Friday, March 9, 2012

Barbell Strategy

by Rick Nason, PhD, CFA

Partner, RSD Solutions Inc.

www.RSDsolutions.com

info@RSDsolutions.com 

 

Everyone who has worked in asset / liability management knows what I mean by a barbell strategy.  In simplistic terms, a barbell strategy has a mix of both long term assets as a macro “fixing” of the overall risk of the portfolio, and short term assets to fine tune the hedge of the portfolio.   Thus the asset liability hedging is done by a mixture of long term and short term assets.

 

In our information world, the hedge necessary is keeping up with ideas.  Thus it might be prudent to adopt a barbell strategy.  That is reading a mix of short term items such as a newspaper clipping service, or a series of blogs, and a different mix of longer more thoughtful articles such as books or more extensive journal articles.

 

For the risk manager, information and creativity are truly the most critical elements.  Does your firm have a barbell strategy (or any risk management information strategy for that matter)?

 

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