Broken Pie Chart: Deal or No Deal – Hedged Equity – Option Value of Cash

Deal or No Deal – Hedged Equity – Option Value of Cash – Utility of Bonds in Portfolios

Mar 28, 2021

Recently John Hussman put out a piece that the expected value of a 60/30/10 stock and bond portfolio over the next 12 years would be -5%. Future projections can be wrong or right, but what he explained that the option value of cash or a hedged equity approach may be more suited. So how does hedged equity play into this? How Deal or No Deal game show explains the expected value calculation. And why bonds with low rates and risk of rising rates might present challenges in the typical 60/40 portfolio.

How to Calculate expected value

Deal or No Deal Example on expected value

Exploring Hussman’s option value of cash

Expected returns based on valuation.

60/40 stock and bond portfolio vs hedged equity approach

Container shipping revolutionized trade like the internet?

Stuck container ship causing global trade snafu.

Real returns on bonds after inflation

Mentioned in this Episode:

Hussman article on the option value of cash due to market expectations https://www.hussmanfunds.com/comment/mc201201/

The Box book on Container Shipping by Marc Levinson https://amzn.to/3dcx8jO

Buy and Hedge Book https://amzn.to/31kXXfV