Show Us Your Portfolio: Jason Buck

Episode Summary

Executive Summary: Jason Buck explains the Cockroach Portfolio as a robustness-first framework built to preserve wealth across regimes, not maximize upside. Drawing on his 2008 real estate crisis, he favors a diversified mix of global stocks, income, long volatility, trend, gold, and crypto to reduce drawdowns, sequence risk, and dependence on getting lucky.

Main Topics: Stay-rich philosophy vs. get-rich investing (Priority: 5/5): Buck argues most investors should focus on preserving wealth through all environments rather than chasing concentrated upside. He emphasizes robustness, low volatility tax, and avoiding bets that rely on luck. Impact of the Global Financial Crisis on portfolio design (Priority: 5/5): His commercial real estate experience in the 2007-2008 collapse shaped his obsession with hedging global liquidity risk and building portfolios resilient to systemic shocks. Critique of the 60/40 portfolio (Priority: 5/5): Buck says stocks and bonds are both offensive, long-GDP assets and that their favorable negative correlation over the last several decades may not persist in future inflationary regimes. Permanent portfolio and the Cockroach framework (Priority: 5/5): He adapts Harry Browne’s permanent portfolio into a modern, multi-asset structure using ensembles within four quadrants: stocks, income, long volatility, and trend, with gold and crypto as overlays. Long volatility as a key defensive sleeve (Priority: 5/5): Buck describes long vol/tail-risk exposure as hard to access, path-dependent, and best implemented via an ensemble of specialized managers rather than simple ETFs. Trend following and income as regime diversifiers (Priority: 4/5): The trend bucket is built with multiple CTA managers across short/medium/long horizons, while the income sleeve uses global bonds and carry strategies across asset classes. Gold, crypto, and liquidity in extreme events (Priority: 4/5): Gold and crypto are treated as fiat hedges and multi-generational savings tools, intended to help preserve purchasing power in shocks such as war, market shutdowns, or diaspora.

Key Arguments: Most investors are trying to get rich, but Buck believes the real goal is to stay rich by surviving any macro regime. 60/40 worked largely because stocks and bonds were negatively correlated during a disinflationary era; that relationship may not hold going forward. Risk should be judged by drawdowns and capital preservation, not just volatility or Sharpe ratio. The best portfolio design combines offensive and defensive assets with different correlation structures, not just more asset classes. Long volatility and CTA trend are among the few real diversifiers because they can be structurally uncorrelated or negatively correlated to equities. Ensemble construction matters because individual managers and strategies have large dispersion across different market paths. Gold and crypto function as fiat or purchasing-power hedges, especially for extreme or non-standard disruptions. Retail investors often cannot replicate this structure using ordinary ETFs because access, minimums, and regulatory constraints limit implementation. Savings should be treated as a robust reserve, not as a vehicle to get rich; wealth creation belongs in one’s business or career.

Data Points: Age: 44 years old - Buck describes his current life stage and how he optimizes for experiences now. Books read annually: 100-150 books per year - He says he reads heavily, though podcasts have reduced book reading somewhat. Cockroach portfolio stock sleeve: ~60% U.S., 20% foreign, 20% emerging markets - He describes the global equity exposure used in the portfolio. Volatility managers: 14 long volatility managers - Current number of managers in the long-vol ensemble. Managers tracked: 30-40 managers - Universe of long-vol managers that Buck and his team monitor. Retail minimum access: $100,000 US - Accredited retail investors can access the long-vol product at this level. Institutional minimum allocation: About $5 million - Typical minimum allocation for CTA/managers in the trend space. Long-vol dispersion in 2022: 50-60% - Illustrates large performance dispersion among long-vol managers. Gold allocation: 16% - Overlay allocation to gold within the broader portfolio. Physical gold storage: About 5% - Portion of gold exposure held in physical storage. Crypto allocation: 4% - Overlay allocation to cryptocurrencies. Bitcoin allocation: 2.5% - Market-cap-weighted crypto split within the portfolio. Ethereum allocation: 1.5% - Market-cap-weighted crypto split within the portfolio. Rebalancing threshold: 10% band - Harry Browne-style rule: rebalance if a sleeve moves 10% from target weight. Historical rebalancing frequency: Every 1.6 years - Approximate average cadence implied by the rebalancing bands. VIX rule of thumb: VIX 32 implies ~2% daily move - Buck uses the rule of 16 to translate implied volatility.

Pivotal Quotes: "we’re in the stay rich game" — Jason Buck: Explaining the core philosophy behind portfolio construction and capital preservation. "we build the least shitty portfolio" — Jason Buck: Describing his goal of robustness over optimization or perfection. "stop thinking about your savings as investments" — Jason Buck: His closing advice: savings should preserve purchasing power and be there when needed, not serve as a get-rich vehicle.

Implications: Listeners should view portfolio construction as risk management under uncertainty, not prediction. The episode argues for broader diversification across correlations, path dependencies, and liquidity profiles, while highlighting that robust multi-asset hedging is still difficult for most retail investors to replicate.