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 [0:38]

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. We have no sponsors, we have no guests, and we have no expansion plans.

Mostly Voices [1:08]

I don't think I'd like another job.

Mostly Uncle Frank [1:11]

There are basically two kinds of people that like to hang out in this little dive bar.

Mostly Voices [1:15]

You see in this world there's two kinds of people, my friend.

Mostly Uncle Frank [1:19]

The smaller group are those who actually think the host is funny regardless of the Content of the podcast. Funny how, how am I funny?

Mostly Voices [1:28]

These include friends and family and a number of

Mostly Uncle Frank [1:32]

people named Abby. Abby someone.

Mostly Voices [1:36]

Abby who? Abby normal.

Mostly Uncle Frank [1:40]

Abby normal. The larger group includes a number of highly successful do-it-yourself investors. many of whom have accumulated multimillion dollar portfolios over a period of years. The best Jerry, the best. And they are here to share information and to gather information to help them continue managing their portfolios as they go forward, particularly as they get to their distribution or decumulation phases. of their financial life.

Mostly Voices [2:18]

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 [2:27]

But whomever you are, you are welcome here.

Mostly Voices [2:31]

I have a feeling we're not in Kansas anymore. But now onward, episode 329.

Mostly Uncle Frank [2:38]

Today on Risk Parity Radio, it's time for the

Mostly Voices [2:41]

grand unveiling of money.

Mostly Uncle Frank [2:45]

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. And we also have monthly distributions to talk about.

Mostly Voices [3:01]

Woo hoo! Yes, well, it does sound like fun. I can't wait to start pawing through my garbage like some starving raccoon.

Mostly Uncle Frank [3:09]

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

Mostly Voices [3:13]

emails.

Mostly Uncle Frank [3:17]

And, first off, first off, we have an email from Jetson.

Mostly Voices [3:23]

Meet George Jetson. And Jetson writes. Hi, Frank and Mary.

Mostly Mary [3:33]

I am a direct donor to the Father McKenna Center and a long time listener since finding you through Choose a Five. Yeah, baby, yeah! New episodes of the Risk Parity Radio podcast always go to the top of my podcast queue. You're insane, Gold Member! Thanks for the years of wit and wisdom and the sound bites. Oh, behave! Yeah, yeah, baby! I have two questions. One, Are there days of the year, month, or week that are traditionally better to execute market tasks? Not for the purpose of timing for profit, but to avoid volatility from certain cyclic activities in the market such as earning reports, etc. Two, I'm close to retirement with no exact date yet, but feel I am within 24 months. My current portfolio is about 10% cash, short-term bonds, and 90% split between VTI and VIoV. My portfolio is also at an all-time high. The investments are split across a Vanguard Roth IRA, a 401k with my employer, and my traditional brokerage account at Vanguard. Half of the total portfolio is in my Roth IRA, and the remaining balance is split pretty evenly between the 401k and the traditional brokerage accounts. I've decided that I favor a portfolio modeled after Mika's Alaskan Golden Butterfly, Episode 281, and I want to seize this opportunity to sell high and buy diversified assets. But here's the rub. The 401k doesn't have Treasuries, gold, or REITs, and no option to self-direct. The bond options include only VBTIX, Vanguard Total Bond Market Index, FXNAX, Fidelity U.S. Bond Index, and VBILX, Vanguard Intermediate-Term Bond. The only ticker close to gold offered would be OGMIX, Invesco Oppenheimer Gold and Special Minerals. VBILX seems close to VGIT, but it still has 45% corporate bonds. I don't want to shift my Roth assets away from equities. If I used my traditional brokerage to buy gold, I would be facing the 28% cap gains rate, but only until I could move my 401 to a traditional IRA brokerage. I'll turn 59 this year, but won't qualify for the 59 and a half rule until next year. I'm thinking the best strategy might be to use my traditional brokerage account to purchase the gold and cash short-term components while using the VBILX option in my current 401. Once I have access to my 401k next year, roll that to a traditional IRA with Vanguard and shift my gold allocation from the brokerage to the traditional IRA. I don't think the tax bill will be too large because I would have held the gold in my traditional brokerage for only a year. I would sincerely appreciate your feedback or comments on my plan, Frank. Sincerely, Jetson.

