Episode 400: An AI Thingamabob Takes Over To Review And Reconstruct Our First Five Foundational Episodes

Feb 5, 2025

In a fun twist, AI podcasters summarize key insights from foundational discussions. They break down the essence of risk parity investing, emphasizing portfolio diversification to weather economic storms. Historical wisdom from the Talmud offers timeless strategies for modern finance. The evolution of investment theories, like the transition from the 60-40 portfolio to innovative risk parity models, showcases the importance of adapting to market changes. Humor also plays a role, adding lightness to critical financial lessons and audience engagement.

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ADVICE

Starting with Risk Parity Radio

New listeners can start with the foundational episodes (1, 3, 5, 7, 9).
Show notes contain all related links for convenience.

ANECDOTE

All Seasons Portfolio

The All Seasons portfolio, inspired by Ray Dalio, aims for all-weather performance.
It diversifies across assets reacting differently to market conditions.

ADVICE

Leveraged Portfolios

Leverage amplifies gains and losses, so handle with caution.
Accelerated portfolios use leverage on classic strategies like Permanent and 50-50.

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In this frolic and detour from our regularly scheduled programming, we create a "Reference Episode" by employing two AI podcasters to summarize the information contained in Episodes 1, 3, 5, 7 and 9, which are some of the foundational episodes for this podcast. BTW, choose PFFV instead of PFF if you are interested in that. But the point was to teach you how to analyze investments.

Here are (most of) the original links and notes from those episodes.

Episode 1:

In this episode we answer five basic questions:

1. What is Risk Parity Radio?

2. Who is this podcast for?

3. Gee willikers, what does "Risk Parity" mean anyway, Uncle Frank?

4. How will will make this real and actionable for you?

5. How can you get involved?

Episode 3:

In this episode we explore the ancient origins of asset allocation and diversification.

Bava Metzia 42a: https://steinsaltz.org/daf/bavametzia42/

70-year History of Investment Consulting: https://seekingalpha.com/article/4357226-70-year-history-of-investment-consulting-1950minus-2020

Episode 5:

In this follow-up to Episode 3, we explore the development of risk-parity style investing from the 1980s to the present day.

The All Weather Strategy Paper: Bridgewater Paper 2009.12 AW Info Pack.doc (granicus.com)

Risk Parity Portfolios: Efficient Portfolios Through True Diversification: https://www.panagora.com/assets/PanAgora-Risk-Parity-Portfolios-Efficient-Portfolios-Through-True-Diversification.pdf

Risk Parity: Silver Bullet Or A Bridge Too Far: chapter-4-from-managing-multiasset-strategies-2018.pdf (callan.com)

Episode 7:

In this episode we discuss the three basic principles are (1) the Holy Grail Principle; (2) the Macro-Allocation Principle; and (3) the Simplicity Principle.

March draw-downs for professional risk-parity style portfolios: https://www.markovprocesses.com/blog/risk-parity-funds-in-the-coronavirus-market-rout/

Ray Dalio explains the Holy Grail principle of risk-parity style investing: https://www.youtube.com/watch?v=Nu4lHaSh7D4

Episode 9:

In this episode we discuss how NOT to choose investments and how to employ a good process to analyze an investment. We adopt the process of David Stein's 10 Questions and apply it to an exchange-traded fund of preferred stocks.

Ishares description of PFF: https://www.ishares.com/us/products/239826/ishares-us-preferred-stock-etf

The 10 Questions To Ask When Considering An Investment:
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?

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