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In Episode 68, we welcome Meb\u2019s friend and Newfound Research founder, Cory Hoffstein (or as Meb refers to him, a \u201cfellow nerd\u201d).\nPer usual, we start with Corey\u2019s background, but then Meb jumps in by asking Corey to describe his general, 10K foot investing framework.\xa0\nCorey tells us that a specific product and/or style doesn\u2019t necessarily define him or Newfound. Rather, he believes in a consistent, well-researched process that takes into account the behavioral challenges that accompany any given investment strategy. This is because the journey is often just as important as the destination.\nMeb asks where Corey starts when creating a portfolio. Corey tells us it\u2019s about the balance of risk. This is because \u201crisk cannot be destroyed, only transformed.\u201d Therefore, when building a portfolio, there\u2019s no single holy grail. You need to understand the goals and fears of your client, then figure out how to balance various strategies in order to find a robust, flexible portfolio that handles risk appropriately.\nThis dovetails into one of Newfound\u2019s white papers, \u201cPortfolios in Wonderland,\u201d which tackles today\u2019s investing climate. Corey tells us that we\u2019re in a unique environment, whether focusing on equity valuations or interest rates. It used to be that stocks and bonds zigged when the other zagged. But in the 1980s, both became cheap. Today, we have the opposite: high equity values and low yields on fixed income.\nThis leads to a great discussion on bonds, including Corey\u2019s rule of thumb for estimating future bond returns, and his research into the source of bond returns \u2013 how much was due to the coupon, versus declining rates and roll yield.\nThe guys agree that with U.S. equities richly valued, and bond yields so low, future returns of the classic 60/40 portfolio don\u2019t look too appetizing. So, what\u2019s the solution?\nCorey likes the proliferation of asset classes that used to be found almost exclusively in hedge funds. Now, we can use them to diversify our portfolios and reach a solid rate of return. The conversation bounces around a bit here \u2013 how 8%-10% returns aren\u2019t likely going forward unless you\u2019re invested exclusively in emerging markets... how if you let a portfolio optimizer do its thing, you\u2019d have almost no U.S. exposure in either equities or bonds... and how, behaviorally, most people couldn\u2019t have 0% allocated to the S&P, so finding a balance between the best portfolio and the most realistic portfolio is needed.\nThere\u2019s way more in this episode, including answers to \u201cShould we be holding more cash?\u201d \u201cIs dividend investing dangerous\u201d and \u201cHow do you factor in various global interest rates when looking at a bond allocation?\u201d There\u2019s also how Corey constructs multi-asset portfolios\u2026 how value works across asset classes\u2026 the biggest concerns Corey is hearing from clients today\u2026 an idea Meb has for a \u201cweird ETF\u201d\u2026 and of course, Corey\u2019s most memorable trade.\nWhat is it? Find out in Episode 68.\nLearn more about your ad choices. Visit megaphone.fm/adchoices