The Money Scope Ep 7: Portfolio Management Foundations

portfolio management foundations

This episode covers portfolio management: including an overview of portfolio planning, portfolio execution, and portfolio maintenance.

Much of the episode will focus on asset allocation. This topic builds on what we covered in our last episode. Asset allocation is the mix of investments that you hold.

When designing a portfolio for your situation, you want to take as much compensated-priced risk as you are willing, able, and need to take.

Building and maintaining your portfolio can be extremely simple or complex. You will also have to consider the trade-off between optimizing and being able to execute your plan.

“The riskiest and the highest expected return assets are not necessarily going to make sense in the context of everyone’s financial situation and goals.”


“Fear of being poor is a very powerful emotion for investors. This can tie back to the idea of risk premiums. If owning an asset is scary, then investors are going to require a higher expected return to be compelled to own it.”


“Assets with a lot of volatility that co-vary with bad states of the world and have negative co-skewness – They’re objectively hard to own. You have to be in a very resilient financial position to do that, but [they’re] also psychologically hard to own.”


“It’s really hard to know what the appropriate asset allocation is for your risk tolerance until you’ve actually grappled close up with the prospects of working less.”


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