Certain hedge funds have been employing an investment
strategy known as risk parity, which is safe, measured, cautious. Not unlike
most of the movie characters played by Steve Carell. Hedge funds such as AQR, Invesco, and
Bridgewater Associates, which ranks as the world’s largest hedge fund, have
been struggling lately. The problem, according to experts, is that these funds
all employ an investment strategy known as risk parity, which can best be
explained through Steve Carell’s most memorable movie roles.
“The Forty-Year-Old Virgin”
The Role: Carell plays Andy Stitzer, an involuntarily celibate
40-year-old virgin who has always lived a simple, straightedge lifestyle. He has
trouble meeting women, despite the best efforts of his friends and
encouragement of those around him. Carell’s character is so cautious he has
trouble with women even in situations where opportunities are seemingly handed
to him.
The Connection: Risk parity involves spreading risk around a
portfolio evenly and proportionately based on the riskiness of an asset class.
In other words, it’s always making sure to operate with a measured approach and
extreme caution. Perhaps too much caution — the kind that can make you miss out
on life experiences…
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