In part one of our analysis of Chris Coles appearance on the Odd Lots podcast we took a look at the danger of the recency bias and the over reliance of investors on the 60/40 portfolio which has performed tremendously for more than a generation, but may now move into a massive multi-year path of underperformance due to a variety of factors including demographics, interest rates and de-globalization. What's really happening here is that the Dragon is not the Serpent and Hawk mating, it's everybody's typical short volatility portfolio (think - stairs up, elevator down movement of stocks) merged with a long volatility portfolio. Recent history has certainly borne him out as 2020 which saw the presence of all three market regimes created a perfect laboratory test for Mr. Coles thesis which in turn generated a 50% return for his Dragon portfolio versus only a 15% gain for the 60/40 mix. As well, they touch on the problems with Sharpe ratios and Coles new metric, CWARP, which is inspired by advanced sports analytics and looks to determine whether adding a strategy actually helps improve your portfolio, adds more of the same, or worst of all, if it hurts your portfolio. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record. This is what we would expect true diversification to look like: over a 40 year period which included periods of growth, recession, inflation, and some deflation, the Permanent Portfolio chugged along providing solid returns with much more manageable levels of risk. So any critique or suggestions for how to improve my implementation of the portfolio is welcome. If you asked me a year ago whether Russia would invade Ukraine or inflation would exceed 8%, I would have bet strongly against that. What does a portfolio look like over many, many, many different investment cycles spanning booming growth, nasty drawdowns, inflation, stagflation, and everything in between. The Allegory of the Hawk and Serpent. Furthermore, the composite performance record may be distorted because the allocation of assets changes from time to time and these adjustments are not reflected in the composite. Is Artificial Intelligence the Next Bubble? The greatest threat to 100 years of prosperity is neglecting the lessons from long-term financial history and having no true diversification against secular change. However, our core belief has always been that long volatility is only a part of a broader portfolio. by Random Musings Sun Oct 11, 2020 9:07 pm, Post The optimal portfolio, since 1929, included risk weighted combinations of Domestic Equity (24%), Fixed Income (18%), Active Long Volatility (21%), Trend Following Commodities (18%), and Physical Gold (19%). Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own. There is however a big problem with Mr. Coles approach as he is the first to admit. Disclaimer However, the backtest performance of the Hundred Year Portfolio only dates back 15-years, a lot less than the near 100-year backtest of the Artemis Dragon Portfolio. Commodities Fire Up the "Dragon Portfolio" - True Market Insiders Its having hurricane insurance that doesnt just rebuild your house, but leaves it better than it was before the storm at a compounding non linear rate. They aren't just talking their book. ), secular growth assets (large cap and small cap stocks), fiat alternatives (precious metals and crypto), trend and momentum strategies (typically done by commodity pool operators) and long volatility. Stocks and bonds have been ripping for 40 years, so many investors have decided to base their entire investing strategy around only those two assets. Since we wrote this post (and Chris wrote the original piece), volatility has exploded, both during the massive sell-off in March as well as in the shocking market melt-up since then. Having enough assets in the interim: making sure that if we need to use our assets for a family emergency, illness or other unexpected life event (dare I say global pandemic?) However, I While other portfolio allocations only performed well in certain conditions, the Dragon Portfolio was able to perform positively regardless of conditions, during periods of both secular growth and decline. Assets like Long Volatility, Gold, Commodity Trend, and Discretionary Global Macro should be core portfolio holdings. This site is about how you can implement the portfolio yourself. Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.coms discretion. The inner workings of the portfolio are a bit hidden and very intriguing. Investors could certainly add the fiat alternative component by buying the GLD ETF and adding bitcoin to the mix but its the trend momentum strategies and long volatility strategies that are hard to replicate because there are no good ETF and ETN products that can mimic these approaches. The Dragon Portfolio's Performance - 100 Years Ahead | Enola This allocation is highly unorthodox compared to a Traditional Pension Portfolio dominated by equity Linked Assets (73%) and Fixed Income (21%). In another way, however, the level performance similarity is surprising, given the difference in the non-overlapping allocations of the portfolios; the commodity trend and long volatility allocations of the Hundred Year Portfolio are quite distinct from the cash allocation of the Permanent Portfolio. Inflation Still despite the practical obstacles to its construction, investors should still consider Mr. Coles ideas. The federal status of this trademark filing is REGISTERED as of Tuesday, March 8, 2022. Even negative opinions can be framed positively and diplomatically. The Dragon Portfolio