Ramblings of a Finance PhD Student
My week in discoveries - the graphs that made me stop scrolling, the songs that got stuck in my head, the ideas that shifted how I see things, and the trade that's got me curious.
How I Build My Portfolio? - July 13th, 2025
Hello from Philadelphia, writing this the morning after a visit to a North Korean-themed bar. Strange vibes from the bouncer, cash only but still a fun night.
Usually, I follow a format — music recs, charts, trade ideas. But today, we’re going full op-ed. No structure, no newslettery polish.
This week’s topic is something I’ve been meaning to write about for a while: how I think about building my portfolio. My own money, my own preferences, no finance industry platitudes.
The “Traditional” Portfolio
The 60/40 portfolio, 60% stocks, 40% bonds, has been treated as gospel in personal finance for decades. But… why?
When John Bogle first proposed the 60/40 framework, his idea was simple: stocks are for growth, bonds are for stability. The 60/40 split offered a sensible middle ground for the average investor.
But here’s the problem: 2022 broke the rule. The traditional 60/40 portfolio fell 25.1% marking the first time in 150 years that it experienced more losses than an all-equity portfolio. That year, both stocks and bonds collapsed together. The core assumption that bonds provide diversification during equity stress didn’t hold anymore.
The logic behind 60/40 assumes that bonds will hedge stocks, rates will fall in recessions and volatility can be reduced by mixing assets. But in a world of rising interest rates, persistent inflation, and fiscal dominance, these assumptions start to break down.
Worse, 60/40 isn’t optimized for return, risk, or even diversification, it’s just an average of two asset classes. In fact, portfolios tilted more heavily toward bonds often have better Sharpe ratios. And some analysis shows the optimal stock weight in certain sample periods is closer to 14%, not 60%.
So the question isn’t just “Why not 60/40?”
It’s “Why 60/40 in the first place?”
Why Risk (and Your Life Stage) Actually Matters
Before diving into my approach, let’s talk about something most investment advice glosses over: risk isn't one-size-fits-all. Your relationship with risk should evolve based on where you are in life, your income trajectory, and your psychological makeup.
In your 20s–30s: Your biggest asset is your human capital. With a long runway and stable income, you can afford higher volatility.
In your 50s–60s: Drawdown risk matters more. You have less time to recover and might need to withdraw capital.
Regardless of age: Risk tolerance is personal. If market swings keep you up at night, even the best long-term plan can fail when you panic.
The real risk isn’t volatility. It’s being forced to sell when you don’t want to.
My Investment Philosophy
Rather than following someone else's allocation, I've built my portfolio around a few core principles about how I approach investing:
I want exposure to growth, but I'm not all-in on any one sector or idea
I'm comfortable with volatility, but I want some cushion to stay emotionally stable
I think there's value in finding mispriced ideas, but I don't want to bet my life on them
I like having cash and liquidity
And I enjoy investing, so my portfolio isn't just optimized for returns, it's also designed to keep me entertained.
My Actual Portfolio Allocation
Based on these principles, here's how I currently allocate my money:
Deep Drawdown Stocks: Buying Quality on Sale
This is the most unique and overlooked part of my portfolio.
The Strategy
Identify companies in the top 50 of the S&P 500 by market cap. If one drops more than 50%, buy it.
The Results
From 2016 to 2020, this approach delivered 177% returns vs. 111% for the S&P 500, outperforming the market every single year. Of the 24 companies included, only 3 lost money, and none went bankrupt.
Why It Works
Even the biggest, best companies make mistakes. Think:
Pfizer: Down 48%, yielding 7%+, with strong fundamentals
Taiwan Semiconductor: Down 40%+ despite dominating global chip production
3M: Lost 70%+ from 2016 but rebounded 50% after leadership reset
Intel: Lost 63% after strategic stumbles, but still a vital player
The key: these firms recover. Their brand power, balance sheets, and market dominance buy them time to fix mistakes.
