The Meb Faber Show
Welcome to The Meb Faber Show, where the focus is on helping you grow and preserve your wealth. Join us as we discuss the craft of investing and uncover new and profitable ideas, all to help you grow wealthier and wiser. Better investing starts here.
Build Your Perfect Portfolio (w/ Cullen Roche) | #612
My guest today is Cullen Roche, Chief Investment Officer at Orcam Financial Group and Discipline Funds. His latest book is Your Perfect Portfolio: The ultimate guide to using the world’s most powerful investing strategies. In today’s episode, Cullen walks through the principles of portfolio construction. He emphasizes the importance of viewing investments as a means of savings rather than a quick path to wealth. Cullen explores the significance of time horizons in investment decisions, why real returns are what matter, and the origins of the 60/40 portfolio.
Key Points
- Cullen Roche's "Define Duration" methodology provides a structured way to align investment portfolios with specific time horizons, aiming to reduce sequence of returns risk and improve financial planning accuracy.
- The Forward Cap portfolio is designed to anticipate future market trends by overweighting sectors expected to grow significantly, such as technology and healthcare, resulting in a more aggressive and forward-looking asset allocation.
- Roche argues that traditional market cap-weighted bond indexes are suboptimal due to their heavy allocation to long-duration government bonds, advocating instead for a barbell strategy that blends short-duration bonds with equities to achieve better risk-adjusted returns.
Chapters
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Transcript
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