Education . Factor Models . 3 of 3
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A premium you cannot sit through is not yours.
01
The premium is rent for taking a discomfort nobody else wants. If a factor stopped hurting in the dry years, everyone would pile in and arbitrage it flat. The pain is what keeps the pay.
02
A winter is not a crash. A crash is sharp and over fast. A winter grinds, quarter after quarter of nothing, and that slow ache is what shakes people out at exactly the wrong time.
03
Only sign up for a factor whose worst drought you can outlast. Size it so thirteen flat years annoys you instead of breaking your plan. The premium belongs to whoever is still holding when it comes back.
A factor does not pay you for being right. It pays you for staying when the chart says you were wrong. Most people pay the winter on the way out instead of the way through.
How factor premiums actually get paid, in plain words
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