The ETFs I Use
U.S. Stocks (30%)
ETF: VTI (Vanguard Total Stock Market)
Why: Lowest-cost, broadest exposure to U.S. equities, including small/mid caps
Tech Stocks (10%)
ETF: VGT (Vanguard IT ETF) or XLK (Tech Select Sector SPDR)
Why: Broad tech exposure; VGT includes more mid/small-cap names
International (10%)
ETF: 70% VEA (Developed), 30% VWO (Emerging)
Why: Currency hedge + global diversification
Cash / 3–6mo Treasuries (10%)
ETF: SGOV (iShares 0-3 Month Treasury Bond ETF)
Why: Liquidity + yield (~4.4%)
Treasuries (20%)
ETF: 60% TLT (20+ Year), 40% IEF (7–10 Year)
Why: Convexity in downturns, lower correlation to equities
Why This Works for Me (And Maybe for You)
This allocation addresses the fundamental problems I see with traditional approaches:
Elevated yields make cash and short-term bonds attractive
International exposure adds diversification and currency hedging
Systematic value investing through deep drawdown stocks adds upside
Most importantly: it fits me.
I’m comfortable with moderate volatility. I enjoy researching individual names. I have the time to let asymmetric trades work. This isn’t the optimal portfolio in a spreadsheet, it’s the one I can actually live with.
💰 Trade Idea of the Week
Disclaimer: This is not financial advice. I'm sharing my thoughts for educational purposes. Do your own research and consult with financial professionals before making investment decisions.
The Trade
Long AMD: The only real NVDIA competitor
The Reasoning
Why it works: China export ban headwinds ($800M impact) largely behind us with recovery expected Q4 2025. New products showing better performance-to-cost ratios vs NVIDIA. New "Gorgon Point" mobile processors and strengthening Amazon partnership (CPUs + GPUs) create multiple growth vectors.
Risks: Continued NVIDIA dominance in AI training market. Potential macro slowdown affecting datacenter spending. Execution risk on new product ramps.
🎯 Trade Strategy
Targets (12-18 months):
Conservative: $146.42 → $180.00
Optimistic: $146.42 → $200.00
Aggressive: $146.42 → $225.00
Stop Loss: < $115.00 - Below key technical support and recent analyst downgrades
📈 Tracking Past Trades
🎵🎧📚 Music, Podcasts and Book Recs
Songs I liked this week
Never knew you - safe and sound
DANCING ALONE - Emmit Fenn
When the Party Ends - Max Allais
Love Moves Slow - Eddie 9V
Link to recommended songs playlist
“How to Turn Bad Experiences into Healing Experiences & Finding Calm in Chaos” - On Purpose with Jay Shetty
“Who are the world’s best inventors” - The Economist
“Will Jesus Christ return in an election year” - Eric Neyman
Link to recommended podcasts
💭 Quote (Reflection) of the Week
"It is no measure of health to be well adjusted to a profoundly sick society." — Jiddu Krishnamurti
We celebrate those who “have it all together.” Who stay busy, stay productive, stay positive. But what if that version of stability is just adaptation to dysfunction?
Modern life is filled with quiet absurdities: working jobs we hate to buy things we don’t need, numbing out with endless screens, measuring our worth in likes and follower counts. Adjusting to that isn’t sanity—it’s surrender.
Healing, then, doesn’t always look like coping better. Sometimes it looks like stepping back, slowing down, asking harder questions. Sometimes it means not adjusting.
Because maybe the goal isn’t to fit into the world as it is, but to imagine a better one, and start living like it already exists.
What did you discover this week? Reply and let me know - I love hearing about other people's interesting finds. See you next week!
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Hi, Fer. Love this space, man! I’m learning a lot.
Your portfolio got me curious:
1. How do you compute allocation shares? How often do you rebalance?
2. What about crypto? Where are your thoughts on this class?