The first step for learning about Risk Parity should be a podcast: Risk Parity Radio. Informative, original, and entertaining, RPR is a beacon for investors interested in constructing better portfolios.
This is the work of Frank Vasquez, whose voice I first heard on episode 194 of another great podcast, Choose FI, and who has since attracted a loyal cadre of individual investors interested in these ideas. Vasquez’s goal is to explore “alternative asset allocations for DIY investors,” and he accomplishes this by tracking various sample portfolios, analyzing particular assets and asset classes, answering listener questions “on the air,” and generally sharing his knowledge and humor about this fascinating topic.
OK, enough reading: go ahead and go to your preferred podcast app or click the button below and subscribe to the podcast already!
Once you’re there, one way to learn more is just to jump in with the most recent episode. These days, many of the episodes are in a mailbag format and are great, for sure, but they may seem a bit much at once. For the newcomer to Risk Parity, Vasquez suggests starting off with episodes 1, 3, 5, 7, and 9, and if you mix these in with the current episodes as they are published, you’ll get a lot more out of the show.
- Episode 1 is, naturally, an introduction to Risk Parity Radio.
- Episodes 3 and 5 offer a two-part history of Risk Parity as an investing approach.
- Episode 7 covers Vasquez’s “Three Principles” of Risk Parity.
- Episode 9 addresses how Vasquez thinks about different assets. He uses J. David Stein’s ten-part process to analyze PFF, a Preferred Shares ETF. Speaking of Stein, his “Money For the Rest of Us” podcast is another fantastic one.
You may be wondering about the even-numbered early episodes. These are portfolio reviews, and since they are really dated by now, probably not worth listening to so far after the fact. In episodes 2, 4, 6, 8, 10, and 11, however, Vasquez introduces his six sample portfolios, so the latter halves of those in particular are still worth going back to.
Another great way to learn about RP is to listen to the early episodes where Vasquez uses the “Stein process” to analyze particular assets and asset classes, as in episode 9. Since there are so many, I won’t list them all, but some of the best are 12 and 40 (on gold), 14 and 16 (on bonds), 19 and 21 (on REITs), and 59 (on NTSX, a RP-style, embedded leverage ETF). Listening to how Vasquez thinks about these assets was really helpful in developing my own sense of what RP was and how it’s a little different from mainstream (lame-stream?) investing approaches. Other earlier episodes worth checking out are episode 37 (“back to the basics”) and episode 44 in which he looks at how a RP approach might have done with Warren Buffet’s famous challenge to active managers.
Vasquez is a retired attorney with degrees from Caltech in economics and engineering and you really do learn something new in every episode, whether it’s about math, logical fallacies, the evolution of DIY investing, or finding fulfillment and purpose in one’s life. He also has a sharp tongue for various charlatans and cranks who try to scam everyday investors, and you’ll get the full sense of this in his epic rants. Try episodes 12, 20, 28, and 46 in the first fifty, and don’t worry, there are more! You can get a guide to the episodes on his website, Risk Parity Radio on the tab for podcasts, or else on its Buzzsprout page. Definitely listen to the rants - they never get old.
Vasquez has recently started a YouTube channel for some screencasts where he goes over the tools of the trade: Portfolio Charts and Portfolio Visualizer. There is also a Twitter account that announces the episodes. As for the website, Vasquez would probably be the first to admit that it is pretty lean: essentially it has the episodes and the data for the sample portfolios. A few listeners have emailed in to ask for more information, or for something to be added to the website, or something like that, to which Vasquez replies along the lines of: "I’m retired, and that seems like work!,” so the website has remained basic. Fun fact: One such listener asked in episode 121 if Vasquez would include some links…and that, that was the magic moment that Risk Parity Chronicles was conceived. Chris, if you’re reading this - consider this blog an answer to your query!
And, finally, a shout out to Frank, and his project, for the inspiration for this project. Hopefully, Risk Parity Chronicles can supplement Risk Parity Radio and contribute to the broader goal of educating everyday people about better ways to invest.