Mostly Voices [0:00]

A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines. If a man does not keep pace with his companions, perhaps it is because he hears a different drummer. A different drummer.

Mostly Mary [0:18]

And now, coming to you from dead center on your dial, welcome to Risk Parity Radio, where we explore alternatives and asset allocations for the do-it-yourself investor. Broadcasting to you now from the comfort of his easy chair, here is your host, Frank Vasquez. Thank you, Mary, and welcome to episode 105 of Risk Parity Radio.

Mostly Uncle Frank [0:48]

Today on Risk Parity Radio, and as always on Risk Parity Radio, I'm intrigued by this, how you say, emails. And, first off, First off, we have an email from Peter L. Peter writes, hello again, love the podcast. Really changed how I think about certain things. I'll improve on your methods. Only asking one question this time. Smiley face. Groovy baby. One of the light bulbs for me on risk parity was when you explained how it allows you to avoid putting large amounts into non-performing cash equivalent assets while still managing sequence a return risk. But it is not as guaranteed as cash equivalents. As an example, not trying to time anything, just choosing an example, looking at the current environment where interest rates may go up bad for treasuries and equities are highly valued, it could result in most asset classes going down. Maybe gold will go the other way and make it work, but we can't know for sure. My question is, if using a risk parity portfolio, how big is the risk of all slash most asset classes going down for a stretch of time, forcing you to draw down losses and exposing you to sequence of return risk. Trying to figure out the expectation is that you never end up in that situation or you expect that situation with risk parity, but it softens edges so the negative drawdown is less extreme, allowing the portfolio to support a higher drawdown rate long term, even though you will at times draw down when you wouldn't want to. Sorry for the long question. There's a real change in the way I view things and I want to fully understand it to truly change my default thinking. Yeah, baby, yeah! Peter L from New York. All right, well, I mean, you can look at the historicals for these kinds of portfolios. The easiest way to do it is to go put one in at Portfolio Charts and go look at what is called the Heat Map. and the heat map there looks at a portfolio that starts in every particular year for the past 50 years and then sees how long essentially it was in the red, which is what you're trying to avoid with sequence of return risk as being too long in the red. And what you will see is these kinds of portfolios have typical drawdowns of three to four years and typical depth of drawdowns of no more than about 20%. So yeah, everything can go down for a short period of time. It happened once. If you look at a year like 2018, everything was down in 2018. It didn't go down a whole lot, but the stocks were down, the bonds were down, the best performer was cash, and that happens once every 30 or 40 years. I think the last time it happened was Sometime in the 80s or the 60s, I can't remember which. So that happens. But I think you need to compare that to the alternative. We're never talking about things in a vacuum here. We're always comparing them to an alternative. And the alternative that you have proposed is something with a cash equivalent, a cash buffer in it. So say suppose you took instead of your 100% stock portfolio, you said, well, I'm just going to take 30% cash. and 70% stocks. And I'm going to use this cash to ride out a drawdown. You could ask yourself questions. What is the maximum length of drawdown for a portfolio like that? It's about 13 years. Do I feel lucky? 13 years.

Mostly Voices [4:27]

Do I feel lucky?

Mostly Uncle Frank [4:31]

So that portfolio is not solving your problem to begin with. That's where you need to start. That portfolio is not Solving your problem to begin with. Well, do you punk? And I see a lot of people who say, well, I'm just going to take this cash buffer and three or four years are good enough, aren't they? Aren't they? Do I feel lucky? Three or four years are good enough. I can make it, right? Do I feel lucky? It usually turns that around. The average time for it to turn around, well, you're going to walk across the river with an average depth of four feet and hope you don't hit a 10-foot spot.

Mostly Voices [5:10]

That's not an improvement. Expect the unexpected.

Mostly Uncle Frank [5:15]

If you have a portfolio like that, you need to go back and analyze it. You need to look at what its maximum length of drawdown is. And you'll see it's vastly inferior to what we're talking about. Vastly inferior in terms of this metric, how long it could be down. So that portfolio that you are talking about as an alternative is not a usable alternative for what you are trying to avoid. It will not help you survive a 13-year drawdown.

Mostly Voices [5:46]

You can't handle the dogs and cats living together. Am I right or am I right or am I right?

