— Richard Davis, Needham & Co
Isn’t gold supposed to inversely correlated to stocks? Aren’t commodities only partially correlated? And, worst of all, aren’t hedge funds supposed to be uncorrelated or inversely correlated?
If you believe the “ism,” it’s a great argument to suggest that a diversified portfolio is a fair weather friend, an illusion that appears to work in smooth seas but that sinks in rough ones. Is real diversification possible — i.e., diversification where the correlation doesn’t head to 1 in rough times? I’m not so sure.