Weekend Reading – Portfolio Diversification in 2025 Report & Is this the end of FIRE?
May 16, 2025
Weekend Reading – Portfolio Diversification in 2025 Report & Is this the end of FIRE?
Weekend Reading is a collection of Investment Research and Lifestyle topics from all corners of the Web. We source the highest quality insights from Wall Street and Main Street that you may apply to your investment process. Unlike the rest of Bankeronwheels.com, this series is provided without additional guidance. As usual, everything is to be used at your own risk. Below is the type of content we shortlist:
Every sweet has its sour; every evil its good.
Featured
Is Your Overconfidence In Understanding Risk Leading You To Financial Ruin? (Banker on Wheels)
Investing comes with various risks. One of the most critical is not achieving your goals. To reduce it, a certain amount of equity risk is needed. On the flipside, some investors take more risks that they are able, willing or need to take. In today’s article, Larry argues that being on the conservative side and thinking of equities as ‘uncertain’ is more prudent. Focus on Larry’s key takeaway – for a lot of investors the perception of the equity market often flips from measurable ‘Risk’ to ‘Uncertainty’ we cannot measure when unprecedented events unfold. Misjudging how our brain works when faced with black swans increases your risk of ruin.
Portfolio Construction
Asset Allocation
Morningstar's Building Diversified Portfolios Report (60 Pages) (Morningstar)
Diversification has often been called the only free lunch in investing. As Harry Markowitz first established in his landmark research in 1952, a portfolio's risk level isn't just the sum of its individual components, but it also depends on how the holdings interact with each other. This interaction is referred to as correlation, which is a statistical measure that captures how two securities move in relation to each other (although it captures only the direction, not the magnitude, of returns).
- Got Diversification? The S&P 500 isn't the only source of returns (Verdad)
- Are Completion Portfolios Effective for Managing Concentrated Stock Risk? (AQR)
- How to Prepare Your Portfolio for a Recession (Morningstar)
- How much exposure to US stocks is too much? (FT)
- What Higher Inflation Means for Stock/Bond Correlations (Morningstar)
- Real Assets & Resilient Portfolios (CAIA Association)
Understand Financial Markets
Past Decade: Top Countries by Stock Market Returns Since 2015 (Visual Capitalist)
This chart, which visualizes annualized returns (in U.S. dollars) between March 15th, 2015–2025 from major stock exchanges in 30 countries, has some insights. The S&P 500 delivered a 17% annualized return in 10 years, the most for major stock exchanges from around the world. That’s nearly 5x in returns, which means $10,000 invested in 2015 would be almost $50,000 in 2025. In 2015, China’s stock market experienced a surge in retail investor activity, fueled by speculative reading and easy credit. As a result, the Shanghai Composite Index, which had been climbing rapidly, peaked in June before crashing 30% over the next three weeks. As of April, 2025, the Shanghai Composite Index has not yet recovered its 2015 high.
AQR's Antti Ilmanen Research: U.S. vs. Non-U.S. Equities (AQR)
In recent years allocators to global equities have faced the conundrum of how to respond to persistent US outperformance. Some serenely maintained market cap weights, others pursued the contrarian view implied by yield-based expected returns, and yet others gave up entirely on the rest of the world. We address this highly topical regional question by analyzing the drivers of relative performance—in particular the different roles of fundamentals and valuations—and assessing the most likely implications for future returns.
How To Invest
Investing Mistakes Add Years To Your Working Life & 7 Other Investing Lessons From Cycling The World (Banker on Wheels)
One of the biggest misconceptions and most frequent question that people ask adventure cyclists is whether they’re lonely. It couldn’t be further away from reality. These adventures are some of the most exciting and enriching human experiences you can have. Some cycling experiences profoundly changed me, but also my way of looking at investing. You may think that spending 15 years on Wall Street would teach me more about successful investing than cycling. Surprisingly, Wise Money is more about perspective than technicals. Here are 8 Investing lessons I learned from Cycling the World.
Active Investing
Factor Investing
Our guest on the podcast today is David Booth. He’s the Chairman of Dimensional Fund Advisors, a firm he founded in 1981. David led Dimensional as CEO and later Co-CEO until 2017, when he stepped back from the daily management of the firm. David helped create one of the world’s first index funds in the 1970s and launched the first passively managed small-company strategy in the early 1980s.