Mostly Uncle Frank [5:51]

It's just going to stay down for 13 years, like 1999 to 2012. Or the late 60s to around 1980. Danger, Will Robinson. Danger. So once you get rid of that imagination that this cash buffer is going to solve this problem, it's not. That's not how it works. That's not how any of this works. Then you can start thinking about, well, what kind of portfolio will solve the sequence of return problem? And you will arrive at these Risk Parity Style portfolios as one of those possibilities. I also like to analogize this to the weather. That, yeah, it is possible to have weather where the sun is out and yet it's raining where you are, and maybe you'll get a rainbow out of that. But typically when it's raining, it's overcast the whole sky, and typically when it's Sunny, there's no rain coming down in your head. So while those things do happen, they don't happen for very long and they don't happen very often in most places. Lighten up, Francis. Interestingly enough, at the time of this recording, the long-term interest rate has just dropped something like 15 basis points sending your treasury bonds as by far the best performer this week. So it makes me wonder, why would we be fearing that outcome when it's not happening? Crystal Ball can help you.

Mostly Voices [7:27]

It can guide you.

Mostly Uncle Frank [7:30]

Shouldn't we be fearing things that actually happen? You can't handle the Crystal But crystal balls are crystal balls.

Mostly Voices [7:49]

And thank you for that email.

Mostly Uncle Frank [7:58]

Second off. Alright, the next email comes from Darren. This is a long one from Darren. And he writes, I will break this up into parts when we get down to the questions. Uncle Frank, thank you for the amazing podcast. It has been so insightful and enlightening. Yes. I have recently discovered the fire community and thanks to that, your podcast too. I've listened through all the episodes, but apologies that my questions have already been answered and also for challenging my sensei. Bow to your sensei. Bow to your sensei. I'm 41 years old, based in the UK, and in the accumulation phase, and though I'm still working through the calculations, approximately 10 to 15 years from FI, I have various pension pots now invested in various stock funds, although they not be accessible until at least age 57. If I were to stop working prior to this, I'd be using an ISA, which is a free of interest income tax and capital gains tax where you can be withdrawn from at any time as mentioned by other listeners. I've started investing into an ISA with Vanguard and given these funds may be required within 10 years or sooner for shorter term requirements. Considering a risk parity style portfolio or hybrid for this account, this brings me to a number of questions. First question, correlations. Being UK based, the biggest problem I find is finding correlation information. The new fund pick at portfolio charts is excellent for those outside the US. However, how can we be sure the correlations are equivalent when changing from US funds to overseas funds? I'd rather not eyeball graphs to guess at correlations unless I have to. If you were UK based, how would you estimate correlations? do try and source market data. I see there are well known if complicated looking formula for correlations. All right, let's start with that question. Yeah, this is a bit difficult for people outside the US because you can't necessarily find things like Portfolio Visualizer that will analyze the European UCITS ETFs, which are the ones that are generally available there and that's how how that environment is going. I have found a site that will do this two things at a time. It is called unicornbay.com, I'll link to it in the show now, it's unicornbay.com, but I was able to stick in some of these European based ETFs and compare them. So, for example, you can compare a fund like GLTL, which is 15-year plus gilts for us people who are not in the UK, that is Treasury bonds in English speak. You can compare that with VUTY, which is a European sold Treasury bond fund, a US Treasury bond fund, and you'll see they're 92 or 93% correlated, positively correlated. And you could do that with any other number of funds as long as they have some kind of ticker symbol. You could make the comparisons in there with a little bit of work. And hopefully that will solve that problem. I have not been able to find other good sources online for this, although I have not spent a whole lot of time looking for them. Hopefully this will improve over time. I think I've improved on your methods a bit too. All right, the next part of the email. Wil's moving away from Vanguard is an option if I were to stay with Vanguard, given there's no gold option nor a long-term treasury bond option. Closest is a mix of mostly short-term treasury bonds index in or going with a long-term gilt, US government bonds index, its correlation's max approximately. what might be a portfolio that could come closest to a risk parity style portfolio with the available funds. And I did go and look at the available funds there. It looks like what might have been available to a US investor about 15 years ago when they were really starting to break out some of these different kinds of treasury bond funds. But no, I think it's difficult to really construct a risk parity style portfolio out of what's in there. The best you could do would be to take some kind of large cap fund, combine it with a small cap fund. I saw a couple of those in there. And then also add both some gilts and some US Treasuries. That will get you part of the way there, but no, you don't have the gold component. It didn't really have a REIT component that I could see or any other kinds of alternatives in there. there to invest in. So I think the best you could probably do is to construct that part of the Risk Parity Style Portfolio in there and then have something outside of that that holds these other assets to balance everything out. It's not exactly the most efficient or tidy way of constructing a portfolio, but that is pretty much what you're going to be able to do with that. If you can dodge a wrench, you can dodge a ball. All right, the next part of this email, US versus global markets. See the Banker on Fire article. You mentioned a high correlation between them and that big companies being global in nature, but I don't think you mentioned that the US market has significantly outperformed the rest of the world for a decade or so. Is that length of time just noise? The popularity of listing in the US, and the work ethic there may or may not help explain this. To avoid the crystal ball, would it not be better to have a more global portfolio even for US investors?

