:46
    As an aside always enjoy DDM's sardonic humor. This RV interview jibes nicely with Cole's recent Macrovoices podcast. I would hope that the real audience for this are pension managers and insurance annuity architects. As a retail investor too far down the food chain but great insight nonetheless and you don't get more macro than this,
  • PB
    Pieter B.
    26 February 2020 @ 15:12
    Fantastic interview! Thanks a lot!
  • DF
    David F.
    25 February 2020 @ 17:22
    One of the most enlightening talk ever..
  • AL
    Aureo L.
    22 February 2020 @ 17:15
    I suposed Dragon Portifólio must be periodic rebalanced to mantain asset class proportions. Anybody knows which is the timeframe suggested for that?
    • AM
      Aengus M.
      24 February 2020 @ 21:24
      “A continuously re-balanced portfolio”
  • HC
    Hahns C.
    24 February 2020 @ 17:52
    I watched this interview back on 2/20 - I wanted to make this comment for my appreciation of this interview. Chris Cole is gifted with the profound ability make the complicated seem simply. RV has outdone themselves - it does not get any better than this interview. I have watched it TWICE; I will probably go back and watch again for a Fifth time! The information from this interview was well worth the $180 I paid for access to Real Vision. It brings together a years worth of invested time watching RV and taking in high level information. Thanks to all at RV that brought together the retirement series and especially this interview. Danielle DiMartino Booth is equally if not smarter - she knows the wheat from the chaff. I follow Danielle and appreciate her smart wit and no-nonsense approach to finance, the fed and monetary policy. I know one day the investments of my time and treasury in Real Vision will pay off HUGE dividends. I recommend including Chris Cole in future interviews. Blessings to all!
  • DS
    David S.
    21 February 2020 @ 01:15
    Mr. Cole is the real deal and certainly delivered on this interview. My favorite Mr. Cole interview was with Mr. Green and Mr. Bassman. Three really solid thinkers sharing the screen at the same time. Thanks again. DLS
    • SM
      Stephan M.
      24 February 2020 @ 11:21
      He should have hedged against his divorces ;-)
    • SM
      Stephan M.
      24 February 2020 @ 11:22
      Sorry - wrong threat - Mel Gibson was ment.
  • SM
    Stephan M.
    24 February 2020 @ 11:08
    How to buy "long term volatility" that is not gold or 30y bonds as a normal investor?
  • DS
    David S.
    23 February 2020 @ 00:14
    The first pension fund the treasury must fund is the Federal Pension Funds. They are paid out of current tax revenues. I do not believe the federal government has has any reserves for billions of dollars of its own pension obligations. There are no fiscally conservative legislators in Washington. DLS
    • NA
      N A.
      24 February 2020 @ 06:30
      Whether you believe the MMT hype or not it sure as heck seems global CBs are flirting with the idea and even if they are not fully on board right now, it's going to be the easier choice than going bust (or going Japan). So, if this is the case, the government has unlimited reserves to fund whatever it wants to. Whether people will still hold USD or UST then and at what price is another question. But if you're a US politician answering to US citizens it is also an easy choice to make. Besides, the US is not the only place drowning in debt, so I could even see this transpire without USD and UST losing their global currency and risk free status. Just a thought. The limits of MMT are far wilder than the limits of your imagination, and you don't even have to believe it, just a handful of central bankers have to and the world will continue to be upside down for a generation. I'd also add, if the government were to bailout XY pension so Jo and Joanne Q can afford retirement, it sure feels like a better use of bailout funds than stoking asset price inflation that only benefits the 1%.
  • JH
    Jason H.
    24 February 2020 @ 05:52
    Yes. Nice work. I need to watch it again.
  • WP
    William P.
    24 February 2020 @ 04:11
    one of the best RV interviews.....ever!
  • DW
    Daniel W.
    24 February 2020 @ 02:37
    is this Fox news?
  • Am
    Alex m.
    20 February 2020 @ 06:38
    Great interview - how would one incorporate the Long-vol segment in personal accounts?
