Broken Pie Chart

By Derek MooreBusiness Investing

Broken Pie Chart episodes

December 16, 2018 Target Date Investment Funds: Good, Bad, Or Just Misunderstood?
Welcome to the Broken Pie Chart Podcast Episode 15. In this episode Derek Moore discusses the often-misunderstood target date funds prevalent in many workers 401k accounts and whether they are a good or bad idea especially given their drawdowns during the 2008 financial crisis
21 min
December 02, 2018What are Risk Adjusted Investment Returns?
In this episode Derek Moore discusses the concept of Risk-Adjusted Returns, Standard Deviation of Returns, Sortino Ratio, Risk Free Interest Rates. Plus, how to compare two investment returns against one another on a risk adjusted basis and why many investors might be using the wrong investor benchmarks against their portfolios.

Key Takeaways:

• What are risk adjusted investment returns?

• What is the standard deviation of investment returns?

• What is the Risk-Free Interest or Discount Rate?

• Why do people use Treasury Bills or Treasury Bonds as the Risk-Free Rate?

• What is the Sharpe Ratio?

• How is the Sharpe Ratio calculated?

• How is the Sharpe Ratio different than the Sortino Ratio?

• How larger than expected upside investment returns can actually raise the standard deviation of portfolios

• The pitfalls of using past historical returns to try and evaluate expected returns

• Why do many investors always use the S&P 500 Index as the benchmark?

• What would be a more appropriate way to choose investment benchmark indexes for comparison?

Mentioned in this Episode:

Broken Pie Chart Book by Derek Moore https://amzn.to/2MibTSk

Sortino Ratio https://www.investopedia.com/terms/s/sortinoratio.asp

Sharpe Ratio https://www.investopedia.com/terms/s/sharperatio.asp
20 min
December 02, 2018 What are Risk Adjusted Investment Returns?
In this episode Derek Moore discusses the concept of Risk-Adjusted Returns, Standard Deviation of Returns, Sortino Ratio, Risk Free Interest Rates. Plus, how to compare two investment returns against one another on a risk adjusted basis and why many investors might be using the wrong investor benchmarks against their portfolios
20 min
November 16, 2018EP013: The Option Volatility Episode
Welcome to the Broken Pie Chart Podcast Episode 13. In this episode Derek Moore is joined by ZEGA Financial Founder Jay Pestrichelli to discuss volatility as an asset class, implied volatility, the VIX Index and more.

Key Takeaways:

• What is the VIX Index?

• Volatility Indexes for the Nasdaq 100 VXN and the Russell 2000 Index RVX

• How is the VIX Volatility Index constructed?

• What is implied volatility vs historical volatility?

• How implied volatility looks to predict perceived potential trading ranges for underlying assets

• Options premium pricing around earnings and other events

• Probability based credit spread selling strategies

• How probability calculations illustrate options market perception of 1 standard deviation and 2 standard deviation moves

• Benefits of adding alternative income strategies such as short volatility to potentially provide income compared to bonds

• How selling deep out of the money credit spreads can potentially generate returns in up, down, or flat markets

• Differences in ZEGA's High Probability Options Strategy compared with the ETFs and funds shorting volatility using VIX Futures and options

• Thoughts around the "Volpocalypse" or "Volnado" when funds shorting volatility ran into trouble

• How risk management in selling volatility is key and picking spots to tactically enter markets increases probabilities

Mentioned in this Episode:

Broken Pie Chart Book by Derek Moore https://amzn.to/2MibTSk

Buy and Hedge Book by Jay Pestrichelli and Wayne Ferbert https://amzn.to/2TaBmO5
52 min
November 16, 2018 EP013: The Option Volatility Episode
Welcome to the Broken Pie Chart Podcast Episode 13. In this episode Derek Moore is joined by ZEGA Financial Founder Jay Pestrichelli to discuss volatility as an asset class, implied volatility, the VIX Index and more.
52 min
November 11, 2018Ep012: Does Diversification Alone Reduce Systematic Market Risk?
Welcome to the Broken Pie Chart Podcast Episode 12. In this episode Derek Moore discusses why diversification alone may not reduce systematic material stock market risk using the backdrop of the 2008 Financial Crisis. Plus, potential solutions using real hedging in portfolios.

Key Takeaways:

• What are the two main types of stock market investment risk?

• What is single stock or concentrated stock risk?

• What is systematic market risk?

• What is diversifiable stock risk?

