Utility and Factors in Portfolio Construction

This chapter explores the concept of utility in measuring risk and return, and discusses whether to focus on controlling for risk or return in portfolio construction. It also delves into the advantages and risks of a barbelled portfolio strategy with bonds and small cap value factors, as well as the benefits of sticking to rules and rebalancing. The chapter also addresses tax implications and the concept of present value in relation to selling securities.

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Welcome back to the podcast everybody, we have another great round-up episode for you where we field questions that you sent in and cover a bunch of things we think you need to hear! We discuss how you should weight your stocks and bonds ratio and times that you could think about changing it, we also talk about index funds, Michael Burry and why his reputation is a bit overstated. Then we get into the different types of risk! We cover volatility, uncompensated risk, skewness, and inflation and help you think about each and the impact that they may have on your portfolio. The conversation then turns to planning, longevity, and sustainability and we talk about how to prepare for your last years cleverly and realistically. Goals are so important when laying out a sustainable strategy and we give you a bunch of questions to ask yourself to make the task a bit easier. We finish off with another edition of last wee's worst advice and this time around we are talking about some questionable actions and remarks from TD Ameritrade. For all this and more, join us on the Rational Reminder, today!

Key Points From This Episode:

Considering a bond to stock ratio and when you might adjust it. [0:01:22.7]
Questions when switching to index investing and what to hold on to. [0:06:04.3]
The Michael Burry question and how much index funds affect prices. [0:11:46.0]
Risk 101; going through all the different types of risk. [0:18:07.6]
Identifying which risk you are actually averse to and the results of this. [0:31:04.2]
Planning and annuities; longevity risks and age-related questions to ask yourself. [0:32:48.1]
Increasing the sustainability of your investments and the importance of goals. [0:36:46.9]
Last week's worst advice! TD Ameritrade's confusing decisions around fees. [0:42:01.8]

Links From Today’s Episode:

Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/

Benjamin on Twitter — https://twitter.com/benjaminwfelix

Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/

Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/

Cameron on Twitter — https://twitter.com/CameronPassmore

Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/

Larry Swedroe — https://www.etf.com/contributors/larry-swedroe

Vanguard — https://investor.vanguard.com/corporate-portal/

Michael Burry — https://www.cnbc.com/2019/09/04/the-big-shorts-michael-burry-says-he-has-found-the-next-market-bubble.html

Barry Ritholtz — https://ritholtz.com

The Economist — https://www.economist.com