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(Modern) Modern Portfolio Theory (EP.193)

The Rational Reminder Podcast

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Portfolio Construction

Investors care more about just the mean and variance of their portfolios. The need to hedge other risks, like rocession risk, causes most investors to move away from the mean variance optimal portfolio by adding in hedge portfolios. Investors should be asking themselves how they're different from average. If you have lower financial wealth, higher debt relative to your income, it might make sense to build a portfolio tilted more toward large cap grows stocks.

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