The Professor's Portfolio

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“We are not in Kansas anymore….”

“Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally.” Keynes.

After a rather abrupt landing in Oz, Dorothy said to her dog Toto, “I have a feeling we are not in Kansas anymore, we must be somewhere over the rainbow.

Given the outperformance of U.S. stocks (Kansas) since 2008, the preponderance of media coverage has been about a binary choice – U.S. stocks or U.S. bonds. The rest of the world is often ignored. There is a good chance that the old multi choice, “rainbow” colored quilt charts will make a comeback as the single-country focus may become costly. Diversification will no longer be synonymous with poor performance. Home country bias will surrender ink to the “free lunch” associated with the quilt. More and more articles will surface touting the benefits of good old modern portfolio theory(MPT). Client expectations will follow.