How to Use Leverage to Manage Risk

I'm a big believer in the use of leverage uh for smart reasons as a way to manage risk not as a way to magnify risk.

In this case, leverage is being used to magnify potential risk but also magnify outperformance.

More risk, more return.

That's the whole name of the game.

Um but I'm a big fan of using leverage as a way to manage risk.

So, and and long short is using leverage um because you can have more long exposure and manage risk by your short exposure.

And then there's a new um new type of theme uh use of leverage which is this idea of return stacking.

Corey Hoffstein is sort of the uh person the mastermind behind the idea of return stacking which is actually stacking and using leverage to gain equal exposure.

Um so if you have for example they do this a lot with alts you want to get 100% exposure to your 60/40 but you want to have alts as a um diversifier.

So you might leverage part of your 6040 so that you can get 100% exposure and then use that as leverage to get your alt exposure so that you'll be able to get the benefit of both things without sacrificing on returns.

And that's that concept of return stacking.

And there's products out there that do that.

One that stands out to me is RSBA, which is Corey's return stacked bonds and stock port uh portfolio.

And he has others as well.

Um and Wisdom Tree also has some products in this space and this concept of return stacking.