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New Podcast Available Deal or No Deal – Hedged Equity – Option Value of Cash

On this episode (you can click below to listen) Jay and Derek are back to discuss hedged equity versus the typical 60/40 portfolio. They also talk through some commentary around market valuation and return expectations for the next decade. Plus, how the gameshow Deal or No Deal with Howie Mandal is an expected value decision game? To find out click play below.


Recently John Hussman put out a piece that the expected value of a 60/30/10 stock and bond portfolio over the next 12 years would be -5%. Future projections can be wrong or right, but what he explained was that the option value of cash or a hedged equity approach may be more suited. So how does hedged equity play into this? How the Deal or No Deal game show explains the expected value calculation. And why bonds with low rates and risk of rising rates might present challenges in the typical 60/40 portfolio.

  • How to Calculate expected value
  • Deal or No Deal Example on expected value
  • Exploring Hussman’s option value of cash
  • Expected returns based on valuation.
  • 60/40 stock and bond portfolio vs hedged equity approach
  • Container shipping revolutionized trade like the internet?
  • Stuck container ship causing global trade snafu.
  • Real returns on bonds after inflation

 

Mentioned in this Episode:

Hussman article on the option value of cash due to market expectations 

 The Box book on Container Shipping by Marc Levinson 

 Jay’s book Buy and Hedge  

Derek Moore’s book Broken Pie Chart