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 [0:19]

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.

Mostly Uncle Frank [0:39]

Thank you, Mary, and welcome to Risk Parity Radio. If you are new here and wonder what we are talking about, you may wish to go back and listen to some of the first episodes where we did our introductions of the various topics. And those episodes are episode one, 3, 5, 7 and 9. And so if you go back and listen to those, it will get you up to speed. But now onward to episode 145. Today on Risk Parity Radio it is time for our weekly portfolio reviews of the seven sample portfolios that you can find at www.riskparityradio.com But before we get to that, we have a few emails, of course. And before we get to the emails, I would like to just give a shout out to my good friend Clark Bender, who has a podcast called Board Game Times about playing board games and playing them in particular in the Chicago area. Anyway, Clark and I have been friends since about 1974 or 5 when we were in a bowling league together. And he mentioned this podcast on his podcast, and so I thought I would return the favor. I did notice that there was a big uptick in listeners from Chicago after his podcast dropped last week. By the time we hit that Shy Town, them bears was getting smart. They'd brought up some reinforcements from the Illinois National Guard. But I will link to his podcast in the show notes, and you can check it out if you are interested in such things. It's funny, I tend to think his listeners are probably more interested in the humor on this podcast than the substance of it. Well, I'm funny how? I mean, funny like I'm a clown? I amuse you? Yes! And here is a little sound bite for you, Clark Bender.

Mostly Voices [2:30]

Yes, the old ones. The ones who made us. Yes. The old ones here, the ones who made us, yes. Yes, it is still in my memory banks. That was the equation. Existence, survival, must cancel our programming. One of his favorites, I assure you. But anyway. Here I go once again with the email.

Mostly Uncle Frank [3:06]

And first off, we have an email from Chris.

Mostly Mary [3:14]

And Chris writes：Dear Frank, I wanted to follow up on the order execution problem that Alexei had in episode 141. I have seen the same issue before and I think I may have a better explanation of what happened and why. Over the past several years, most online brokerages have been engaged in a race to the bottom on fees. In order to stay profitable, they have had to reduce their expenses wherever possible. One of the ways they do this is by internally crossing their own customers' buy and sell orders. This is a form of dark pool trading. Essentially, they create a private transaction between two of their clients that never gets listed on a public exchange. Because these are generally executed as market orders, unless the broker has internal controls to check each trade against the actual high and low prices for the day, it is possible for these trades to be executed outside of the publicly listed trading ranges. This suggests that this isn't a case of M1 doing something nefarious like front running, it's just an instance of poor internal order execution. execution controls. My guess is that the M1 customer service reps did not have enough technical background to really even understand the question that Alexei was asking. When I ran into this issue, it happened at Vanguard, so it really isn't a problem exclusive to M1's trade execution system. However, that being said, Vanguard was only higher than the daily price by a few pennies per share and not off by a few dollars per share like M1. Also, I'd like to say this type of issue is relatively rare. I've seen it only once over the past decade. Thanks, Chris.

Mostly Uncle Frank [4:47]

And my answer is, I really don't know, but I will give you credit.

Mostly Voices [4:51]

You are correct, sir, yes!

Mostly Uncle Frank [4:58]

I have to say I've heard mostly good things about M1 and this was the first bad thing I've heard about them, but I do not have an account there and can't really speak to what they do or how they do it. But thank you for that email. Groovy, baby. Second off, we have an email from Roy.

Mostly Mary [5:18]

And Roy writes, hello, Frank. Loving the podcast, and I am not a fan of tips either. But in episode 142, you stated that PDVC was up 41% last year, but it had a huge end-of-year drop and is actually flat or down over the year. Even your portfolio summary shows a modest gain. Am I missing something? And the answer is...

