All Weather Portfolio By Dalio – Not Easy But Doable

All Weather Portfolio By Dalio – Not Easy But Doable

An All weather portfolio is not easy to make. We give some pointers on hot to make an all weather portfolio if you feel this is something for your stock market investing style. Ray Dalio also doesn’t like to disclose the asset portfolio allocations because those change all the time. He did that with Tony Robbins and his book but that was 5 years ago.

All Weather Portfolio By Dalio – Not Easy But Doable (Intro)

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VolatilityContinued from part one... Q1 hedge fund letters, conference, scoops etc Abrams and his team want to understand the fundamental economics of every opportunity because, "It is easy to tell what has been, and it is easy to tell what is today, but the biggest deal for the investor is to . . . SORRY! Read More

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Q2 hedge fund letters, conference, scoops etc


Good day for investors in yesterday's videos. We discussed how the stock market is in a bubble and how one of the best approaches for a passive investor is to have an all where their portfolio ends. As promised today we're going to discuss what is an all weather portfolio how you can think about building one. What are the key components and what are the key things to look at when doing such an all weather portfolio. The key within all whether it is that it is prepared for whatever can happen. So in the 40 years that retailers or whether portfolio has been back tested it had it had only six negative years. And the average downturn in those negative years was about 2 percent in 2008 all way there their portfolio from radio lost to just 3 percent while the stock market was down 40 something percent. However it's a careful balance between risk and you have to constantly rebalance that portfolio every six months or once a year. However you feel it's better for you. Let's start digging into it. I will not give you the exact portfolio locations because that is personal and that depends on what you own watch on otherwise. So that's something you really have to sit down and look at individual positions you have. What is the risk there and how that's real risk balances in an all way their portfolio. I'll give you some tips on how to measure that risk. At the end of the video.

So let's start with what an all weather portfolio is the basis of an all weather portfolio is that there can be four different economic environments and nobody knows what will happen with the economy and how long it will last. So you can have economic growth faster than expected and slower than expected. And then incrimination with inflation or without inflation. These are the four main environments that you can encounter when investing. The second thing to understand is that asset classes carry different returns and different risks inflation linked bonds. Lowest risk lowest return. And then if you go higher you have equities you have emerging markets equities you have private equity with the highest volatility but also the highest returns. However if you adjust that for the risk then every asset class gives you a return between 4 and 7 percent which is not bad. Over the long term the additional return within the all weather portfolio comes from the constant rebalancing when something drops you bring it back to the portfolio risk exposure. And then when it goes higher it goes higher and you start selling. So even know where their portfolio by rebalancing you buy low sell high. And this gives you the extra additional return on those 4 to 7 percent that are calculated from a historical average and then you reach 7 8 9 10 percent. And the most important thing you do it with less volatility less risk because your portfolio goes up slowly while the other stock markets might go out might go down the environment might change. Interest rates might increase for the next 10 20 years and then stocks and other assets would do very very bad. But you would do good because you were let's say in an old weather portfolio. Let's dig deeper.

The key is to position your self your portfolio in a way that whatever happens as some assets in the portfolio will move in opposite ways you get ahead year by year and you'll grasp that the return that gets comes from volatility and from the assets a normal natural returns in the form of dividends. It's crucial to allocate 25 percent of your portfolio risk to each of the four economic environments. So in an environment of growth and rising inflation you have equities which were.

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Jacob Wolinsky is the founder of, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at) - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver

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