    • JH
      Joe H.
      20 February 2020 @ 09:32
      Watch Nancy Davis on RV. She created www.ivoletf.com
    • AA
      Alberto A.
      20 February 2020 @ 20:25
      I believe you can buy the VIX either the the straight underlying or call options. It is mean reverting to equities....if this is what buying long-vol means.... You can also sell put options...you'll get a premium with a higher probability of success but higher buying power versus buying the calls (less probability with les capital usage).
    • AA
      Alberto A.
      20 February 2020 @ 20:40
      Ivoletf.com is interesting...but is a combination of other assets and how they manage it together...TIPS, Treasuries, etc.
    • GT
      Gene T.
      20 February 2020 @ 22:45
      I read Chris' paper, and in the appendix he outlines the long vol methodology used for the purposes of the paper's portfolio modeling. He used a simplistic model of buying out of money puts when an index moved down 5% from a recent high, and bought out of ,money calls when an index moved up 5% from a recent low. It doesn't specify how far out of the money or how many months out. Still, one could make some assumptions and do their own backtesting if they were curious enough:)
    • TW
      Tom W.
      21 February 2020 @ 01:35
      I very much enjoyed the interview, and I've been a log time fan of Danielle. I need to learn more about implementing long term long vol and commodity trend. Alberto A., my understanding is long vol can be implemented by buying puts or calls. Short vol is selling the same. VIX is a very expensive way to go. See: https://sixfigureinvesting.com/2013/08/next-vxx-reverse-split/ I bet Chris has a strategy that is more cost effective, and hope to find an answer in his blog that is suitable for individual investors, such as myself.
    • RT
      Richard T.
      24 February 2020 @ 01:04
      Have you any luck incorporating this into a retail portfolio?
  • BG
    Bruno G.
    22 February 2020 @ 20:30
    I am a simple person but I always thought my 20% exposure to gold was good for me but not recommended by anyone, this is the first time I heard someone model it in.
    • DS
      David S.
      23 February 2020 @ 00:05
      I hope you are simply right. In addition I hope a lot of portfolio managers agree and buy a lot of gold. DLS
    • HS
      Henry S.
      23 February 2020 @ 14:52
      Tony Deden has a large percentage allocated to Gold and he's one of the best to ever do it. I think it's great if you're making these wise decisions on your own.
  • RK
    Ron K.
    23 February 2020 @ 05:07
    Thank you for this, I cannot get my family or friends to understand what is going to transpire. Sad. Danielle is just freaking awesome.
  • JT
    Jan T.
    22 February 2020 @ 12:44
    Great video! Anyone here has any thoughts on how to get long the HFRX Macro Systematic Diversified CTA Index and the Eureka CBOE Long Volatility Hedge Fund Index? Any ETFs linked to these indices or similar index so a retail investor can build such portfolio?
    • TQ
      Tech Q.
      22 February 2020 @ 18:15
      I wondered that too....and from what I can tell, or see there are no ETFs for it...and those indices actually follow, or hold hedge funds. According to his doc he has a fund that uses the second one...so I'm assuming you'd had to belong, or be a part of the hedge funds. Which is private equity? How does a retail investor do that when trapped in an IRA or 401k?
  • EO
    Elena O.
    22 February 2020 @ 16:15
    I found myself asking the same follow up questions DDB asked, but in my head. Got a hint in the beginning that gold will be one of the assets still standing, when we hit crossroads but was surprised with 25% allocation. Great explanation on the tail risk and auto correlations, which totally clicked in my non math head. Want to learn more now about commodity trending and long vol strategies. Everything else I already have in my portfolio. Bravo! One of the most exciting interviews to date! And as a Russian, I don't praise lightly.
    • TQ
      Tech Q.
      22 February 2020 @ 18:13
      Actually according to his slides and the doc he mentions here, it's a 19-20% allocation. Not 25. Hope that helps! And I was surprised too...I always assumed it was at least 10% (which is where I'm at)...so it looks as though I need to increase mine. LOL...though with Gold rising, that kind of sucks, since I did my allocation over a year and a half ago. Cheers!