Mostly Uncle Frank [5:38]

Au contraire! Yes, you are missing something. There were two very large distributions out of PDBC in December. And I will link to the Yahoo Finance performance page for PDBC where you can see that the returns overall were 41.87% for 2021. So almost all of its gains were actually distributed. And you can see that in the All Seasons portfolio where it resides in our sample portfolios, that there is a large cash balance in there right now that will continuing paying out the distributions until it's rebalanced again. I toyed with the idea of taking that distribution and rebuying back into PDVC, but since I hadn't been doing that as a rule, as a rule, we just use the dividends and distributions from these funds to pay out the distributions every month. And so I decided not to do that and we will buy back essentially whatever we need to buy back when it comes time for rebalancing in July. And thank you for that email. Now third off, we have a twofer of emails from Dustin. Surely you can't be serious. I am serious. And don't call me Shirley.

Mostly Mary [7:03]

And Dustin writes extensively：Dear Uncle Frank, First off, I apologize in advance for the length of this email.

Mostly Voices [7:08]

You are talking about the nonsensical ravings of a lunatic mind.

Mostly Mary [7:12]

But I've been keeping a running ledger of questions that I'd like to ask, and rather than hit you with five or six different emails a la Alexei, I figured I'd send you one long one. Real wrath of God type stuff.

Mostly Voices [7:23]

I have been listening to your podcast sequentially from episode one since Diana

Mostly Mary [7:27]

Miriam mentioned you on her Optimal Finance Daily podcast this summer.

Mostly Voices [7:31]

Yeah, baby, yeah! I'm finally caught up.

Mostly Mary [7:34]

As I've been listening, a couple of questions have been building. Easy ones first. One, do you recommend reinvesting dividends or letting the cash accumulate for other buys? I've always dripped, but I'm interested in your thoughts. 1. Does your answer change during accumulation versus during drawdown shift to risk parity investing? 2. When you reference your portfolio returns, is it net of distributions? Curious how you calculate that. I think you may have covered this before, so feel free to toss this or refer me to the right episode. Set up for question three. Around mid-2021, I discovered the Boglehead forum and read it, which prompted me to simplify my investing approach and to read J.L. Collins' the Simple Path to Wealth. At this point, I'm still accumulating, so all new money is primarily going into VTI, although I'm putting a portion into VUG and VIoV as well. However, prior to this, I went on a bit of a frenzy late 2020, blindly buying Motley Fool stock recommendations with a portion of my rollover IRA. Some of which have done rather well and others are in the toilet. I know, I know, an investor policy statement would have served me well. It's now in development. I have always been a buy and hold investor, and it's worked well for good buys like Google, Amazon, Marvel, no Disney, Burlington Northern, now Berkshire, and Visa, which I bought 10 to 15 years ago, all multi-baggers. However, I now have a dozen and a half stocks, primarily of the tech variety, in my rollover IRA that are down 30 to 60% after the wire brushing the last few months. My rational mind says to hold for three to five years minimum since that's the Motley Fool guidance. That has worked well on many. Yet my FUD mind says to cut my losses and dump them. Of course, this locks in those losses rather than giving them a chance to recover over years. It's in an IRA, so no tax benefit for selling. Three, what are your thoughts on selling the losers in a tax favored account? I'm 44, so I still have 15 to 20 years of runway before I need to get at the money. Just leave it or sell the losers, put it on VTI and walk away? Okay, now watch this.

Mostly Voices [9:59]

I'm just going to break the wrist and walk away. Break the wrist, walk away.

Mostly Mary [10:03]

