I have 30 years investment experience across individual stocks, mutual funds, ETFs, hedge funds and private investments as an individual investor. My experience with the dotcom and GFC market drawdowns changed my investing approach towards diversification and investing methodologies that do a much better job of minimizing drawdowns. Since 2015 my focus has been on building diversified portfolios that provide excellent risk-adjusted returns through all market environments. Thus far I have been successful in this endeavor. Since January of 2015 I have achieved a risk-adjusted return over double that of a traditionally diversified portfolio (60% VT and 40% BND) – my Sharpe is 1.39 compared to 0.57 for the traditionally diversified portfolio (through May 2026). My maximum drawdown during this period was -7.0% compared to -21.1% for the traditional portfolio. While diversified portfolios such as mine likely don’t make sense for a 25-year-old with many years until retirement, for retirees the low volatility and reduced drawdowns can alleviate considerable stress. Most important, they can greatly reduce the chance of catastrophic ruin. Through my writing, I am looking to educate Seeking Alpha users on the methods and benefits of true diversification, including specific funds that can be utilized. I use back tested results to help readers understand how these strategies would have historically performed
Analyst’s Disclosure: I/we have a beneficial long position in the shares of DBMF, VMNFX either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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