The Sharpe Ratio of Your Relationships

Anyone can look emotionally diversified in a bull market.

A Thought Experiment

You manage a portfolio of fifteen people. You did not select them with anything resembling discipline. Some you inherited from your parents. Some you rolled into during a panic in college. A few you bought at the top of a manic bull run in your late twenties because they made you feel like the market would never go down.

You have not rebalanced this portfolio in eleven years. You do not have a written investment policy. You have no exit criteria. You check the positions reactively, on emotional impulse, and you hold most of them out of inertia disguised as loyalty.

Anyone can look emotionally diversified in a bull market. The drawdown is where the real Sharpe ratio shows up.