Mostly Mary [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 Voices [0:22]

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 [0:36]

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 foundational episodes for this program. Yeah, baby, yeah! And the basic foundational episodes are episodes 1, 3, 5, 7, and 9. Some of our listeners, including Karen and Chris, have identified additional episodes that you may consider foundational. And those are episodes 12, 14, 16, 19, 21, 56, 82, and 184. And you probably should check those out too because we have the finest podcast audience available. Top drawer, really top drawer. Along with a host named after a hot dog.

Mostly Voices [1:34]

Lighten up, Francis.

Mostly Uncle Frank [1:37]

But now onward, episode 351. Today on Risk Parity Radio, it's time for our weekly portfolio reviews of the eight sample portfolios you can find at www.riskparityradio.com. on the portfolio's page. And it was the week of small cap value. Guess what? I got a fever.

Mostly Voices [2:01]

And the only prescription is more cowbell.

Mostly Uncle Frank [2:06]

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

Mostly Voices [2:10]

say, emails.

Mostly Uncle Frank [2:15]

And first off, we have an email from Brian.

Mostly Voices [2:19]

Hey, Brian, care to place a wager?

Mostly Uncle Frank [2:23]

And Brian writes, GOVT is a total treasury fund.

Mostly Voices [2:28]

You're as diversified as you can be against treasury duration risk, reinvestment risk, et cetera. It should feel and act as an intermediate treasury fund in aggregate, yes? VGIT is a native intermediate fund but is far more popular. Why isn't GOVT much more popular? Duration matching? What if you just want something to hold forever? Low ER, exposure to all ends of the curve, all durations, as Munger said, what could go wrong? It's a suboptimal choice.

Mostly Uncle Frank [3:00]

All right, GOVT. That is one of many iShares ETFs that invest in various combinations of treasury bonds. And you ask me, why isn't it more popular? I really don't know, but I can guess. What I would guess first is that because iShares has so many different treasury bond funds, oftentimes it's very difficult to sort them all out. And I don't know that iShares promotes this particular fund. So I can see why it may not have gained traction in that respect. I think it's also the case that A place like Vanguard enjoys a advantage in terms of publicity because it not only creates funds, but it has its own platform, whereas iShares just creates funds. Well, Laddie, frickin' dog! So really, the people that would know the most about those are professional investors and advisors and your average do-it-yourselfer at Vanguard or Fidelity or Schwab. Isn't going to gravitate necessarily towards iShares funds because Fidelity, Schwab and Vanguard would like you to invest in their funds. And that's what they promote there. The next question then is where does GOVT fit in kind of the spectrum of all of these treasury bond funds that are out there? And really the defining characteristic of most of these funds is what is their duration ultimately? Because that gives you a metric to compare more than one fund against another one and decide what kind of risk reward characteristics it's likely to have based on that. And when you go over to Morningstar, which is the easiest place to find this information and look at the duration of this fund, I will link to that in the show notes, it's about five and a half years. And so where does that put that on the spectrum? It puts it between two other iShares funds, one's called IEI, which is a 327 year treasury bond fund. that has a lower duration than GOVT. And on the upper end, you would see IEF, which is the same thing as VGIT essentially, and that is an intermediate treasury bond fund. Seven to 10 years is the bonds held in there. The duration is around seven, at least currently. All right, so why would somebody use this or not use this? You mentioned that it's got a low expense ratio exposure to all ends of the curve, all durations. and that's all fine and good, but is that what you want? Is that your goal to just hold all of the bonds across all of the durations? That does not seem like a goal that really goes anywhere because it's not actually attached to any portfolio goal. In fact, you don't need to own all of the things in the world and you don't need to own all of the bonds in the world. That unto itself is not a useful goal or purpose to have. So what is the purpose of having a bond fund or treasury bond fund in a portfolio? The purpose is to diversify against stock holdings. And so when you look at it from that perspective, it's just a fund of moderate duration that's between short and intermediate. And so it probably isn't all that useful when you can just buy the short or intermediate funds that you want, and you would have to buy more of this to have the same effect in a portfolio as an intermediate treasury bond fund, like a VGIT or an IEF. You really wanted to compare this. You wouldn't just compare it to other funds, but you would create a portfolio with this as the bond fund in it, and then swap in and out different treasury bond funds to see what effect that had on the portfolio and run Monte Carlo simulations and other things to determine that. Because ultimately, you don't really care about any of these assets in a vacuum that you're putting in a portfolio. What you care about ultimately is how they all work together. And I think that's a mistake that people often make when they're selecting funds. Instead of looking at the whole picture, they're looking at these things as just individual funds. This is what I would call the shopping cart method of picking funds. You walk down the aisle and say, oh, this one looks good. Oh, I need a bond fund. This one looks good. Oh, I need a stock fund. Oh, this one looks good. Without taking into account anything about how those things interact with each other and how they're going to perform together in a portfolio. And if you do that, you'll end up often with very unbalanced portfolios that aren't really serving any purpose. other than being a collection of funds you found interesting or desirable on their own? The answer is, yeah, you could use this in a number of different portfolios, particularly if you're trying to construct something really conservative. It is probably a sub-optimal choice for most portfolios, long-term portfolios, simply because it's going to just take up more space than, say, an intermediate treasury bond fund without really doing much more than that. It's characteristic of holding many, many more treasury bonds as kind of irrelevant for the purposes that we have, which are to diversify a mostly stock portfolio. So you would probably only really prefer this if for some reason your goal was to own as many treasury bonds as possible in one format. You might compare that with some kind of bond ladder of similar bonds. But personally, I don't think there's any reason for me to use this, and I'm not sure it's that useful for most people given all of the other options there are out there for bond funds. So hopefully that helps. It does raise interesting questions of fund picking to begin with, and thank you for your email.

