In this episode we answer emails from Philip, David and Keith. We discuss an aggressive risk-parity style portfolio (without leverage), review QREARX, which we analyzed in Episode 81, and how the value factor is determined by various funds and indexes.

Links:

Father McKenna Center Donation Page: Donate - Father McKenna Center

Portfolio Matrix Tool at Portfolio Charts: Portfolio Matrix – Portfolio Charts

The Weird Portfolio: Weird Portfolio – Portfolio Charts

Morningstar Page for QREARX: QREARX – TIAA Real Estate Account Fund Stock Price | Morningstar

Amusing Unedited AI-Bot Summary:

Ready to rethink your investment strategies? Discover how pushing the boundaries with aggressive risk parity portfolios can transform your financial growth. Inspired by listener Philip's question, we unravel the potential of a 70% equity allocation, showing you why it might be your ticket to a prosperous retirement with a longer horizon or increased growth needs. Learn how to artfully allocate the remaining 30% across assets like large-cap growth, small-cap value, long-term treasuries, gold, and managed futures for optimal diversification. Plus, get the scoop on our informal meetup at the Economy Conference—it's where finance meets fun.

In this episode, we're not just about strategies but interactions. As we sift through listener emails, we spotlight financial strategies and fund analysis, tackling topics from the intriguing weird portfolio to critiques of funds like QREARX. Unearth the complexities of value stock categorization and challenge the purported benefits of illiquidity premiums in outdated financial structures. As travel plans call for a brief hiatus, we invite you to keep the conversation alive through emails and our website. Tune in for insights, engagement, and a touch of humor designed to entertain and inform our valued listeners.

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In this episode we answer emails from Richard, Robert and Jacob. We discuss Richard's generosity and excellent example as a role model, an ill-conceived and biased critique of small cap value allocations, why you probably should not use popular personal finance gurus as retirement role models due to their workaholism and hoarding behaviors, and why having too much cash or very short term bonds in a portfolio is not a good idea.

And THEN we our go through our weekly portfolio reviews of the eight sample portfolios you can find at Portfolios | Risk Parity Radio.

Additional links:

Father McKenna Center Donation Page: Donate - Father McKenna Center

ERN Small Cap Value Article of 2 December 2024: Small-Cap Value Stocks: Diversification or Di-WORSE-fication? - Early Retirement Now

First Merriman Response to SCV Article: The True Story About Small Cap Value

Supplemental Merriman Responses To SCV Article: Why should small cap value make higher returns?

Testfolio Comparison Of IWN vs. IJS vs. VISVX vs. DFSVX vs VFINX Since July 2000: https://testfol.io/analysis?s=gkqbgk7mzka

Shannon's Demon Article Re Math Of Diversification: Unexpected Returns: Shannon's Demon & the Rebalancing Bonus – Portfolio Charts

ERN Safe Withdrawal Rate Post of 15 April 2016: Pros and cons of different withdrawal rate rules - Early Retirement Now

Michael Batnick Article re Shifting In CAPE Ratio: Stocks Are More Expensive Than They Used to Be

Rick Ferri Interview: Show Us Your Portfolio: Rick Ferri | Why a Simple Approach Beats 90% of the Pros

Core 4 Portfolios: Process – Core-4

Rob Berger Interview (with transcript): Bogleheads on Investing with Rob Berger – Episode 48 - The John C. Bogle Center for Financial Literacy

Interview of Michael Kitces Re Problems With TIPS Ladders: Michael Kitces: How Higher Yields Affect Asset Allocation and Retirement Planning | Morningstar

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In this frolic and detour from our regularly scheduled programming, we create a "Reference Episode" by employing two AI podcasters to summarize the information contained in Episodes 1, 3, 5, 7 and 9, which are some of the foundational episodes for this podcast. BTW, choose PFFV instead of PFF if you are interested in that. But the point was to teach you how to analyze investments.

Here are (most of) the original links and notes from those episodes.

Episode 1:

In this episode we answer five basic questions:

1. What is Risk Parity Radio?

2. Who is this podcast for?

3. Gee willikers, what does "Risk Parity" mean anyway, Uncle Frank?

4. How will will make this real and actionable for you?

5. How can you get involved?

Episode 3:

In this episode we explore the ancient origins of asset allocation and diversification.

Bava Metzia 42a: https://steinsaltz.org/daf/bavametzia42/

70-year History of Investment Consulting: https://seekingalpha.com/article/4357226-70-year-history-of-investment-consulting-1950minus-2020

Episode 5:

In this follow-up to Episode 3, we explore the development of risk-parity style investing from the 1980s to the present day.

The All Weather Strategy Paper: Bridgewater Paper 2009.12 AW Info Pack.doc (granicus.com)

Risk Parity Portfolios: Efficient Portfolios Through True Diversification: https://www.panagora.com/assets/PanAgora-Risk-Parity-Portfolios-Efficient-Portfolios-Through-True-Diversification.pdf

Risk Parity: Silver Bullet Or A Bridge Too Far: chapter-4-from-managing-multiasset-strategies-2018.pdf (callan.com)

Episode 7:

In this episode we discuss the three basic principles are (1) the Holy Grail Principle; (2) the Macro-Allocation Principle; and (3) the Simplicity Principle.

March draw-downs for professional risk-parity style portfolios: https://www.markovprocesses.com/blog/risk-parity-funds-in-the-coronavirus-market-rout/

Ray Dalio explains the Holy Grail principle of risk-parity style investing: https://www.youtube.com/watch?v=Nu4lHaSh7D4

Episode 9:

In this episode we discuss how NOT to choose investments and how to employ a good process to analyze an investment. We adopt the process of David Stein's 10 Questions and apply it to an exchange-traded fund of preferred stocks.

Ishares description of PFF: https://www.ishares.com/us/products/239826/ishares-us-preferred-stock-etf

The 10 Questions To Ask When Considering An Investment:
1. What is it?
2. Is it an investment, a speculation, or a gamble?
3. What is the upside?
4. What is the downside?
5. Who is on the other side of the trade?
6. What is the investment vehicle?
7. What does it take to be successful?
8. Who is getting a cut?
9. How does it impact your portfolio?
10. Should you invest?

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