  • TQ
    Tech Q.
    22 February 2020 @ 18:11
    I was already concerned about Pensions. But, hearing that the Fed actually debated bailing them out in 07...and knowing that the recent budget bill actually bailed out one Pension system, scares the bejeezus out of me. This was a fascinating interview and I went out and downloaded Chris's doc "The Allegory of the Hawk and Serpent." Thank you for this. Though according to his doc, in order to do the Dragon Portfolio you need to play the Long Vol and in order to do that his doc mentions an index that is only done by Hedge funds. How can retail investors partake of this?
  • KB
    Kenneth B.
    21 February 2020 @ 21:36
    A respectful note to the interviewer - Please work on less confirmation utterances. The 'hmmhmmm', 'okay', and 'right' utterances are very distracting. Love your informed questions of course, and hope to see more interviews from you. Best.
    • AG
      Andrew G.
      22 February 2020 @ 15:26
      I agree and would argue that it takes away from the interview. I don't want to watch a conversation where the interviewer agrees with everything as if they had the idea first. I would rather watch a neutral party ask probing questions to the interviewee so they can more deeply explains their thoughts.
  • KB
    Kirk B.
    22 February 2020 @ 02:27
    Bravo!! Great interviewee and very effective interviewer. I have the same two questions repeatedly raised by other commenters: what exactly are long term vol and commodity trend assets, and how can a retail investor realistically invest in them?
  • ST
    Scot T.
    21 February 2020 @ 01:55
    "Average Millennial has no savings" and it's generally assumed this is because of deteriorating economic conditions. Millennials have an attitude of entitlement that undermines self discipline, hard work, and delayed gratification. Their sense of entitlement is the core of the problem, not the economic hand dealt to them by Boomers.
    • MB
      Michael B.
      21 February 2020 @ 12:37
      If you thumbs down this take you haven't spent any time with this new bunch. Total sense of entitlement. I am 38-year wirehouse veteran. I turn the lights off and on and men take a 90 day leave when their wives have a baby.
    • WM
      Will M.
      21 February 2020 @ 14:34
      Yes, while wishing to be careful of generalizations, I would agree there is a bit MORE of a sense of entitlement among millennials than GenX or Baby Boomers. The current generation following the millennials are now heading toward graduation and have even more of that sense, except they also are developing as teens and young children in a crisis atmosphere. I feel so sorry for what they are about to experience in the next few years....
    • SA
      Sebastian A.
      21 February 2020 @ 22:25
      I am a millennial born in 1991 and I can verify his statement as true. The majority of my peer group has the financial sense of a goldfish, including myself until I decided to do something about it.
  • DH
    Daniel H.
    21 February 2020 @ 05:53
    Here is another attempt at a simple portfolio that works on a hundred year time frame. It is easier to implement because there is no explicit long vol asset class included. https://www.advisorperspectives.com/articles/2012/04/24/why-a-60-40-portfolio-isn-t-diversified
    • AJ
      Andy J.
      21 February 2020 @ 21:47
      Thanks for taking the time to add/link this, Daniel.
  • MG
    Miguel G.
    21 February 2020 @ 21:03
    For lack of a better word Chris Cole is FUCKING AMAZING! Even if you don't agree with his premise at bare minimum he makes us all think on a much deeper level. I think we could all use a little more of Chris in 2020 and beyond. This is the content that makes me a proud real vision subscriber! Awesome job to the real vision crew and obviously Mrs. DiMartino Booth who has a beautiful way of enhancing these conversations.
  • TS
    Theodoros S.
    21 February 2020 @ 19:35
    Very interesting conversation on a very high level. However how can it be that investing in equally weighted, different financial assets is the solution, as the correlation between those assets is becoming higher last decades and more importantly auto-correlation among them stands.
  • FK
    Firoze K.
