Predicting the Unpredictable with Alex Shahidi

The investment world is filled with overconfidence. We obsessively track our wins while conveniently forgetting our losses, leading most investors—even professionals—to achieve prediction accuracy barely above 50%. This sobering reality forms the foundation of a fascinating conversation about why predicting markets is so difficult and how diversification offers protection against our behavioral biases.

When we zoom in too closely on market movements, every fluctuation appears significant, triggering emotional responses that frequently sabotage our long-term success. The natural instincts that serve us well in everyday life often lead to counterproductive investment behaviors—buying high and selling low in response to fear and greed. A risk parity framework offers an antidote to these tendencies by emphasizing balanced exposure across assets that respond differently to various economic conditions.

True diversification extends far beyond traditional 60/40 portfolios, which typically show 98% correlation with equity markets. Instead, it requires thoughtful allocation across stocks, bonds, commodities, and inflation-protected securities, weighted according to their volatility characteristics. Historical data supports this approach: equities have experienced "lost decades" in two of the past five decades, while alternative assets like gold have delivered comparable long-term returns but performed best during equity's worst periods. This complementary performance pattern demonstrates why diversification across uncorrelated assets provides the only "free lunch" in investing.

Today's environment of heightened uncertainty and inflation volatility makes diversified approaches more valuable than ever. While many portfolios have become increasingly concentrated in U.S. equities after years of outperformance, the coming decade may reward those who embrace a more balanced approach to navigating the unknowable future. Remember: investing isn't about predicting tomorrow perfectly—it's about building resilient portfolios that can thrive across diverse economic scenarios.

Riddler Road Rally is not your average adventure. It’s a live, citywide scavenger hunt on wheels, that will be the most fun you have this summer!

Riddler Road Rally is hitting eleven cities across Utah and Idaho. Each rally brings new clues and its own vibe, with pre-rally parties, swag giveaways, and surprise diversions. Whether you rep your hometown or hit every stop on the Wasatch Tour to climb the 2025 leaderboard, the choice is yours.

You and your team will race across t

 Sign up to The Lead-Lag Report on Substack and get 30% off the annual subscription today by visiting http://theleadlag.report/leadlaglive.