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.

Mostly Uncle Frank [0:37]

Thank you, Mary, and welcome to Risk Parity Radio. If you have just stumbled in here, you will find that this podcast is kind of like a dive bar of personal finance and do-it-yourself investing. Expect the unexpected. It's a relatively small place. It's just me and Mary in here. And we only have a few mismatched bar stools and some easy chairs. We have no sponsors, we have no guests, and we have no expansion plans. I don't think I'd like another job.

Mostly Voices [1:13]

What we do have is a little free library of

Mostly Uncle Frank [1:17]

updated and unconflicted information for do-it-yourself investors.

Mostly Voices [1:25]

Now who's up for a trip to the library tomorrow?

Mostly Uncle Frank [1:29]

So please enjoy our mostly cold beer served in cans and our coffee served in old chipped and cracked mugs along with what our little free library has to offer.

Mostly Voices [1:51]

But now onward, episode 304. Today on Risk Parity Radio, it's time for the grand unveiling of money.

Mostly Uncle Frank [2:01]

Which means we'll be doing our weekly portfolio reviews of the seven sample portfolios you can find at www.riskparityradio.com on the portfolios page.

Mostly Voices [2:13]

But before we get to that, I'm intrigued by this how you say emails.

Mostly Uncle Frank [2:19]

And first off, we have an email from Visitor59-70.

Mostly Mary [2:35]

And Visitor59-70 writes, if the majority of one's retirement funds is in the government TSP, What is the best way to lower the stock allocation to 70%

Mostly Uncle Frank [2:43]

before retirement? I've heard you disparage the G Fund as like a cash allocation. Well, there's two answers really. I mean, the best way would be to have other assets outside the TSP that you are not restricted in only investing in TSP based funds. But within the TSP, obviously the fund that you can use there is the F Fund, F as in Frank, which is a basic bond fund that follows a Bloomberg US Aggregate Bond Index. And that's similar to a total bond fund like BND, the Vanguard Total Bond Fund. Not exactly the same, but similar enough. The problem with the G Fund is it's just a money market essentially, or equivalent to that. And so while it's fine to have some money in something like that, It's not going to grow. And so if you have still a long time before you're actually using this money, the whole reason you put it in something like a TSP is to hopefully get some growth out of it because it's tax protected. So you're not really using the TSP for its intended purpose if all you're doing is throwing cash in there and watching it not grow. Now the common refrain you hear these days is, well look at the past couple of years, this G fund or these money markets performed way better than these bond funds which are down. and that's true for the past couple years, but I'm anticipating based on your comment that you're leaving this in there for some time and over a long period of time, you're better off with the F Fund than the G Fund for a bond allocation in a TSP. And that's especially true now that interest rates have risen and could potentially fall in the future. But really, I would just be looking at your TSP as one of your assets in whatever else you are overall holding, and then it becomes an asset location question as to which assets belong in which place. But since I don't have any information about what else you hold, I can't tell you anything more about that. Not going to do it. Wouldn't be prudent at this juncture. Anyway, hopefully that helps and thank you for your email.

Mostly Voices [5:09]

Second off.

Mostly Uncle Frank [5:12]

Second off, we have an email from Frank. The name's Francis Sawyer.

Mostly Voices [5:19]

But everybody calls me psycho. Any of you guys call me Francis and I'll kill you. And no, I'm not talking to myself.

Mostly Mary [5:32]

Frank writes, I am catching up on your podcasts after hearing you recently on the Catching Up to Five podcast. You have great content.

Mostly Uncle Frank [5:41]

Well, thank you for the compliment. Most of the reason we have great content these days is because we have great listeners who bring great questions and other information to our attention. Top drawer, really top drawer. and hopefully because we've built on a foundation based on principles. And that's the way, I like it, she on the sunshine band. It was fun to go on that catching up to five podcast with my friends Bill and Becky, who just started that this year. And I'll link to that again in the show notes. That's a nice podcast for people who find themselves in midlife and not having really paid that much attention to their investments and are trying to catch up because both Bill and Becky have had that experience of really not getting going on what they needed to do until about age 50. And that is a broad audience that has been kind of neglected out there in personal finance world. It's not as exciting as some young person becoming a millionaire by age 30. But it does cover a lot more people in a lot more situations. And they talk to all kinds of people who are doing everything from just sharing their personal stories to talking about the books and other things they've written in personal finance world. One trick is to tell them stories that don't go anywhere.