    21 February 2020 @ 16:01
    This was brilliant. I think I may be classed as a Millenial (turning 40 next month) and I would love Chris to manage my money. I would love to know how to be long volatility and commodity trend
    • WM
      Will M.
      21 February 2020 @ 16:40
      Hi Feroze K, I think / you are cusp of end Gen X & beginning of Millennials (graduation class of 2000, I believe) So there is still hope for you :)
  • WM
    Will M.
    21 February 2020 @ 16:37
    Without question one of the best RV videos I have watched. Chris Coles last interview was already well within my top ten. This second interview is better and probably well within my top 5. The implications and the results of his analysis are dire for the pension industry as a whole. For other readers interest, as part of my retirement savings I have 2 private company pensions which are currently 100% funded but the splits for the US one is 60/40 bond/equity. The UK one is 55/35 bond equity. My personal savings are currently 25% cash, 25% private equity hedge funds, 25% precious metal physical / stocks (60/40), 25% US$ long funds. The only ones that worry me are those pension funds for the reasons Chris described. The Artemis Fund requires a $250k minimum I believe. I am now strongly considering moving some of my cash position to that investment opportunity. Danielle excelled herself by, as an interviewer allowing Chris to finish all his points and prompting good questions as well. Bravo Danielle please keep up this approach and stay engaged with RVT ...please!
  • MS
    Michiel S.
    21 February 2020 @ 13:56
    Hi Danielle, Chris, this interview and information is exquisite and goes definitely in my top 3 with RV and as I have been with them from the very beginning, when it was still Raoul and Grant, and watched nearly everything and completely, it does tell, if only to me for which I am sorry. Please make sure you come back with whatever you want to share as it will most probably also be of the same level and would definitely be even more interesting if related to actual ways of constructing what has been described. Thank you very much. Regards, Michiel
  • JA
    Jörg A.
    21 February 2020 @ 13:34
    I need more "like" buttons for that interview. Thank you so much!
  • MS
    Mark S.
    21 February 2020 @ 03:36
    Fascinating. For me I will watch it several times, taking notes. There is nothing unoriginal about the entire discussion. Thank you to both CC and DDB. Cheers
    • MS
      Mark S.
      21 February 2020 @ 03:39
      PS. One topic I would be fascinated to hear CC's view on sometime in the future is his view of Bitcoin. With his view of gold, it would be interesting to hear his thoughts.
    • RA
      Ralph A.
      21 February 2020 @ 12:47
      He needs to wait 90 more years to have enough data to include bitcoin in the analysis
  • JC
    Jack C.
    21 February 2020 @ 09:46
    Chris advocated for a 20% position in long volatility. How does one get exposure to vol? By owning calls and puts?
    • RV
      Ryan V.
      21 February 2020 @ 09:59
      The most recent macro voices podcast has a chart deck and Patrick ceresna going over it.
    • MK
      Michael K.
      21 February 2020 @ 12:34
      Check out the book by a peer / competitor of Chris, “the dao of capital” for a simple tail risk strategy and lovely storytelling about the conifer trees.
  • SG
    Sven G.
    21 February 2020 @ 12:28
    that was exceptional! One reason why the dragon portfolio will never become popular in places where most people choose to invest their money is virtually everyone has been brainwashed to allocate money to stocks and bonds. it's sad but true. Another reason is most portfolio managers want funds under management and therefore create funds to cater to the stocks and bonds people. My guess is if an investment manager went to "Joe public" with the dragon portfolio, 99% of Joe's would take their money elsewhere. Sad but true!
  • PV
    Peter V.
    21 February 2020 @ 09:27
    Great great great... What an insight... Go Realvision
  • AS
    Ahmed S.
    21 February 2020 @ 08:55
    This is 1999 and 2007 walk into a bar and hookup. DDB can be pretty hilarious at times.
  • KT
    Kai T.
