Wknd Notes

The report examines the importance of risk management and tail-risk mitigation in achieving long-term capital compounding. It highlights the non-symmetric math of market drawdowns and the necessity of preserving liquidity for market phase changes.

Key Takeaways

• 1.Market volatility should be managed by mitigating left-tail risks to enable full exposure to right-tail compounding opportunities.
• 2.Large drawdowns severely impede long-term compounding, as the mathematical recovery required for large losses is significantly higher than the initial percentage drop.
• 3.Liquidity management during phase changes from low-risk to high-risk environments constitutes a critical form of structural alpha.

Table of Contents

• Exposure
• Exposure II
• Exposure III
• Exposure IV
• Exposure V
• Exposure VI
• Anecdote
• Week-in-Review
• Weekly Close
• YTD Equity Index Returns

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