Mostly Voices [7:10]

Like the time I caught the ferry over to Shelbyville. I needed a new heel for my shoe. So, I decided to go to Morgantown, which is what they call Shelbyville in those days. So I tied an onion to my belt, which was the style at the time. Now, to take the ferry cost a nickel, and in those days, nickels had pictures of bumblebees on them. Give me five bees for a quarter, you'd say. Now, for most of us who listen to this podcast, we're more of the nerdy sort and probably have been fiddling around with this stuff for decades. You can't handle the gambling problem.

Mostly Uncle Frank [7:54]

But if you have somebody that you know that wants to get into personal finance but doesn't want to be overwhelmed than they are at midlife, that podcast may be very attractive to them and for them. If you don't start making more sense, we're going to have to put you in a home. you already put me in a home. Then we'll put you in the crooked homies on 60 Minutes. I'll be good. So if you haven't checked it out yet, you really should. And thank you for your email.

Mostly Voices [8:25]

And I don't like nobody touching my stuff. So just keeping meat hooks off. If I catch any of you guys in my stuff, I'll kill you. Lighten up, Francis.

Mostly Uncle Frank [8:41]

Next off, we have an email from Alexei. So that's what you call me, you know?

Mostly Voices [8:45]

That or his dudeness or duder or, you know. Bruce Dickinson. If you're not into the whole brevity thing. And the dude writes.

Mostly Mary [8:57]

I know you are not a regular user of the Bird app, but here is a pretty fiery takedown of Wealthfront's risk parity fund by Andrew Beer. I tried to look up the holdings of WFRPX and found them to be totally opaque. I guess the use of swaps can make even mutual funds completely inscrutable. AZ.

Mostly Uncle Frank [9:27]

Alright, what the dude is referring to here is a Tweetstorm, or I guess they call it an X storm. I don't use Twitter or X and have not for about five or six years other than to post a couple of things for this podcast. But this refers to something that Andrew Beer posted about Wealthfront and its so-called risk parity fund, WFRPX, and roundly criticized it. Now, Andrew Beer is the founder of the managed futures fund, DBMF, and has rightly become a popular voice in finance these days, given the work that he's put in and what he's created there. But we did note ourselves the problems with Wealthfront's attempt at a risk parity portfolio and fund all the way back in episodes 85 and 90 from over two years ago. and when we looked at that, what we saw was something that was very poorly constructed, had a lot of foreign and corporate bonds in it and other things that made it look just kind of like a hodgepodge of stuff. And so naturally it just did not perform very well, especially compared with other commercial constructions, if you will. I've really never had much faith or interest in any of these robo-advisors because they do seem to come up with kind of Cookie cutter things with little basis for what they're doing there, other than it kind of looks good on the surface and it's something they can market. And I think we can easily do better ourselves, whether we're doing some kind of complex portfolio or something that's very simple. You don't really need to go there. But it's just another example of why do it yourself investing makes even more sense now than it did in the past, because we have so many other and better options to use. than we did in the past, and they're cheaper. So thank you for bringing that to our attention, and thank you for your email. Take it easy, dude. Oh yeah. I know that you will.

Mostly Voices [11:29]

Yeah, well, the dude abides. Last off.

Mostly Uncle Frank [11:38]

Last off, we have an email from Paul. Paulie hated phones. He wouldn't have one in his house. He used to get all his calls second hand.

Mostly Voices [11:51]

Then you'd have to call the people back from an outside phone. And, guys, that's all they did all day long was take care of Paulie's phone calls.

Mostly Mary [12:04]

And Paul writes, hi, Frank. I look forward to your podcast every week. The Golden Butterfly by Tyler is one of your core portfolios. However, I am curious about his other portfolio, the pinwheel. This portfolio, which you have briefly mentioned in a previous podcast, looks very interesting and very much in line with what you are doing here. In your opinion, how does it stack up against the Golden Butterfly, Golden Ratio, and other risk parity portfolios? All the best, Paul G. Well, thank you for bringing this up because it gives us a chance to talk about Several different things here.