    21 February 2020 @ 02:54
    To AUSTRALIAN Real Vision viewers: who can recommend an Australian Super Fund that I can research? Just the name as a lead is fine, but if you can say why you think they are good that would be helpful. I'm in the UK and I'd like to be able to help my brother in Australia who is ignoring this issue. Thank you. 🙏
    • DS
      Dan S.
      21 February 2020 @ 03:35
      https://www.macrobusiness.com.au/macrobusiness-fund/
    • jS
      john S.
      21 February 2020 @ 04:06
      the industry super funds are ok, the best from a bad bunch if you ask me. You can pick and choose what risk u take through the various options...but...no gold option as far as im aware. If you know what your doing a SMSF is better as u can even buy gold
    • SK
      Stephen K.
      21 February 2020 @ 04:26
      Not a client myself, but you may like to research Prerequisite Capital Management. Daniel Want, CIO has been interviewed on Real Vision previously. He takes a systemic view of markets and structures portfolios to be uncorrelated to equities.
    • JL
      James L.
      21 February 2020 @ 08:26
      ING Super offer stock and ETF investing including precious metal ETFs
  • AL
    Aureo L.
    21 February 2020 @ 03:37
    Fantastic!
  • JH
    Jason H.
    21 February 2020 @ 01:43
    It's Mel Gibson's doppelganger! Sorry, carry on, don't mind me!
  • FB
    Floyd B.
    21 February 2020 @ 00:32
    Regardless if you agree with this video or not there are two points to consider.First, you will never hear these thoughts on any other MSM financial channel,why? Because it would up-end all the talking heads that are the consensus. Two, being informed about the markets history(not just recent history,last 30 years) is critical in successful investing. "Many of our leaders are more interested in failing conventionally with the herd than succeeding unconventionally" . Boy does that hit the nail on the head!
  • DG
    Dave G.
    21 February 2020 @ 00:25
    Good job Danielle
  • CL
    Chris L.
    20 February 2020 @ 23:34
    If you want inflation... raise rates.
  • AM
    Artem M.
    20 February 2020 @ 14:18
    Wow, that was great! Not only was Chris very informative but it was great to see how much Danielle had to add to the conversation. This was a good match, hope to see pt. 2 soon. I just listened to Chris on the 'Macro Voices' podcast discussing his new paper, I recommend checking it out if you want to hear more Chris, though I would say this conversation went much deeper. As an fyi, the Macro Voices guys said they planned on walking through the creation of 'Long Vol' strategies for retail investors in future episodes. If anyone else have any good resources on this topic, please let me know. Thanks again Danielle, Chris and RV, you are doing a great service to the society, by helping us understand, prepare and thrive.
    • DB
      Danielle B. | Contributor
      20 February 2020 @ 23:20
      Your feedback most insightful. Many thanks.
  • SC
    Sejong C.
    20 February 2020 @ 14:37
    Good interview. Ms. Booth is an excellent interviewer, even better than her appearances as an interviewee.
    • DB
      Danielle B. | Contributor
      20 February 2020 @ 23:13
      I HOPE you'll still watch me when I'm in the hot seat! (wink)
  • RR
    Ryan R.
    20 February 2020 @ 22:56
    One of my favorite RV videos. Thank you so much!
  • TE
    Thomas E.
    20 February 2020 @ 22:47
    Chris Cole has a number of very interesting and though provoking research on his (Artemis Capital) website. BTW...it's free! Go check them out. Everyone thinks they are diversified but ultimately the majority of their portfolio is short volatility. We have been in an abnormally low volatility environment for the past 10 years mostly thanks to the "Fed Put." What do you think will happen when (not if) volatility returns to more "normal" levels (if there is such a thing).
  • RV
    Ryan V.
    20 February 2020 @ 22:16
    I have a question. Say someone inherited $1M today. They want to allocate to this portfolio. Does it really make sense to allocate the bond portion with interest rates where they are? Wouldn’t it make sense to wait for higher yields? Even equities? You could buy a global everything index fund but if we are less than 5 years from a huge drawdown wouldn’t it make sense to wait? Ie, ease into this portfolio and ideally not paying top bond and equity prices.....
