The Quest to find 15 uncorrelated asset classes

srinir said:
Time series momentum will never pick up true market top or bottom, but tends to avoid major draw-down during time of distress.

One could employ some option strategies to avoid tail risk. I also roll 1x2's regularly to mitigate my levered portfolio, but they are expensive.

I believe diversification is only free lunch available and always take them over any market technicians or guru's call.
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There are two other free lunches:
1) reducing tax exposure
2) reducing transaction costs

But those two plus the one you mentioned are the only three I'm aware of.
 
We witness disparate real estate markets, I think, much as we see more sector rotation and selectivity in bull markets. When things go south, correlations return.
 
One other area that most don't normally think of as an investment, making your own electricity. Depending on your local electric rates, usage, and the power of your local monopoly utility to influence legislators, you can get some pretty decent return on installing solar to offset your electric use. And remember that you're saving after tax dollars, so depending on your tax load saving a dollar on electricity is the same as earning $1.25-$1.50. And to the subject of this thread, that return is pretty close to completely uncorrelated to the market. And to those who don't have access to OTC swaps, it's a $15-30k investment almost anyone can make.
 
rvince99 said:
We witness disparate real estate markets, I think, much as we see more sector rotation and selectivity in bull markets. When things go south, correlations return.
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Actually there is are niches in real estate, leasing, financing and insurance that does very well in bear markets or crashes. This would not be catering to your typical tenants who lose their jobs, or go out of business etc. Hint; Gov't Programs and Health Insurance. I was fortunate to have 10% of my holdings in this space during the '09 recession. Beating myself that I didn't invest more.

There is mini recession that is hitting the sub-prime auto market right now and currently testing a business idea in this space in the dallas market. Again, just like last time only 10% of my diversified allocation. If I had bigger balls I would liquidate my portfolio and go all in on this.

I realize this is a traders forum and most people are averse to RE due to the pains of the 2009 recession. But syndication is very powerful in RE and I'm finding that even trading OPM doesn't come close to the potential in RE.
 
InTheMaking said:
I'm not really a professional. I posed a question on diversification to get feedback fron the group.

My first real trade was in April-14th of 2016, where I sold a 2 day straddle on SPY and made $50.

Regarding real estate, I had drinks last week with a 22 year old, who rents out couple of apartments in uptown Dallas on airbnb. He doesn't own the asset just subleases them on airbnb. This is low cost entry into real estate
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Thank you for your response.

I know you are a successful investors and business person, I look forward to your success as a fellow trader.

Regards,
 
rvince99 said:
We witness disparate real estate markets, I think, much as we see more sector rotation and selectivity in bull markets. When things go south, correlations return.
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Actually re-reading this posting, and putting more thoughts into this, its making more sense. As I pay my property taxes for my rentals, I'm realizing the I have better ROI on certain class of commercial properties than residential rentals regardless of the length of the leases. One area that I have very little control is property tax assessment. And its a big amount here in Texas.Yes, you're right! There has been sector rotation on RE as well. Sector rotation has moved away from residential rentals to more commercial property development and leasing.

One benefit compared to the markets, is that this is something that takes a few months to years to take effect. For those in the know in RE, this is usually advantageous. I don't claim I'm in the know yet. I missed the boat on all the storage facility build outs that was happening in Dallas. Too busy playing the stock market then. No regrets, though!
 
Correlation is not static. Generally the less volatility, the more uncorrelated choices you have.
 
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