Mostly Voices [9:00]

No, no, no, no, no, Brian. No, no, you win. You win. I quit. It's your liver, you do whatever you want.

Mostly Uncle Frank [9:12]

Second off. Second off, we have an email from Wendy. Wendy, I'm home. And Wendy writes. Hi, Frank.

Mostly Voices [9:25]

Thanks for the clarification of the book Die With Zero. A former advisor who used to work for why I hold my investments recommended that reading. I will look into your recommendation, the Psychology of Money. Is it better to convert my IRAs rather than leave them on in my 70s? I hardly hear of anyone my age or older converting IRAs. Then again, I hardly know of my circle of friends who have investments like I. What podcast do you listen to or recommend? Best, Wendy.

Mostly Uncle Frank [9:59]

Well, first let me apologize, Wendy. Wendy is a friend of my Elder Sister and I lost her message. Are you stupid or something? But I finally found it. I guess getting a new computer helps with that. I don't know why I couldn't find it before, but I found it this time.

Mostly Voices [10:18]

Honestly, as stupid as this stupid do is.

Mostly Uncle Frank [10:22]

And this does follow on another email, but you did write into the show, so we're gonna answer this one on the show. So first I would say there are many good books that you could read and many good sources, too many sources for investing in retirement in fact. Those two that you mentioned, Die With Zero and Psychology of Money are I think very good books for people to read. They're big picture books. They're conceptual books. They don't tell you much about nuts and bolts. I suppose Psychology of Money tells you a little bit more. die with zero is more just thinking about the big picture of what the purpose of money is in your life. Now your next question, is it better to convert your IRAs rather than leave them to later on in your 70s? The answer to this really depends on a couple of things. First, how much money do you have in your IRAs? Because it's a different question if you have less than a million dollars, say, or $4 million? Because the other issue is what tax bracket are you going to be in based on your other income from Social Security or other sources? Because there is no one answer to this question. It is an individualized determination as to whether and when to do conversions from a traditional IRA to a Roth IRA. And the issue is really this. If you do not convert your traditional IRAs, you start having what are called required minimum distributions. in your 70s, where you are required to take out so much money out of it and pay the taxes on it, and that percentage goes up as you age. And there is a table provided by the IRS saying, if you're this age, you need to take out this much money out of your traditional IRAs or face a big penalty. So to avoid that kind of forced distribution in your 70s, It is often a strategy for many retirees to start converting that earlier, say in their 60s, maybe before they take Social Security. I think you've already started your Social Security, so that wouldn't be relevant to you. But the idea there is to spread out the distributions over the course of many years. A conversion does count as a distribution, and you have to pay taxes on it in that year. But if you can spread out the distributions over many, many years, either through conversions or directly just taking the distributions, you do tend to minimize your tax burden over the course of those many, many years. If you are in the lowest tax brackets, particularly if you're in the 12% tax bracket or 15%, this may not be a very big issue for you at all. Fortunately, nobody can really answer the question without knowing your entire situation. So sorry I can't be more specific on that, but I will talk about some resources where you may find some more answers about this question. Now you also asked, what podcasts do I listen to or recommend? Well, I listen to far too many podcasts. I pity the fool who listens to more podcasts than I do, and essentially keep them on as a radio in the background when I'm doing other things.

