All Seasons Portfolio - Risk Parity Investing for everyone

Read more about the article Why Diversification Feels Wrong Before It Works

Why Diversification Feels Wrong Before It Works

Why do diversified portfolios rarely feel “right” in the moment, even though they are designed to work over full market cycles? In this article, we explain the psychological biases that make diversification uncomfortable, why there is almost always a visible underperformer, and what diversification is actually meant to protect against.

Using the logic behind All-Weather / All-Seasons Portfolio construction as a practical example, the article clarifies how diversified portfolios aim to survive different economic environments without relying on forecasts. The core lesson is simple but demanding: diversification works not by feeling good, but by reducing dependence on any single future.

If you’ve ever questioned your portfolio because it didn’t resemble what was winning at the time, this piece invites you to step back and reconsider what long-term robustness really looks like.

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Read more about the article What is an All-Weather Portfolio?
What is an all-weather portfolio

What is an All-Weather Portfolio?

The All-Weather Portfolio is a long-term investment framework designed for one simple goal: to help you build wealth without needing to predict the next recession, inflation spike, or rate cut. Instead of betting on a single market outlook, it aims to stay resilient across a wide range of economic environments.

At the core is a practical idea: most market outcomes can be explained by two forces—economic growth and inflation—each of which can rise or fall. Different assets tend to shine in different “regimes,” so an All-Weather approach combines them to reduce reliance on any single scenario.

The strategy is often paired with risk parity, meaning the portfolio is balanced by risk contribution rather than just money invested. Over time, it seeks to earn returns through multiple risk premia (stocks, bonds, commodities, gold) and a disciplined rebalancing process—systematically trimming what has become expensive and adding to what has become cheap.

If you’re investing for the long run—especially retirement—this approach can offer a smoother ride, fewer deep drawdowns, and better odds of staying invested through tough markets. In this article, you’ll learn the logic behind the All-Weather Portfolio and how to think about building one with clarity and confidence.

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Read more about the article Different Types of Inflation and Assets That Hedge Against Each

Different Types of Inflation and Assets That Hedge Against Each

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Surely you have not missed the talks about inflation the past year. Even from the Fed and Yellen, the sentiment about inflation has changed from “not a problem” to “transitory” to “longer than first expected” and now to “good for the economy”.

While the price of risk assets, such as stocks, may also inflate due to the rise in inflation, they are not rising as much in real terms.

Rising inflation, and especially inflation that is higher than expected, is harmful to most common portfolios that comprise of stocks, or a combination of the two like the 60/40 Portfolio. Both stock and bonds are assets that perform well in times of low or decreasing inflation, and will lag in times when inflation rises.

It is thus vital to have a portfolio which also includes inflation hedges to mitigate the risk of unexpected inflation prints.

In this post, we will be looking at different types of inflation - as inflation can manifest in different ways - and how you can protect your wealth against each of them with different assets.

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Read more about the article A study of risk parity portfolios against S&P 500 since 1927

A study of risk parity portfolios against S&P 500 since 1927

Earlier this week, I received a very good comment to the monthly portfolio update article which I published last month. In that article, I discussed how the stock market seems greatly overvalued based on several widely different indicators, measuring both listed stock’s earnings and assets, as well as market cap in relation to GDP.

Based on the indicators CAPE (Shiller's PE), Q Ratio, and the Buffett Indicator (market cap to GDP), future potential returns of the stock market over the next decade appear limited.

In the light of this, the question arises whether the All Seasons Portfolio would be a better choice, and how it has performed under similar conditions in the past when compared with the S&P 500. The comment reads as quoted here below and this is what I have set out to answer in this month's article.

We can anticipate that future returns of the stock market will be below what we have become used to in recent years based on these metrics, and the fact that returns 1) usually are clustered in a way that good years are followed by further good years and bad years are followed by further bad years, and 2) always regress to the mean (between 7-10% annually) and that the last decade has seen annual returns far above this level.

When acknowledging the current worrying state of the equity markets, it becomes relevant to further understand how the All Seasons Portfolio has performed versus the stock market under similar market conditions.

Instead, it is relevant to compare against 1) long-term performance over several decades, and 2) periods with similar conditions as where we are currently. To me, these are two extremely central questions to clarify, and that I wanted to have answers to as well.

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Read more about the article Why The 60/40 Portfolio Is Not Balanced

Why The 60/40 Portfolio Is Not Balanced

When it comes to the All Seasons Portfolio strategy, or any other risk parity strategy for that matter, one of the fundamental ingredients is how to allocate the capital between assets in the portfolio based on risk rather than capital.

Why this is important, or even why bother doing it at all, is a question I get quite often. I think therefore it is time to have a closer look at risk parity portfolio allocation principles. Here I mean the reason for why the allocation to the assets is based on their risk (volatility) rather than equal weight based on capital.

In this article, for a comprehensible description, we will be examining a simple two-asset portfolio to illustrate the importance of weighting assets based on risk rather than capital. For this example, I will be using a 60/40 Portfolio consisting of 60% stocks and 40% bonds, as this is popularly (and erroneously) considered as a “balanced portfolio”, and as this is a portfolio allocation strategy among both retail and institutional investors.

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