Four, I have a small risk parity portfolio set up with funds I'm managing for my folks. I'd like to get your feedback on my attempt at a golden ratio style portfolio. The numbers keep changing with the market moves these last two weeks, but my plan was a composition of the following. Stocks, VTI, Total U.S. Stock Market, 26%. VXUS, Total International Stock Market, 16%. Bonds, TLT, 20-year Treasuries, 13%. I Bonds, 13%. ALTS, GLDM Gold, 4%. PDBC Commodities ETF 4%, PFF Preferred Shares 4%, VNQ REIT 4%, crypto Ethereum 5%, Bitcoin 5%, cash 6%. Hopefully that image goes through. I recognize I'm heavy in crypto, but it appears uncorrelated to the market, and I'm bullish on the future innovations in blockchain. Because Bitcoin and Ethereum are the OGs, I think they'll do well over time. After listening to your episode 142, I'm thinking that my boggle-headed move of using VXUS may not be wise, and the last year has been awful. Is my alternative bucket of 16% really alternatives, or are the PDBC, PFF, and VQNQ really part of the stocks allocations? For the 26% I have for bonds, do the I-bonds belong there, or should I think of those more like cash? Last off, I really appreciate all you do. While I'm still further away from retirement than I'd like, your show has been a great resource and a way to exercise my mind in terms of thinking of new ways to invest. Dear Sensei and Aunt Mary. Bow to your Sensei. Bow to your Sensei. Quick follow up. I haven't hit submit on the iBonds buy on Treasury Direct yet, so I'm leaning towards putting 16% to TLT and 10% to I Bonds, roughly golden ratio, to keep more money accessible, i.e. due to the lockup period on treasuries. The Portfolio Visualizer impact shows minimal Delta, slightly higher Sortino ratio, higher best years, and lower STD deviation, but I could only find VIP SX for my I Bond entry, so not sure if that's accurate. Thoughts? I realize if you come back to my first email and tell me I Bonds shouldn't be looked at as long-term treasuries, Then I'm not sure how to think of this other than cash. Thanks again for being awesome and spending your retirement educating others. D. All right, let's see if we can work through some of your questions, Dustin.

Mostly Uncle Frank [12:48]

That would be great. All right, first off about reinvesting dividends or letting the cash accumulate for other buys. Let's talk about accumulation portfolios and then Deaccumulation or drawdown portfolios in accumulation portfolios. I think that's fine if you want to do it that way or do it the other way. I don't think it's going to matter that much for a couple of reasons. The first reason is that you are going to be continually putting money into these things anyway. And if you have a variety of funds that you are adding to, you're going to be evening that out. The second reason is that your funds in an accumulation portfolio are probably all going to be equity funds. So they're all going to be correlated and going up or down together most of the time. So again, it's not going to matter that much whether you reinvest the dividends immediately or have them out for some short period of time and then buy something different. Just as long as you're not leaving the money lying around in cash for long periods of time. but I don't think anybody would be doing that. Now, on the decumulation side or drawdown side, it doesn't really make sense to reinvest dividends when you're taking money out of a portfolio, because what you end up doing is just creating a lot of transactions and churning where you buy things back and then immediately sell them to take out the money. So the easier practice is to simply use those dividends and distributions to pay out the distributions of your decumulation portfolio. And usually that is just going to be a couple of a percent per year. So you're going to end up taking all that money and using it and then selling a few things along the way to make up for the rest of the distributions that you want to take out of your portfolio. All of this has more to do with convenience than anything else. I think mathematically, a lot of this is trivial, honestly. So I would just do whatever's most convenient for you and perhaps your tax preparer. All right, your next question was how I reported portfolio returns. And I'm pretty lazy about this, actually. I do not keep these on a separate spreadsheet or do anything complicated. So they're not all internally consistent. What I do basically for the monthlies and the annuals, I just look at Fidelity and see what it reports for that portfolio and just use that figure. So that figure on the monthlies and the annuals comes straight from Fidelity. For what happens weekly, I simply compare the balance of the portfolio at the beginning of the week and at the end of the week. And if there are distributions, I take that into account or I try to and then report back what the difference is. from one week to the next. For the returns since inception, what I do is this. I look at each portfolio, look at what it started at, and almost all of them started at $10,000. Take whatever it is over that. So suppose the portfolio is at $11,000 now. So that would be $1,000. Then I just add in the total distributions that we've had over time, and I use that as the total return. I realize that to be mathematically precise, you should be taking out those distributions and accounting for them in a spreadsheet on the months that they were actually taken out and doing a slightly different calculation. But I don't think it's worth it and I am retired, so it's close enough for what we're doing here. Ain't nothing wrong with that! which is to see whether these portfolios can withstand the kinds of distributions that we are taking out of them over a long period of time. All right, moving on to your next question about Dustin's fancy stock picks. You have a gambling problem.