Discretionary Investing
Sustainable Investing
- The New Joule Order (Carlyle)
- Traditional and ESG investors are not that far apart (Joachim Klement)
- The Countries Most Dependent on Imported Fossil Fuels (Visual Capitalist)
- The Oil Industry's Double Whammy of Higher Costs and Lower Prices (Oddlots)
- Investing in the green economy 2025: Navigating volatility and disruption (S&P Global)
Alternative Asset Classes
Wall Street
- Scaramucci on Importance of CEOs Voicing Concern for the Administration’s Economic Policies (Bloomberg)
- Amid The Noise, Active Management Quietly Reinvents Itself (CFA Institute)
- Two Enduring Legacies, One Oracle’s Exit, and “Buffett’s Alpha” (CFA Institute)
- There will only be one Warren Buffett (Masterinvest)
- Billion Dollar Companies by Country in 2025 (Visual Capitalist)
Bad Bets
ETFs
UCITS ETFs
Become A Passive Investing Ninja – The Definitive Guide to Slashing ETF Costs and Taxes (Banker on Wheels)
This guide is Bankeronwheels.com’s deep dive into selecting cheap and tax-efficient ETF Selection. Join Kumiko (くみこ) in becoming a Passive Investing Ninja! Why Is Our Guide Different? We haven’t come across one definitive guide that allows you to become the Ninja of slashing Investing Cost. Here is where we step in. Slashing them, one by one. Whether they are visible, or not: ETF Costs – by selecting the best performing ETF. Taxes, FX Fees & Invisible Costs – When trading ETFs, including spreads.
US ETFs
The Unappreciated Costs and Risks of Interval Funds (Morningstar)
Incentives matter, especially when evaluating new investment trends like interval funds. Interval funds have become a popular way to invest in private assets, particularly for those who are not accredited investors. Since interval funds limit withdrawals, though not inflows, they have more flexibility than mutual funds to maintain positions in potentially higher-returning illiquid investments.
Wealth Management
Personal Finance
Platforms
- Interactive Brokers Fixed vs Tiered Plan – Which Is The Best For ETFs? (Banker on Wheels)
- Research Affiliates signals UK push with sales hire (ETF Stream)
- Vanguard's and Blackstone's plan to bring 'alts' to the masses revealed in SEC filing, but protagonists take passive role, leading analyst to brand the new fund a 'dud' (Riabiz)
(Early) Retirement
Recession Fears and the Trade War – Is this the end of FIRE? (Early Retirement Now)
By popular demand, and because it’s been a while since I wrote my last such post, here are a few thoughts on the current market conditions, especially the economic and financial uncertainty. Some of the issues I like to cover: - Is there a recession around the corner? - What’s my inflation and Federal Reserve policy outlook? - What are my views on the Trade War? - With all this financial volatility, is the FIRE movement finally finished? That’s a lot to cover, so let’s get started…
Financial Advice
Design Your Lifestyle
Personal Development
Health & Wellness
Careers & Entrepreneurship
Travel
Tech & Economy
Economy
Trump's 'miscommunication': Imports do not subtract from GDP! (Noahpinion)
Tariffs feature prominently in this year’s election debate. Although the Biden administration has put some pretty steep tariffs on some Chinese goods, Trump wants to go much further. Trump seems to be a deep believer in the power of tariffs to solve almost any economic problem. But why does Trump believe this? Matt Yglesias has been talking to some of Trump’s policy people from his first administration, and he has an answer. It’s because a whole lot of people think that imports subtract from GDP
The shift in US leadership: building the euro for a new age (Deutsche Bank Research)
The first 100 days of 2025 have seen some of the most significant dislocations to the global economic order in the last 100 years. The US has imposed substantial tariffs on all its most important trading partners, among them its main allies. Despite recent moratoria, average US tariffs are still likely to reach levels last seen during the Great Depression, with major question marks over long-term US intentions. Long-standing core US policy commitments. This report assesses what these radical departures in US leadership in the global economy mean for Europe.
Tech & Science
The World Needs AI, But There's a Problem (Bloomberg)
There's no denying data centers play a critical role in society, with every text, web search and medical scan flowing through these giant buildings. Now AI has turbocharged their demand, along with the electricity that powers them. With utilities rushing to keep up and popular opposition to these behemoths growing, the latest tech revolution may be in for a rough ride.
And Finally
The Man Who Killed Millions and Saved Billions (Veritasium)
The story of one of the most tragic scientists to ever win the Nobel Prize, Frtiz Haber, a German chemist whose groundbreaking work had profound impacts on both agriculture and warfare. Haber's contributions present a paradox—while his work in chemistry revolutionized agriculture and saved countless lives, his involvement in chemical warfare caused immense suffering and death.
Good Luck and Keep’em* Rolling!
(* Wheels & Dividends)
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