Mostly Uncle Frank [6:53]

Well, first off, thank you for being a donor to the Father McKenna Center. As most of you know, this podcast does not have any sponsors and is really just for fun, but we do have a charity we support. It is called the Father McKenna Center and it serves hungry and homeless people in Washington, DC. We are small but very efficient with the resources we receive and also support and encourage a lot of volunteering at the center, which includes lots of high school aged children and young adults.

Mostly Voices [7:28]

Young America, yes sir.

Mostly Uncle Frank [7:31]

Full disclosure, I am the current treasurer of the organization and am on the board. But if you do donate to the center, you get to go to the front of the email line, as Jetson has done here. And you can do that in one of two ways. You can give directly as Jetson did, or you can go through our support page and become a patron on Patreon. Either way, you get to go to the front of the line. The reward is the same. The beatings will continue until morale improves. Just make sure you do flag that if you send me an email so I can duly move your email to the front of the line. Yes. But now let's get to your questions. And your first one is, Are there days of the year, month, week that are traditionally better to execute market tasks? Not for the purpose of timing for profit, but to avoid volatility, et cetera. And the answer is, I don't think this makes as big a difference anymore, but there are some general guidelines. One is to not do trading either in the first hour of trading or the last hour of trading, because that is in fact when lots and lots of trading is done and markets tend to move the most. So it's generally better to make your trades in the middle of the trading day. I also like to try to do ours in the middle of the week on a Tuesday, Wednesday or a Thursday, because again, there's generally less activity and also not at the end of months or quarters, particularly if there are triple witching and options going on or any of those other trading things. Are you a good witch or a bad witch?

Mostly Voices [9:20]

Who me? I'm not a witch at all.

Mostly Uncle Frank [9:24]

These days, because there are so many Fed watchers, Fed announcements tend also to result in a lot of volatility in, say, the 24 hours after there is some kind of announcement. So you might want to avoid something like that. But honestly, if you are just managing a portfolio, you're probably not really doing very much trading. And so all of this should not matter all that much, unless you are doing something like making giant swings to convert your portfolio from one strategy to another. and really large hedge funds and institutions tend to do that kind of trading in blocks, although their blocks are probably much larger than our entire portfolio. So again, I'm not sure it matters on the scale that we are talking about as individual investors. But those basic guidelines are the best I can give, even though I'm not sure that they matter nearly as much in this day and age of Electronic trading. All right, your bigger question. You mentioned having a 9010 portfolio right now, which is good for accumulation, but you're retiring within 24 months. So yeah, this is a very good time actually for you to be making your shift from a accumulation portfolio to a retirement portfolio because we are at or near all-time highs in these markets. And the clock is sort of ticking, so you don't want to be caught up if there is some kind of market crash or 2022 kind of event in the next 24 months. You wouldn't want to be selling after that occurs. So this is a very good time for you to be making that shift. No more flying solo. Now you've mentioned Micah's Alaskan Golden Butterfly from episode 281. Hey, Shell, you know it's kind of funny.

Mostly Voices [11:24]

Texas always seems so big, but you know you're in the largest state of the union when y'all anchor down in anchor, and I think that sounded like a good idea to me at the time, and so it's probably a good idea for you if it was a good idea for him. Inconceivable.

Mostly Uncle Frank [11:50]

I do actually very much enjoy it that people bring their own ideas to this and then I can put them out there so other people can check them out and decide whether they want a certain variation or a certain approach. Because I'd really rather not be presenting formulaic approaches. You must do this or do that. But just apply the three principles we try to apply：Holy Grail, Macro Allocation Principle, and the Simplicity Principle, which can yield a variety of different actual portfolios, depending on how conservative or aggressive somebody wants to be, and there are other circumstances.

Mostly Voices [12:32]

If a man does not keep pace with his companions, perhaps it is because he hears a different drummer. Let him step to the music he hears, however measured or far away.

