
“A Glaring Error Of Omission”
VaR shocks. Taper tantrums.
I talk about such things a lot. And with good reason.
Investors have a discernible tendency to dismiss discussions of cross-asset correlations as if the subject should be confined to jet propulsion laboratories. All the while, these very same investors fail to see the connection between cross-asset correlations and the simplest of simple investing concepts: the 60/40 stock-bond portfolio.
If you understand why a 60/40 stock-bond portfolio works, then you're