Mostly Voices [14:11]

As you can see, I've got several here, a really big one here, which is huge.

Mostly Uncle Frank [14:21]

Okay, well, I don't really know what the specific answer to that is. I can tell you what people say that seems to make sense. The US has many of the large cap growth stocks in the world. All of these big internet stocks like Apple are selling products all over the world. So it's essentially the home for the world's big growth stocks for the most part. If you look at what is held in other jurisdictions, most other developed markets, you would describe much of what's offered there as large cap value, especially when compared with US stocks. So growth stocks has been doing well over the past 10 years. So you would expect that a market that has more growth stocks and more large growth stocks would outperform other markets. Will that be the same in the next 10 years? I don't know, but that's kind of, What seems to me to be the reason I don't see that the US necessarily has some kind of mode of operating that guarantees that its stocks are always going to perform better than the rest of the world. And that has not been historically true. The US has had decades of issues when you would have been better off buying value stocks and emerging market stocks and other sorts of things. You don't frighten us English piggies. As for whether it'd be better to have a more global portfolio, maybe, maybe not. I don't know. I don't think it's that likely to make that big of a difference, honestly. I really do believe that any reasonably well diversified all stock portfolio is likely to perform 90% the same as any other ones. Now, if you are talking about specific countries, though, a lot of the countries do not have very well diversified stock markets, particularly if you're looking at somewhere like Canada or Australia or Russia, certainly would be natural resource heavy. And your European stocks might be described as tech light in a lot of ways compared to the US market. So it's hard to see not having a large component of US stocks to make sure that you're actually covering the whole world. But assuming you do that, you should be fine and dandy.

Mostly Voices [16:54]

Prove it, baby.

Mostly Uncle Frank [16:57]

All right, the next part of this, my current plan for all accounts and pensions is to go with a global approach with no local bias. Though as you like to do, flipping the previous point around, what are your thoughts on a non-US resident focusing solely on US funds, there's the added element of currency risk, though over the long term, perhaps the impact would be relatively low. Yeah, you're right. That is probably the major issue is the currency risk for somebody outside the US. I don't think I can do any better than the general advice that's given to people outside of the US, which is to have a more globally focused portfolio, particularly if you are in a country that has a bias towards a particular sector of the overall market in the world. So I think I would go with the global portfolio in your case. All right, next point, glide paths. I love how you take a scientific and data-based approach to investing. However, you seem to take a more relaxed approach on glide paths. You mentioned if you are near to your goal or winning the game, you can start to move to a risk parity. Portfolio or alternatively five years out may be a rule of thumb, but what if you are nearing those points and there's a large and extended market crash? I'm interested to hear your thoughts on this article from Vanguard on glide paths. Well, I did read the article. It did seem a bit like an artificial construction because it was talking about some portfolio where somebody just plopped in some money and then looking at various paths at a certain point later with no further contributions, at least that's the way I read it. There are a couple of thoughts here. First, when I'm talking about these things, I'm talking about making your transference when your portfolio is at or near an all-time high. I think it's foolish to use some kind of blind glide path or timing mechanism Because what's critical is making your transition when your portfolio is near, at or near an all-time high. You don't want to make your transition of your portfolio in a downturn. Therefore, the earliest point in time you can make your transition that's reasonably predictable and when you get as close as five years, seven years, than you are getting into somewhere that's reasonably predictable, that's the time to do it. I don't see as having some sort of calendar-based glide path in your mind improves over that. In fact, it could screw you up because markets are not going to obey the rules put forth by your glide path. That's not how any of this works.