Mostly Uncle Frank [12:45]

So I'm really glad I can serve as a conduit for that. Now your specific questions have to do with what of three not quite the right bond fund options was the best, and also how to incorporate gold into this portfolio given the restrictions you have in your 401 right now. I think the solutions you've come up with sound like the best approach to me to use the VBILX as an intermediate bond fund. Because most of the time it will perform pretty much exactly like Treasuries. The times it doesn't is when you have those big 2008-2020 kind of recessions. So you can definitely plop that in for the bonds at this point in time until you can do something different in an IRA. I also think it makes sense to use a gold ETF in your taxable account right now. You could do part of it in your Roth, but as you said, you wanted to keep your best growers in your Roth. Well, these days, gold seems to be one of the best performers this year. You never know when that's going to happen. But I think the time frame you're talking about generally indicates that you're probably not going to have that big of a swing in gold up or down in a very short period of time. So any tax gains or losses are likely to be relatively minimal in the grand scheme of things. And then when you're able to move all these things into IRAs and have better investment options, you can basically swap it out by selling it in one place and buying it in another. Just make sure you don't trigger a wash sale rule when you're doing that. That's not an improvement.

Mostly Voices [14:36]

The reality is once you get something like this set up, you are really not

Mostly Uncle Frank [14:40]

making that many transactions or incurring a lot of taxes in any given year. And oftentimes there are tax loss harvesting opportunities you can take advantage of as well. That's also why I think it's okay to have something of everything in the taxable side of the account, because chances are one of those things is going to have a bad year and you may want to harvest it at that point in time. So there are lots of good ways to skin these cats. Anyway, it really looks like you're on the right path here, both with your choice to make this transition now and in what you are moving to for the long term and how you are getting there. So I commend you for your efforts.

Mostly Voices [15:37]

Bow to your sensei. Bow to your sensei.

Mostly Uncle Frank [15:40]

And thank you for your email. Keep talking, dog.

Mostly Voices [15:50]

and that's all. Splendid splendid.

Mostly Uncle Frank [15:55]

Now our next overexuberant listener sent us two emails. Surely you can't be serious. I am serious. And don't call me Shirley. And so we will do them in succession. Second off. Last off. Our second and third emails of the day are from John.

Mostly Voices [16:15]

How about John? That's nice and simple. What, are you serious? Well, yeah. John, you want to do that to the kid? Do what? Hey, John, hey, let's go to the John, huh, John, let's go. And in his first email, John writes, hi, Frank.

Mostly Mary [16:34]

I'm just getting into Risk Parity Radio and going down the rabbit hole with portfolio charts and portfolio visualizer. I'm really enjoying it and finding it all very eye-opening. Thank you for the podcast. The information you provide, dad humor, and pop culture clips are all right in my wheelhouse. Well, let's start the insanity.

Mostly Voices [16:55]

Giddy up.

Mostly Mary [16:58]

In my portfolio chart experimentation, I found the portfolio with my favorite historic performance. See the portfolio matrix output below. But it's a little wonky, and I have a few questions I was hoping you could address.

Mostly Voices [17:13]

And you won't be angry? I will not be angry.

Mostly Mary [17:17]

If all of the portfolio charts metrics for a portfolio are good, except that the standard deviation is bottom tier, one, is it really a successful risk parity portfolio, or is risk synonymous with standard deviation slash variance? Two, is the high standard deviation potentially indicative of a backfitted portfolio that may have gotten lucky even over a 50-year horizon and potentially has flaws that reveal themselves over time? Three, other than the psychology of it, are there standalone downsides to high variance that I'm not thinking of if all of the other metrics look good? I'm also curious if you've seen a portfolio matrix output like this And or if you can guess the asset allocation. Thanks again for all you do, John.

Mostly Voices [18:06]

Long John Silver? I mean, I don't know what to say.

Mostly Uncle Frank [18:10]

And in his second email, John writes, hi, Frank. Me again. This is the central scarabonizer.

Mostly Voices [18:21]

Again. Hi, it's me. the central sclerosis.

