November 5, 2025

Investing 101

Excess Returns: Victor Haghani on Why Static Allocation Fails

In this episode, we sit down with Victor Haghani, founder of Elm Wealth and one of the original partners at LTCM, to explore his journey from running complex hedge fund strategies to adopting a simplified, evidence-based investment approach. We discuss how investors should think about expected returns, portfolio construction, dynamic asset allocation, valuation signals, buybacks, managed futures, and the dangers of extrapolating past returns into the future.

Topics covered:

  • Victor’s journey from LTCM to simple, systematic investing
  • Why position sizing is as important as what you own
  • How to think about expected returns and valuation frameworks like CAPE and P-CAPE
  • The role of risk, risk premia, and personal utility in portfolio decisions
  • Why 60/40 and the permanent portfolio ignore expected returns
  • Buybacks, market elasticity, and capital flows
  • Indexing misconceptions and asset allocation discipline
  • The ETF structure and tax efficiency in asset allocation strategies
  • Concentration in large tech stocks and long-term equity returns
  • The importance of dynamic asset allocation vs static allocation
  • Key lessons for individual investors and avoiding “too good to be true” opportunities

Video courtesy of Excess Returns.

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This content is intended only to provide observations and views of the author(s) at the time of writing, both of which are subject to change at any time without prior notice. The information contained in the commentaries is derived from sources deemed by Elm Wealth to be reliable, but its accuracy and completeness cannot be guaranteed. This material does not have regard to specific investment objectives, financial situation and the particular needs of any specific reader. Any views regarding future prospects may or may not be realized. Past performance is no guarantee of future results.