Avantis expands Small Cap Value ETF Availability, Return Stacked ETFs vs DBMF & 4 Alternative Paths to Retirement

Investing comes with various risks. One of the most critical is not achieving your goals. To reduce it, a certain amount of equity risk is needed.

On the flipside, some investors take more risks that they are able, willing or need to take. The excessive risk often comes from overconfidence in an “ability” to estimate the odds of the equity market.

In today’s article, Larry argues that being on the conservative side and thinking of equities as ‘uncertain’ is more prudent. More than the specific terms of the framework, focus on Larry’s key takeaway – for a lot of investors the perception of the equity market often flips from measurable ‘Risk’ to ‘Uncertainty’ we cannot measure when unprecedented events unfold.

Misjudging how our brain works when faced with black swans increases your risk of ruin.

So you have read our comprehensive review of Interactive Brokers (affectionately abbreviated IBKR or even IB by its users) and you have decided to open an account. This guide will walk you through the steps of the process. In some ways, this broker account opening process can be longer than for other brokers. That’s because IBKR is more sophisticated. But, we make this process a bit simpler. In the end going through it is worth the hassle given the benefits the broker may give you in the long run. Let’s get started!

Risk mitigation strategies can be separated into three distinct categories: First Responders, Second Responders, and Diversifiers.

First Responders are the portfolio’s fast-twitch muscles. Their job is to respond immediately when markets become disorderly. Long volatility strategies sit in this category. They are designed to provide explicit and reliable protection during sudden market declines, even if that protection comes at the cost of carrying them during quieter periods. Second Responders are the portfolio’s slow-twitch muscles and are intended to complement the First Responders. Rather than reacting to sudden panic, they seek to identify and exploit persistent trends as they emerge. Trend-following strategies are often less effective in the opening stages of a crisis but become increasingly valuable as market dislocations deepen and trends become established. Diversifiers are capital-efficient, liquid alpha strategies whose job is to lift the average return of a risk mitigation program without importing short volatility or negative skew into a portfolio that benefits from the opposite. They matter for the longevity of a program, but they are deliberately optional and not explicitly defensive.