Mostly Mary [18:31]

Maybe to take a different tack and put more of a fine point on it, would you agree with the contention that historically, including gold in an equity driven portfolio seems to help with the drawdown recovery above and beyond gold's overall return rate, volatility, or correlation to equities? By nature, I'm averse to investing in speculative assets like gold or attributing anecdotal attributes that I can't see in the math. Forget about it. But spending time with the drawdown charts on portfolio charts and seeing gold's impact on withdrawal rates has me planning to include much more gold in my portfolio than I ever would have expected, and actually more than you typically recommend.

Mostly Voices [19:19]

All my life I've been in love with its color, its brilliance, its divine heaviness. I welcome any enterprise that will increase my stock.

Mostly Mary [19:29]

The drawdown charts are breathtaking. I've included a few below with some further description of what I'm seeing. It turns out I love gold. Thanks again, John. I love gold. Here's the drawdowns chart for a 50% total stock market, 50% long-term bond portfolio. Adjust the percentages all you want between stocks and bonds, and the drawdowns chart doesn't look like anything that I want to encounter. Not going to do it.

Mostly Voices [20:01]

Wouldn't be prudent at this juncture.

Mostly Mary [20:05]

Here's the drawdowns chart when I moved 25% of that portfolio from bonds to gold, ending up with something similar to the golden butterfly. without short-term bonds. After looking at a large number of drawdowns charts without gold, the impact of including gold seems downright magical. You're a wizard, Harry. I'm a what? You're a wizard, Harry. I'm a what? You're a wizard. I'm a what? For what it's worth, with just a little bit of tweaking, for example, your preferred approach of splitting equities 50-50 between large cap growth and small cap value, Gold can have a similar impact on drawdown recovery, even with no bonds at all. That's the fact, Jack. That's the fact, Jack. For equity-driven portfolios, given currently available DIY investment options, I've started to think of long-term bonds as the solved best answer for reducing volatility and gold as the solved best answer for drawdown recovery. Am I off track?

Mostly Voices [21:13]

Down the quarter mile of death in their 7,000 horsepower nitro burning suicide machines as they shake hands with the devil when they scream through the burning gates of hell. We'll sell you the whole seat, but you'll only need the edge. Be there.

Mostly Uncle Frank [21:23]

Well, John, I'm glad you found portfolio charts and have been poking around in there because I think that's a really useful tool. and a really useful set of comparison tools, particularly the portfolio matrix and the risk reward matrix for comparing a sample portfolio that you might come up with against all kinds of these commonly known portfolios from Merriman, Fery, Bogleheads, Swenson, etc. And I think we really do owe a debt of gratitude to Tyler of Portfolio Charts. who basically created it as his kind of retirement project back in around 2015 or 2016. And I remember he proudly announced its unveiling on the message boards over at Early Retirement Extreme around then. And we all applauded it and said, this is excellent and is exactly what a lot of us have been looking for, which is a good way to analyze all kinds of portfolios and asset allocations and compare them in a series of attractive charts. And there's about at least a dozen different kinds of charts there from safe withdrawal rates to these portfolio comparison ones to retirement drawdown calculators and then just other calculators showing performances over time and years to retirement as well. and after you poked around in the calculators and things there, you should also poke around in the articles that he's written over the years about these various portfolios and other portfolio related issues, including things like Shannon's demon that we've been referring to a lot these days, but are fundamental principles of portfolio construction and rebalancing. Now, in your first email, you present me with Something from Portfolio Matrix of a mystery portfolio that seems to have a perpetual withdrawal rate of 6.1. No, I'm not sure exactly what it is, but I imagine that it involves a lot of small cap value and some gold in it. But maybe you can email back an enlightenness on the mystery at some point.

Mostly Voices [23:44]

Do you expect me to talk? No, Mr. Bond, I expect you to die!

