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 Queen 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 [0:36]

Thank you, Mary, and welcome to Risk Parody 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.

Voices [0:49]

Yeah, baby, yeah!

Mostly Uncle Frank [0:51]

And the basic foundational episodes are episodes one, three, five, seven, and nine. Some of our listeners, including Karen and Chris, have identified additional episodes that you may consider foundational. And those are episodes twelve, fourteen, sixteen, nineteen, twenty-one, fifty-six, eighty-two, and one hundred and eighty-four. And you probably should check those out too, because we have the finest podcast audience available.

Voices [1:26]

Top drawer. Really top drawer.

Mostly Uncle Frank [1:30]

Along with a host named after a hot dog.

Voices [1:34]

Light in the Francis.

Mostly Uncle Frank [1:37]

But now onward, episode 464. Today on Risk Perry Radio, it's time for our weekly portfolio reviews of the eight sample portfolios you can find at www.riskperdy.com on the portfolios page.

Voices [1:54]

Not the bees.

Mostly Uncle Frank [1:56]

Yeah, well, the bees did show up last week. It wasn't too bad, actually, unless you were all invested in the NASDAQ. But before we get to that.

Voices [2:10]

I'm intrigued by this. How you say emails.

Mostly Uncle Frank [2:16]

And first off. First off, we have an email from Dave. And Dave writes.

Mostly Queen Mary [2:30]

Hi Frank. I just started listening to your podcast and have only listened to the recommended episodes and a few others. Two questions. One, do you have a breakdown or estimate of how the sample portfolios would do if the withdrawal rates were the same percentage? I am most interested in the leverage portfolio. You have a gambling problem. Two, along those lines, I still don't fully understand the full downside of UPRO other than it going to zero if the SP 500 goes down one-third in a day, or I guess if there are a lot of significant one-day declines. Looking at the long-term chart, it seems to have returned close to three times the SP 500 index over the last five to ten years. Seems like a no-brainer to invest a decent amount in UPRO and get 24 to 30% annual returns. Well, you have a gambling problem. I donated to the Father McKenna Center, but if you just want to email me back, that's fine, as I'm sure there are likely better questions from your listeners. Dave.

Voices [3:35]

This is pretty much the worst video ever made.

Mostly Uncle Frank [3:39]

Well, first off, thank you for being a donor to the Father McKenna Center. As most of you know, we do not have any sponsors on this program. We do have a charity we support. It's called the Father McKenna Center, and it supports hungry and homeless people in Washington, D.C. Full disclosure, I am the board of the charity and am the current treasurer. If you give to the charity, you get to go to the front of the email line, as Dave has done here. Couple ways to do that. You can go to the donation page at the Father McKenna website. I'll link to that in the show notes. Or you can become one of our patrons on Patreon, in which case you just go to the support page at www.riskpartyreader.com and follow the links to sign up there. Either way, you get to go to the front of the email line, but be sure to mention that you are a donor in your email so that I can move you to the front of the line.

Voices [4:32]

Yes!

Mostly Uncle Frank [4:33]

Now getting to your email. Do I have a breakdown or estimate of how the sample portfolios would do if draw rates were the same percentage? No, but you can generate something like that pretty quickly.

Voices [4:45]

It's not that I'm lazy. It's that I just don't care. Don't don't care? It's a problem of motivation, alright?

Mostly Uncle Frank [4:54]

If you use portfolio visualizer, the back tester there, or testfolio, testful.io, both of those have back testers that you can put in these portfolios. Actually, testful has some of these as generic already set up portfolios. And then they both have a feature where you can have it either adding money to the portfolios or taking money out of the portfolios. And therefore you can set a withdrawal rate and run them all to your heart's content. The only limitations you're going to have are portfolio visualizer is limited to 10 years on ticker symbols, unless you pay. Testfolio is not limited except for the existence of a particular ticker symbol. And you can also test by asset class at portfolio visualizer. If you are interested in this topic and want to test portfolios, and you should do that if you're going to create your own. Those two tools, testfolio and portfolio visualizer, are very useful. And also portfolio charts is very useful. What you're going to find though is that portfolios over a given time period are going to have kind of the same relative performances, whether you're withdrawing 0%, 3%, or 6% out of them. As I mentioned in episode 463, what the withdrawals really affect is the overall volatility of the portfolio and how long it takes to recover. And if you are comparing portfolios over recent times, and by recent I mean since the great financial crisis in 2008 and 2009, you're basically going to find that the ones with the most stocks in them perform the best. Mostly because it's just been a relatively benign period and a very good period to be invested in the stock market with only a couple of short downturns. But I think this is why a lot of amateur investors in particular have been lulled into thinking that going into retirement with a hundred percent stock portfolio is a good idea because they've gotten away with it, frankly.

