Ray Dalio’s ‘Holy grail’ and millennial investment ‘memes’, plus My Actifit Report Card: October 31 2019
Today's thought: I've been thinking about asset classes and risk since the the a-ha moment from Julia Lee the other day. Julia basically said that with a well-managed diverse portfolio you can in theory decrease your risk by investing in something considered high risk. The example she gave was bitcoin (I think she actually said 'cryptocurrency' - so 2017). She said normies will tell you don't invest in that, it's too risky. But with something like bitcoin, it's an asymmetric opportunity, and you are further diversifying yourself, thus reducing your risk. This reminded me of Ray Dalio's Holy Grail idea of uncorrelated asset classes. Ray says "the simple thing is to find 15 or 20 good, uncorrelated return streams. Things that are probably going to make money, but you don't know. But have a good probability of making money."
So here are a few that I can think of off the top of my head - stocks, real estate, gold, bitcoin, infrastructure, ... but what else? I don't consider bonds worth investing in in this day and age. Then we have what I call millennial investment memes. These include bitcoin and other alts, esp ETH (2017), pot stocks (2018), fake meat (2019) and whatever else comes next (genome sequencing? nanobots? quantum computing? avocados?). Also ... Tesla. I feel like these move independently from the overall day-to-day movements of stock market sentiment (S&P500). So, can we call these asset classes? For all the Ray Dalio opinion pieces on his 'Holy Grail', actually where are these 15 or 20 good, uncorrelated streams? Each individual meme, in my opinion, is worthy of being considered an uncorrelated stream. Perhaps two to three ideas per meme could represent an uncorrelated stream in a diverse portfolio? So that still leaves me quite a few short. Sigh. CATS, anyone?
By the way, did any of this actually make sense to anyone?
Today's activity included: Walking to and from the pool. Walking to and from train stations. I went out for dinner and a few drinks with a couple of old friends. I got a lift home (was going to walk so my step count ended up being slightly lower than my average count for the week).