Weekend Reading – Flirting With Financial Ruin? How Much Cash, New ETFs From Robeco & Invesco.
"In the end, it's not the years in your life that count. It's the life in your years"
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. The excessive risk often comes from overconfidence in an “ability” to estimate the odds of the equity market. In today’s article, Larry argues that being on the conservative side and thinking of equities as ‘uncertain’ is more prudent.
Portfolio Construction
Asset Allocation
How much cash should I have in my portfolio? (Vanguard)
Determining the ideal amount of cash to hold in an investment portfolio isn't a one-size-fits-all decision. It requires a personalized approach that considers several key factors, including your goals, time horizon, risk tolerance, and funding level.
- Would you invest 72% in one country? (Pim van Vliet)
- Importance of building a well-diversified portfolio resilient to a wide range of scenarios (AQR)
- Why we believe it’s time to exit cash and move back into bonds (Capital Group)
- How Machine Learning Is Transforming Portfolio Optimization (CFA Institute)
Diversifying Equity Portfolios (Verdad)
Traditional asset allocation within equities involves diversification in style (value vs. growth), size (small, mid, large), and region (US, developed international, and EM). But the stellar performance of large-cap US growth stocks over a long period of time has left many wondering what the point of all this “diversification” really is, particularly given that the correlation between all equity types is quite high. We wanted to provide a brief statistical overview of how to think about diversification within equities.
Understand Financial Markets
The Less-Efficient Market Hypothesis (AQR)
Market efficiency is a central issue in asset pricing and investment management, but while the level of efficiency is often debated, changes in that level are relatively absent from the discussion. I argue that over the past 30+ years markets have become less informationally efficient in the relative pricing of common stocks, particularly over medium horizons. I offer three hypotheses for why this has occurred, arguing that technologies such as social media are likely the biggest culprit.
- Market Efficiency vs. Behavioral Finance: Which Strategy Delivers Better Returns? (CFA Institute)
- Should You Ignore Past Stock Market Returns? (Morningstar)
- The butterfly effect, index funds, and small caps (Joachim Klement)
- The Impact of Debt with Howard Marks and Morgan Housel (The Memo)
- Is the Stock Market Tipping Over? (A Wealth of Common Sense)
- Who sells to index trackers? (Joachim Klement)
How To Invest
Active Investing
Factor Investing
Investing in “smart beta” was the rage in the early 2000s, as small-cap-value stocks vaulted over large-cap-growth stocks. But like all supercharged investment strategies, it didn’t last. Factors premiums have not materialized since the financial crisis. For most of the last decade, value has underperformed growth, driving the underperformance of the largest category of smart-beta strategies. We’ll go over the case for and against factors in this interview with long-term investment adviser, Rick Ferri.
- In Praise of High-Volatility Alternatives (AQR)
- Can smart rebalancing improve factor portfolios? (Alpha Architect)
- Inside the Mind Of A Successful Trend Follower: Doug Greenig (Meb Faber)
- The Trend is Your Best Friend – Here Is Why (Optimal Momentum)
- Narratives and momentum - another source of trends (mrzepczynski)
Discretionary Investing
Alternative Asset Classes
Wall Street
Untold Story of Bank of America - Documentary (FinAIus)
A deep dive into the strategic rise, controversial practices, and the profound impact of Bank of America, revealing the dark secrets and audacious gambles that defined its rise to dominance.
ETFs
UCITS ETFs
Robeco to launch five active ETFs in Europe debut (ETF Stream)
Robeco will soon launch five actively managed equity strategies in its initial push into Europe’s ETF market.The five ETFs have been approved by the Central Bank of Ireland (CBI): Robeco 3D Global Equity UCITS ETF, Robeco 3D US Equity UCITS ETF, Robeco 3D European Equity UCITS ETF, Robeco 3D EM Equity UCITS ETF and Robeco Dynamic Theme Machine UCITS ETF.
US ETFs
Wealth Management
Personal Finance
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Platforms
Finding Your Broker Tribe: Our Broker Classification System (Banker on Wheels)
Most comparison sites lump brokers together, as they don’t have an in-depth knowledge of how investors think about counterparty exposure and products. Most of the websites are also conflicted, often promoting brokers with the highest-earning commissions. We take a more professional angle. How would an institutional investor categorise them?
(Early) Retirement
- The Three Cornerstones of a Happy And Fulfilling Retirement (The Human Side Of Money)
- From Making $2 Million A Year To Quitting His Finance Job (Financial Samurai)
- 5% SWR, Revealed Preferences and the 3 stories (ChooseFi)
- How to invest for retirement when time is no longer your friend (My Own Advisor)
- They’re Breaking Every Retirement Rule to Be Off Now, Not Later (Wall Street Journal - Paywall)
The Cost of Solo Aging (Next Avenue)
The United States is experiencing a profound generational shift on marriage: most Americans still walk down the aisle before retirement age, but a growing number are staying single. While Census Bureau data says that just 4% of people aged 75 and over have never married, the figure rises to 8% of Americans aged 65 to 74 and 13% of people from 55 to 64. As more people age alone, they may face greater financial risks.
Financial Advice
- The Essential (often ignored) Skills Of The BEST Financial Advisors (@davezoller )
- A Playbook To Master The Human Side of Advice with Michael Kitces (The Human Side Of Money)
- Childfree Planning Turns Traditional Advice on Its Head (Think Advisor)
- Ingredients of Engagement: How Trust, Presence, and Values Make for a Winning Combination (Dimensional Funds)
Design Your Lifestyle
Personal Development
This time, we have a very special episode I recorded with my close friend Kevin Rose in person at his house. We trade our latest discoveries, and I think it’s one of our best. Tons of actionable takeaways and laughing fits. We cover dozens of topics: new projects, what I’ve done on my recent sabbatical after the podcast’s 10th anniversary, Kevin’s latest findings and shenanigans, real vampire protocols, and much, much more.
Travel
Tech & Economy
Economy
Tech & Science
And Finally
World’s Top 40 Largest Military Budgets (Visual Capitalist)
In the final year of World War II, the U.S. spent about 38% of its GDP on its military. When adjusted for inflation, the military budget over those four years of war came to a staggering $4.1 trillion in 2020 dollars. Almost 80 years later, modern day military spending isn’t much of a far cry from World War II budgets. The top spenders have continued to increase their military capabilities, while war in Ukraine has caused countries in the region to re-evaluate their budgets as well. In 2022, global military budgets hit an all-time high of $2.2 trillion, according to data released by Stockholm International Peace Research Institute (SIPRI), the eighth consecutive year of increase. This post looks at the top 40 largest military budgets in the world. The United States accounts for almost 40% of global military expenditures, with its 2022 spend coming to $877 billion.
Good Luck and Keep’em* Rolling!
(* Wheels & Dividends)
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How You Can Cycle The World – A Practical Guide
Weekend Reading – Vanguard Cuts Fees across 15 ETFs & IBKR launches prediction markets
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