Mostly Voices [13:43]

But I pity the fool, and I will destroy any man who tries to take what I got.

Mostly Uncle Frank [13:47]

So I have actually got this question before, and instead of boring you for 20 minutes with a gigantic list, I'm going to refer you back to episodes 124 and 246 of this podcast, where I talk about the podcasts that I listen to. And most of those are similar or the same as they were when I recorded those a year or three ago. Let me just give you three podcasts that you might want to listen to that are focused on retirement issues. One is called the Retirement Answer Man, another one is called the Retirement and IRA Show, and another one is called Big Picture Retirement. All of those podcasts talk endlessly about these issues of IRAs, conversions, what to do with them, and all of the other legal issues that you encounter When you get to retirement and you have these accounts and there are various rules that cover them or dictate what you have to do with them. And there actually was recently on the big picture retirement, a discussion of IRA conversions and when you're doing too many of them because there are circumstances where you don't want to convert all of your traditional IRAs to Roths anyway. I'll link to that specifically in the show notes. There's another resource that I would direct you to first though to help kind of just learn a few things. And this is Andy Panko's YouTube channel. And Andy Panko is a financial advisor. But he's one of the good guys out there. He creates a lot of free content to educate people in all aspects of personal finance and he has a lot of nice video explanations about what these things are. And how they work and all those sorts of issues. So I'm going to link to that in the show notes because I think that that's a easier resource to get into than maybe some of these podcasts where you feel like you're walking into a room with a bunch of people that already know what they're talking about and you have no idea what the lingo or the jargon is. That's what this podcast is like, unfortunately, for many people. You are talking about the nonsensical ravings of a lunatic mind. Now, if you are on Facebook, and if you're not on Facebook, just get on Facebook to go into this group, Andy Panko also has a group that is called Retirement Planning Education, retirement planning education. And that is a nice group moderated by a few fee-only financial advisors, Andy Panko, Cody Garrett, and a few other people. But this is a very good place to ask the kind of questions you're asking in this email. Because you'll get good answers from a lot of people in there and you can also search that group for many of these topics. I rattle around in there as well.

Mostly Voices [16:41]

Talkamata, do not ask them for mercy. Either entertaining or annoying people, as the case may be. Let's face it, you can't talk them out of anything. As I lurched between silliness and sarcasm.

Mostly Uncle Frank [16:56]

Ah, the sweet smell of an all-day sucker. What you will find there, a lot of people eager to answer these kind of questions and also eager to direct you to other resources. And that may be a much easier way to get at some of this information rather than pulling out a bunch of books and trying to sort through them, which I think is just a way more daunting task than having some simple conversations with people. And you can also just read the questions as they go through and see what the answers are. And I think just doing that will really get you up to speed very quickly in terms of what these things are, what your options are, and what other people have done with them. So I apologize again for not getting to this sooner, Wendy, but hopefully you'll forgive me for that. And hopefully this helps. And thank you for your email.

