In my last post I introduced an alternative asset-allocation approach for investors that no longer subscribe to the discredited models of traditional (strategic) asset allocation, Modern Portfolio Theory (MPT), Efficient Market Hypothesis and what pedestrians refer to as “buy-and-hold” investing.
This new portfolio construction approach, Hybrid Portfolio Theory, is a unique and timely portfolio construction methodology that is distinctly disparate from MPT in that it employs two distinct capital pools: Portfolio A, the larger portfolio has the primary objectives of safety of principal, liquidity and income, and, Portfolio B that only allocates to private or public investments that exhibit the potential for positive asymmetrical outcomes (PAO) via exposure to positive black swans.
Last week Investment Advisor Magazine and Ameritrade co-sponsored a webinar that allowed me to introduce Hybrid Portfolio Theory to investment professionals. The call was well attended with nearly 500 registrations.
[You are welcome to listen to the archived call and view the presentation which is hosted at this link, or, you can simply view the Powerpoint, without the audio, here.]
We cut the call at the hour mark which means that many questions from participants that were in the queue for the Q&A portion were unable to be addressed. I welcome the opportunity to address your questions, comments and critiques and would encourage you to post them on the comment boards of the Hybrid Portfolio Theory post and I will reply in that forum.
If you would like to have a direct dialogue, please reach out to me via LinkedIN and we can schedule a private conversation.
After the call, I received dozens comments on HPT via LinkedIN. I was not at all surprised to hear from a number of advisors who had previously embraced a number of HPT core principles in their portfolios. I plan to introduce these advisors (and the manner in which they have adopted or adapted HPT to their portfolios) to VP readers in the months ahead.
Many of the comments received revealed that investment advisors were compelled by the concepts of HPT, but also had many questions about implementation and execution of the strategy at the client, portfolio and practice level.
For good reason…HPT is not as pie-chart ready as Modern Portfolio Fallacy.
Going forward, VenturePopulist posts will address issues associated with the implementation of HPT and defining the broad PAO opportunity set…with particular focus on private equity (angel investing and venture capital) investments.
Thank you for your all of your responses to HPT…the curious, the complimentary and the critical. I welcome and look forward to your comments on our boards.
Album: What’s Next? Foster Edwards Orchestra, 1964
Popularity: 33% [?]