Mostly Voices [16:49]

The general rule with all investments is if you make an investment

Mostly Uncle Frank [16:53]

with the idea that you made it for a particular reason, if that reason is no longer true, then you get out of the investment. However, in your case, it looks like what you were planning on doing to begin with was holding these things for three to five years. So if that was your original plan, then you should probably just stick with your plan and live with the consequences. There really is no right or wrong answer here because I cannot say whether selling these things now is a bad idea because they're going to go up or they're going to continue to go down. I have no idea. You can't handle the crystal ball. But I'm just giving you the general principle as to when you get in an investment and then when you get out of an investment. Psychologically, even if you decide to sell them, I would leave one really bad one there. And the reason I would do that is so you can remind yourself that you went down a path that probably wasn't the right path for you at some point, and that will keep you from doing that again. Because the biggest dangers, or one of the biggest dangers that we face as investors, in particular amateur investors, is becoming enamored with a new strategy every year or two and then jumping from one strategy to another. That is actually how amateur investors end up underperforming even the things that they hold. So you're better off getting a decent strategy and just sticking with it for the most part. And if you want to speculate in other things, have a little pot of money on the side, that you can just do whatever you want with and not feel like it's attached to your overall financial goals. All right, next, looking at this little portfolio you've set up, I do have a few comments on it.

Mostly Voices [18:42]

You need somebody watching your back at all times.

Mostly Uncle Frank [18:46]

