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Risk-Managed Equity Exposure II

One ETF to rule them all?

Nicolas Rabener
10 min read
21 Mar 2022

SUMMARY

  • Relying on single entry and exit signals for trading introduces model risk
  • However, simple tactical asset allocation strategies are surprisingly robust
  • Necessity of signal diversification is questionable

INTRODUCTION

Last week, we explored a simple risk management system for an equity allocation that might be suitable for investors with a cautious outlook on stock markets. Given record-high valuation multiples, all-time high debt levels, and poor demographics in most countries, the stock returns for the next 20 years will likely be less attractive than those of the previous two decades. Caution is warranted (read Risk-Managed Equity Exposure).

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