Voices [7:02]

Uh, what? It's gone. It's all gone. What's all gone? The money in your account, it didn't do too well, it's gone.

Mostly Uncle Frank [7:10]

And the truth is, any portfolio will do just fine in periods like we've had for the past 15 years, and you'll probably take out 8% out of some of these portfolios, and you'd be alright. Where you get into real safe withdrawal rate issues is when you have bad decades, like the early 2000s or the 1970s or something like that.

Voices [7:31]

There was this sound like a garbage truck dropped off the Empire State Building.

Mostly Uncle Frank [7:40]

And that is really the litmus test for portfolios. A good test, a stress test, would be to start your portfolios at the end of 1999 and see how they perform, relatively speaking. Because then you will get at least one bad decade there, and that'll give you a good idea of how bad a risky portfolio is going to be. Now, as for your second question, leverage in a portfolio and you pro in particular. You've got to ask yourself questions. We did talk a lot about this in the last episode, so go back and listen to that as to how leverage works. The truth is though, if you were holding UPRO during 2008, it didn't exist then, it would have gone close to zero, or a loss of something like 90%, effectively going to zero.

Voices [8:32]

And it's gone.

Mostly Uncle Frank [8:36]

Because the stock market can lose 50% of its value in a short period of time in a real market crash. Now, as I mentioned, we haven't had anything like that since 2008 or nine. And so YouPro looks a whole lot better these days than it would look over a long period of time that included periods like that. And what that ultimately tells you overall is you can put some of your eggs in a basket like that, but you don't want to put all your eggs in a basket like that because it's just too dangerous long term. I know what you're thinking.

Voices [9:12]

Did he fire six shots or only five? Well, to tell you the truth and all this excitement, I kind of lost track myself. Being this the 44 magnet is the most powerful handgun in the world and would blow your head clean off. You've got to ask yourself one question. Do I feel like it?

Mostly Uncle Frank [9:30]

What do you think? That being said, I have at least one listener who rode UPro from about 2011 to 2020 and became financially independent just on that. Shirley, you can't be serious. I am serious. And don't call me Shirley. So it's possible to get lucky. Do I feel lucky?

Voices [9:53]

Do I feel lucky?

Mostly Uncle Frank [9:55]

I do believe he has de-risked his portfolio now by adding some diversified elements. Although I think he's still riding with a bunch of leverage in it.

Voices [10:06]

You're a legend in your own mind.

Mostly Uncle Frank [10:09]

A lot of this is all fine and good if you're young and have a lot of work life and new investing in front of you. But it's not very palatable once you get to retirement age and you don't expect to be going back to work anymore.

Voices [10:22]

I don't think I'd like another job. And then I want to go back to my apartment and watch Kung Fu.

Mostly Uncle Frank [10:28]

We've actually talked about this a lot in the past, and if you go to the website, you can search the podcast for things like UPro and Leverage and find all kinds of episodes discussing the pros and cons of such things. I'm glad you're curious, but don't let your curiosity kill you. Thank you for being a donor to the Father McKenna Center, and thank you for your email.

Voices [10:58]

Every day for the last ten years, Loretta there has been giving me a large black coffee. Today she gives me a large black coffee, only it's got sugar in it. A lot of sugar. I just came back to complain. Now you boys put those guns down. Say what? Go ahead. Make my day. Second off.

Mostly Uncle Frank [11:27]

Second off, we have an email from Isaiah.

Voices [11:30]

Off we go into the Bible.

Mostly Uncle Frank [11:35]

And Isaiah writes.

Mostly Queen Mary [11:37]

Hi, Frank and Mary. The discussion in the most recent episode, 462, about money managers who recommend 4% or lower withdrawal rates to their clients made me think about the misalignment of incentives even for flat fee or hourly advisors. I want to die with zero. It is unlikely that this will happen precisely, with some probability that I will fall short and some probability that I will oversave.

Voices [12:05]

Oh boy, I'm rich! I'm wealthy! I'm independent! I'm socially secure.

