What is 42 Macro?
42 Macro is Global Wall Street’s leader in macro risk management research and portfolio guidance.
Renowned for our differentiated frameworks, we deliver the highest quality analysis to help our clients consistently make money and protect gains across market cycles.
Founded by CEO Darius Dale, the 42 Macro team is composed of thoughtful individuals with extensive experience in the financial services and software development industries.
Who is the KISS Portfolio Construction Process for?
The KISS portfolio was expressly designed for retail investors and RIAs who are fed up with discretionary investment strategies that have caused them to consistently and demonstrably lag broad market returns.
42 Macro Founder and CEO Darius Dale also uses the KISS Portfolio Construction Process to manage his entire liquid net worth.
What makes 42 Macro research unique?
At 42 Macro, our mission is to provide the highest-quality macro risk-management guidance and analysis. We do this by continuously monitoring market dynamics, a wide range of economic indicators, and policy developments, ensuring our analysis is always current and accurate.
Our unique advantage is found in our systematic investment approach, which combines qualitative research with the distillation of quantitative risk management signals. Through this repeatable, data-focused process, we have consistently helped our clients generate returns across market cycles.
What is the KISS Portfolio Construction Process?
A thoughtful evolution of the 60/40 portfolio framework, the KISS portfolio is a systematic, long-only investment strategy designed for long-term, low-turnover investors.
The KISS portfolio is a 60/30/10 trend-following strategy that aims to simplify investing, minimize downside during bear markets, and maximize upside during bull markets – all with the express intent of demonstrably outperforming the traditional 60/40 portfolio over the long term.
How has the KISS portfolio performed in comparison to the traditional 60/40 portfolio?
Since the start of 2018, when the KISS portfolio’s out-of-sample backtest began, the KISS portfolio has generated an average annual return of +23%, which compares very favorably to the average annual return of +10% for the 60/40 portfolio.
Moreover, the KISS portfolio has outperformed while also subjecting investors to lower risk. Specifically, the maximum drawdown of -11% for the KISS portfolio compares very favorably to the maximum drawdown of -22% for the 60/40 portfolio.
Furthermore, the KISS portfolio’s risk-adjusted return, as measured by a Sharpe Ratio of 0.9, outpaces the 0.6 Sharpe Ratio of the 60/40 portfolio. KISS’ Calmar Ratio – the average annual return divided by the maximum drawdown – of 2.2 dramatically outpaces the Calmar Ratio of 0.4 for the 60/40 portfolio. A Calmar Ratio greater than 1 is considered good in institutional finance, thus, KISS’ Calmar Ratio of near 2 is exceptional.
Who is the KISS portfolio construction process for?
The KISS portfolio was expressly designed for retail investors and RIAs who are fed up with discretionary investment strategies that have caused them to consistently and demonstrably lag broad market returns.
42 Macro Founder and CEO Darius Dale also uses the KISS Portfolio Construction Process to manage his entire liquid net worth.
What if I’m an institutional investor and/or do not wish to implement the KISS portfolio?
We developed our Discretionary Risk Management Overlay specifically for long-short investors who have chosen not to implement the KISS portfolio — likely because they are institutional investors or because they believe they can outperform KISS with their own discretionary trading process.
You can find more information about the Discretionary Risk Management Overlay via our Dr. Mo FAQ .
What are the allocations of the KISS portfolio?
The maximum exposure to each asset class is 60% Stocks, 30% Gold, and 10% Bitcoin.
The actual exposure depends on signals generated by our Global Macro Risk Matrix and Volatility Adjusted Momentum Signals (VAMS).
Specifically, the trend-following strategy employed by the KISS portfolio increases exposure to each asset class when our Global Macro Risk Matrix and VAMS generate incrementally bullish signals in Market Regime terms or for a particular asset class, and decreases exposure when our Global Macro Risk Matrix and VAMS generate incrementally bearish signals in Market Regime terms or for a particular asset class.
Where are the allocations of the KISS portfolio?
The latest KISS allocations are featured in the latest Around the Horn report, which may be an Around the Horn Intraweek Update if the most recent change occurred during the week. Scroll to the slide titled, “Current KISS Portfolio Construction (Implement The Pie Chart)”. Implementing KISS is a simple as aligning one’s portfolio with weights and ETFs featured in the pie chart.
What is Dr. Mo?
“Dr. Mo” is the primary tool we use to help our buy side clients and sophisticated retail traders remain on the right side of market risk, which is shorthand for maximizing upside capture in bull markets and minimizing downside capture in bear markets.