Mostly Uncle Frank [23:47]

So I won't be able to link to this directly in the show notes, but it appears stock heavy in that its return is better than most or all other of the sample portfolios that they compare this against. And since the standard deviation is high, I would have to believe that that involves a high percentage of stocks in the portfolio. And this is the portfolio matrix calculator. If I haven't made that clear, which is one of the comparison tools. So, yeah, I had a couple of questions. Is it really a successful risk parity portfolio or is risk synonymous with standard deviation and variance? Those two things are not synonymous, but they are related. So, having a high standard deviation or variance is not desirable, but it's not the end of the world. It's how I know there's a lot of stocks in this portfolio, though. Second, is the high standard deviation potentially indicative of a backfitted portfolio that may have gotten lucky even over a 50-year horizon and potentially as flaws that reveal themselves over time? I would say that's probably true because if you are simply just changing numbers in something to goose out the highest number on one particular metric here, the perpetual withdrawal rate, That is essentially a form of backfitting, regardless of what the amount of data is. But it gets to how best to actually use these calculators and why you want to use more than one calculator. Because the best use of these calculators is not actually to look at the raw numbers themselves, but to compare numbers between two options. Portfolio A and this Portfolio B, how do they both perform over this given data set? Now since the data set here goes back to 1970, it does tend to favor things like gold and small cap valued because of its start date. Gold had a great 10-year run in the 70s and small cap value had a 12-year run from 1975 to 1987 where it was up every single year while other parts of the stock market were doing terribly, particularly in the late 70s. So if you get a result like this and you're wondering whether it's anomalous or not, what you want to do is take it over to a different calculator like Portfolio Visualizer or the Toolbox at Early Retirement Now if you can use it for this purpose and then run comparisons of the same portfolios there and see if you get similar results or not. because if you're getting similar results, regardless of what data set you're looking at and these are large data sets, then you know you're on to something. But if something just looks good on one calculator or for one particular time frame and then does not compare well with other portfolios and other time frames or calculators, then it is more a result of back fitting or back testing than anything interesting. if you will. All right, your question three in this first email, other than the psychology of it, are there standalone downsides to high variance I'm not thinking of if all the other metrics look good? Well, I think eventually that would play into your actual ability to draw down from a portfolio. But you are correct, this is mostly psychological, and it really doesn't matter if you're in an accumulation phase and you can just leave the thing alone and don't look at it. because then you're not doing anything there. When you're drawing down from a portfolio, you are forced to look at it because you have to decide what to sell in whatever time frame you're talking about. You may only have to look at it once a year, but you do have to look at it. Now, I will tell you that professionals like Cliff Asness over at AQR would say that no high variance is not a problem with respect to individual assets in particular, because you actually want high variance in a diversified portfolio to trigger more rebalancing opportunities. And it's actually a symptom of better diversification. But I would also be looking at what this portfolio did in particular in a year like 2022, which is probably the worst year in our lifetimes in many ways for stock and bond based portfolios. It makes a good kind of worst case scenario for testing of many portfolios. So if the variance was tolerable there, then perhaps you're onto something. The other thing I wasn't sure of when you posted this is whether you inserted leverage into the portfolio because portfolio charts does allow you to go over 100% in putting things into a portfolio, which is basically simulating a leveraged portfolio. And you can get all kinds of strange results with that. So for example, if I take a sample kind of golden ratio portfolio and lever it up by the golden ratio, if you want to see what that looks like, put in 33 for large cap growth, 34 for small cap value, 42 for long-term treasury bonds, 26 for gold, 16 for REITs. and 10 for T-bills. And you'll get a perpetual withdrawal rate of 8.8.

Mostly Voices [29:17]

You have a gambling problem.

Mostly Uncle Frank [29:21]