Mostly Uncle Frank [12:43]

The pinwheel portfolio is another invention of Tyler over at Portfolio Charts. He is the progenitor of the Golden Butterfly portfolio as well, which is what he personally uses. And this is one of the 19 portfolios he has as kind of standard portfolios for modeling over on his portfolios page. That is a very useful tool because it's got all of the common portfolios that people talk about, whether it's a three fund or a 60/40 or a Meriman portfolio or a Swedroe portfolio and a number of other ones that you've probably heard about. And you can compare all of them there, either looking at them individually or looking at things like his risk reward calculator, which has them all on one graph and compares various risk and reward metrics. And I'll link to both of those things in the show notes. But this also gives us opportunity to think about, well, how do we analyze any portfolio? And the first thing we do is we look and see what's in it. This one has 15% in a total stock market, 10% in US small cap value, 15% in international stocks. I guess that's just large cap international blend, 10% in emerging markets, 15% in intermediate bonds, 10% in cash, 15% in REITs, and 10% in gold. And so whenever you're looking at a portfolio, the first thing you want to do is think about, well, what are the macro allocations in this? How much is it in equities versus bonds versus other stuff? And when you add all of these things up, what you see is it's 65% in equities, including the REITs, 25% in bonds, which includes the cash, it would be a money market, or a T-Bill, and then 10% in gold. So it's a 65/25/10 kind of portfolio. And you would expect this portfolio to perform similarly to other portfolios that look kind of like that. And so what this kind of looks like is kind of a standard three fund Boglehead kind of portfolio with REITs and gold added to it. It's another way of looking at it. So it's certainly something anybody could use. You would say it would be conservative for a accumulation portfolio. And you probably wouldn't want that cash in there if you were using this to accumulate. And on the slightly aggressive side for decumulation portfolio, but nothing out of the ordinary. I know your works. You're neither cold nor hot. so because you are lukewarm, I will spew you out of my mouth. It does have the characteristics of a typical retirement or drawdown portfolio in that it's between 40 and 70% in equities with the rest in bonds and other things. Now the easiest way to compare it with other portfolios is to go and look at those risk reward charts there at portfolio charts. And what you'll see there is that when you compare this pinwheel portfolio to all of the other 18 ones on there, it does seem to have better risk reward characteristics than most of the standard kind of portfolios, 60-40, 3 fund, those sorts of things. But it doesn't do as well as some of the more risk parity leaned portfolios like the weird portfolio from Value Stock Geek. or the Golden Butterfly, or if you put in a golden ratio kind of portfolio into this calculator because it allows you to put in your own portfolio, you'll see that those all tend to have better risk reward characteristics than this one does, although this one's not bad. And I think what probably helps this one over your basic standard portfolios is just having that 10% gold in it. because that really does improve the diversification properties of just about any portfolio. If you just add a little bit of that in there, it does help. What are the drawbacks you see in this portfolio? Well, looking at these international stocks and emerging markets that may just be too much for this kind of portfolio, and you probably want to have those tilted towards value or something like that so they're even more diversified from your US stocks, particularly that Total Stock Market fund and the 10% cash and it probably isn't really helping it that much either. It's interesting if you redistributed these things around a bit, this would end up looking a lot like the Value Stock Geeks weird portfolio, which is 60% in stocks including some REITs with more of a tilt towards the value and then 20% in gold and 20% in actually long-term treasury bonds instead of the intermediates and cash that are in this portfolio. And we have talked about that weird portfolio a number of times in this podcast, and they are episodes 113, 126, 165, 267, and 281. I also appeared on the Value Stock Geeks Security Analysis podcast. which I can link to again in the show notes, even though it's only tangential to this discussion. But my own conclusions on this pinwheel portfolio is that it's a very viable portfolio for somebody to be holding, but probably could be tweaked a bit depending on what you're actually using it for, whether it would be an accumulation type thing or a decumulation type thing. But it certainly would be a good base to work with and compare with other things that you're considering. But hopefully that helps and thank you for your email.