First was you asked about the crypto in it, which comprises 10% of the portfolio. and you made a statement that it appears uncorrelated to the market. I'm not sure that's true or is true anymore. It seems to me that as these kind of assets become more institutionalized and are traded more by the big institutional investors, it becomes more and more like what you would call a risk on asset. And you saw a bit of that in March 2020 when the crypto went down with the stock market. You're seeing a bit of that now. They do seem like they are getting more correlated as they become more popular. Now, whether that'll change again, I have no idea. These assets are really too new to make a definitive statement as to how well correlated or uncorrelated they are. But I think it would be a mistake to assume that they are uncorrelated with stocks because they've not been exhibiting that behavior. the kind of behavior they've been exhibiting is more of a very volatile commodity. And so if you do put 10% of a asset like that in a portfolio, because it's so volatile, it is going to dominate the performance, the overall performance of the portfolio. At this point in time, cryptocurrencies still are about 10 times more volatile than the stock market. that's coming down, but it's still a big multiple of it. So what that means is the whole portfolio is likely to swing on the performance of the crypto in any given year, because the crypto may go up or down 60, 70, 80%. And so if you go back to our Bitcoin episode, episode 29, we talked about trying to right size a proportion for this asset class in an overall portfolio. which has a lot to do with relative volatility of an asset class, that if something is more volatile, you need less of it in a portfolio to have a good balance. But if it's less volatile, you would need more in a portfolio to have it have an effect on the portfolio. And that's just the mathematics of it. All right, your next question was about VXUS, which is your basic, total international stock market outside of the US. I think we need to be more careful about what kind of international stocks we put in our portfolio for a couple of reasons. The first is that a lot of the companies that you might find in the developed world are essentially large cap value companies. They're like Nestle and like Toyota. And so they're highly correlated with their large cap value counterparts in the United States, which means they're not really adding much in the way of diversification. So what you probably want to focus on would be more of the emerging market type things, which are going to be more diversified from your basic big international US companies. The other thing we need to recognize about foreign stock markets is they frequently are focused in a particular industry and not necessarily on the economy of the country where they are situated in. So for instance, countries like Canada and Australia have a high proportion of mining stocks and things like that. Russia is all about oil and some of these stock markets overseas have a lot of state-owned enterprises in them. which may not be something you really want to own. So I think in this day and age of globalization, you probably want to be a little more selective as to what you choose on the international side. So it matches up in terms of low correlation with what you've got in the US, and it also has a decent expected return coming out of it. We're experimenting with a fund like KBA, in our Risk Parity Ultimate Portfolio that is Chinese A-shares, basically Chinese companies that are only traded on Chinese stock markets. And they have a very low correlation but a decent overall return, so they match up well with a US-centric portfolio. They're not cheap though, but I think that's the way to really focus on what you're doing with your international stocks that you want them to be an adjunct to what your base is, which in most cases for most of us is mostly US stocks and US large companies. Okay, then you asked some questions about how to categorize PDVC, which is a commodities fund, PFF, a preferred shares fund, and VNQ, which is a REIT fund. I do think you should probably collect or categorize VNQ, the REIT fund, as part of your stock allocation and also PFF. PFF is kind of a funny bird. It's like a low volatility dividend generator. So you could categorize it as either a stock fund or you could model it as some kind of high yield bond fund. I think it fits best in the stock category. I'm not sure you really need anything like that in this little portfolio you're constructing. It's mainly used by very wealthy people because it pays qualified dividends. So that's why Rick Ferri holds it in his personal portfolio. I also used it kind of as ballast in some of these leveraged portfolios because of its relatively low volatility when compared to the rest of the stock market. But it's certainly not a must-have in any portfolio. A commodities fund like PDVC is separate and apart from stocks. As we saw last year, when there's a lot of inflation, that's really what that fund is there for. For that very circumstance where there happens to be high inflation in a particular year, it can take off and go up 30-40%. Other than that, sometimes it's going to be correlated with stocks. Sometimes it's not. And it's the kind of thing like crypto that you really don't want too much of that in there because it's very volatile. It doesn't have a great track record as far as returns are concerned. It does one thing. It has one job and it does it really well. But that's all it does. Now, as for I bonds, I would categorize that as cash, essentially. Because once it's been there for a year, you can take it out with some small penalty up to five years, and then after five years you can take it out without penalty. It's never going to go down in value. It's always going to pay some return. It's probably not going to be paying 7% when we first looked at it last year. It was paying about 3%, and that's not bad for something that is the equivalent of a certificate of deposit, essentially. but I would consider that as part of your cash allocation in any given portfolio and not expect that it's going to generate large returns over time, but that it's going to be stable and liquid after one year. And just one final comment looking at this portfolio. The only thing that I would think that you would want to have in there that you don't have is some small cap value stocks because those are in fact more diversified from Vti, the total US stock market, than a lot of these international funds. And they also do well in inflationary environments, so they make a good balance with the rest of a portfolio. But hopefully that answers enough of your questions. And thank you for that email or those emails, I should say. Next off, we have an email from Daniel. Hi, Frank.

Mostly Mary [26:56]

The equity portion of the risk parity strategies you present are skewed toward U.S. Stocks. I know they have outperformed the ex-U.S. Stocks for some time, and the correlations are very similar. But don't you think that things could go back to a time when ex-U.S. Stocks outperformed U.S. Stocks? U.S. Stocks seem so much more expensive, so why not use a global world equity ETF instead? Thanks for your input.

Mostly Uncle Frank [27:20]

well, I guess my thoughts on this are what I just said in answer to the previous question that I think you need to be discriminating on what you choose for international stocks, that you really do want to find those things that are the least correlated but likely to have a decent return over time. And so you're going to be looking more at things like emerging markets, Chinese shares or other things that don't look like big US companies. And that tends to exclude a lot of the developed world in terms of what they have to offer there because that overlaps a whole lot with what you've got in the US. And you would expect those things just to go up and down together. And since they're more value related than growth related, they're going to have a more muted return overall. So they'll provide some stability to your portfolio, but they will probably reduce the returns overall. It's for that reason I would prioritize after your big growth fund or total stock market fund, going for a small cap value fund, going for a reit fund, and then also looking at international stuff selectively to match up and go with those together. In terms of what is expensive and what is not, that requires the use of a crystal ball. A really big one here. which is huge. I don't recommend that you decide what to buy based on your ability to forecast or decide which one is more expensive than the other. These things do tend to work out over very long periods of time, but they are very long periods of time. And so any given fund or class can underperform for a decade or more. And so it's for that reason I don't recommend that you try to crystal ball this and decide, well, today this group of stocks is more overvalued than that one, so I'm going to buy more of the one that's lower. I don't think that's a good process unless you're some kind of a trader, which I am not.