Mostly Voices [19:50]

And so if you have some long glide path and you have some gigantic dip

Mostly Uncle Frank [19:54]

in the middle of it, it's not going to help you work things out. The other thing that needs to be appreciated is the compression that is caused by compounding. And what I mean by that is say you needed to have a million dollar portfolio. Now, When would you be halfway there in terms of time? You are going to be halfway there about eight or nine years before that date. If you wanted a million dollars on a certain date, you go back eight or nine years, you'd have $500,000 then. You would be on track. But as you go back further in time, you would see that that compounding curve. So that time is actually extremely compressed towards the end of your accumulation because of that compounding. So putting in a linear idea of a glide path over that doesn't make a whole lot of sense because you're talking about a different shaped curve as far as accumulation is going on. where you get to all of this on sort of a philosophical and theoretical basis is that there are too many uncertainties to make a prediction or to pick a glide path and say this is going to work in all circumstances. You're better off using a few rules of thumb and looking at your portfolio In a practical sense, as to where am I, where do I need to be, and how much more risk do I need to take to get there? You need somebody watching your back at all times. And you need to think exponentially, not linearly.

Mostly Voices [21:52]

I did not know that.

Mostly Uncle Frank [21:56]

And the last part of this email, finally, for an accumulation phase portfolio of 100% in stock market funds, what are your thoughts on the amount to allocate to small cap the rest being based on all cap global market share, including emerging markets. You mentioned a key principle is that any mix of one asset class funds will behave about 90% the same as any other mix of the same asset class. But I'm wondering how to interpretate your caveat of for a reasonably diversified mix. Thanks and keep up the great work, Darren. So where that comes from and it's part of what we call the macro allocation principle, it's from the book of Jack chapters 18 and 19, that's common sense investing by Jack Bogle where he discusses many studies going back to the 1980s that compared all kinds of managers who were putting together portfolios in sophisticated ways, And what the studies showed, which leads to why indexing is such a good idea, low-cost indexing, is that the portfolios constructed by these professionals really were all the same in terms of performance based on their macro allocation. So all the 90-10 portfolios were performing 90 or 94% the same. All the 80-20 ones were performing 90 or 94% the same. All 100% stock portfolios were performing 90 or 94% the same is what Jack says. So it leads you to the corollary that if the best investors constructing these diversified portfolios are all performing 90 or 94% the same, you're likely going to have the same kinds of outcomes. The best you can do is to make sure that you do have a reasonably well diversified portfolio. And I think the best way of doing that is if you can look at the correlations between the funds you're picking, try to pick funds that are pretty well diversified themselves. I mean, they have like hundreds or thousands of stocks in them. But then when you match them up with each other, they are diverse. So if you just look at the most diverse things you can find. It's generally going to be large cap growth versus small cap value in your looking at kind of, you know, basically available funds. So if I were you, I would be matching that global market fund with a small cap value fund, but I would go and analyze what the specific correlations are, and hopefully you'll get a number that is around 0.8. which is very diverse for stock funds. Most of the stock funds, if you put them in a correlation analyzer, they're 90 to 95% correlated, in which case just pick one. You don't need both of those. As for how much, I mean, I put anywhere between 25 and 50% in the small cap value. I have to tell people they want something that's not just a total stock market fund. I would make it half large cap growth and half small cap value, throw in whatever international to taste essentially, and you could call it a day with that, or you could use any number of Bogleheads, Merriman portfolios, or other portfolios, at least the stock portions of those, and you are likely to get similar results, which will be fine. That would be great. M'kay? What's all going?

Mostly Voices [25:41]

The money in your account. It didn't do too well. It's gone.

Mostly Uncle Frank [25:45]

And we have time for one more email today because it's another long one. And this one comes from Patty. And Patty writes, hi Frank, I first heard you on FI and have listened to almost all of your episodes. I find them very insightful and entertaining.

Mostly Voices [26:05]

You are talking about the nonsensical ravings of a lunatic mind. Keep up the good work.

Mostly Uncle Frank [26:12]

I have shared your wisdom with my husband and adult college-aged children, although I confess I cannot always communicate as clearly and concisely as you.

