Editor’s Notes: This is the 3rd installment on portfolio design for students of the Early Retirement Masterclass. In launching the course, we faced a host of immediate problems, many of them similar if not exactly the same faced by hedge funds though on a less complex level and with far less autonomy. The challenges were follows:

1. How do we ensure students are able to achieve long term success behaviorally?
2. How do we design, build, and implement a portfolio that achieves the above more easily for the students?
3. Are there additional steps we can take to be more defensive so that they experience drops that are less than the market value?
4. How do we bake design a portfolio for current interest rate environments while also experiencing stronger resilience/performance if interest rates rise? ie; how do we counter the fact that REITs perform well in low interest rate environments and less well in rising interest rate environments?

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