Mostly Voices [29:28]

Forget about it.

Mostly Uncle Frank [29:33]

And as for a global world equity ETF. I guess you'd be talking about something like VT. Again, I would look inside of one of those things. I think what you're going to find is if you buy one of those things, what you're doing is tilting your portfolio toward large cap value and these large international banks and big companies that tend to be not very exciting. And so I would really look at this in that lens. Not what country is something from and saying, oh, it's a different country, it must be diversified, but what kind of a thing it is from a factor perspective. Meaning, is this large cap, is this value, what is it? How would we categorize it if it were living in the United States? Because that's going to be a much better metric than saying, well, it's a different country, it must be different. That doesn't pan out. the way you would want it to. But thank you for that email. And now, last off, we have an email from Kevin.

Mostly Mary [30:38]

And Kevin writes, first, thank you. Your podcast add tons of value. Anyone whose web page is focused on finance and quotes Tom Waits is super cool in my book. Do you have a recommended reading list? I wish I could buy the Ray Dalio Holy Grail in Excel and get to that level of precision in my understanding. Any thoughts on how to learn that or if anyone online has built it into Excel? Thanks.

Mostly Uncle Frank [31:31]

Well, Kevin, I've been listening to Tom Waits since the 1980s when Frank's Wild Years came out.

Mostly Voices [31:51]

Frank settled down out in the valley and he hung his wild years on a nail that he drove through his wife's forehead.

Mostly Uncle Frank [31:59]

It is funny, Tom Waits had a father named Frank. My name's Frank. I have sons named Frank and Tom. It is a coincidence though. My father-in-law is also named Tom, as every other male member of my wife's family. It happened once. But getting to your questions about that Ray Dalio YouTube video link. Yeah, I have not found that again. I have been aware that this link had been broken, but I have not found that video. I will tell you what it says. What he says in that video, it's a short interview, and they're asking, well, how do you build a risk parity style portfolio? And he says, well, usually you basically start with some stocks and some treasury bonds and some gold. kind of go from there. So that is probably the sum total of what you need to get out of that video, but that's basically what he was talking about there. Now, a recommended reading list. No, I don't have one. Forget about it. I am retired and I'm not likely to create one. I will say that I am aware of one of my listeners who is thinking of putting together a blog which might have something like that on it. But I'm going to wait and let him roll that out and if and when it happens, I will let you know. But there is a shortcut you might make. If you go to the podcast page at www.riskparityradio.com, you can search it and you can search the show notes for all the podcasts. So put in the word paper, P-A-P-E-R, into that search function. It will bring you up a bunch of podcasts with show notes that have papers in them. And so you'll get papers from Bridgewater, you'll get a CFA manual, you'll get some AQR white papers. These are all things written over the past 25 years about this style of investing, what it means and what you can do with it. And so that's probably the easiest way to get into a reading list without me having to prepare you a reading list. Yes. As for building the Ray Dalio holy grail in Excel, I'm not sure anybody could actually do that because Bridgewater uses this as a principle, but they invest in all kinds of complicated things, many of which are not available to mere mortals like us. So I view this as a principle, and the sample portfolios we've constructed are just that. They are sample portfolios applying this principle. And so my idea here is not to tell you this is the portfolio that you should invest in. This is the risk parity portfolio. That's not true and it's not what we're trying to do here. You still have to evaluate how much risk you want to take in your portfolio. Whether you want it to be really conservative like that all seasons portfolio. Whether you're looking for something that's got the same kind of risk reward. or at least risk that a 60/40 has got, the golden butterfly, golden ratio, risk parity ultimate, or if you are trying to take leverage and then you're looking at some of those experimental portfolios that we've got. But the principle simply is to look at whatever you're trying to do and then find uncorrelated assets to put in the portfolio with the idea that that will give you shorter and shallower drawdowns overall. when you compare it to somebody's standard portfolio where they really haven't applied the idea of the Holy Grail principle, which is to reduce correlation. If you're looking for correlation numbers themselves, you can get them over at Portfolio Visualizer in the asset correlation tool they've got there. And then you can also run any number of simulations. I should mention that I just put up a new tutorial, tutorial number four, about the Monte Carlo Simulator that's at Portfolio Visualizer. It's kind of an introduction to that. It's a complicated tool, has lots of moving parts to play with. But if you want to go take a look at that, I'll link to it. It's at the YouTube channel and it's our fourth tutorial video.

