The All Weather Portfolio and The Golden Butterfly
A lot can happen over the decades. There will be recessions, bear markets, bull markets, political upheaval, possibly even depressions. What should we do with our money in each of these scenarios? Do we up-end our asset allocation every time some pundit is on CNBC screaming at us?
Certainly not. One of the key components of our investment philosophy is to set it and forget it. When you are constantly buying and selling based on the prevailing economic conditions, you’re practicing the exact opposite of set it and forget it investing.
We need to create a portfolio that performs well in all conditions. Well, we don’t need to create this portfolio because someone has done it for us. And that someone is not just anyone. He happens to be Bridgewater Associates hedge fund manager Ray Dalio, one of history’s legendary investors.
Ray Dalio created what is known as the All Weather Portfolio which contains the exact asset allocation you need to make money in any kind of economy. But Ray Dalio’s All Weather Portfolio has some competition, in the form of the Golden Butterfly Portfolio. LMM is a huge Ray Dalio fan. Can the Golden Butterfly best our boy?
We love a good smackdown so we’ll breakdown the All Weather Portfolio and the Golden Butterfly Portfolio. May the best portfolio win.
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