Mostly Queen Mary [12:11]

A baseline withdrawal rate for me in my early 40s might be 5.1%, say, adjusting to market and life events as I age. A professional advising me or managing my money may not be willing to give me advice that would effectively pursue that goal, because they may only care about the risk that I may fall short and run out of money early. If that were to happen, I might get mad at them and spread negative word of mouth, submit complaints to regulatory bodies, or even sue them.

Voices [12:39]

As you all know, first prize is a Cadillac El Dorado. Anybody want to see second prize? Second prize instead of steak knives. Third prize is your fire.

Mostly Queen Mary [13:08]

Bing again. So their incentives are biased toward oversaving and underspending purely from a cover their butts perspective, even if they aren't drinking my milkshake through AUM. Cheers, Isaiah. And I have a straw, there it is. That's a straw, you see.

Voices [13:25]

Watching. My straw reaches a cruo's through and starts to drink your milkshake. I drink your milkshake. I drink it up!

Mostly Uncle Frank [13:48]

Well, Isaiah, first you're in luck because I did remember that you are a patron on Patreon and moved your email to the front of the line, even though you didn't mention it in your email.

Voices [14:00]

Lucky?

Mostly Uncle Frank [14:02]

Well, thank you for being a donor to the Father McKenna Center. And please do mention it the next time you email in.

Voices [14:08]

And uh I'll go ahead and make sure you get another copy of that memo.

Mostly Uncle Frank [14:12]

Okay. As for your email, yeah, I tend to agree with your observations here. As Charlie Munger is famous to have said, that if you know what somebody's incentives are, you can predict their behaviors. And I always find this very interesting looking at the psychology and the business practices or marketing aspects of financial advisory services.

Voices [14:37]

A B C. A always B B C closing. Always B closing. Always be closing.

Mostly Uncle Frank [14:47]

Mostly because I'm trained to think that way as a lawyer. I'm always thinking, if I'm gonna cross-examine this person, one of the things you cross-examine people on are their biases and incentives. I don't like your attitude.

Voices [15:02]

What else is no? I'm holding you in contempt of court.

Mostly Uncle Frank [15:06]

And so whenever I'm dealing with somebody that is either just selling me something or offering a service, I'm often thinking about what are their incentives.

Voices [15:15]

You know, whenever I see an opportunity now, I charge it like a bull. Ned the bull, that's me now.

Mostly Uncle Frank [15:20]

And I think what might be going on here is what Charlie Munger calls a Lollapalooza effect. When you have more than one incentive pointing in the same direction. And in this case, there is kind of a self-selection or survivorship bias in that people who are likely to hire financial advisors are probably more conservative than the general population to begin with. And they are more likely to have just saved a bunch of money and then they are hiring a financial advisor because they're afraid of losing it or something bad happening to it. So they're naturally conservative by nature.

Voices [15:58]

You can't handle the gambling problem.

Mostly Uncle Frank [16:01]

The financial services industry kind of knows this and caters to it andor markets to it, which is why when you get these free steak dinner invitations, they always have something about avoiding taxes or avoiding the next calamity or avoiding some bad thing that's going to happen to your money.

Voices [16:20]

A guy don't walk on the lot lest he wants to buy. They're sitting out there waiting to give you their money. Are you gonna take it?

Mostly Uncle Frank [16:28]

And that's what also leads to the attraction of all of these expensive shiny objects, whether they're variable annuities, things with buffers attached to them, things that supposedly generate guaranteed income of some kind or high income of some kind, like these covered call funds and stuff like that. But even if we're talking about an advisor that is not selling shiny objects, essentially, and is trying to be efficient about asset selection, it is always in an advisor's best interest to have clients that don't spend much money. Because it takes a lot less effort to serve such a client, they're more likely to be happy with the service, and they're more likely not to have any problems whatsoever.

Voices [17:10]

That's the fact, Jack! That's a fact, Jack!

Mostly Uncle Frank [17:14]

And so if you can come up with a formula, and most advisors do use some kind of formula that keeps the clients happy and keeps them not spending too much money, you'll pretty much be golden, and your advisory practice will be very profitable over time. And if you happen to run into a potential client who wants to spend a lot of money, maybe you just say, yeah, I don't think you're a good fit.

Voices [17:36]

Not gonna do it. Wouldn't be prudent at this juncture.

Mostly Uncle Frank [17:40]

And it also leads to overly conservative planning, and in particular using time segmentation structures that involve lots of cash. Buckets, ladders, and flower pots full of cash.