Mostly Voices [36:13]

We have the tools, we have the talent.

Mostly Uncle Frank [36:16]

It's not very pretty, but it does the job, I think. And thank you for this email.

Mostly Voices [36:20]

One night Frank was on his way home from work. He stopped at the liquor store, picked up a couple of Mickey's Big Mouths, drank him in the car on one of the Shell stations. He got a gallon of gas and a can. Drove home, doused everything in the house, and torched it. Parked across the street laughing, watching it burn. All Halloween orange and chimney And now for something completely different.

Mostly Uncle Frank [36:52]

And the something completely different is our weekly portfolio reviews of the seven sample portfolios that you can find on the portfolios page at www.riskparityradio.com But it was a bloodbath in the markets last week, the worst week since March 2020, at least for stocks. This is why we can't have nice things. So we'll go review that and then we'll take a look at what these portfolios did and how they held up. And so last week, the S&P 500 was down 5.68%. The Nasdaq was down 7.55%. Gold was up. I love gold.

Mostly Voices [37:32]

Gold is up 0.9%.

Mostly Uncle Frank [37:35]

Long-term treasury bonds represented by the fund TLT were also up. They were up 0.85%. REITs represented by the fund REET did not do too badly. They were down, but they were only down 1.16%. PBDC, that commodities fund, continues to go up. It was up 1.02% last week. And the preferred shares fund PFF that we use in some of our portfolios was down 1.53% for the week. If you want to look at some of the more oddball things we have in some of these portfolios, the best performer of all of the funds in all the portfolios was a volatility fund VIXY, which was up 25.73% last week. But you only use that for insurance in stock market crash scenarios, and you see how it works. Since we've been talking about international funds, we do have this International Fund KB A, that's A shares from China, it was actually up 1.34% for the week. So you can see its behavior, and this is true last year and most years, is not correlated with what the US stock market is doing. All right, now going through the portfolios, our most conservative one is this All Seasons portfolio. It's 30% in a total stock market fund, VTI, 55% in treasury bonds, which are TLT and VGIT, and then for the remaining 15% that is divided into gold and commodities, GLDM and PBDC. It was down last week, but it was down 1.34% for the week. So it's still capable of putting you to sleep at night. I'm putting you to sleep.

Mostly Voices [39:17]

It is up 8.

Mostly Uncle Frank [39:22]

