The Risk of Using Low Correlation

In this episode we chat with Wayne Himelsein, president and chief investment officer at Logica Capital. Wayne has spent over two decades managing long/short portfolios and so brings a wealth of experience to the conversation.

We talk with Wayne about a concept called negative skew and how it leads many investors to underestimate the risk in their portfolio (as well as what investors can do to protect against it).

We dived into the concept of ergodicity, an idea that I initially discovered through Nassim Taleb but that has become a very valuable mental model for me for looking at both markets and life in general.

We dove into the pitfalls of diversification and how many investors engage in naive rather than what Wayne calls thoughtful diversification as well as why you only need to be right 54% of the time.

You can find more of Wayne on Twitter (@WayneHimelsein).