Mostly Voices [26:20]

Forget about it.

Mostly Uncle Frank [26:25]

My husband and I are fully planning to fully retire within the next year and want to move to a risk parity style portfolio soon. We have a few questions for you. And in fact, there are four lengthy questions here. Let's move through them. First off, real estate in our portfolio. Over the years, we've acquired a few residential rental properties. Yeah, baby, yeah. Yeah, baby, yeah.

Mostly Voices [26:51]

Groovy, baby.

Mostly Uncle Frank [26:55]

We would like your thoughts as to how to factor them into our overall portfolio, as they represent a pretty big chunk in terms of value. I had heard on one episode that we could consider them as the REIT component, but was unsure about the valuation and how to handle an outsize proportion as ours is. Our properties are in an LLC, so the flexibility to determine at the end of each year how to distribute the income between us and our three children who have small shares in the LLC. We recently sold one. So we have $685k in a Vanguard account, $575 in money market, $80 K and VFIAx and 30K and VSGAx. I was in the process of beginning to shift to risk parity within this account and then stopped. The other three properties are earning 6% cash flow based on aggregate purchase price 1.2 million and 3% cash flow on fair market value 2.4 million. We are considering selling one to two of these properties given the hot real estate market and move the proceeds into a risk parity portfolio. Until then, should we use a value of 1 million or 2 million for the three real estate properties? How would you suggest we characterize this component and what effect does it have on the rest of the portfolio given its relative size? Which is huge. Okay, there are really two different ways of valuing this sort of thing. And valuation is an interesting topic because depending on how you're using something often tells you whether your method of valuation is appropriate or not. Now, if you are valuing these things as income producers, that would be in the scenario where you did not plan on selling them and you were just going to live off the income and you're going to get the income from it. The easiest way to deal with that in terms of a portfolio would be just to reduce your expenses by that much. So you treat it as if it were a pension or Social Security or something. So you look at your annual expenses, say I'm going to get this much income out of this thing, this real estate, and so it's going to reduce my expenses by that much. And then you just take that aside and then you take the rest of your portfolio to deal with your other expenses and you could just do that. Cool. And that way you wouldn't even have to assign a particular value to the properties. Now, if you're going to sell the properties, then you are looking at what do you think you are going to get out of them and when are you going to get that money? And it may be that you use that first form of valuation for simplicity purposes to start with because it'll lead you to a more conservative position anyway, because from what you're telling me, you're going to get much more out of these properties in terms of reinvesting it and being being able to draw down off of it, you're certainly going to be able to draw down more than 3% if you sell them for what you believe they're worth on the fair market value of those things. So when you get to that point, then it's going to come out in cash and then you're going to have to reallocate it into your portfolio and you'd make an adjustment there. But again, you're always looking at this, okay, well I'm going to have these expenses take off What these incomes are handling in terms of the expenses and then use that remaining expense bucket to analyze your port, the rest of your portfolio against. And hopefully that helps. All right. Number two, the rest of our portfolio, we have roughly 1.3 million in Vanguard 401ks and IRAs, mostly in three life strategy funds, VAS GX, VSMGX, VSCGX, which we now realize are not as diversified slash uncorrelated as we thought, and a small amount in VSIAX, which we now realize should be long-term, not intermediate term. We also have $110k in an American Express Privileged Assets account, tax sheltered until age 59 and a half, my husband's age, that earns a guaranteed 5% compounded monthly off a automated monthly contribution via his Amex card. We pay the full balance each month and never incur any finance charges. He wants to increase the monthly contribution from 150 to 3,000 the max because he likes the notion of the guaranteed 5%. By the way, I don't think this is an annuity because there are no loads/commissions. Is this a bad idea to increase the contributions? Should we stop contributing altogether since we have finished accumulating. This is such a small portion of our overall portfolio. Maybe we just leave it as is, but I will need your help in explaining to him why we should turn down a guaranteed 5%. All right, just thinking about that. Well, a guaranteed 5% is nice, but after inflation, it's only worth two or three percent long term. So it's not really a good return. This is really something that should be looked at as part of your cash bucket or cash equivalent portfolio, similar to short-term treasury bonds, money markets, or other things like that. So it's fine to have some of this, you want to have some of this kind of stuff, and you should have some of this kind of stuff. You just don't want to make it too large a portion of your portfolio, because then it just becomes essentially a cash drag. The other issue with it is liquidity. that you do want to have liquidity in this sort of thing because the idea is if you have one of those years when everything else is going down, this is what you're going to be spending and if it's not liquid and you can't get at it then it's essentially useless and you wouldn't want it. You always want these cash equivalent type things to be very liquid so you can get at them when you need them. Think McFly, think!

