Macro Investing for Smart Wealth: AI + Risk Parity | Dan Pascone with Joseph Gradante | Ep #25

Joseph Gradante is the co-founder and CEO of Alio Capital, a fintech company in the macro investing space. He grew up in Manhattan, interned at Cantor Fitzgerald after college, and graduated during the Great Recession. He says living through 9/11 and the 2008 downturn left him focused on systemic events, which he sees arriving roughly every 10 years.

He later worked in traditional finance, including time at Merrill, watched fintech emerge, learned to code and moved to the West Coast. He now lives in the Pacific Northwest. He says the money printing during COVID, Thomas Piketty's Capital in the Twenty-First Century and Ray Dalio's writing on the changing world order convinced him that macro investing deserved a wider audience.

Joseph describes 2 ways to approach a portfolio. Bottom-up investing, associated with Benjamin Graham, starts with fundamental analysis of individual companies. Top-down investing starts with big-picture forces such as geopolitics and technicals, then moves into asset classes and sectors.

His point is about sequence. In his words: "If you can't pick asset classes and you can't pick sectors, then how are you going to pick stocks?" In his view, many people start with stocks, or even options, and that's why they fail. Dan's reaction was that they start at the end instead of the beginning. Joseph also says geopolitics drives returns just as much as fundamentals do in today's environment. That is his opinion, and reasonable investors disagree on how much weight macro forces deserve.

Joseph describes a mobile app with 2 paths, based on how users answer an onboarding questionnaire:

• Managed path: For busy people who want a professional team to handle it. He says it takes less than 30 seconds if you answer quickly.
• Build-your-own path: For people who want control. Users build custom top-down portfolios by asset class, sector, industry and geography, which he says takes less than 3 minutes.

He calls the design "behavior-led UX," meaning the app teaches while you build. For example, he says the app requires a minimum of 4 assets and won't let you add assets that don't align with your stated risk tolerance. There's also a net worth tracker.

Joseph says over 90% of people on trading apps lose money, and describes his build-your-own audience as "failed traders" [VERIFY: guest claim, not independently verified]. He also says that over a 30–40 year investing span, fees paid to others could eat away a quarter to over a third of compound annual growth [VERIFY: guest estimate]. Costs do compound whichever route you choose, including working with an advisor like us, so it's worth knowing what you pay and what you get for it. We are describing the platform, not recommending it.

Joseph points to Ray Dalio's All Weather strategy and risk parity as inspiration. In general terms, risk parity tries to balance a portfolio by how much risk each piece contributes, rather than by how many dollars sit in each piece, and it leans on assets that have tended to move differently from one another. Joseph asks whether investors really want a portfolio that's 40% bonds when debt levels and inflation could pressure currencies. That's his view, and inflation is a real consideration (see our piece on how inflation affects your portfolio).

A balanced view: how assets move together changes over time. In 2022, stocks and bonds fell at the same time, a reminder that diversification can reduce risk but can't remove it. Some institutional risk-parity approaches also use leverage, which adds its own risks.

Joseph says Alio's patent-pending Altitude AI powers its macro portfolios. He describes mean variance optimization, a long-standing portfolio construction method, as an engine from the 1990s, and asks why anyone would want that powering their money. We can't evaluate proprietary technology from an interview. A newer method isn't automatically a better one, so any AI-driven strategy should come with plain-English documentation of what it does, what it assumes, and how it has behaved in tough markets, including actual results and not only hypothetical or backtested ones. Our FAQ below covers what to ask.

Joseph calls it "fintech 2.0." He says the first wave brought polished interfaces, followed by a lull, and he expects expansion as regulation and policy shift. At the time of recording, he pointed to deregulation, the Big Beautiful Bill and crypto legislation such as the GENIUS Act as tailwinds, and to areas like cross-border payments where the financial sector has been slow to adopt technology. He also says big macro issues, including the monetary system and debt levels, are where fintech can offer solutions. These are his opinions and policy views, and they may age quickly.

