Seeking Protection in Risk Off Markets - Simple!

Jordan Eliseo

The Perth Mint

Q3 2015 has taught investors that risk still exists in the market. The ASX is set for a quarter to forget, with the market currently on track to shed 7% of its value. With that in mind, we read with interest through the latest report from AQR Capital Management. Titled “Alternative Thinking: Good Strategies for Tough Times”, it looked at the performance of a range of asset classes in the worst 10 calendar quarters for equities between 1972 and 2014. On average, equities fell 19% in these periods. The second best performer in those periods was gold, which was up 4%. The only “investment” that beat it was a “Simple Risk Parity” model, which AQR defined as "a hypothetical long/short strategy consisting of five broadly recognized and dynamically traded sources of returns which can be systematically harvested in multiple asset classes.” Simple! In other words – you can buy gold, accessible to everyone, easy to trade and highly liquid, or you can try and pull off something not even 1 in 1,000 professional traders could. All that and more (VIEW LINK)


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Gold bull since early 2000. Have spent +20yrs working in investment analytics, research & portfolio construction. Author of two books on investing in gold and the causes of the GFC. Lover of markets, competition & technology

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