Mostly Voices [17:53]

Hey Torquemada, what do you say? I just got back from the Auto da Fe. Auto da Fe, what's an Auto da Fe? It's what you oughtn't to do, but you do anyway. Last off, we have an email from Midas. Stick it in your ear, La Fleure. I wouldn't sell you your gym back for all of King Midas' silver. And Midas writes：Wow. You didn't need to call me an idiot to all your audience. I merely pointed out that gold is not always, 100% of the time, a good diversifier, which is true. But I guess lawyers can and will spin up anything in their favor or to prove a point. It's just their nature. My wife is a lawyer too, so don't get me wrong. I don't blame you. I do use gold on my portfolio, just FYI. Sorry to bother you with my stupid comment in my previous email. I promise I won't write you again, Midas.

Mostly Uncle Frank [18:48]

Well, first off, I must point out that you already broke your promise. You promised you wouldn't write me again, and you've written me again. But we'll forgive that. Midas is referring back to episode 340, where he brought forth an argument that amounted to cherry picking of data and a misuse of statistics. which I criticize.

Mostly Voices [19:16]

Never go in against a Sicilian when death is on the line.

Mostly Uncle Frank [19:19]

And you can go back to episode 340 if you want to go and rehash that. But I think you may have misinterpreted my intents and goals in the way I answered that question. I wasn't trying to call you an idiot. That is my least favorite thing to do. The issue here is separating ideas from people. This podcast is trying to be about ideas and not about people. And so I don't know you. All I have before me is the idea you put forth and I will agree with it or disagree with it and then tell you why I agree with it or disagree with it. It really has nothing to do with you as a person. Forget about it. But there are a couple of principles or things going on here. The first one's not a principle. The first one is I have this silly, crazy sense of humor. And so part of what I enjoy doing is kind of going over the top with respect to critiquing ideas, which is why I have some rant episodes.

Mostly Voices [20:29]

What we do is if we need that extra push over the cliff, you know what we do? Put it up to 11. Exactly. That is for entertainment purposes, really.

Mostly Uncle Frank [20:38]

I find it entertaining to do. I realize not everybody likes that form of entertainment, but some people do, and some people listen to this podcast for that form of entertainment. Oh, behave. Yeah. Yeah, baby. I appreciate it's not everyone's cup of tea. which is why I also appreciate that not everybody wants to listen to this podcast and probably a very only small portion of the general population would enjoy listening to this podcast. But that's enough. This podcast is not trying to be the last word on anything. Second point. The second point is that my approach is dictated a lot by the fact that I have been a lawyer for three decades, and my principal job was to cross-examine financial and technical experts. And so whenever I see something, my first reaction is, let me figure out what's wrong with this and go after it.

Mostly Voices [21:40]

We come in peace, shoot to kill, shoot to kill, shoot to kill, we come in peace, shoot to kill, shoot to kill, man.

Mostly Uncle Frank [21:47]

I do think that is a valid and important method of questioning. It's called the Socratic Method. And I first learned it back at Caltech, not from a science person, but from somebody in the humanities. There was an adjunct professor there named Martin Ridge, who is long passed on now. And his principal job was to be a curator. I think that's what his title was at the Huntington Gallery and Gardens, which is a very nice Museum and Grounds, very close to Caltech. It's actually not in Pasadena, but in San Marino, across the road and down the road. It's top drawer. Really top drawer. So I took an elective from him, which was just a course in American history, but he taught it in a particular way, which was by the Socratic method, in which every time we had an idea, he challenged our idea. He questioned our idea, and sometimes we held up well, and sometimes we didn't.

