Make your portfolio anti-fragile with the Risk Reward Reset Strategy (RRRS), by assuming a posture of
concentrated risk-on strategic asset allocation and hitting the market at its most potentially lucrative
point.
For those unfamiliar with the term, anti-fragile is a property of systems in which they increase in
capability to thrive as a result of stressors, shocks, volatility, mistakes, attacks, or failures. The concept
was developed by Nassim Nicholas Taleb in his book Antifragile (2012) which we highly recommend.
Taleb is a professor, former trader, and hedge fund manager. He believes we must make our public and
private lives anti-fragile, rather than simply less vulnerable to randomness and chaos. When it comes to
investing, Taleb proposes a “barbell strategy” that splits capital between highly safe and highly
speculative investment assets. We agree with him. Particularly for retired people.
That is what the Risk Reward Reset Strategy is all about. And to review the implementation process,
here are the four steps to create your very own barbell:
- Get out of the stock market, particularly with your retirement account, by taking your chips off
the Wall Street Roulette Table and then putting them in your pocket. In other words, take the
money and run. - Create the speculative side of your barbell by concentrating and redirecting your at-risk assets
to a trading account where out-sized gains are possible and the risk/reward ratio works for you,
not against you. - Complete the barbell on the other end by protecting your core holdings and retirement account
and transferring them into a Fixed Indexed Annuity. In so doing, you will be guaranteeing your
principal, plus any gains on the account where and when they occur, against any market loss.
You cannot lose any principle, or any gains once earned.
