A trade that mimics a strategy first popularized by Ray Dalio two decades ago is starting to look a bit precarious.
Formally called risk parity, the method aims to hold multiple asset classes in a way that that balances out risks, so that if one investment takes a dive, losses will be moderated by holdings that tend to move in the opposite direction. A simple version of the trade — pairing stocks with long-dated government bonds as a hedge — has been growing in popularity over the past few years as equities soared to new highs around the world.
Read more at Bloomberg
