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Gaining Perspective

Oct 4, 2019

Our guest is Larry Swedroe. If you take the common 60/40 portfolio, with 60% in stocks and 40% in bonds, you find that approximately 90% of the risk – in terms of volatility – is in the stock portion of the portfolio. Risk parity addresses that incongruity, and uses an approach builds an asset allocation in terms of risk rather than asset classes.