The Radical Portfolio Theory

Anyway, the little-known fact is that the major predictor of your portfolio’s volatility doesn’t stem from the individual stocks you pick, as most people think, but instead from your mix of stocks and bonds.

he says in our opinion just a few things in life are noble and it is because just a few things are noble that noad has just a few Investments the Church of diversification is seen as an insurance against any one idea being wrong we would propose that if knowledge is a source of value ad and few things can be known for sure then it Li logically foll

In the idealized model, the portfolio manager has an accurate probability distribution on the future performance of each asset in the universe of potential investments. Kelly’s methodology then provides a quantitative specification of how big a position to take in each of the candidate assets. Not surprisingly, the fraction of one’s portfolio to be

This traditional approach to asset allocation ran aground in 2008, when the financial markets collapsed and investors found that even if they had both stocks and bonds in their portfolio, they all fell together.

The strategy we’ve adopted precludes our following standard diversification dogma. Many pundits would therefore say the strategy must be riskier than that employed by more conventional investors. We disagree. We believe that a policy of portfolio concentration may well decrease risk if it raises, as it should, both the intensity with which an inves