Invest with Wesley
Invest with Wesley
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The Risk Parity Portfolio, The Billionaires Secret To Investing
What Is Risk Parity?
Risk parity is a portfolio allocation strategy that uses risk to determine allocations across various components of an investment portfolio. The risk parity strategy modifies the modern portfolio theory (MPT) approach to investing through the use of leverage.
MPT seeks to diversify an investment portfolio among specified assets to optimize returns while adhering to market risk parameters by viewing the risk and returns for the entire portfolio, but only utilizing long and unmargined positions. With risk parity strategies, portfolio managers can derive exact capital contribution proportions of asset classes in a portfolio to achieve optimized diversification for a range of objectives and investor preferences.
Understanding Risk Parity
Risk parity is an advanced portfolio technique often used by hedge funds and sophisticated investors. It requires a complex quantitative methodology, which makes its allocations more advanced than simplified allocation strategies. The goal of risk parity investing is to earn the optimal level of return at the targeted risk level.
Simplified allocation strategies such as the 60%/40% stocks-bonds portfolio make use of MPT. MPT provides a standard for diversification within one's investment portfolio that maximizes expected return for a given level of risk. In simplified MPT strategies using just stocks and bonds, allocations are usually more heavily weighted toward equities for investors who wish to take on more risk. Risk-averse investors will instead have a higher weight in bonds for capital preservation.
Risk parity strategies allow for both leverage and alternative diversification, along with short selling in portfolios and funds. Following this approach, portfolio managers can use any mix of assets they choose. However, instead of generating allocations to different asset classes to arrive at an optimal risk target, risk parity strategies use the optimal risk target level as their basis for investing. This goal is often achieved by using leverage to weight risk equally among different asset classes using the optimal risk target level.
Risk Parity Methods
With a risk parity strategy, an investment portfolio will often include stocks and bonds. However, instead of using a predetermined proportion of asset diversification such as 60/40, the investment class proportions are determined by a targeted risk and return level. Risk parity strategies have generally evolved and developed from MPT investing. They allow investors to target specific levels of risk and to divide risk across the entire investment portfolio to achieve optimized portfolio diversification.
The security market line (SML) is another part of the risk parity approach. The SML is a graphical representation of the relationship between the risk and return of an asset and is used in the capital asset pricing model (CAPM). The slope of the line is determined by the beta of the market. The line slopes upward. The greater the possibility for the return of an asset, the higher the risk associated with that asset.
There is a built-in assumption that the slope of the SML is constant. The constant slope assumption, however, may not actually be realistic. For the traditional 60/40 allocation, investors must take greater risk to achieve acceptable returns and the diversification benefits are limited as more and riskier equities are added to the portfolio. Risk parity solves this issue by using leverage to equalize the amount of volatility and risk across the different assets in the portfolio.
Real World Examples of Risk Parity
The AQR Risk Parity Fund invests globally across stocks, bonds, currencies, and commodities and seeks to achieve optimal return through balanced risk parity investing.
Horizon's Global Risk Parity ETF also uses a risk parity strategy in its investments. The exchange traded fund (ETF) employs an equal risk-weighted volatility distribution to determine the amount of capital participation.
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ความคิดเห็น

  • @TheLethargicAge
    @TheLethargicAge 3 วันที่ผ่านมา

    What if the cash flow gets eaten up by the myriad expenses you incur in order to hold on to the asset? I mean, if you don’t pay the property taxes, you’ll find out who the real owner is.

  • @Ghofy
    @Ghofy 4 วันที่ผ่านมา

    Thx taking 100k and putting it at doge eiosrll at2x and free 100k

  • @xerse29
    @xerse29 9 วันที่ผ่านมา

    You know I’ve really been learning a lot recently. Like really learning. And all of what I’ve been learning is just how fucked we are being fucked over. Oh how did we free people forget our responsibility to uphold our freedom from the very powers we fought against who wanted us to be naive obedient sheep that could be manipulated for one’s personal gain. Hate the federal reserve, lobbyists, and morally weak politicians. Big reason why damn near all the founding fathers were so against any power being given to the government, as it would only want more to gain control and power in society. The very society that is meant to be equal in terms of rights and liberties of the people. A system that was designed FOR the best interest OF ITS PEOPLE. But when the government starts to say “We have your best interest at heart” it’s a lie. Because how exactly does the government now what it is that is best for you and your family and the world. The governments “job” is to stay out of our lives not be apart of it. Great video btw lol

  •  10 วันที่ผ่านมา

    In theory inflating debt away sounds fine and dandy, I’m tempted to run out and buy a new house, but that window of opportunity has closed because the new home's value has appreciated x3 and my future new house wouldn’t be income producing because i’d be living in it, all though I would rent my existing house which would cover half the new home’s mortgage! I’m on the fence because I wouldn’t want to find myself in a house upside down in value with higher interest rates of today-with a looming collapse in restate or the dollar! I so-so love leaving debt free and within my means! Thanks for the awesome video!