Mostly Voices [22:52]

At no point in your rambling, incoherent response were you even close to anything that could be considered a rational thought.

Mostly Uncle Frank [23:00]

Now, this was a common technique of teaching law school in the distant past. If you go find an old series called the Paper Chase from the 1980s, that was on TV. John Houseman started as a grumpy professor who taught by the Socratic method. And I had it still had a few professors at Georgetown that did it. We use the Socratic method here. You come in here with a skull full of mush and you leave thinking like a lawyer. But this was a more intense experience that I had at Caltech with Professor Ridge, because we only had six students in the class. So you were going to be grilled almost every class about some idea you had. And I distinctly remember something we were arguing about. I think we were asked to decide who is the best president and then defend our ideas. And I picked Lincoln and he questioned me and said I was wrong and that Washington was better. And we went back and forth about it. At one point he says to me, and I'll always remember this, He says to me, you, consistency is commendable, but it's hardly a valid argument to support your position. Your consistency is commendable, but it's hardly a valid argument. That's the fact, Jack!

Mostly Voices [24:17]

That's the fact, Jack!

Mostly Uncle Frank [24:20]

At the time, I had not connected that with Emerson's great essay, Self-Reliance, which is quoted at the beginning of this program. A foolish consistency is the hobgoblin of little minds. But it raised the point that there are many forms of fallacious reasoning, and just clinging to something just to be consistent is one of those. What you brought up in episode 340 was another form of fallacious reasoning. And I think that's how we should be looking at ideas. Does this follow a logic to it? Or is there some kind of fallacy embedded in the kind of reasoning that is being put forth. Wrong! And that's the approach I try to take to personal finance and many other things writ large. And yes, it can be rude and abrasive, and that is the type of discourse you will get into if you are arguing about ideas and not simply about people, but you do need to separate the people from the ideas. that just because I criticize your idea or I like your idea doesn't make you a better or worse person. That's not how it works. That's not how any of this works. Gets me to my final point here, which is that there is a tendency in personal finance to simply look for an authority. And that is a fallacy in itself, the appeal to authority. that just because so-and-so is a famous person or well-known or well-respected and they say a particular thing, we should just go and follow with that. That may be a starting point that you probably should credit it, but that's not the end point. That's not the end point. And if you look at the way people approach personal finance and portfolio construction, often they rely mostly on this appeal to authority. which also leads to forming of groups of people. So you have the people who want to have the Rick Ferri portfolios, the people who want to have the William Bernstein portfolios, the people that want to have the Paul Merriman portfolios, the people that want to have the Boglehead portfolios. All of those are versions of an appeal to an authority or some form of group think. And while many people view that as kind of the end of the conversation, I view that as the beginning of the conversation as good places to start with, but then taking on, well, what are the principles that we are trying to apply here? What are the goals that we are trying to serve here? And do these examples of good ideas, how did they compare? How did they hold up? Can we come up with other things that apply our principles better, that reach our goals better? And here those principles are the Holy Grail Principle, the Simplicity Principle, and the Macro Allocation Principle. I have to direct you back to the first episodes of this program for those 1, 3, 5, 7, and 9. And our ultimate goal here is to seek portfolios that allow us to take out the most money as represented by the metric, the highest projected safe withdrawal rate. So those are our principles and those are our goals. And that is how we judge these things, not by whether I said this was a good idea or some other person said this was a good idea. That's a starting point, not an ending point. The Inquisition. Let's begin the Inquisition. Look out, Santa! So in the end, I was not trying to criticize you directly, but only the idea you put forth. And I was not bothered by the idea you put forth because it gave a good topic for discussion and made for an interesting part of a podcast. So while I appreciate it if you do not want to send me any more emails, and I appreciate it if you don't want to listen to this anymore, but I do thank you for sending your emails. and I am willing to engage with them as long as they're not spam. And your emails are certainly not spam. Hopefully that clears things up about what we're trying to do here. I apologize again and thank you for your email.

