Wayne Penello on Risk Management Beyond Diversification
From the “Adjusted for Risk” podcast, host Ryan Nauman interviews Wayne Penello, founder and CEO of NextGen EMP, about practical risk management for investors and advisors. Penello shares his background as a NYMEX options market maker and commodity risk consultant, emphasizing translating risk into meaningful metrics like budget outcomes and drawdowns rather than simple volatility. He argues advisors often diversify but don’t actively manage risk, and recommends using high-watermark/drawdown analysis to improve tactical entry decisions. Penello discusses why market timing fails and frames the opportunity as an allocation problem, advocating long/short strategies—especially in an ETF wrapper—for downside control, potential tax efficiency, and scalability for smaller accounts. He critiques buffered products for embedded costs, addresses misconceptions about long/short funds, and points listeners to the EMPB ETF and nextgenemp.com for more information.
Connect with Ryan Nauman:
Learn more about NextGenEMP: https://nextgenemp.com/
00:00 Podcast Kickoff
01:10 Meet Wayne Penello
01:46 Wayne’s Risk Journey
05:26 Defining Investment Risk
06:47 Drawdowns and Timing
09:20 Buy Hold Hope
11:22 Advisors and Risk Gaps
14:13 Process Over Timing
18:22 Why Long Short Works
23:40 Long Short Myths
27:14 Market Cycles and AI
32:42 Core Portfolio Role
37:26 Advisor Practice Benefits
40:42 Where to Learn More
42:07 Closing Thanks