• Why spreading investments between sectors or regions may not reduce risk in a material correction

• Comparing investment returns during the 2007 to 2009 peak to trough in areas of the market

• What typical advice from "experts" you tend to hear during market selloffs

• How dividend paying stocks only provide so much protection against market selloffs

• Strategies that have embedded hedges, floors, or buffers to reduce stock market risk

• How bonds low interest rates may make them less appealing as a stock market hedge

• Alternative investment strategies to manage systematic risk in markets

Mentioned in this Episode:

Broken Pie Chart Book by Derek Moore https://amzn.to/2MibTSk

Mark Cuban says "Diversification is for idiots" https://www.youtube.com/watch?v=u5Pp1HEKSPM

Episode Talking About Buy and Hedge Strategies https://player.fm/series/broken-pie-chart/why-investors-need-a-protective-hedged-equity-strategy
28 min
November 11, 2018 Ep012: Does Diversification Alone Reduce Systematic Market Risk?
Show Summary:
Welcome to the Broken Pie Chart Podcast Episode 12. In this episode Derek Moore discusses why diversification alone may not reduce systematic material stock market risk using the backdrop of the 2008 Financial Crisis. Plus, potential solutions using real hedging in portfolios
28 min
November 01, 2018EP011: How Do Interest Rates Affect the Economy and Stock Market?
Welcome to the Broken Pie Chart Podcast Episode 11. In this episode Derek Moore discusses how changes in interest rates affect not only obvious things like car loans and home loans but also potential stock market and stock valuations. How does a higher discount or interest rate change the present value of earnings?

Key Takeaways:

• How Do Higher Interest Rates Potentially Affect Stock Valuations?

• What is the Discount Rate?

• How Do Interest Rates Affect the Value of Future Earnings or Cash Flows from Companies?

• How Do Interest Rates Affect the Present Value of Payments?

• Why Net Present Value Changes Depending on Higher Discount or Interest Rates

• Comparing the Value of Future Earnings Across Various Interest Rates

• Difference in Home and Car Loan Payments Depending on Interest Rates

• Fundamental Analysis and Interest Rates

• What is Free Cash Flow?

• How the Fed Keeping Rates Low Encouraged Investments That Otherwise Wouldn't Qualify

• Interest Rates Rising Effect on Bonds

Mentioned in this Episode:

Broken Pie Chart Book by Derek Moore https://amzn.to/2MibTSk

Buffett Indicator https://razorwealth.com/the-buffett-indicator-explained/
22 min
November 01, 2018 EP011: How Do Interest Rates Affect the Economy and Stock Market?
Welcome to the Broken Pie Chart Podcast Episode 11. In this episode Derek Moore discusses how changes in interest rates affect not only obvious things like car loans and home loans but also potential stock market and stock valuations. How does a higher discount or interest rate change the present value of earnings?
22 min
October 27, 2018Ep10: Deconstructing GDP, Inflation, and Unemployment Economic Indicators for Investors
Welcome to the Broken Pie Chart Podcast Episode 10. In this episode Derek Moore discusses some economic indicators that matter to investors. Many people hear the terms GDP, Inflation, Unemployment, and the Fed Funds Rate but aren't exactly sure what they really mean. We look to deconstruct these popular indicators and show how they are important to investors.

Key Takeaways:

• What is Inflation and the Consumer Price Index or CPI?

• What is GDP (Gross Domestic Product)?

• What is the difference between real and nominal returns and indexes?

• How is unemployment in the US constructed?

• Who gets included and excluded from unemployment numbers?

• Does people working two jobs impact the unemployment figures?

• Hedonic adjustments to CPI

• How CPI uses substitutes to put in and take out items from the basket

• How the economic indicators can help determine future Fed Funds changes

• Nominal versus Real GDP

• Employment indicators like Quit Rate and Labor Force Participation

• Measuring Wage Growth in the economy

• How Social Security cost of living adjustment or COLA is calculated?

• When is GDP number released?

Mentioned in this Episode:

Broken Pie Chart Book by Derek Moore https://amzn.to/2MibTSk

Real GDP Growth Rate https://fred.stlouisfed.org/series/A191RL1Q225SBEA

Unemployment Rate https://tradingeconomics.com/united-states/unemployment-rate

US Atlanta Fed Wage Growth Tracker https://www.frbatlanta.org/chcs/wage-growth-tracker.aspx?panel=1

Atlanta Fed GDP Now Forecast https://www.frbatlanta.org/cqer/research/gdpnow.aspx

CPI All Urban Consumers https://fred.stlouisfed.org/series/CPIAUCSL

Inflation Rate https://tradingeconomics.com/united-states/inflation-cpi

Shadow Stats Alternative Inflation Charts http://www.shadowstats.com/alternate_data/inflation-charts
24 min

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The Broken Pie Chart Podcast offers fresh looks at investment portfolio management, economics, markets, retirement planning, and more by simplifying and explaining important aspects of financial…