#shorts #Barbellstrategy
The Barbell is an approach that advocates playing it safe in some areas and taking a lot of small risks in others. That is extreme risk aversion on one side and extreme risk loving on the other, rather than just the “medium” risk attitude.
This strategy would suggest putting 80% of your portfolio into something less risky like government bonds or real estate, and 20% into something much riskier like angel investments or cryptocurrencies.
What matters in this form of diversification is not average correlation in assets put together for diversification, but correlation during a crisis or black swan event - which should be negatively correlated or completely uncorrelated.
The key from a financial perspective is to prepare for a situation where the markets drop and your job income gets hit at the same time. In one lifetime, it will likely happen. Volatility tends to cluster.
Or, as Vladimir Lenin put it “There are decades in which nothing happens and weeks in which decades happen.”
Here's discussing how it works.
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A Chartered Accountant with about 10 years of experience in areas of Tax Advisory, Startup Consulting, Fundraising, Audits, Deal Advisory, Business Modelling and contract CFO services.
Winner of the ISB Young Leader Award 2017 and the Best All Rounder, PGP Class of '17, Sarthak has also been published about in the leading financial newspapers such as The Financial Express as possibly the youngest Indian to have completed the courses of CA, CS and CMA along with a graduate degree in Financial & Investment Analysis from University of Delhi, all by the age of 23 years.