Mostly Voices [28:49]

I award you no points and may God have mercy on your soul.

Mostly Uncle Frank [29:01]

Okay, a simple wrong would have done just fine, Now we're going to do something extremely fun. And the extremely fun thing we get to now are our weekly portfolio reviews of the eight sample portfolios you can find at www.riskparityradio.com. I'm proud of that eight because we just added the eighth one last week. But looking at the markets first, It was a very interesting week. The S&P 500 was up 0.87%. The Nasdaq was up 0.25%. But look at small cap value. Small cap value, represented by the fund VIoV, was up 6.08% for the week.

Mostly Voices [29:45]

I'm telling you, fellas, you're gonna want that cowbell. We'll talk more about that in a minute.

Mostly Uncle Frank [29:49]

Gold was up 0.68% for the week. Long-term treasury bonds represented by the fund VGIT were up 1.38% for the week. REITs also had a bang up week. REITs represented by the fund R E E T were up 3.9% for the week. Commodities represented by the fund, PDBC were down. They were a big loser last week. They were down 2.16% for the week. Preferred shares represented by the fund PFF were up 0.98% for the week. And managed futures represented by the fund, DBMF, were showing their diversification properties, meaning they were down 1.05% for the week. So what does this big pop in small cap value last week tell us or represent? I gotta have more cowbell. Well, I think what this tells us is two things. First of all, small cap value is different from the large cap growth. It just is. And it does have these kind of diversified properties that it will perform differently at different times than the broad measure of the stock market. But the other issue is you really can't time this. There was nothing to say that this would be the big week when every big investor out there, I guess, decided that it was time to sell their big large cap stocks and start buying small cap value. Yeah, there were CPI and PPI metrics that came out, but those come out every month. There is no way that anyone could have really reasonably tried to time something like this. And that tells you why trying to time the market is such a bad idea. Because it is also true that if you miss the biggest up days in your portfolio because you're jumping in and out of things, you will miss out the returns of your portfolio and you don't know when those are going to come. So it's possible this trend could continue. The last time you saw something like this was at the end of the year 2020 when I think small cap value went up about 20% in less than three months. And it will often have those kind of big rallies at various points in time that are not predictable. So for me, the lesson to be learned here is to pick a portfolio and stick with it because there's no way you are going to time these gigantic moves in any reasonable manner with any crystal ball you may have. Now, you can also use the ball to connect to the spirit world. Now, getting on to these portfolios. As you can imagine, they did pretty well last week. First one is the All Seasons. This is a reference portfolio that's only 30% in stocks, it's got 55% in treasury bonds, intermediate and long term, and the remaining 15% in gold and commodities. It was up 0.97% for the week. It's up 6.21% year to date and up 7.82% since inception in July 2020. Now moving to these kind of bread and butter portfolios that are actually designed to give you higher safe withdrawal rates. First one is Golden Butterfly. This one is 40% in stocks divided into a total market fund and a small cap value fund. 40% in bonds divided into long and short treasuries and 20% in gold. It was up 1.96% for the week, which is a Very large move for this kind of conservative portfolio. It's up 6.69% year to date and up 28.59% since inception in July 2020. Next one's the golden ratio. This one is 42% in stocks, including an allocation to small cap value. There are three funds there. 26% in long-term treasury bonds, 16% in gold, 10% in a REIT fund, which also helped it and 6% in cash in a money market. It was up 1.89% for the week. It's up 7.62% year to date and up 25.96% since inception in July 2020. Next one's the Risk Parity Ultimate, our kitchen sink portfolio of too many funds that I will not go through. There's 15 funds in here, but it's just a kind of something of everything. It was up 1.62% 71% for the week. It's up 10. 