The History of Portfolio Construction

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In the simplest scenarios, funds are allocated evenly across a series of asset classes and rebalanced on a periodic basis back to the original allocation. A simple risk parity like example of this would be the late Harry Brown's permanent portfolio which has been around since the 1970s. The Golden Butterfly Portfolio is simply a Harry Brown permanent portfolio with extra equities in it in the form of small cap value. That is the straight stuff, O'Funkmaster. I'm telling you fellas, you're going to want that cowbell.

In this episode we answer an email from Judy. We discuss a 2013 Michael Kitces article about risk parity, which aspects we have incorporated and which we have not (and why), and then talk about an interview of William Bernstein about his new book and some related thoughts and ramifications about bonds, crystal balls, annuities and other things. (Note: I think I said it was the 4th edition, but its really just the 2d.)

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:

2013 Michael Kitces Risk Parity Article: Microsoft Word - Kitces Report November-December 2013 - RISK PARITY - FINAL

Morningstar Long View Interview of William Bernstein: Bill Bernstein: Revisiting The Four Pillars of Investing | Morningstar

Morningstar Long View Interview of Aswath Damodaran: Aswath Damodaran: A Valuation Expert’s Take on Inflation, Stock Buybacks, ESG, and More | Morningstar

Factor Investing Book: Your Complete Guide to Factor-Based Investing: The Way Smart Money Invests Today by Andrew L Berkin | Goodreads

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