MI270: How to Improve a 100% Stock Portfolio Using Return Stacking w/ Corey Hoffstein
The Intrinsic Value Podcast - The Investor’s Podcast Network
What is Return Stacking?
Return stacking is the idea of layering a new set of returns on top of an existing portfolio, adding a new diversifying source of returns to enhance long-term returns, increase diversification, and reduce drawdowns. This strategy involves using derivatives and is implemented through sophisticated techniques. One research paper by Cliff Assness showed that leveraging a portfolio that looks similar to a 60/40 allocation can historically provide higher returns and similar risk to a 100% equity portfolio. Diversification is considered the only free lunch in markets, and leveraging can unlock its benefits. The strategy has been validated in a product launched by WisdomTree and the findings have held true over the years. Diversification remains a valuable and evergreen concept.