47% year to date. It's up 18.36% since inception in July 2020. So really been having a banner year here, but is playing catch up. And now we move to these experimental portfolios involving various forms of leveraged funds and other oddities. Don't try this at home. First one's the Accelerated Permanent Portfolio. This one is 27.5% in a leveraged bond fund, TMF, 25% in a leveraged stock fund, UPRO, 25% in PFF, a preferred shares fund, and 22.5% in gold, GLDM. It was up 2.21% for the week. It's up 11.84% year to date and up 2.49% since inception in July 2020. It's very highly volatile like all of these are, especially that one on the next one. And the next one is the aggressive 5050. This one is the most levered and least diversified of these portfolios. It's one third in a levered stock fund, UPRO one third in a levered bond fund, TMF and the remaining third in Ballast divided into an intermediate treasury bond fund and a preferred shares fund. It's up 2.46% for the week. It's up 11.2% year to date and down 8.81% since inception in July 2020. Next one is the levered golden ratio. This one is 35% in a composite fund. That's the S&P 500 in treasury bonds called NTSX, 25% in gold, GLDM, 15% in a REIT, O, 10% each in a levered bond fund, TMF, and a leveraged small cap fund, TNA, and 5% in a managed features fund, KMLM. This one was the big winner last week because it has the greatest exposure actually of all these portfolios to small caps in general and also to REITs. It was up 3.48% for the week. It's up 8.72% year to date, down 5.91% since inception in July 2021. And this is an interesting study because of its large exposure to small caps and when it started as a portfolio because small caps did peak in November of 2021 and they have not recovered like the rest of the stock market has. Maybe they will be doing that now. I don't know. But it's a good bet over time, however, that they will perform just as well or better as the rest of the stock market. It'll just happen at a different time. And this, I think, is a good illustration of that. But that's also why if you're going to hold something like that, you just need to leave it alone. Because if you were to be holding that kind of a portfolio and see that large caps are greatly outperforming small caps over a period of a couple of years, you might have a tendency to panic and say, oh, I better get out of this and get into more large cap stuff, that is exactly the wrong thing to do because basically you'd be selling low and buying high. What you want to do is remain confident that over a long period of time these things will equal out, they will catch up, and that by continually rebalancing into the lower performer, you will actually outperform as opposed to underperforming by jumping around. But one of the reasons we have these sample portfolios are going through this exercise is to see those very lengthy periods of time of underperformance followed by periods of outperformance because that really illustrates how it really works when you're going through it and not just looking at a back test of 30 or 50 years when three years looks like a blip on the chart. It doesn't feel like a blip when you're going through it. Anyway, moving to our last portfolio, our new one on the block, the Optima Portfolio, one portfolio to rule all. One ring to rule them all. This one is 15% in a leveraged stock fund, UPRO, 24% in a composite value fund that's both international and domestic called AVGV from Avantis. It's got 24% in a strips fund, treasury bond fund, GOVZ, and the remaining 36% is divided into 18% for gold GLDM and 18% for the managed futures fund, DBMF. It's off to a very good start since we only put it on the table this month. It was up 1.57% for the week. It's up 3.38% year to date, month to date, and since inception in July 2024. I've gotten a couple of emails from some of you recently saying you're intrigued and entertained by this portfolio, and I'm glad you're enjoying it so far. We'll see what happens as it goes forward. I did talk about it extensively in the last episode or two, so I will not be discussing it again right now. Looking forward to next week, we have some annual rebalancing we'll be doing not this week, but the Monday following. And that will apply to the four basic non-experimental portfolios. And so next weekend we will go through that in detail to see how they are going to be rebalanced for the coming year. And that will also be an interesting exercise if you are unfamiliar with how rebalancing works. 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, put your message into the contact form and I'll get it that way. If you had a chance to do it, please go to your favorite podcast provider and like, subscribe, give me some stars, a follow, a review. That would be great. Mkay? Thank you once again for tuning in. This is Frank Vasquez with Risk Parity Radio. Signing off.

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The Inquisition, what a show. The Inquisition, here we go. We know your wish and we go away. It's cause the Inquisition's here and it's here to stay. 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.