But of course that does not include the cost of the leverage. And the variance is much higher as well. But it does kind of give you an inkling or a promise of what somebody might do in the future with these kinds of portfolios and a little bit of leverage. Well, you have a gambling problem. Now moving to your next question, all about gold. Yes, as you have discovered, and as just about anybody who's played around with any kind of calculator and inserted gold into standard portfolios, that having some gold in some kind of stock and bond portfolio does improve its withdrawal characteristics. And it's all due to the diversification principles of it, because on its own, it's really not that impressive. Tyler over at Portfolio Charts has a couple of nice articles that I will link to in the show notes about this kind of phenomenon where you are thinking about your portfolio allocations as ingredients and there is a kind of right amount of ingredient to put into a portfolio, which could be too little or too much. And with gold, I think it's still somewhere around 10 to 15% in a standardized or common stock and bond portfolio. Keep me searching for a heart of gold. And I'm getting old and where I really get that metric is by looking at the 100-year analysis that Big Earn did at early retirement. Now it's number 34 in the safe withdrawal rate series. We actually talked about this all the way back in episode 40 of this podcast and also in episode 12 a bit. But anyway, over this 100-year time frame where he ran it, the presence of about 10 to 15% in gold in any kind of stock bond portfolio tended to improve its withdrawal characteristics. I think you may be right that that's probably on the low end because that period of data also included a lot of years when the dollar was on the gold standard and therefore gold was much less volatile and much less interesting. Since it came off of that in the early 1970s, it has become a much more interesting asset class for diversification purposes. Just because it tends to hold its value over time, regardless of what's going on in currencies of the rest of the world. But it's also completely unpredictable, so it's very difficult to use as some kind of standalone asset, and it's best used as just a small ingredient in a bigger portfolio, as you've seen in your experiments. And that's the way, -huh, -huh, I like it. I do think it probably looks a little better on portfolio charts than it would on another data set simply because it does include that period of the 1970s where the US dollar came off of the gold standard and then had this abrupt increase in value very quickly. So you wouldn't expect to see too many repeats of that kind of price action, but you never know. People do seem to be flocking to it these days again, even though in theory it should not be going up right now because the real rate of interest is positive. But my experience is that anybody who's trying to predict the future price of gold is going to be shown to be a fool within the next five to ten years, if not sooner. Fat, drunk, and stupid is no way to go through life, son. Anyway, I'm glad you're making good use of these tools and discovering what I believe is the truth about these things. You can't handle the crystal ball.

Mostly Voices [34:16]

Which is that they have good use in a portfolio,

Mostly Uncle Frank [34:20]

but it may not be for the reasons that somebody might say there's too many stories about assets that People just kind of repeat blindly without actually looking at data and performances, which I think is the real deal.

Mostly Voices [34:36]

Oh, no, my young Jedi.

Mostly Uncle Frank [34:42]

You will find that it is you who are mistaken about a great many things. Now, whether gold is actually the best asset for this purpose is still an open question, and I think things like managed futures, which actually generally incorporate any kind of trend in gold, may be even better over time if you can keep the cost of it under control. But I don't know whether that's true or not right now. My own personal solution is simply to hold some of both. and that is my favorite answer actually to questions where you have choice A and choice B and they're both decent choices or useful choices and somebody says, well, which is better? If you don't know, then the natural answer to the question should be both. That if you're allowed to take both because you don't know which one's better but you know they're both good, then you should take both. It's a practical application of the Old adage, don't let the perfect be the enemy of the good. And in a world of uncertainty, it's better to be approximately right than precisely wrong. Wrong? Wrong! Right? Wrong! Anyway, I think you're on the right track with these things. Now, I would suggest that you take what you've learned here at Portfolio Charts and then go see if you can replicate similar results at Portfolio Visualizer or in other places or with other databases and Monte Carlo simulations because then you'll get a better feel for what it's applying generally and what is more specific and not as meaningful. But I'm very enthused by your enthusiasm and your efforts here. You have been well trained, my young apprentice. And so thank you for your email.

Mostly Voices [36:57]

Keep me searching for a heart of gold. You keep me searching And I'm growing old. Now we are going to do something extremely fun.

Mostly Uncle Frank [37:13]

And the extremely fun thing we get to do now is our weekly and monthly portfolio reviews of the seven sample portfolios you can find at www.riskparityradio.com on the portfolios page. Giddy up. And just looking at the markets last week, The S&P 500 was up 0.38% for the week. The Nasdaq was actually down, it was down 0.30% for the week. Small cap value was a big winner last week. I'm telling you fellas, you're gonna want that cowbell.

