INK Ultra Money: Goal-keeping in the G-economy

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Diego Parrilla, portfolio manager and author of “The Anti-Bubbles”,  likens portfolio construction to putting a soccer team on the field. In the coming decade he sees equities as being the strikers and options as being the goal-keeper. On Real Vision today, he explains his approach which includes using options to get defensive exposure to assets like Treasuries. He believes the 60/40 balanced paradigm is not suited for the coming decade. Unless one believes 10-year yields are going negative, his conclusions make a great deal of sense.

Stocks as strikers, options as goal-keeper (pic: Jeffrey  F. Lin)

 

In terms of the team that I am putting on the field, my strikers are G-economy recruits that include the Horizons Cdn Insider Index ETF (HII; which uses the INK Canadian Insider Index under license). They also include a variety of other investments.

Those investments include a portfolio of mining, healthcare and  cryptocurrency-related investments to name a few. I also use options as my goal-keeper for downside protection. I am not as sophisticated as Parrilla in my options strategies so my carrying costs are not cheap. However, that is the price I am willing to pay in order not to leave the goal net empty.

 

The INK Cdn Insider Index (blue) has outperformed the TSX since breakeven yields bottomed on March 19th

Parrilla is not a big fan of credit and high-yield bonds as he does not believe they will be scoring many goals over the next 10 years. Again, I found myself agreeing with him. As it turns out, before the interview appeared we had decided to highlight Firm Capital Property (FCD) in today's morning report as a REIT that offers a high yield. In that sense, FCD could play the role of a striker and provide some yield at the same time. Watch the free video summary here.

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