Mostly Voices [18:42]

Now the guy's got Paulie as a partner. Any problems he goes to Paulie. Trouble with the bill, he can go to Paulie. Trouble with the cops, deliveries, Tommy, he can call Paulie. But now the guy's got to come up with Paulie's money every week, no matter what. Also, Paulie could do anything, especially run up bills on the joint's credit. And why not? Nobody's gonna pay for it anyway. And as soon as the deliveries are made in the front door, you move the stuff out the back and sell it at a discount. You take a $200 case of booze and you sell it for $100. Doesn't matter, it's all profit. And then finally, when there's nothing left, when you can't borrow another buck from the bank or buy another case of booze, you bust the joint out. You light a match.

Mostly Uncle Frank [19:28]

You look like you're decorating a Christmas tree. Now we are going to do something extremely fun. And the extremely fun thing we get to do now is our weekly portfolio reviews of the seven sample portfolios you can find at www.riskparityradio.com on the portfolios page. And the November recovery continues after the three month slide of August through October. in most markets and for most things, noticeably the dollar is going down in value versus other currencies and gold. And so everything seems to be improving on that basis. Interest rate scares appear to be off the table. But anyway, looking at the markets last week, the S&P 500 was up 2.24% for the week. The Nasdaq was up 2.37% for the week. Small cap value was a big winner last week.

Mostly Voices [20:24]

I'm telling you, fellas, you're gonna want that cowbell. Our representative fund, VIoV, was up 5.

Mostly Uncle Frank [20:29]

32% for the week. It's been pretty volatile recently, but mostly in the good sense. Gold was up. Gold was up 2.06% for the week. Long-term treasury bonds represented by the fund VGLT continue a recovery. They were up 2.23% for the week. Reits represented by the fund REET were also up sharply. They were up 4.06% for the week. Commodities represented by the fund PDBC were down slightly. They were down 0.21% for the week. Preferred shares represented by the fund PFF were up 2.1% for the week. And managed futures represented by the fund DBMF were the only things that were really down. They were down 2.55% for the week. And a lot of that, I think, is because they've been essentially long the dollar or short other currencies against the dollar. And that fund has also been short interest rates. But it is showing good diversification properties against everything else, if nothing else. Now, moving to these portfolios, first one's this All Seasons, which is a reference portfolio. It's only 30% in stocks and a total stock market fund. 55% in intermediate and long-term treasury bonds and the remaining 15% divided into gold and commodities. It was up 1.98% for the week. It's up 3.75% year to date, but down 4.61% since inception in July 2020. Moving to these three kind of bread and butter portfolios. First one's this golden butterfly, Tyler's construction, It is 40% in stocks divided into a total stock market fund and a small cap value fund, 40% in treasury bonds divided into long and short, and 20% in gold. It was up 2.51% for the week. It's up 5.01% year to date and 12.6% since inception in July 2020. Next one's the golden ratio. This one's 42% in stocks divided into three funds, including some low volatility and small cap value. It's got 26% in treasury bonds, 16% in gold, 10% in a REIT fund, and 6% in a money market fund. It was up 2.55% for the week, it's up 5.95% year to date, and up 8.61% since inception in July 2020. Next one's the Risk Parity Ultimate. I won't go through all 15 of these funds. It does include commodities and managed futures and a little bit of Bitcoin and some foreign stocks. The Kitchen Sink, if you will. It was up 2.23% for the week. It's up 5.77% year to date, but down 0.04% since inception in July 2020. Now moving to these experimental portfolios. Where we run hideous experiments so you don't have to. These are very volatile portfolios involving levered funds, so don't try this at home.

Mostly Voices [23:42]

You have a gambling problem. First one's the Accelerated Permanent Portfolio.

Mostly Uncle Frank [23:46]

This one's 27.5% in a levered bond fund at TMF, 25% in a levered stock fund, UPRO, 25% in preferred shares, PFF, and 22.5% in gold, GLDM. It's up 4.63% for the week. It's up 4.44% year to date, but down 20.4% since inception in July 2020. And it's gone from about minus 10% to up over 15% this year so far. Next one is our least diversified and most levered portfolio. This one's the aggressive 50/50. It's 50% stocks and 50% bonds. It's got one third in a levered stock fund, UPRO, one third in a levered bond fund, TMF, and the remaining third in Ballast divided into a preferred shares fund and an intermediate treasury bond fund. It was up 4.91% for the week. It's up 1.7% year to date. We're down 29.5% since inception in July 2020. And our last hideous experiment is the levered golden ratio. This one is 35% in a levered composite fund. NTSX, that is the S&P 500 in Treasury bonds, 25% in gold, GLDM, 15% in any EREIT, O, 10% each in a small cap levered fund, TNA, and a levered bond fund, TMF, and the remaining 5% in a managed futures fund, KMLM. And that levered small cap fund is finally doing something positive. It's really struggled since about the end of 2021. Anyway, the portfolio is up 4.24% for the week. It's up 1.71% year to date, but down 22.15% since inception in July 2021. It's a year younger than the other ones. And that concludes our portfolio reviews. I don't care about the children. I just care about their parents' money. It's funny for all of the volatility we've seen in the market this year. It looks like these things may end up finishing out in a very average fashion by the end of the year. We'll see what happens in the next six weeks. A month or two ago, all of the pundits were talking about interest rates going up, but now all of them are talking about interest rates going down, and the Fed actually cutting rates in early next year.

