It’s been another eventful week in the markets with a stronger than expected earnings season, Bitcoin continuing to reach new highs despite China testing their own digital currency called the e-yuan, and a SPAC bonanza.
As mentioned last week, Erik, Brandon and Justin spend the majority of this episode discussing how to think about risk, return and allocating capital over the long-term including a framework of how to practically think about risk and return, how to approach long-term investing like a pro, and why ultimately your outcomes matter more than participating in the latest investment fad.
- (2:04) How to practically think about risk and return
- (2:46) The basic valuation formula
- (3:57) Valuing uncertainty
- (6:23) The building blocks of risk
- (7:19) Equities
- (9:13) Municipal bonds
- (12:08) Interest rates impact
- (16:33) Will we return to normal at some point?
- (17:13) Resource: Josh Brown, The Reformed Broker
- (18:24) Engineered risk
- (19:16) Manager skill