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Praise for Risk Parity
“A must‐read for anyone investing in the market who wants to maximize upside return while minimizing downside risk. Alex has skillfully crafted a ‘how to’ book that spells out, step‐by‐step, building a balanced portfolio that can generate equity‐like returns across a diverse spectrum of asset classes without the concomitant risk of equity securities, a strategy that will deliver in the long run no matter the market or economic environment. His proven, no‐nonsense approach is communicated in such a refreshingly straightforward manner that it can be easily understood and applied in practice by novice investors while simultaneously educating and informing the savviest wealth manager. If you're laboring under the belief that a balanced portfolio is 60% stocks and 40% bonds, then this book is for you. Risk Parity will change your life—and your wallet!”
—Lloyd Greif, President and CEO, Greif & Co.; Founder, Lloyd Greif Center for Entrepreneurial Studies at the University of Southern California's Marshall School of Business
“Alex has written a book that perfectly encapsulates why his vision and perspective on finances is so deeply respected. I've been lucky enough to have his wisdom and guidance around risk parity investing and now you can, too.”
—Greg Berlanti, writer, producer, and director
“This book is an excellent roadmap for understanding both how, and more importantly why, risk parity strategies work. Alex deftly explains the differences between a 60/40 portfolio and a more balanced strategy.”
—Bill Lee, former CIO, Kaiser Permanente
“When done right, diversification can be the key to producing better investment returns over the long haul—yet not enough investors have been paying enough attention. For this reason, I consider Risk Parity one of the best portfolio strategy books for growth investors and money managers.”
—Daniel Martins, Founder, DM Martins Capital Management; regular contributor to Seeking Alpha
“Alex shows that the standard portfolio of stocks and bonds may be a lot riskier than most people realize. This is a terrific critique of conventional thinking on asset allocation.”
—Brett Arends, MarketWatch columnist
Risk Parity
How to Invest for All Market Environments
Alex Shahidi
Copyright © 2022 by Alex Shahidi. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per‐copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750‐8400, fax (978) 646‐8600, or on the Web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748‐6011, fax (201) 748‐6008, or online at www.wiley.com/go/permissions.
Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.
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Library of Congress Cataloging‐in‐Publication Data
Names: Shahidi, Alex, author.
Title: Risk parity : how to invest for all market environments / AlexShahidi.
Description: Hoboken, New Jersey : John Wiley & Sons, Inc., [2022] |Includes index.
Identifiers: LCCN 2021031557 (print) | LCCN 2021031558 (ebook) | ISBN 9781119812562 (hardback) | ISBN 9781119812432 (adobe pdf) | ISBN 9781119812425 (epub)
Subjects: LCSH: Risk management. | Portfolio management.
Classification: LCC HD61 .S389 2022 (print) | LCC HD61 (ebook) | DDC 658.15/5—dc23
LC record available at https://lccn.loc.gov/2021031557 LC ebook record available at https://lccn.loc.gov/2021031558
Cover Design: Wiley
Cover Image: © Dimitri Otis/Getty Images
I dedicate this book to the investors with curiosity to learn and open‐mindedness to overcome convention.
Foreword
Alex is doing a great service to the savers and investors of the world and, in particular, those who are responsible for their livelihood in retirement. Statistics show that the average individual investor has substantially underperformed most passively held asset mixes. And the history of markets shows that every