Mostly Voices [37:46]

Our representative fund, VIoV, was up 3.

Mostly Uncle Frank [37:51]

03% for the week. And it's kind of interesting, small cap stocks in general have been lagging the market and are still nowhere near their all-time highs that they reached in November of 2021. So it would make sense that at some point they were going to catch up with the rest of the market. And we may be seeing that now, or maybe not. It's only one week.

Mostly Voices [38:15]

Crystal Ball can help you. It can guide you.

Mostly Uncle Frank [38:19]

Moving to these other asset classes, gold had another good week. Gold was up 2.66% for the week and is At all-time highs. I love gold. Long-term treasury bonds represented by the fund of VGLT were up 0.29% for the week. REITs were up. Our representative fund, REET, was up 2.02% for the week. Commodities were also up. A lot of people are going cuckoo for cocoa puffs these days as cocoa has had one of its biggest runs ever. It is a very small part of the commodities complex. Hey, go go my cocoa bombs, go go my cocoa bombs. But our representative fund, PDVC was up 1.09% for the week. Preferred shares represented by their fund PFF were down last week. They were down 1.08% for the week, but that may reflect the monthly distribution that comes from that fund. Lastly, managed futures represented by the fund DBMF were up 0.84% for the week. Now moving to these portfolios, first one is this all seasons portfolio that we only use as a reference. It is 30% in a total stock market fund, VTI, 55% in intermediate and long-term treasury bonds, and the remaining 15% divided into gold and commodities. It was up 0.65% for the week. It's up 2.67% year to date and up 4.24% since inception in July 2020. Now we'll be taking a monthly distribution from this. It'll be $30, which is at an annualized rate of 4%. And we'll be taking that from the Total Stock Market Fund, which has been the best performer recently. That'll be $120 year to date. and $1,443 since inception in July 2020. And now moving to our bread and butter portfolios, something like somebody might actually use in a retirement portfolio. First one is the Golden Butterfly. This one's 40% in stocks divided into a total stock market fund and a small cap value fund, 40% in bonds divided into long and short term treasuries, and 20% in gold. It was up 1.38% for the week. It's up 3.08% year to date and up 24.23% since inception in July 2020. You'll note that portfolios like this are plotters, particularly if they only have 40% in stocks in them. But that's by design, that they are supposed to have lower volatility and just grow nicely over time so they can cover their distributions. So we are taking distributions out of this at a 5% annualized rate and it'll be $43 coming out of it. There is enough accumulated cash to pay that so we'll just take it from the cash. That'll be $169 year to date to $1,947 since inception in July 2020. Moving to our next one, the Golden Ratio. This one's 42% in stocks divided into three funds in this variation. It's got 26% in long-term treasury bonds, 16% in gold, 10% in a REIT fund, and 6% in a money market fund from which we take all the distributions. It was up 1.39% for the week, and it's up 3.14% year to date and 20.72% since inception in July 2020. Also plotting along, we'll be taking $42 for the distribution out of it that sells at a five percent annualized rate, the $164 year to date and $1916 since inception in July 2020. This one's a good example of a portfolio that's managed to reduce transactions as much as possible because since we take all of the distributions out of the money market, we only do transactions once a year in this portfolio when we rebalance it and refill up the money market, and then we don't have to engage in any transactions whatsoever for the rest of the year. Follow all instructions and you? And yes! And yes! And yes! And yes! And yes! Which is a very useful approach if you do not wish to be looking at your portfolio more than once a year. It's as simple as that folks. The alternative, of course, is what we use with the rest of these portfolios, which is to sell from the best performer for every monthly distribution. But these are more just by way of examples of portfolio management, because I don't think the difference in performance is ultimately that great when you're only taking fractions out as a monthly distribution. It all gets reset when you rebalance the portfolio anyway. Moving to our next one, the Risk Parity Ultimate. This one's kind of the kitchen sink of portfolios. We've stuffed it with 15 funds, including a little bit of Bitcoin. More than you would want to be putting in a portfolio, actually, but we wanted to have something with everything in it. So anyway, this one was up 1.57% for the week. It's actually up 6. 06% year to date, benefiting from that 2% allocation to cryptocurrencies this year, and it's up 13.81% since inception in July 2020. Now we're taking a $38 distribution out of it. That's also at a 5% annualized rate. It's going to come out of accumulated cash because we have enough cash. If we didn't have enough cash, we would be selling actually some of the Bitcoin because that has been by far the best performer this year. But if we don't have to sell anything, then we don't. This will be $148 year to date from this portfolio and $2,135 from it since inception in July 2020. Now moving to these experimental portfolios. You can't handle the gambling problem. We do hideous experiments here so you don't have to.

