Risk Parity Delusion: The Notion That Machines Cause Crashes

Risk Parity Delusion: The Notion That Machines Cause Crashes
AP Photo/Richard Drew

You may have noticed the market turbulence lately. You may have also noticed the legion of commentators among the media, politicians, and famous investors, blaming this turbulence on “risk parity,” “trend-following strategies,” or my favorite, just “the machines.”

Poppycock. Yes, it's come to this; they've driven me to swear like Mrs. Doubtfire.

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