Mostly Voices [26:14]

Crystal Ball can help you. It can guide you.

Mostly Uncle Frank [26:18]

I don't know if any of that's going to happen, but you can see why it really is true that none of these people can really predict anything, no matter what crystal ball they may be using.

Mostly Mary [26:30]

Now you can also use the ball to connect to the spirit world.

Mostly Uncle Frank [26:35]

But now I see our signal is beginning to fade. We're coming into Thanksgiving week in the United States at least. I think we're gonna be having a festival of people here all week long coming and going, which should be a nice time for the Vasquez family.

Mostly Voices [26:55]

Sorry we're closed. Well then, what are all these people doing here? Drinking and having a good time. Well, that's why we're here. You're too stupid to have a good time.

Mostly Uncle Frank [27:19]

and hopefully I will be able to put together a podcast at some point this week although I can't guarantee it you're

Mostly Voices [27:27]

too stupid to have a good time but anyway if you have comments or questions

Mostly Uncle Frank [27:31]

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 Put your message into the contact form and I'll get it that way. If you haven't had a chance to do it, please go to your favorite podcast provider and like, subscribe, give me some stars, a review, a follow. That would be great. Mmmkay? Thank you once again for tuning in. This is Frank Vasquez with Risk Parity Radio. Signing off.

Mostly Voices [28:09]

Far back as I can remember, I had always wanted to be a wise guy. When I was growing up in Massapequa, the mob was all over the place. And because I knew them, I was treated with respect. I remember there was Jimmy and Tommy. Hey, there was Frankie Carbone. Hey, how you doing? There was my brother's friend, Skinny Lou. Hey, I took care of that thing for you. And there was Jimmy two times who got that nickname 'cause he said everything twice. I'm gonna go get the papers. Get the papers. You had Bobby Buckethead. Hey, what's up, Alec? And there was Jimmy five times. I'm gonna get the papers. Get the papers. Get the papers. Get the papers. Get the papers. It was Johnny Bigballs. Hey, I got something to show you. All right, suit yourself. And Richie pause and shout, hey, how's it going? And there was Nick the puppet lampoon.

Mostly Mary [29:21]

How you doing? And Denise, who let her kind in here, Washington? I got off at the wrong subway stop.

Mostly Voices [29:25]

And there was Sonny via Satellite Panero. Hey, greetings from Tokyo. And it was Anthony Santa DiNapoli. Hey, how's it going? And the girls, cold saw Carol and Gina to clap and Eddie. How come you don't call me? Your head out of focus, Eddie. What are you looking at? And don't forget, Pete the pedophile. Hey, when are you gonna bring the kids over? A naked Derek. Hey, when are you gonna bring the kids over? My sister's friend, Johnny the Informer. Hey, hey, Alec, between you and me, what's the good word on the street? What's going on, huh? He wasn't too popular. Also, there was Stacy kind of looks like Kim Bassinger. How are ya? She was real popular. And of course, there was Edie, a complete idiot. Hey. Who we decided to call that 'Cause he was a complete idiot. What's up? You see, he was such a moron, the name kind of suggested itself. Yeah, how you doing? First it was just Ed the Idiot, but it didn't seem enough, hence Ed the Complete Idiot. All right, we get it. I'm an idiot. Move on. And of course, there I was. Those were great days back then. Everybody had a nickname except me, although sometimes they used to call me Wide Load. No idea where that came from.

Mostly Mary [30:46]

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.