    • DS
      David S.
      20 February 2020 @ 22:34
      This presentation shows the mismatch of current pension allocations verses a different portfolio that preformed much better over the much longer period of time. This was a great video and should wake up a lot of pension funds. For your investment allocation of your current portfolio or an addition million dollars, your first decision will be your investment time frame. DLS
  • OS
    Oliver S.
    20 February 2020 @ 16:04
    Exceptional stuff.
    • DB
      Danielle B. | Contributor
      20 February 2020 @ 21:56
      Why bother with mediocrity?
  • CB
    Chris B.
    20 February 2020 @ 16:10
    Best interview of the series; period
    • DB
      Danielle B. | Contributor
      20 February 2020 @ 21:56
      High praise. Most appreciated.
  • RL
    Ricardo L.
    20 February 2020 @ 18:00
    Extraordinary interview. Congratulations.
    • DB
      Danielle B. | Contributor
      20 February 2020 @ 21:54
      Much obliged.
  • DG
    Daniel G.
    20 February 2020 @ 21:50
    I usually listen to the videos in 1.25x or 1.5x. Not this one, regular speed and loving every minute. Two of my favorite guests and the reason why I watch every video on RV. I'm better prepared for whatever happens next.
  • JE
    Jon E.
    20 February 2020 @ 21:09
    Loved it, thank you
  • PT
    Peter T.
    20 February 2020 @ 18:49
    how does the average guy invest in long Vol strategies
    • RA
      Robert A.
      20 February 2020 @ 21:09
      Sorry Peter, I put my response to yours in the next box down by mistake.
  • GE
    George E.
    20 February 2020 @ 18:27
    Thank you RV!!!
    • RA
      Robert A.
      20 February 2020 @ 21:08
      I have been an investor in Chris Cole’s Artemis Capital Vega fund for several years after seeing his first RV interview. The following is my VERY simplistic synopsis of what this fund does (apologies to Chris); the fund utilizes a sophisticated strategy that Chris developed to opportunistically buy/sell Vol in such a way as to hold tail risk protection against an elevated and prolonged high Vol environment at the most reasonable cost possible—the strategy does not pay off on Vol spikes that are not prolonged and rather high, but uses those as a way to fund what I call “super insurance or ‘CAT’ insurance” against extreme tail risk at a much lower cost than simply continuing to roll over extreme tail risk insurance which is very expensive to do.
  • AM
    Andrew M.
    20 February 2020 @ 21:01
    Tools like https://www.portfoliovisualizer.com/ are good to back-test different assets and funds. BTW, my old job was interviewing wealth managers all day. I can say that, without a shadow of a doubt, that the world's private rich are massively tilting into alternatives (art, infrastructure, litigation funding, farmland, student property and gold etc). Many of these strategies can actually be accessed cheaply via investment trusts or REITs, including CTAs (UCITS). Admittedly, it is hard to go long vol for retail (and many hedge funds aren't great anyway), but there are more than enough solutions out there to put together a robust portfolio for the years ahead if you don't want to can't trade constantly.
  • NC
    N C.
    20 February 2020 @ 20:51
    Quite a coincidence, I've followed your wonderful interviews from MV, JF, and now here. Hoping Chris or someone can answer this question. How much practical value is there for individuals (not institutions, endowments, etc) in constructing a portfolio which is that long in duration? If you assume that someone starts investing at 25 and then begins withdrawing at 59 1/2. That is 35 years, a full 2/3 shorter in duration than this 100 yr portfolio. Not to mention, how many really invest with the idea in mind of passing their portfolio to their kids? How different would a 35-year portfolio look?
  • CD
    Cheryl D.
    20 February 2020 @ 20:45
    Brilliant!!! Loved it!!!!!!
  • AA
    Alberto A.
