Diego Parrilla

And what if the market goes down another 20 or 40 or 60, which is how it feels at that time.

And so most humans will naturally be frozen and just cross their fingers and say, and a month later, six months or whatever, the equities recover and your protection disappears.

And so you ended up with a nice mark-to-market hedge, but you didn't really take the opportunity, which was let's monetize the 20 and use those $20 to buy equities at $80.

which buy me roughly 25 units.

So by the time market goes back to par, I'm no longer back to 100, I'm up to 125.

And that non-linearity of portfolio construction, that embracing the volatility of the markets in a way that we do it in the most unemotional way possible.

And to do that, you need convexity because you need a way where your protection, you know, if you take those profits, you know that as the market goes down, you keep going.

generating that protection.

That convexity is so important and effectively results in this rebalancing alpha.

And that non-linearity of portfolio construction is not well enough understood and is the kind of work that I've done with the

with the white paper.

A lot of my work has been dedicated to that defense and teamwork element of portfolio construction.

So let's think of Michael Jordan and again Sean Array, the Chicago Bulls.

So let's say Michael Jordan scored 50 points per game and the Chicago Bulls won games and series and championships.

But there are other guys and, you know, this guy called Dennis Rodman, who is particularly well-known.

And Dennis Rodman did a bunch of things for the team, right?

One of the things he did is he blocked the other guys.

So you, Alan, are going to shoot.

Maybe it was going in, but his hand is on the way and it's no longer in, right?

So think about Markowitz, mean variance, risk return.