Mostly Voices [33:01]

Now I didn't go look up what this thing is but It does look like

Mostly Uncle Frank [33:05]

some kind of annuity, but I'm not sure I would really call it that because I don't know what the payout schedule is if it has a payout schedule or whether it's more like a CD. But it seems to be something on a contract. And I tend to characterize all of those sorts of things, whether they're annuities, insurance contracts, or other things that lock up your money for some period and then you're going to get some back at some point in time. As birds of a feather, they're all contracts. They just have different terms to them. So in the end, I think that thing's fine as long as it's gonna be liquid. And if it's not liquid, I would probably do something else or make it even smaller.

Mostly Voices [33:48]

Oh, Mr. Marsh, don't worry. We can just transfer money from your account into a portfolio with your son, and it's gone.

Mostly Uncle Frank [33:56]

All right, the next part of this How to construct the risk parity portfolio. I'm struggling with what amounts to put where given the outside proportion of real estate in our overall portfolio. I've studied your sample portfolios and I'm leaning towards the golden ratio somewhat due to its simplicity and number of funds. I came up with something like this. What do you think? I used the lower value for real estate in order to get a higher proportion of the risk parity style funds. I picked VFIAx and VSGAX, only because they are already in our portfolio and the guiding principle that 90% of stock funds will perform similarly over time, right? Yes, that's correct. Yes. Please advise on the proportions of risk parity funds, i.e. not the LLC real estate and Amex cash, as well as when slash how to implement, do we dollar cost average in over time? say weekly over six months or longer, should we move into a particular fund first like Gold Long-Term Treasury since we have little to none, or do we move all the funds proportionally over time? Alright, yeah, I took a look at your portfolio. It looks good to me. You've got 42% in the two stock funds. I would try to get some small cap value in there instead of small cap growth. because that is going to be more diversified from the 500 fund. The 500 fund, an S&P 500 fund is more focused on large cap growth. And so the reason you want value instead of growth is because it's more diversified on the small cap end and it does better in inflationary scenarios. And so it gives you more diversification in terms of your stock fund. So if you can make that adjustment, maybe in a 401k, I would move it to a Vanguard small cap value fund as opposed to small cap growth fund. And then you've got your, your treasuries and golden proportions. And I agree that Amex, privileged assets is, is a cash equivalent and can be used as that as long as it's significantly and liquid for you. Am I right or am I right? Am I right? Am I right? Am I right? As for the timing of moving everything in, at this point if you're going to retire in the next couple of years, I would move it as quickly as you're comfortable moving it. It's generally better to move it into the gold and long-term treasuries kind of proportionately as you go, simply because what your risk is now is getting a big drawdown in the stock market and not having those diversified things in there, your long-term treasures and your gold. So the quicker you can move those in, the better off you're going to be. And you would do it proportionally as you go. I realize this also has to conform with your tax situation. And so you're not incurring lots of capital gains all in one year. And I would be mindful of that as a general proposition. I would make sure you go over this plan with a tax professional. If you're selling a lot of funds outside of 401ks to make sure that you're not incurring excessive tax liabilities in one form or another. All right. Last number here is gold. I love gold. Vanguard does not offer GLD or GLDM. What suggestions do you have for the gold component? Vanguard offers 51 quote gold funds unquote from other firms such as Fidelity FSAGX but these are not pure gold slash bullion funds. They have significant investments in precious metal mining companies. Do we go outside Vanguard for this one? component of our risk parity portfolio. If so, what's the difference between GLD and GLDM and what low-cost online brokerages offer GLD/GLDM? I used to have an account at E-Trade, but I'm open to any that offer GLD/GLDM if we need to go outside of Vanguard to achieve the ideal risk parity style portfolio. Well, GLD and GLDM are offered just about everywhere. Fidelity, Schwab, E-Trade, I am at a loss to understand why a company like Vanguard would not allow people to buy some of the most popular ETFs in the world, which GLD is.

