AllSeasonsPort @AllSeasonsPort: "𝗧𝗵𝗲 𝗺𝗲𝗿𝗶𝘁𝘀 𝘁𝗼 𝗣𝗜𝗠𝗖𝗢’𝘀 “𝘀𝘁𝗿𝗮𝘁𝗲𝗴𝗶𝗰..."

Sweden

𝗧𝗵𝗲 𝗺𝗲𝗿𝗶𝘁𝘀 𝘁𝗼 𝗣𝗜𝗠𝗖𝗢’𝘀 “𝘀𝘁𝗿𝗮𝘁𝗲𝗴𝗶𝗰 𝗺𝗲𝗱𝗶𝗼𝗰𝗿𝗮𝗰𝘆” 𝗽𝗵𝗶𝗹𝗼𝘀𝗼𝗽𝗵𝘆 𝗶𝗻 𝗶𝗻𝘃𝗲𝘀𝘁𝗶𝗻𝗴 Yesterday I came across an absolutely billiant episode of OakTree’s podcast with a discussion between OakTree's legendary founder, Howards Marks, and Morgan Housel, the author of the popular investing book “The Psychology of Money”. In this show, Howard and Morgan discussed several topics that resonated with me and that I would like to share with copiers and other investors here on eToro, as they rather well describe how I view the All Seasons Portfolio strategy which I run on this platform. It was a mention by Morgan about how PIMCO used to describe what they called “strategic mediocracy” in capital management. What they meant by this was that they aim not to be a top-half ranked manager in any single year, but always be in the top 5-10% over any 10-year period through prudent risk management and asset allocation. This struck a chord with me, as it was a simple way to describe how I view the All Seasons Portfolio. I will not be a Popular Investor when measuring returns for any one year, but the portfolio is instead constructed with resilience in mind, with the benefits being seen over longer horizons. I intend to stick around on eToro for several decades at least, and will ensure my capital and wealth is not risked at any time over that horizon. Namely, what many eager (and perhaps a tad too greedy) investors tend to forget is that the number 1 priority of any investor should be survival. By investing in risky (volatile) assets or applying a lot of leverage (or both), you might look like a king over one year or two, but reality will catch up with you sooner or later and you face a large drawdown, which might end up devastating. The centrepiece of any investor’s wealth should therefore be a well-diversified, risk balanced portfolio which growth steadily into perpetuity (a nest egg, so to speak). For the most parts, investing should be boring, and when you feel a lot of excitement, you are probably taking too much risk. But then again, adding some excitement births curiosity and a motivation to better understanding the world and your finances, why one should add a sliver of risky investing on top of one’s overall portfolio. The caveat is that it should be in addition to a broad core of certainty with an All-weather like strategy, not a substitute. 𝗧𝗵𝗶𝘀 𝗶𝘀 𝘄𝗵𝗮𝘁 𝗜 𝗮𝗶𝗺 𝘁𝗼 𝗰𝗼𝗻𝘁𝗿𝗶𝗯𝘂𝘁𝗲 𝘄𝗶𝘁𝗵 𝗵𝗲𝗿𝗲 𝗼𝗻 𝗲𝗧𝗼𝗿𝗼: 𝗮 𝘀𝗶𝗺𝗽𝗹𝗲 𝘄𝗮𝘆 𝗳𝗼𝗿 𝘆𝗼𝘂 𝘁𝗼 𝗶𝗺𝗽𝗹𝗲𝗺𝗲𝗻𝘁 𝗮 𝗱𝗶𝘃𝗲𝗿𝘀𝗶𝗳𝗶𝗲𝗱 𝗮𝗻𝗱 𝘀𝘁𝗲𝗮𝗱𝘆 𝗽𝗼𝗿𝘁𝗳𝗼𝗹𝗶𝗼 𝘁𝗵𝗮𝘁 𝘆𝗼𝘂 𝗰𝗮𝗻 𝗰𝗼𝗽𝘆 𝗮𝗻𝗱 𝗵𝗮𝘃𝗲 𝗮𝘀 𝗮 𝗰𝗼𝗿𝗲 𝗶𝗻 𝘆𝗼𝘂𝗿 𝗽𝗼𝗿𝘁𝗳𝗼𝗹𝗶𝗼, and which you can combine with some more spice and excitement on the side. Even though I apply indirect leverage through the allocation to $TMF (3x exposure to long-term treasury bonds), it is done to lever a low-volatility portfolio, rather than actually taking large risks. This is exactly as prescribed by Markowitz’s Modern Portfolio Theory - optimize risk-adjusted returns and lever to preferred level of volatility. Still, the volatility of the All Seasons Portfolio remains substantially lower than that of the stock market. I therefore manage a portfolio of diverse assets with allocations to stocks through seven different ETFs such as $VXUS, $MTUM and $VTV (30%); treasury bonds (38%); inflation-linked bonds through $TIP (12%); gold through $IAU (7.5%); commodities and carbon credits through $DJP and $KRBN (7.5%); VIX through $VXX (3%) and cryptocurrencies through $BTC and $ETH (3%). The risk score of the portfolio remains cemented at 3, while we have seen rather stable monthly returns throughout 2023 and 2024, having overseen the stock allocation and portfolio management procedures after 2022. I end this brief post with the link to the full interview, which I found was full of small nuggets of wisdom, prudent investing advice, and how to think about risk. I hope you spare the time to listen to it, as Howard Marks is one of the brightest and most successful investors alive. open.spotify.com/episode/1ewk6BeHzcHadH5vfJvZSy?si=7685952535c94bf5 Thanks for your kind attention, Nicholas

Behind The Memo: The Impact of Debt with Howard Marks and Morgan Housel

open.spotify.com

Episode · The Memo by Howard Marks · In this special episode of Behind the Memo, Howard Marks is joined by Morgan Housel, the bestselling author and partner at the Collaborative Fund. They discuss ideas from Howard’s recent memo “The Impact of Debt,” which was inspired by Morgan’s article “How I Think About Debt.” They explore the relationship between leverage and longevity, the nature of risk, and the eternal relevance of Voltaire’s famous saying: “History doesn’t repeat itself. Man always does.”You can listen to or read the Memo here (https://www.oaktreecapital.com/insi...

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