Risk Parity Radio

In this episode we answer emails from Justin and Arun.   We discuss the last decade of history of the failed use of CAPE ratios as a crystal ball and the general problems with those approaches, and the inherent limitations and problems with using the personal finance recommendations of theoretical economists.

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

Additional links:

CAPE Ratios Article:  CAPE Fear: Why CAPE Naysayers Are Wrong | Research Affiliates

Michael Kitces  CAPE Article (2016):  Reducing Retirement Return Assumptions For High Valuation? (kitces.com)

Kitces Critique of November 2021 Morningstar Forecasts Report:  Can Morningstar's Withdrawal Rate Report Refute The 4% Rule? (kitces.com)

Sector P/E Ratios Article:  Sector Valuation: Shiller PE By Sectors - GuruFocus.com

Industry P/E Ratios Article:  Price to Earnings (P/E) Ratios by Industry | Eqvista

2022 Morningstar Report:  2022 Retirement Withdrawal Strategies Report | Morningstar

Afford Anything Kotlikoff Interview:  #329: Challenging Your Confirmation Bias, with Economist Larry Kotlikoff - Afford Anything

Planet Money Economist Interview:  Yale Economist James Choi Analyzes Popular Financial Advice : Planet Money : NPR

Complex Adaptive Systems and the Math that Applies To Them:  The Fractal Lens - Prospecting Mimetic Fractals

More Than You Know Book:  More Than You Know: Finding Financial Wisdom in Unconventional Places by Michael J. Mauboussin | Goodreads

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In this episode we take the Dude's suggestion and do a detailed analysis of the Advocate Rising Rate Hedge ETF, ticker symbol RRH.

To conduct our analysis of RRH, we use SPLB, using David Stein's Ten Questions to Master Investing:

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?

Links:

RRH Website:  Advocate Rising Rate Hedge ETF (rrhetf.com)

RRH Fact Sheet:  Microsoft PowerPoint - Advocate RRH Fund Fact Sheet Jan 2023 v01 (rrhetf.com)

RRH Summary Prospectus:  advocate_rrh_summary.pdf (rrhetf.com)

Podcast about RRH:  Scott Peng, PhD, Founder and CEO/CIO, Advocate Capital Management - Alpha Exchange | Podcast on Spotify

Asset Correlation Analysis of RRH:  Asset Correlations (portfoliovisualizer.com)

Risk Parity Chronicles TIPs Blog Series (Summary and Conclusions):  Eight Observations About TIPS (riskparitychronicles.com)

EconoMe Conference:  Programming & Activities - EconoMe (economeconference.com)

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In this episode we answer emails from Alexi (Dude!) and Spencer.  We discuss a recent Bloomberg presentation about what asset classes perform best and worst in inflationary environment, how that informs portfolio construction and why we don't bother with meaningless fund characteristics like mid-caps and dividend-payers for portfolio construction.

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

Additional links:

Steve Hou/Bloomberg Presentation:  MH201-SteveHou-Bloomberg.pdf (markethuddle.com)

Market Huddle Video with Steve Hou:  To Survive Disasters, You Need Smiles (guest: Steve Hou) - Market Huddle Ep.201 - YouTube

Article about the "Factor Zoo":  Taming the Factor Zoo (aqr.com)

EconoMe Conference:  EconoMe Conference - March 17th-19th, 2023

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In this episode we answer emails from Arun, Blake and MyContactInfo.  We discuss helping a spouse getting started with investing, what to do with an options strategy portfolio, why index funds still rule over managed funds, good and bad processes for picking funds and various gambling problems.

Links:

Simple Portfolios for Arun's Spouse:  Backtest Portfolio Asset Allocation (portfoliovisualizer.com)

Article re Index Funds Beating Managed Funds:  Actively Managed Mutual Funds Consistently Fail to Beat Markets, Study Finds - The New York Times (nytimes.com)

EconoMe Conference:  EconoMe Conference - March 17th-19th, 2023

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In this episode we answer emails from Alexi (Dude!), Yangon and Brett.  We discuss the momentum factor (again), mid-cap funds and other fund characteristics that are lacking in meaning for the purposes of diversification, financial advisor certifications and investing in BDCs (Business Development Companies).

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

Additional links:

EconoMe Conference:  EconoMe Conference - March 17th-19th, 2023

DFA Article About Momentum Strategy Funds:  Have Investors Benefited from Momentum Strategies? | Dimensional

Momentum Funds Correlation Matrix:  Asset Correlations (portfoliovisualizer.com)

Series 65 Licenses Article:  Series 65 Definition (investopedia.com)

Series 7 Licences Article:  Series 7: Definition and Formula for Calculation, With Example (investopedia.com)

Brett's BDC Article:  Credit Is Good: BDC Credit May Be Even Better | Seeking Alpha

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In this episode we answer a trio of emails from MyContactInfo and a piece de resistance from Eric.  We discuss why complicated financial products are bad for you, Peter Bernstein's books and what Paul Volcker had to say about gold, and spurious histories of money.  And we celebrate our inanity and insanity with Eric.

Links:

Power of Gold book:  The Power of Gold: The History of an Obsession: Bernstein, Peter L., Volcker, Paul A.: 9781118270103: Amazon.com: Books

Link to Campbell Harvey article:  Gold, the Golden Constant, and Déjà Vu (cfainstitute.org)

Peter Zeihan video about monetary systems:  Global Currency: The Dollar Ain't Going Nowhere - YouTube

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In this episode we answer emails from Trey, Nita, Christy and Keith.  We discuss considerations in bond fund selections (see also Episodes 14 and 16) and the specific fund IEI, timing for transitioning to your retirement portfolio, classifying the Sample Portfolios by intended purposes, and a new tool for analyzing portfolios with managed futures.

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

Additional link:  

Keith's Link to the new tool:  Portfolio Builder - Dunn Capital

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In this episode we answer emails from MyContactInfo, Cy, Alexi (Dude!) and Chris.  We discuss value vs. growth factors, assisting children with investing and inheritances, momentum factor investing and the fund QMOM, and the best audience available.

Links: 

QMOM and MTUM asset correlations:  Asset Correlations (portfoliovisualizer.com)

QMOM Performance:  QMOM – Alpha Architect US Quantitative Momt ETF – ETF Stock Quote | Morningstar

MTUM Performance:  MTUM – iShares MSCI USA Momentum Factor ETF – ETF Stock Quote | Morningstar

Bloomberg Presentation on Asset Classes in Inflationary Environments:  MTUM – iShares MSCI USA Momentum Factor ETF – ETF Stock Quote | Morningstar

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In this episode we do an annual review of the seven sample portfolios you can find at Portfolios | Risk Parity Radio.   We compare them with standard funds including VBIAX (60/40), VWENX, VWIAX, risk parity funds including RPAR and UPAR, and ultra-diversified funds including AQRIX and QDSIX.  And we conclude with some take-away thoughts from this disaster of a year as predicted by Quasimodo.

Additional links:

Risk Parity Chronicles Resource Page:  Resources - Risk Parity Chronicles

RPAR and UPAR Descriptions:  RPAR Risk Parity ETF (rparetf.com)

AQRIX Fund Page:  AQR Multi-Asset Fund - AQRIX

QDSIX Fund Page:  AQR Diversifying Strategies Fund - QDSIX

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In this episode we answer emails from MyContactInfo, Mark and Eric.  We discuss rowing machines, the infernal JEPI and other heavily marketed financial products, and what to do as a DIY investor for legacy investing.  Happy Holidays!

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