Wishing you and your crew a wonderful holiday. Taking a few weeks off from writing as I do each year, for family, friends, gratitude, altitude. Here’s a video podcast I did last week with Goldman’s Tony Pasquariello [here]. Dusted off an anecdote from 2018 about triumph, struggle (see below). And included links to the Total Portfolio research we published here at One River in 2024/25. The results transformed how I think about investing, how I deploy my capital, and how we’re building One River. All the very best, Eric
One River’s Total Portfolio Construction Research:
- Convexity, Correlation, and Compounding on the compounding potential of convexity + equity [here].
- The Convexity (Re)Balancing Act on how to best manage the rebalancing between beta and active risk [here].
- The Absurdity of Certainty on how to size such allocations [here].
- Good Trends Come to Those Who Wait on the tendency for trend to provide returns when you need them, but not always when you want them [here].
- The Ex-Ante Problem - Part I on the evaluation challenges of long-term allocations to risk mitigating strategies [here].
- The Ex-Ante Problem - Part II on the tradeoffs between various design choices within long volatility [here].
- Heretical Thinking - The Long Volatility Premium on how investors can be paid to protect themselves [here].
For Week-in-Review and Weekly & Year-to-Date market data, scroll to the bottom.
Anecdote (March 2018): “I’m going to puke,” said Mara. We waited for the call, the text, the result. Our daughter Olivia was attempting the impossible. “Tell me she’s going to make it,” whispered Mara. I quietly considered the odds. Sighed. Olivia is a force of nature, her spirit pure Olympic Gold. But there’s one problem. She’s tiny. Usain Bolt trapped inside a pipsqueak. “We should have heard by now.” Olivia flew to California alone. I smiled, proud. At fourteen, she takes the train to the YMCA. Walks to the pool, snow or shine. On a good night, I pick her up after work. If not, she trollies home, still steaming, bursting into dinner on a high. Empowered, independent. “Maybe they’ll see past her height and bet on her drive.” Olivia made the Olympic water polo development program. The coaches had gathered their players in San Fran, culling the herd to build a national team. So, our little wildebeest wobbled her way West. “There’s no way, is there?” The mothers of water polo Olympic hopefuls are my height. Their fathers look like Michael Phelps. The fact is, Olivia got cut at conception. “I pray this doesn’t break her spirit.” Sport is a metaphor for life; struggle, risk, failure, triumph. Through it we learn about ourselves, others, our interactions. We learn to connect process and result. “Why would they invite her if she had no shot?” Never in my life have I met a more naturally confident human being than Olivia. It’s at once hysterical, preposterous, intoxicating, inspirational. “You know what my coach said when I told him I got cut?” asked Olivia, returning home, proud. Truth is, the result we want for our kids is not the trophy. We want the triumph. And the triumph is the struggle. “With my spirit and drive I’ll achieve anything I want in life.”
Good luck out there,
Eric Peters
Chief Investment Officer
One River Asset Management
Week-in-Review: Mon: UK GDP 1.3% as exp. Larry Ellison pledges $40b to boost Paramount’s bid, while Netflix refinances part of $59b loan amid takeover battle for Warner Bros. Novo Nordisk announces FDA approval for its Wegovy pill as oral GLP-1, with plans to launch in early Jan. S&P +0.6%. Tue: US GDP ann. QoQ 4.3% (3.3%e), durable goods orders -2.2% (-1.5%e), cons conf 89.1 (91.0e). Canada GDP 0.4% (0.3%e). Gold and silver rallied to all-time highs on prospects for more US rate cuts. US Supreme Court blocks Trump’s deployment of National Guard in Chicago. US District Judge rules Trump’s $100k H-1B visa application as lawful. S&P +0.5%. Wed: US init jobless claims 214k (224k e), cont claims 1923k (1900k e). Mexico unemp 2.66% (2.64%e). Russia IP -0.7% (1.3%e). Russia views peace plan as starting point for negotiations and seeks changes including restrictions on Ukraine military. S&P +0.3%. Thu: Japan unemp 2.6% as exp. US launches military strike targeting ISIS in Nigeria. S&P closed for Christmas. Fri: Russia unemp 2.1% (2.2%e). Zelenskiy and Trump to meet on Sunday to discuss peace plan, despite comments from Moscow raising doubts about a final agreement. Thailand and Cambodia declare ceasefire after the latest round of border clashes. Silver prices surge nearly 8% (+14.4% for the week). S&P flat. Sat/Sun: Trump to meet Zelenskiy at Mar-a-Lago.