  • @devdasmbbs
    @devdasmbbs 14 วันที่ผ่านมา

    You seem to be dancing while speaking. Control your moves dude, not able to focus on your words

  • @alexreyes6659
    @alexreyes6659 17 วันที่ผ่านมา

    excellent ,much appreciated

  • @ristorantanen5769
    @ristorantanen5769 หลายเดือนก่อน

    Do you know that you can grow your own currency in your own home? It will also turn that frown upside down...🤗

  • @user-lz9zm5ke2z
    @user-lz9zm5ke2z หลายเดือนก่อน

    Please do a more detailed video I’m 21 and looking to start a portfolio with a WIRA and potentially this

  • @Virtues162
    @Virtues162 หลายเดือนก่อน

    A Legend grapples with how to mitigate the effect of a high rising SOFR rate ! The real solution is for the US to live within its means. First step is to halve all government salaries !!

  • @harshamin1908
    @harshamin1908 หลายเดือนก่อน

    Should have done some research on Dave Ramsey. He buys his real estate ALL IN CASH. He doesn’t have real estate debt.

  • @michaeledward2323
    @michaeledward2323 2 หลายเดือนก่อน

    Brother your content is quality

  • @garymurphy6000
    @garymurphy6000 2 หลายเดือนก่อน

    Keep banging the drum against the CBDC brother! Everyone need to hear it and heed the warnings

  • @pete9971
    @pete9971 2 หลายเดือนก่อน

    Wise words...🤔

  • @brianquigley6862
    @brianquigley6862 2 หลายเดือนก่อน

    very good video. I generally NEVER listen to Dave. I have no idea why people listen to him at all. I sell Life Insurance and he has it all wrong (story for another day). I didn't know he preaches on debt too. If you are disciplined and are using wise investments, I think it's ok to use debt. Heck most every home is leveraged debt yet the home owner can't even access the equity and everyone is AOK with this arrangement. The reality though is the bank is in control. This makes me angry and motivates me to get the equity out to invest it elsewhere. Problem is I would have to do a cash-out refi which costs more than $10K. My next move is to take out a HELOC (very low cost). Make extra payments, lower balance and access cash when need be. As it stands now, if I have 100K in equity it essentially isn't mine bc I can't walk up to the window and ask for it. Gotta play the refi GAME (very expensive). IDK for sure but I imagine most RE investors use HELOC not traditional mortgages. Stock traders probably use margin, less fees. Banks are criminals. Get more access to your money and use it wisely. Grow it. I use Options with a hedge. Capital preservation is rule #1!!!

  • @TheFactsMan
    @TheFactsMan 2 หลายเดือนก่อน

    For the Algorithm!

  • @CarterCartman
    @CarterCartman 2 หลายเดือนก่อน

    why do u have so few subs and views???

    • @InvestwithWesley
      @InvestwithWesley 2 หลายเดือนก่อน

      It's the algorithm, I only post videos on what people need to know, not filler videos that don't matter. Help a friend out though and share the channel :)

    • @CarterCartman
      @CarterCartman 2 หลายเดือนก่อน

      @@InvestwithWesley will do brother, keep doing what u do, bless up !

  • @damis2372
    @damis2372 2 หลายเดือนก่อน

    What is the best way to take the payments? Monthly, Quarterly, Semi-Annually, or Annually?

    • @InvestwithWesley
      @InvestwithWesley 2 หลายเดือนก่อน

      Imo the best would be annually at the beginning of the year, then letting the remaining balance grow undisturbed

  • @damis2372
    @damis2372 2 หลายเดือนก่อน

    What Account balance do you use if you are investing 100% of your money in stocks and the balance changes daily? Assume you have a balance of $1 million in the 401K, are you able to calculate based on the balance of $700k?

