Episode 421: NItty Gritty Portfolio Considerations And Variations, What We Actually Hold, And The Basics Of Rebalancing
May 8, 2025
This discussion dives into the nuances of portfolio management, evaluating assets like managed futures while questioning the merits of covered call funds. Anecdotes from a listener in Québec add humor while illustrating investment strategies with Canadian and U.S. ETFs. Rebalancing timelines and methods are explored, emphasizing sustainability and simplicity in portfolio management. The host also offers guidance on navigating the podcast's episode archive, keeping the conversation lively and accessible.
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volunteer_activism ADVICE
Prudent Leverage Reduction
Reduce leverage exposure by half to make your portfolio more sustainable.
Combine small leverage with large cap growth to improve rebalancing options.
volunteer_activism ADVICE
Evaluating New Assets for Portfolio
Evaluate new assets based on their historical viability, fees, and professional use.
Prefer assets with low correlation to stocks and bonds and enduring performance records.
volunteer_activism ADVICE
Limit New Idea Incorporation
Incorporate new ideas into portfolios sparingly, approximately once every five to ten years.
Test small allocations over a year or two before making them significant in the portfolio.
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In this episode we answer emails from Luc, Ellen and Andrew. We discuss Luc's target portfolio, the process for evaluating and choosing new assets for a portfolio -- comparing why managed futures pass the test, while covered call fund and TIPs funds don't --, what's actually in our personal variation of the Golden Ratio portfolio, finding old podcast episodes and basic rebalancing principles as to timing. And learn some Canadian French and Minnesota vernacular along the way.
What makes a truly resilient portfolio? In this revealing episode, Frank Vasquez pulls back the curtain on both theoretical and practical aspects of risk parity investing through thoughtful listener questions.
When a software engineer from French-speaking Canada shares his leveraged risk parity portfolio, Frank offers nuanced guidance on balancing potential returns with sustainability. Rather than dismissing leverage entirely, he suggests a more measured approach—reducing exposure to funds like UPRO while maintaining their rebalancing benefits. This practical compromise exemplifies Frank's philosophy of building portfolios that remain psychologically manageable through market turbulence.
The conversation takes a fascinating turn as Frank reveals his framework for evaluating new investment opportunities. Unlike many advisors who chase trends, his three-question methodology ensures only truly valuable assets earn portfolio space. His explanation of why managed futures succeeded where TIPS failed demonstrates how professional-grade analysis can be applied to personal investing. "The truth is," Frank notes, "a lot of otherwise viable or interesting strategies actually just don't fit into what we're trying to do here."
Perhaps most valuable is Frank's unprecedented breakdown of his personal portfolio holdings. Beyond the expected allocations to stocks, bonds, gold and alternatives, he shares his experiments with direct indexing of property and casualty insurance companies—a Warren Buffett-inspired approach that provided positive returns even during 2022's difficult markets. This rare glimpse into a professional's actual implementation bridges the gap between theory and practice.
Whether you're questioning how often to rebalance, wondering about international exposure, or simply curious about how a professional approaches their own money, this episode delivers actionable insights while maintaining Frank's trademark blend of humor and wisdom. Ready to build a portfolio that marches to a different drummer? This is the roadmap you've been waiting for.
Risk Parity Radio