Weekly Close: S&P 500 +1.4% and VIX -1.31 at +13.60. Nikkei +2.5%, Shanghai +1.9%, Euro Stoxx +0.2%, Bovespa +1.5%, MSCI World +1.3%, MSCI Emerging +2.1%, Bitcoin -0.5%, and Ethereum -2.1%. USD rose +0.2% vs India, +0.2% vs Turkey, +0.1% vs Indonesia, and flat vs Brazil. USD fell -4.1% vs Russia, -1.5% vs Australia, -1.2% vs Sweden, -0.9% vs Canada, -0.9% vs Sterling, -0.7% vs Yen, -0.7% vs Mexico, -0.7% vs South Africa, -0.5% vs Euro, -0.5% vs China, and -0.3% vs Chile. Gold +3.8%, Silver +14.4%, Oil +0.4%, Copper +6.0%, Iron Ore flat, Corn +1.4%. 10yr Breakevens (EU -1bps at 1.74%, US -1bps at 2.23%, JP +5bps at 1.85%, and UK -1bps at 2.97%). 2yr Notes flat at 3.48% and 10yr Notes -2bps at 4.13%.
2025 Year-to-Date Equity Index Returns: Colombia +79.7% priced in US dollars (+50.9% priced in pesos), Czech Republic +78% priced in US dollars (+51.8% priced in koruna), Korea +75.7% in dollars (+72.1% in won), Chile +71.1% in dollars (+56.2% in pesos), Israel +70.5% (+49.4%), Spain +68.5% (+48.1%), Poland +67.4% (+46%), Hungary +66.9% (+40%), South Africa +64.8% (+45.3%), Greece +64.7% (+44.8%), Austria +62.2% (+43.2%), Mexico +54.5% (+32.6%), Ireland +52.1% (+33.6%), Brazil +49.2% (+33.8%), Italy +47.8% (+30.5%), Portugal +45.8% (+28.1%), Finland +45.5% (+28.5%), Germany +38.5% (+22.3%), Sweden +37.7% (+14.7%), Canada +36.2% (+29.4%), Norway +35.2% (+18.8%), Belgium +34.5% (+18.2%), Euro Stoxx 50 +33.6% (+17.4%), Vietnam +32.3% (+36.6%), Switzerland +30.9% (+14.2%), Singapore +30.3% (+22.4%), UK +30.2% (+20.8%), Taiwan +29.3% (+24%), HK +28.6% (+28.7%), Japan +27.7% (+27.2%), France +24.9% (+9.8%), China +23.2% (+18.3%), NASDAQ +22.2%, Netherlands +21.9% (+7.1%), MSCI World +20.6% in US dollars, S&P 500 +17.8%, Indonesia +16.7% (+20.6%), Australia +16.5% (+7.4%), Russell +13.6%, Malaysia +12.9% (+2.1%), New Zealand +7.6% (+3.2%), UAE +6.5% (+6.5%), India +4.9% (+10.1%), Thailand -0.8% (-10.1%), Turkey -5.3% (+14.9%), Philippines -8.5% (-7.1%), Saudi Arabia -12.4% (-12.5%), Argentina -12.8% (+22.8%), Denmark -13.2% (-23.2%).
Disclaimer: All characters and events contained herein are entirely fictional. Even those things that appear based on real people and actual events are products of the author’s imagination. Any similarity is merely coincidental. The numbers are unreliable. The statistics too. Consequently, this message does not contain any investment recommendation, advice, or solicitation of any sort for any product, fund or service. The views expressed are strictly those of the author, even if often times they are not actually views held by the author, or directly contradict those views genuinely held by the author. And the views may certainly differ from those of any firm or person that the author may advise, converse with, or otherwise be associated with. Lastly, any inappropriate language, innuendo or dark humor contained herein is not specifically intended to offend the reader. And besides, nothing could possibly be more offensive than the real-life actions of the inept policy makers, corrupt elected leaders and short, paranoid dictators who infest our little planet. Yet we suffer their indignities every day. Oh yeah, past performance is not indicative of future returns.