Most investment books eventually come to a place wherein they introduce the concept of “risk” and how to control or manage it. Stock/Bond 60/40, first discussed in Chapter 2 is such an attempt. To refresh memories, we showed how the 60 percent stock/40 percent bond setup reduced the B&H portfolio’s average underperformance to (2.80) and had only two drawdowns that went beyond 20 percent into “torture” territory, one being a skimpy (0.39) percent beyond. But the ACA portfolio is already there, since controlling risk was built into its DNA. Our problem is exactly the opposite: Shall we increase risk?

Over the past 39 years, an investment in intermediate government bonds had an average underperformance to “riskless” ...

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