94% since inception in July 2020 and does not move too much. regardless of what's going on. Now our next portfolio, and these are sort of our three bread and butter ones, the Golden Butterfly, this one is 40% in stocks divided into a total stock market fund and a small cap value fund, 40% in treasury bonds divided into short term and long term, and then 20% in gold GLDM. This one was down 2.29% for the week. It is up 19.45% since inception in July 2020. Next one we have here is our Golden Ratio Portfolio. This one is 42% in stocks, 26% in long-term treasury bonds, 16% in gold, 10% in REITs, R-E-E-T, and 6% in cash. It was also down. It was down 2.51% for the week. It is up 19.57% since inception in July 2020. And then the last of our bread and butters is our Risk Parity Ultimate, which has 14 funds that I will not go through altogether, but many of them were up this past week, even though the stock components were down. And so all told, it was down 2.57% for the week and is up 18.24% since inception in July 2020. So just pausing and talking about those three funds and actually those four funds, You can see this kind of illustrates the point of having these kind of portfolios that when the stock market is doing really horribly, they tend to do not nearly as horribly and a lot more comfortably because being down 1 to 3% is not a big deal when you compare it to being down 5 to 8% in a week. But that is a direct result of holding uncorrelated assets and applying this holy grail principle to what you pick to put in your portfolio. Alright, moving on to our experimental portfolios. These have leveraged funds in them. The first one is our accelerated permanent portfolio, which is 27. 5% in a leveraged bond fund, TMF, 25% in a leveraged stock fund, UPRO, 25% in PFF preferred shares as kind of ballast there, and then 22.5% in gold, GLDM, took a little beating last week. It was down 4.02%, not nearly as bad as the overall stock market. It is up 19.53% since inception in July 2020. Moving to our most leveraged portfolio, this is the aggressive 5050. What's notable about this portfolio is it also does not have any gold in it, which makes it more volatile. So this one is 33% in TMF, that leveraged bond fund, 33% in UPRO, the leveraged stock fund, with the ballast for the remaining 34% divided into PFF, the preferred shares fund, and VGIT, an intermediate treasury bond fund. It was down 5.76% for the week, so very similar to the stock market performance. It is up 23.42% since inception in July 2020. And then our last one is our newest portfolio. This is the levered golden ratio. This one has been taking a bit of a beating mostly because of the leveraged small cap fund TNA that is in it that accounts for most of its losses. It's only 10% of the portfolio, but it's down about a third from where it started. So anyway, what else is in this portfolio? We have 35% in a composite leveraged S&P 500 and treasury bond fund called NTSX. 25% is in gold, GLDM, although I see it's up to 27.48%. 15% is in a REIT O, Realty Income Inc. And then we have 10% each in a leveraged bond fund, TMF and TNA, the leveraged small cap fund. And then it's also got a volatility fund, VIXM, which was up last week but not nearly as much as VIXY at 3% and then the remaining 2% is in Bitcoin funds BITQ and BITW which are doing absolutely horribly since July they were down 35.56% and 20. 92% respectively but that's what happens with some very volatile parts of this. So this portfolio is down 4.12% for the week it is actually down since inception in July 2021 is down 3.87% since inception. I think this makes a good test because the other portfolios did start at a time when they had some runway and the stock market was mostly going up. This one has been started at a time when things were a little bit rocky already and now have gone down the tubes a bit. But we do want to see how a portfolio like this performs over time and is capable of making its distributions. We're actually applying a 7% distribution to this portfolio to really stress test it and we will see if it holds up. Part of the fun here is not knowing what's going to happen exactly. We got a scary 140 this week and doing little experiments. But it will be curious to see what goes on and happens in the coming weeks. Usually volatility begets volatility, so I would expect that these markets will continue to be volatile for some time. some unpredictable length of time.

Mostly Voices [44:59]

We don't know! But we'll see and we'll see how they perform.

Mostly Uncle Frank [45:04]

But now I see our signal is beginning to fade. If you have comments or questions for me, please send them to frank@riskparityradio.com that email is frank@riskparityradio.com or you can go to the website www.riskparityradio.com and put in your Comment or question in the form there and I'll get it that way. I believe we'll be picking up this week with some more emails, although I do have a interesting fund also to analyze on the list called CROC if you want to go preview it and hopefully we'll get to that as well. If you haven't had a chance to do it, please go to your podcast provider and like, subscribe, give me some stars, a review. That would be great. Okay. Thank you once again for tuning in. This is Frank Vasquez with Risk Parity Radio.

Mostly Voices [45:59]

Signing off. Pin your ear to the wisdom post. Pin your eye to the line. Never let the weeds get higher than the garden. Always keep a sapphire in your mind. Always keep a diamond in your mind. you got to get behind the Muse in the morning and plow. Got to get behind the Muse in the morning and plow.

Mostly Mary [46:39]

Got to get behind the Muse in the morning and plow. The Risk Parity 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.