Cash vs Assets: Bob Elliott (S3, Ep. 3)
In a special live recording, Bob Elliott, Co-Founder and CEO of Unlimited Funds, returns to Tomorrow's People and spoke with Gavin Ezekowitz on the relevance of cash in investment portfolios during times of economic uncertainty, and how investors should be thinking about diversification in varying macroeconomic environments.
Bob Elliott is the Co-Founder and CEO of Unlimited, which uses machine learning to create products that replicate the index returns of alternative investments.
Prior to founding Unlimited, Bob was Deputy CIO at Bridgewater Associates where he created many strategies for the Pure Alpha fund across equities, fixed income, credit, exchange rates, and commodities. In his role on the Investment Committee, he was holistically responsible for the Pure Alpha foreign exchange portfolio from investment strategy to trade execution.
Before that, he built and led Ray Dalio’s personal investment research team for nearly a decade.
He’s the author of hundreds of Bridgewater’s widely read Daily Observations and directly counseled some of the world’s foremost policymakers and institutional investors on economic and investing issues.
Bob holds a BA in History and Science from Harvard.
In this episode, we discuss:
00:00 [https://www.youtube.com/watch?v=Pm3-qRACi2Y&t=0] 💰 Cash is safe but assets always outperform over time. This is the time buy assets, as it's rare for cash to outperform for more than 12-18 months.
04:48 [https://www.youtube.com/watch?v=Pm3-qRACi2Y&t=288] 💰 Cash is not as effective as assets because assets generally outperform cash over time, so one must be very skilled at market timing to justify not being fully invested in assets.
07:48 [https://www.youtube.com/watch?v=Pm3-qRACi2Y&t=469] 💰 Create a diversified portfolio of stocks, bonds, commodities, gold, credit, and inflation index bonds to avoid risk and reliance on one economic condition, as most people mistakenly focus only on stocks and bonds.
11:10 [https://www.youtube.com/watch?v=Pm3-qRACi2Y&t=670] 💼 Diversification strategies, including commodity protection, can generate excess returns and mitigate long-term risk; adding trend following strategies to portfolios can create agility and avoid underperforming assets like cash, while investing in diverse alpha strategies can overcome concerns about hedge funds and generate excess returns.
15:41 [https://www.youtube.com/watch?v=Pm3-qRACi2Y&t=942] 📊 Diversification and indexing can lead to better investment outcomes by reducing risk and costs, while strategies like trend following and dollar cost averaging should be considered over time, and futures can offset losses in an asset portfolio.
21:10 [https://www.youtube.com/watch?v=Pm3-qRACi2Y&t=1271] 💡 Combining different Alpha strategies based on market conditions and allocating agile between them creates a reliable portfolio, avoiding poor decisions of switching to cash and allowing for flexibility in investing.
24:56 [https://www.youtube.com/watch?v=Pm3-qRACi2Y&t=1497] 💰 Creating a diverse and consistent portfolio through indexation and diversification can lead to higher returns and a successful outcome in investment.
29:32 [https://www.youtube.com/watch?v=Pm3-qRACi2Y&t=1772] 👏 Look up Bob Elliott on Twitter for valuable market insights.
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit bfaglobalinvestors.substack.com [https://bfaglobalinvestors.substack.com?utm_medium=podcast&utm_campaign=CTA_1]