    • @InvestwithWesley
      @InvestwithWesley 2 หลายเดือนก่อน

      The IRS would probably have you calculate it based off your average daily balance

  • @conradvreelandyoko
    @conradvreelandyoko 2 หลายเดือนก่อน

    My dad never put mine in an account? And kept all my dividends, Iam 38 and still trying to get at these accounts that were floating outside of an investment account

  • @stevehartman1730
    @stevehartman1730 2 หลายเดือนก่อน

    Im sick of hearing about Dave Ramsey

  • @eddiekulp1241
    @eddiekulp1241 3 หลายเดือนก่อน

    I only owe 42 dollars , this is worthless

  • @jeffs2559
    @jeffs2559 3 หลายเดือนก่อน

    Why do christians feel the need to advertise their beliefs? Weird.

  • @slimeplayz164
    @slimeplayz164 3 หลายเดือนก่อน

    So would've done this back in December of 22 when nivida was 179 a share

  • @nashcollins2428
    @nashcollins2428 3 หลายเดือนก่อน

    My mother robbed from me worked with a judge to do it and claim I am a drug addict. Which is false. And now I currently have a criminal record and ran from my state once i realized because they want me locked up in prison. Meanwhile this judge has a brand new home and I am penniless and unable to go home for fear of being locked up. Completely emotionally wrecked that my mother would steal money received from after my fathers passing that was in my name when i was a minor. Fast forward 30 years this has been a lifetime of deception from the only parent I had left. And I feel as if now that her age is of retirement she made her estate plan out and Completely has disinherited me....currently going on 6 years no contact with my family. Intense emotions behind all the greed.

    • @conradvreelandyoko
      @conradvreelandyoko 2 หลายเดือนก่อน

      I don’t understand why the banks don’t follow utma rules and just notify you at 18

  • @whatsgoodearth
    @whatsgoodearth 3 หลายเดือนก่อน

    i have a student line of credit of 25k available a year cumulative to 100k over 4 years if unused. its a 7,45 % interest per year and only 50 % of growth is taxed. Should i do it

  • @HiImHavoc
    @HiImHavoc 3 หลายเดือนก่อน

    Fantastic video, very clear and concise, thanks

  • @alexpotiodi7024
    @alexpotiodi7024 3 หลายเดือนก่อน

    Thanks

  • @allentarver6286
    @allentarver6286 4 หลายเดือนก่อน

    So if the banks won't want dollars for my house , I would own it outright??

  • @InspireVation
    @InspireVation 4 หลายเดือนก่อน

    Good job. However, moving forward, keep the fact sheet on the screen while you continue talking. Don't show yourself too much. It would be nice to relate what you say with what we see on the fact sheet. That way we won't get bored easily.

  • @knightmare1015
    @knightmare1015 4 หลายเดือนก่อน

    Very nice! Another problem with that dude in the video clip is that he is investing in real estate. Don't do that. Go with oil and precious metals instead of real estate. You'll get far bigger returns on those than you would with real estate.

  • @xkrimzonxrsps
    @xkrimzonxrsps 4 หลายเดือนก่อน

    Watching this video because I just borrowed 50k to fill up my tfsa and just bought pltr and sold them as at 40$ strike 2026 gonna use the premium to pay off each month the interest and the rest in amdy let's gooooo boysss

  • @user-vj3if3tw5t
    @user-vj3if3tw5t 4 หลายเดือนก่อน

    Hi Wesley.... Billy Carson told me to get in touch with business investment with Wesley.... Im not sure what or how to do...plse help 🤔

  • @af049486
    @af049486 4 หลายเดือนก่อน

    Did you payoff the home loan before selling your property to your LLC? I’m trying to understand how is the original lender involved in the installment transaction since they likely need to be involved prior to the transfer of the title into your LLC…? Thank you!

    • @InvestwithWesley
      @InvestwithWesley 4 หลายเดือนก่อน

      You can do it that way for the most seamless, however if you still have a mortgage than it can be structured as owner financed or subject to mortgage to keep it easy and to avoid banks calling the note due

  • @dr-rexmangrca113
    @dr-rexmangrca113 4 หลายเดือนก่อน

    THE POOR BOY IS LOSE ...INFLATION IS HERE LAST 3 YEARS AND SS FOR RETIREMENT IS 2 OR 3 PERCENT PER YEAR ... AND REAL HYPERINFLATION IS HIDDEN ... BUT CAN TELL YOU IN 2024.MY FOOD COST WERE ON 2022E ONLY 90 EUROS NOW 265....

