Most Portfolios Are Not Built for This World

This episode argues for including commodities as a portfolio hedge and treating macro bets cautiously—favor trend-aware commodity strategies or delegate macro trading.

Key Takeaways

Include commodities as a modest, long-term allocation (e.g., ~10% in gold or diversified commodities) because equities and bonds can fail together and commodities rebound during stress.
Commodities lack steady upward drift and require active expertise; use diversified commodity funds or experienced managers to capture term-structure yields and backwardation.
Trend-aware and trend-following commodity strategies add value by buying during weakness; don’t dismiss commodities after price gains—their value often peaks amid shortages.
Avoid frequent tactical macro trading: large macro portfolio bets are risky and success can be luck. Treat macro exposure as a managed-return stream like managed futures.
If you lack professional experience, delegate macro trading or use low-cost access to macro strategies; otherwise construct diversified bets only with deep expertise.
Revisit the 60/40 assumption: recent decades’ low-conflict norm may not persist. Consider alternatives (commodities, gold, Bitcoin) and adjust portfolio expectations.

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