Mostly Voices [44:46]

Look away, I'm hideous.

Mostly Uncle Frank [44:50]

These involve leverage funds and so they have a very high variance to them. and always seem to be either the best or worst performers in this group just because of the leverage that's applied. Anyway, the first one is the Accelerated Permanent Portfolio. This one is 27.5% in a levered bond fund, TMF, 25% in a levered stock fund, UPRO, 25% in a preferred shares fund, PFF, and 22.5% in gold, GLDM. It was up 1.2% for the week. It's up 5. 36% year to date and down 3.44% since inception in July 2020. We're distributing out of this at a 6% annualized rate, so it's going to be $37 for April. It will come from UPRO, the stock fund which has been the best performer, and it's going to get a rebalancing itself on the 15th of next month if that keeps performing the way it has. We'll have taken $143 out of it year to date and $2,365 since inception in July 2020. We are subjecting these to very large distributions just to see if we can make them fail or not. We're working on it. Ramming speed. Ramming speed! Next one is the aggressive 5050. This is the most levered and least diversified of these portfolios. It's got one-third in a levered stock fund, UPRO, one-third in a levered bond fund, TMF, and the remaining third divided into preferred shares and an intermediate treasury bond fund, which is used as ballast here, those two funds. It was up 0.86% for the week. It doesn't have any gold, so it didn't benefit from that. doesn't have any small caps, so it didn't benefit from that. It's up 5.29% year to date and down 13.65% since inception in July 2020. We'll be taking a $33 distribution out of this. That's at a 6% annualized rate. It'll come from accumulated cash. And there's a lot of that these days in this portfolio. So I think that preferred shares fund is paying out at over 7%. that'll be $129 year to date and $2,331 since inception in July 2020. So actually slightly less than the Accelerated Permanent Portfolio, which has performed better over time. But that's a good comparison because that Accelerated Permanent Portfolio, the main difference in those two portfolios besides it having less leverage is that it's got some gold in it, which has improved its performance. substantially over the other one. But now getting to our last one, the levered golden ratio. This is our youngest portfolio. It's a year younger than the other ones. This one is 35% in a composite levered fund called NTSX. That's the S&P 500 and treasury bonds. 15% in a REIT called O, 25% in gold, 10% each in a levered small cap fund TNA and a levered bond fund TMF and the remaining 5% in a managed futures fund KMLM. So it's a big winner last week. It was up 2.11% for the week. It's up 3.52% year to date, but down 10.41% since inception in July 2021. And we'll be taking $32 out of this. It's at a 5% annualized rate. It'll come from that levered small cap fund TNA, which has been the best performer recently. As I mentioned, really since this portfolio started, small cap funds have lagged the overall market and are still something like 15% below their all-time highs in 2021. But if they keep catching up, you will see this portfolio catch up. The main problem with that small cap allocation is that it's not pure small cap value. It's small cap blend. it would be a better portfolio if that were in small cap value. But there's no such thing as a leveraged small cap value fund right now. Maybe there will be sometime soon. Anyway, so that'll be the $32 from TNA for April, $123 year to date, and $1,290 since inception in July 2021. And it's been a long episode, so I think I'll conclude it right here. Because 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 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 or a review. A follow. That would be great. Mm, okay. Thank you once again for tuning in.

Mostly Voices [49:58]

This is Frank Vasquez with Risk Parity Radio signing off. Help! Help! Jane, stop this crazy thing! Jane! I want you!

Mostly Mary [50:13]

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.