Lead-Lag Live Rethinking Diversification: Alex Shahidi on Risk Parity and the 60/40 Problem
Aug 13, 2025
In this discussion, Alex Shahidi, Managing Partner and Co-CIO at Evoke Advisors, delves into the flaws of the traditional 60/40 portfolio and advocates for risk parity as a solution. He highlights the importance of true diversification to guard against growth and inflation shocks. Shahidi also explains why current market conditions, including concentration in U.S. tech stocks, necessitate a balanced approach to investing. Listeners gain insights into constructing resilient portfolios that can withstand potential market turbulence and avoid "lost decades."
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Career Origins And Client-First Ethos
- Alex Shahidi began as a Merrill Lynch financial advisor and prioritized independent client-first thinking.
- He now interviews top investors and synthesizes insights into his investment framework.
Three-Dimensional View Of Risk
- Risk should be evaluated in three dimensions: volatility, resilience in bear markets, and avoiding lost decades.
- Alex Shahidi argues a portfolio must combine return streams that are individually attractive but uncorrelated to achieve this.
60/40 Is Not Truly Diversified
- A conventional 60/40 portfolio is about 98% correlated to the stock market and thus not truly diversified.
- Shahidi emphasizes that heavy weight in volatile equities lets stocks drive portfolio outcomes and risks lost decades.