by Chris Cole of Artemis - YouTube In this part we consider Mr. Cole alternative portfolio an investment thesis that he calls the portfolio for 100 years that is constructed quite differently from the traditional 60/40 stock/bond mix. Sign up to create alerts for Instruments, Simple enough but how exactly do you go about this, much less test it going back 100 years. Some of this is a little misleading, but I do see some interesting aspects of the Dragon that are worth diving into. The successful 100-year portfolio must be able to navigate the secular booms of the Serpent (1947-1963, 1984-2007) while not losing capital on either wing of the revolutionary and regenerative eras of the Hawk (1929-1946, 1964-1983). It was a formative year for a lot of people. See the full terms of use and risk disclaimerhere. Artemis is a long volatility manager, after all, and talking up their book, so to speak. No representation is being made that any multi-advisor managed account or pool will or is likely to achieve a composite performance record similar to that shown. Chris Cole at Artemis tested different portfolios over longer period including the great depression, and came up with the Dragon portfolio which should well in all Oct 1, 2020. The best portfolio balances assets that profit from either regime. Elon & Twitter: A Match Made in Elons Version of Heaven. The answer for Artemis is what they call the Dragon portfolio. What does a portfolio look like over many, many, many different investment cycles spanning booming growth, nasty drawdowns, inflation, stagflation, and everything in between. The Cockroach Strategy is intended to be a total portfolio solution that includes long volatility as well as stocks, income producing assets, commodities, gold and bitcoin with the ultimate goal of making an investment strategy that produces ataraxia. Other things being equal (or close enough), simpler is better. "Imagine you have the opportunity to grant your family great wealth and prosperity over 100 years, but its subject to one final choice. Long volatility is confusing, but the easiest explanation I see is that it is portfolio insurance. The easiest way to become a dragon is to do it through Artemis Capital, but this would require being an accredited investor (basically you need to be a millionaire). Well, a dragon is a combination between a hawk and a serpent. Dragon Portfolio - Protect Your Wealth - INVEST WITH FIRE Artemis shows that on a long enough timeline - every strategy sucks. If this is the case, it will interesting to see to what extent the commodity trend and long volatility components bolster the performance of the Hundred Year Portfolio, and how its performance compares to that of the Permanent Portfolio. Your status will be reviewed by our moderators. Artemis Dragon portfolio is designed to have components which profit from both times of secular growth with those of secular decline. The optimal portfolio, since 1929, included risk weighted combinations of Domestic Equity (24%), Fixed Income (18%), Active Long Volatility (21%), Trend Following Commodities (18%), and Physical Gold (19%). Artemis They are talking about what weve covered before protecting against the Black Swan while capturing the White Moose. WebMost recently and similarly to the Cockroach, Artemis Capital developed the Dragon Portfolio. In this article, we will Stock markets are poised to end the week on a positive note although broadly speaking, it doesnt seem weve progressed in either direction over recent weeks. How The Artemis Capital Dragon Portfolio Can Save Your Future The challenge for us and our families was that these strategies were not readily accessible to non-institutional investors. by nisiprius Sun Oct 11, 2020 1:30 pm, Post The disclosure document contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA. Newedge CTA Index, S&P 500 Index, etc. As such, they are not suitable for all investors. The Hundred Year Portfolio? | Investing.com 1. Portfolio construction The Dragon Portfolio - GitHub No guarantees are made as to the accuracy of the information on this site or the appropriateness of any advice to your particular situation. WebThe Dragon Portfolio by Chris Cole of Artemis - Pros, Cons & Holdings - Should You Invest? On Tuesday, February 9, 2021, a trademark application was filed for ARTEMIS DRAGON PORTFOLIO with the United States Patent and Trademark Office. As Chris wrote in his 2020 report, to thrive, we must embody the cosmic duality between the hawk and the serpent. The Bogleheads Wiki: a collaborative work of the Bogleheads community, Local Chapters and Bogleheads Community. We have a different philosophy, inspired by Brownes work: Offense wins games, but defense wins championships. And, the research showed, 93% of rolling 12-month periods delivering positive nominal returns. Commodity trend is an active strategy which seeks to buy when an asset price trend is rising and sell, or short, when the asset price trend is falling. Im a man filled with bad ideas. The Dragon Portfolio is based on historical research stretching back to the 1920s that sought to identify the most effective portfolio not just over the last few decades, but the long run of history. In 2018, we set out to solve that problem. WebThe Dragon Portfolio by Artemis Capital. Though there are no guarantees in investing, our research suggest that the cockroach portfolio has historically provided better returns with less drawdowns than other approaches and we believe that it is likely to do so going forward. Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.