Mostly Voices [38:39]

This is gold, Mr. Bond.

Mostly Uncle Frank [38:43]

Maybe they'll get their act together sometime, some way, but I would just open an account somewhere else if you have to just to buy that. ETF. Now the difference between GLD and GLDM, GLD is the older and more established fund. It has a higher share price in the hundreds and it's been used since 2004. It was like one of the original gold funds. And there's also a lot of options trading that goes on with GLD because of its higher share price. Gldm is just a miniature version of gld, and it was offered more for retail investors with a lower expense fee in gldm. And so you would probably want to use that one since you're not gonna be trading options or doing anything like that anyway. So if there are at least three low-cost funds now in gold, gldm is one of them. BAR, BAR is another one. SGOL is another one. So you could use any of those. And there may be more by the time I get done recording this. I don't know. They keep coming out of the woodwork every year because everybody realizes that this is an area that people do want to have a low-cost ETF in. And so they're coming out with more and more low-cost ETFs. If you compare these as to performance, they all seem to perform the same. So I don't have any reason or basis to prefer one over the other unless you were doing options trading in which you would want to use GLD. You have a gambling problem.

Mostly Voices [40:22]

And the last part of this email, thank you for your insight.

Mostly Uncle Frank [40:26]

I look forward to hearing your responses in an upcoming podcast. Well, here you go. Living the dream in Atlanta, Patty. PS：One final thought. I see your guiding meta principles on your website. I would love to see the other basic principles you so often cite so I can reference them easily, i.e. Share with hubby, holy grail, wait, I see it's on your homepage. There are the others like macro allocation, the 90% of stock funds perform similarly, etc. I think they are captured in your cool logo, but I'd love to see the underlying concepts written out. Thank you again for sharing your wisdom and methodologies for risk parity style investing. Yeah, baby, yeah! All right, well I have to confess that writing things out is like work to me, so I don't want to do too much work at my retirement. That's why I've chosen podcasting as a method of communication as opposed to blogging. And I try to keep the website relatively simple. What I have done is list some of the episodes on the podcast page, which give you some of these kind of core principle things. The episode you're looking for is episode number seven. So if you go back and listen to that and look at the show notes in there, and you can do that on the podcast page, is probably the easiest way to look at the show notes. You'll get the three principles and the basis for them. Really, the only one that's new that I bring to the table is the holy grail principle because the simplicity principle and macro allocation principle are core principles that have been adopted by many other people from Rick Ferri to Paul Merriman to Jack Bogle and many others. You want to be a public nuisance? Sure, how much is the job pay?

Mostly Voices [42:23]

What the Holy Grail principle adds is that extra

Mostly Uncle Frank [42:27]

added thing that makes your safe withdrawal rate Just a little bit safer.

Mostly Voices [42:34]

It's one louder, isn't it? You see, most most blokes are gonna be playing at 10. You're on 10 here, all the way up, all the way up, all the way up. Where can you go from there? Where? I don't know. Nowhere, exactly. What we do is if we need that extra push over the cliff, you know what we do? Put it up to 11. Exactly.

Mostly Uncle Frank [42:53]

And with that, I see our signal is beginning to fade.

Mostly Voices [42:57]

Shut it up, you.

Mostly Uncle Frank [43:01]

We'll be picking up this weekend with our weekly portfolio reviews and probably some more emails.

Mostly Voices [43:05]

Groovy, baby!

Mostly Uncle Frank [43:09]

If you have comments or questions for me, please send them to frank@riskparityradio.com that's frank@riskparityradio.com or you can go to the website www.riskparityradio.com and put in your message into the contact form and I'll get it that way. If you haven't done it already, please go over to Apple Podcasts, where you get this podcast, and like it, subscribe to it, follow it, whatever they will let you do these days. And that would be greatly appreciated. Thank you once again for tuning in. This is Frank Vasquez with Risk Parity Radio signing off.

Mostly Mary [43:54]

the risk parody radio show is hosted by Frank Vasquez. The content provided is for entertainment and informational purposes only and does not constitute Financial investment, tax or legal advice. Please consult with your own advisors before taking any actions based on any information you have heard here, making sure to take into account your own personal circumstances.