Odd Lots

How to Build a Portfolio That Outperforms For a Century

Apr 22, 2021
Chris Cole, founder of Artemis Capital Management and a leader in portfolio construction, joins the conversation to tackle market uncertainties and inflation risks. He investigates strategies for long-term wealth accumulation while adapting to historical market shifts. Cole emphasizes the importance of diversification, especially in volatile periods, and critiques traditional investment metrics. He also explores the significance of historical volatility and how lessons from the past can inform modern investment strategies.
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INSIGHT

Recency Bias as Systemic Risk

  • Market participants have a recency bias, especially regarding the last 40 years.
  • These years are unusual compared to history, creating systemic risk.
INSIGHT

Replicating Historical Volatility

  • Replicating historical volatility helps understand past strategy performance.
  • It relies on defensible assumptions about market behavior.
INSIGHT

Short Volatility Underperformance

  • Short volatility strategies underperform during market downturns.
  • This was observed in the study when recreating portfolios spanning the last 93 years.
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