    20 February 2020 @ 20:42
    Awesome! Danielle is always great and easy to understands...this time Chris was much simple to follow...excellent content! ...agree that is so far one of the best interviews of the year RV....love the vision of the portfolio for the next 40 years...not sure I saw crypto? included.... thanks again...
  • HC
    Hahns C.
    20 February 2020 @ 20:35
    Well Done!
  • FB
    Frank B.
    20 February 2020 @ 20:28
    This interview is 100% gold.
  • AP
    Anthony P.
    20 February 2020 @ 20:17
    Danielle: "You need to tweet more, by the way." Yes, finally someone tells Chris this haha. Excellent interview, per usual.
  • JL
    James L.
    20 February 2020 @ 15:37
    Interesting how Chri's four economic regimes overlap with Neil Howe's four generational turnings.
    • JN
      Jared N.
      20 February 2020 @ 19:17
      Now that's cool!
  • ca
    carlo a.
    20 February 2020 @ 18:57
    great content! keep on doing interviews like that!
  • WB
    Wes B.
    20 February 2020 @ 17:42
    CC is incredibly smart but the execution risk of a long vol and commodity trend portfolio is very high. Not easy things to execute well since you can't set it and forget it.
  • HC
    Harley C.
    20 February 2020 @ 17:36
    Absolutely fantastic interview. Hope to see Chris Cole on Real Vision again soon.
  • NI
    Nate I.
    20 February 2020 @ 17:29
    Best interview on RV so far this year! Thanks to Chris, Danielle and RV. I've read both "Volatility and the Alchemy of Risk" and "The Allegory of the Hawk and Serpent" twice. Excellent work by Chris Cole. Everyone needs to read those papers. My favorite analogy to explain the passive phenomenon so that anyone can understand it is that of the parasite. This is not a value judgement (I own index funds myself), but the fact is that passive is a parasite hosted by active. Passive has been so successful that the parasite has grown to epic proportions. That works great until the parasite finally gets so big that it impairs or destroys its host. Day-by-day we're getting closer and closer. You don't want to be there when the host finally keels over. Better know what you own.
  • JL
    James L.
    20 February 2020 @ 17:02
    Totally agree with Chris's approach to Asset Allocation. Take a look at the Golden Butterfly Portfolio! It is only missing a long volatility strategy.
  • JA
    John A.
    20 February 2020 @ 13:38
    One of the most important papers to come out in years, IMO. I only wish the long vol strategies were easier to access for retail investors. Investment idea for a 40 Act Fund, anyone?
    • AP
      Ash P.
      20 February 2020 @ 15:11
      IVOL maybe
  • RM
    Ron M.
    20 February 2020 @ 15:10
    Great interview. Both Chris and Danielle are super sharp. I am curious to see how this allocation will do over the next decades. We've had insanely "cheap/free" commodities over the last century. With 8 billion people now, over the next century commodities will explode until feasible alternatives are in place (not to mention climate change impacts). Innovation in technology and biotechnology are also going to change things beyond our expectations. I suspect any "century portfolio" will be humbling!
  • KA
    Kelly A.
    20 February 2020 @ 14:55
    Thank you so much, also, for access to Chris's paper. Much appreciated.
  • MR
    Mitchell R.
    20 February 2020 @ 14:27
    Great interview! Telsa Bacon anyone?
  • KT
    Kai T.
    20 February 2020 @ 14:15
    Great guest, great interviewer.
  • Nv
    Nick v.
    20 February 2020 @ 12:07
    Great job RV and great job interviewing by Danielle Great to know short vol is 5x the size of program trading in 1987 = crash risk is high
  • TJ
    TP J.
    20 February 2020 @ 09:06
    Super interview! I personally moved in to the permanent portfolio(harry brown's) to sleep well in the night. I recommend RV to interview Tyler(author of portfoliocharts website and creator of Golden butterfly portfolio). He is a great guy with lot of insights in to retirement portfolios. Thanks RV.
  • DF
    Diamantino F.
    20 February 2020 @ 07:23
    Best interview of the year, thanks RV,