Dan closes with quick questions. Joseph's answers:

• Coffee or tea: Coffee.

• One meal for life: Chicken parm [VERIFY: captions were garbled].

• Tech he can't live without: AirPods.

• Favorite quote: A line about making things simple rather than complex, which he attributes to Ray Dalio [VERIFY: attribution].

• Favorite book: Zero to One by Peter Thiel, which he calls pure business, not economics.

• Personal hack: ChatGPT. He never sends an important message without running it through first, since an extra 30 seconds can catch typos. See how ChatGPT and AI can assist your finances.

• Bucket list item: Skiing black diamond runs in the Cascades.

• Financial milestone: Raising a Series A round.

• Advice to his younger self: Don't obsess over traditional education or Ivy League names. What you do after school matters, and there are plenty of tools and information online. He says the world, and particularly the web, is your oyster.

Most investors debate which tool or strategy to use. The bigger question is what the portfolio has to do for your life. 3 things tend to get missed:

• Your biggest risk may be your employer: A portfolio can hold dozens of positions and still be 1 big bet. If a large share of your wealth is employer stock, your paycheck, bonus and unvested RSUs often depend on the same company.
• Correlations move: Any model that leans on assets moving differently from one another is only as good as that assumption holds. Stress-test it against the periods when things fell together.
• A tool is not a plan: Questionnaires typically capture risk tolerance. They usually don't capture your vest schedule, tax bracket, cash needs or the date you want work to become optional.

This is a hypothetical with assumed figures, for illustration only. It is not a projection, a recommendation or a client case.

Say a 47-year-old executive has $1,800,000 in investable assets. $600,000 (33%) is employer stock from years of RSU vesting. $200,000 (11%) sits in a trading app, mostly in a handful of individual stocks. The remaining $1,000,000 (56%) is in broad index funds and bonds. By count, she owns a lot of positions. By exposure, she has 1 very large bet: her employer, which also pays her salary and bonus.

Joseph's sequencing point applies here: look at the mix before any single stock. A simple top-down check:

• Single-company exposure: 33% of the portfolio, before counting her paycheck and unvested RSUs.

• Assumed ceiling: Suppose she sets 10% as the maximum for any single company. On $1,800,000, that's $180,000, so about $420,000 of employer stock would be reduced over time.

• Cost of getting there: Selling shares can trigger capital gains, and vesting dates, trading windows and tax brackets all matter, so the reduction is usually staged instead of done at once.

We cover the reasoning in why smart investors never go all in on one stock. Confirm the tax treatment of any sale with your CPA.

Joseph starts from macro forces and works down. We start from your life and work backward. Life Driven Investing (LDI), our approach to building a portfolio backward from life, organizes your assets into the Four Liquidity Bands: 0–2 years (current needs), 3–5 years (short-term), 6–10 years (mid-term) and 10+ years (long-term). Where Joseph and we agree is the sequence: get the mix right before you pick stocks. You can see the idea in our video on how to invest for your life, not just returns.

For executives with RSUs and concentrated positions, we use our Equity Compensation Playbook, our structured rules for equity decisions, to plan how and when to diversify. We keep it current through our Quarterly Strategy Rhythm, our ongoing plan updates and decision reviews. We discuss Alio Capital here because it is Joseph's company. This is education, not an endorsement or recommendation of Alio or any product, platform or strategy.

This conversation is for corporate executives and senior leaders in their 40s and 50s, with household income of $500,000 or more and complex compensation such as RSUs and stock options, who want to understand how top-down and macro-driven portfolios work, and how to keep a portfolio built around their own life rather than around a headline or a tool.

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   If a large share of your wealth sits in employer stock, or you're weighing how a macro or risk-parity approach fits your plan, timing and structure matter. A free Wealth Strategy Call is a low-pressure conversation about your portfolio, equity and tax picture. Book a free Wealth Strategy Call.