Elegant Structural Solutions to Portfolio Theory
In my lifetime, there are a few ideas that structurally click — once you see them, you can’t unsee them.
One of them is why the U.S. dollar has performed the way it has over the last 25 years.
On the surface, the dollar looks range-bound.
The basket appears flat.
But that headline misses the structure.
Against major developed currencies, the dollar didn’t need to trend explosively — it needed to outperform stagnation:
Versus the euro (since 1999), the USD is up roughly 15–25%, depending on start and end points
Versus the Japanese yen, the USD is up roughly 40–50%
Versus the British pound, roughly 20–30%
What looks like “no trend” in a basket is, in reality, systematic strength against aging, low-growth monetary regimes.
The picture is even clearer against emerging-market currencies.
Over the same period, the dollar has appreciated by hundreds to thousands of percent versus many EM currencies, repeatedly resetting higher after every major stress event — 1998, 2008, 2020, 2022.
This isn’t about dollar heroics. It’s about structural survival.
The dollar functions as the settlement layer. It doesn’t need to win every cycle — it needs to remain the place capital resolves to when systems are stressed.
Once you see that, another idea clicks just as cleanly.
Equal-weighting solves benchmark tracking not because it’s clever, but because it respects liquidity and access constraints, especially in emerging markets. When capital cannot reliably access or size into components, equal weighting restores structural balance by design.
Again, the solution isn’t predictive.
It’s architectural.
This is the same lens I apply to portfolio theory.
Authorship isn’t about picking better assets or holding stronger convictions. It’s about capital architecture across the entire portfolio — assigning roles, phases, and interaction points rather than stacking beliefs.
That’s how I solved what is arguably the hardest problem in portfolio construction, with the most elegant solution possible:
How to concentrate and diversify inside the benchmark itself — without collapsing into benchmark gravity, and without exposing the system to single-trade fragility.
Capital Architecture at Scale
When investors want to scale, they are typically told to do one of two things:
Once capital is organized by role rather than opinion, the false trade-off disappears.
Concentration no longer implies fragility.
Diversification no longer implies dilution.
The benchmark stops being a constraint — and becomes the substrate.