  • @grandmasterb7398
    @grandmasterb7398 4 หลายเดือนก่อน

    Short the dollar, long BTC.

  • @sharethelove9316
    @sharethelove9316 5 หลายเดือนก่อน

    And for the people having btc and gokd silver ..will run out at ine point..joinjng a community sekfsufficient would be another thing 😊

  • @robertbacchiocchi5262
    @robertbacchiocchi5262 5 หลายเดือนก่อน

    very good

  • @divyaalok5538
    @divyaalok5538 5 หลายเดือนก่อน

    जय श्री राम🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏

  • @divyaalok5538
    @divyaalok5538 5 หลายเดือนก่อน

    जय श्री राम🙏

  • @MufasaJungle
    @MufasaJungle 5 หลายเดือนก่อน

    0:20, stopped the video, called the bank, let's ride

  • @KBCrochets
    @KBCrochets 5 หลายเดือนก่อน

    Why LLC treated as S Corp? Thanks

  • @ejames6431
    @ejames6431 5 หลายเดือนก่อน

    Good information!

  • @a4yush-305
    @a4yush-305 5 หลายเดือนก่อน

    Great video sir..

  • @debse.7286
    @debse.7286 5 หลายเดือนก่อน

    You can't get a fixed rate mortgage for a reasonable length of time in England.

  • @taylorsmall2280
    @taylorsmall2280 5 หลายเดือนก่อน

    It’s December 31, 2023- YOU ARE SO RIGHT!

  • @EricSmyth2Christ
    @EricSmyth2Christ 5 หลายเดือนก่อน

    Tl;dr you inflate away the debt

  • @GillerHeston
    @GillerHeston 6 หลายเดือนก่อน

    Every American balances their checkbook and tries to make wise financial decisions. Sometimes there is not enough money for emergency situations so borrowing becomes necessary. Our government throws money away on stupid stuff like a kid in a candy store! We give money to foreign countries that hate us and laugh at us for our donations. No crisis is too big to throw US taxpayer money at. They need to tighten their belts just like the rest of us do!! My primary concern is how to grow my reserve which has been sitting duck since forever with zero to no gains, sure I know the risks of short term gains are much greater but if well managed one'd make a killing, am I wrong?

    • @rogerwheelers4322
      @rogerwheelers4322 6 หลายเดือนก่อน

      People believe their currency has the worth it does because they have no other option. Even in a hyper-inflationary environment, individuals must continue to use their hyperinflationary currency since they likely have minimal access to other currencies or gold/silver coins.

    • @eloign7147
      @eloign7147 6 หลายเดือนก่อน

      Inflation is gradually going to become part of us and due to that fact any money you keep in cash or in a low-interest account declines in value each year. Investing is the only way to make your money grow and unless you have an exceptionally high income, investing is the only way most people will ever have enough money to retire.

    • @joshbarney114
      @joshbarney114 6 หลายเดือนก่อน

      I agree, that's the more reason I prefer my day to day investment decisions being guided by an advisor seeing that their entire skillset is built around going long and short at the same time both employing risk for its asymmetrical upside and laying off risk as a hedge against the inevitable downward turns, coupled with the exclusive information/analysis they have, it's near impossible to not out-perform, been using my advisor for over 2years+ and I've netted over 2.8million.

    • @FabioOdelega876
      @FabioOdelega876 6 หลายเดือนก่อน

      Kindly share the details for reaching your advisor. With inflation negatively affecting my funds, I'm in search of a more lucrative investment strategy to optimize their performance.

    • @joshbarney114
      @joshbarney114 6 หลายเดือนก่อน

      Colleen Janie Towe covers things like investing, insurance, making sure retirement is well funded, going over tax benefits, ways to have a volatility buffer for investment risk. many things like that. Just take a look at her full name on the internet. She is well known so it shouldn't be hard to find her.

  • @jacobryan4210
    @jacobryan4210 6 หลายเดือนก่อน

    This is very impressive! Dropping gems out here Wesley! Thank you very much for the content, just subscribed!

  • @CSGATI
    @CSGATI 6 หลายเดือนก่อน

    So if inflation is 20% and interest is 10% the lender loses 10%, Hmm

  • @waynevictory5208
    @waynevictory5208 6 หลายเดือนก่อน

    Nothing if you have a fixed interest rate.