Voices [17:55]

There's $250,000 lining the walls of the banana stand.

Mostly Uncle Frank [18:00]

Because that kind of planning or structure has a lot of surface appeal. You'll just have five years of cash in front of you and you won't have a problem. The problem is if you actually do the research, as Bill Bangin and many others have done, it is very clear that having more than 10% of your portfolio in cash or cash equivalents does detract from a safe withdrawal rate. And so essentially, if you are doing that, you are automatically reducing the ability of the client to spend in favor of what is psychologically comfortable.

Voices [18:38]

That's not an improvement.

Mostly Uncle Frank [18:40]

But that is the fundamental difference between, say, personal finance with retail clients and professional finance with institutional clients. Because ultimately somebody who is working with retail clients is selling psychology or psychological comfort.

Voices [18:56]

Did you see the memo about this?

Mostly Uncle Frank [18:59]

Whereas somebody who is working with an institutional client is going to be totally focused on finances and just what is the most efficient way to reach the financial goal without regard to how comfortable somebody feels about it. Other than making sure they meet whatever fiduciary or reporting standards they are required to meet as an institution. But to me, that's also why retail personal finance is larded with lots of sing-song-y sounding jargon that may or may not mean anything. Including things like go-go, slow go and no-go.

Voices [19:34]

Forget about it.

Mostly Uncle Frank [19:35]

Minimum dignity floors and safety buckets and and these obsessions about creating retirement income paychecks.

Voices [19:45]

Unicorns, unicorns, unicorns, yeah. I love you. Unicorns, unicorns, unicorns, yeah, and all the things you do.

Mostly Uncle Frank [19:57]

Or really anything with the word income in it. Which sounds great until you realize that the first word after income is taxes. Didn't you get that memo? You don't really want income in retirement. What you want are liquid resources, but no retail financial advisor is gonna tell you that. Instead, what you get are a lot of these jargons which lead to built-in inefficiencies to serve psychological needs, but not really serving financial needs. Anyway, it's no surprise at the end of the day, if you listen to financial advisors talk amongst themselves, like the Kitsis podcast where he interviews them, or Andy Panko's podcast, where he talks to other financial advisors, that the biggest problem financial advisors report is that their clients do not spend money. They're not even spending what they plan to spend. And yes, that part of that is just the makeup of the clients and the selection bias. But another part of that is the way financial advisors sell their services to the public. And the psychology of that and the Lollapalooza effect that is caused. So, what I've realized over the past decade or so is that only a certain segment of the population is really cut out to be DIY investors. Because if you're really going to be good at being a DIY investor, you need to be able to separate out what is finances from what is psychology.

Voices [21:20]

Hello? Hello, anybody home? Huh? Think McFly, think.

Mostly Uncle Frank [21:25]

And make sure you're doing the finances first. That's why I'm most interested and started with what do professionals do? People that run hedge funds or invest for pensions or insurance companies, because they are doing pure finance. They're not doing psychology at that level. And I think if you take that and then simplify that down into something, you get things like what we do here, these risk parity style portfolios.

Voices [21:54]

Inconceivable.

Mostly Uncle Frank [21:56]

And then you can also separate out what are unnecessary or inefficient window dressings, which usually involve those buckets, ladders, and flower pots.

Voices [22:08]

Tell me, have you ever heard of single premium life? Because I think that really could be the ticket for you.

Mostly Uncle Frank [22:14]

Too much cash and too many complications with things that aren't really moving the needle or may be moving the needle in the wrong direction.

Voices [22:22]

Fat, drunk, and stupid is no way to go through lifestyle.

Mostly Uncle Frank [22:26]

Because it's interesting when I press advisors or people who recommend or do things like that and point out that they are not helpful from a financial perspective, they don't fight on that. They don't have anything to stand on when I tell them it's like there's really no point to these buckets, ladders, and flower pots you got floating around here. What they invariably say is this they say what's important is to get a plan that people can stick with, and the only way that I can get my clients or whomever to stick with the plan is to add these window dressings. So it's all psychology.

Voices [23:04]

It's all a fugazi. You know what a fugazi is? Fugazi, it's uh fake. Yeah, Fugazi, Fugazi, it's a wazie, it's a woozy, it's a f fairy dust. It doesn't exist, it's never landed. It is no matter, it's not on the elemental chart.

Mostly Uncle Frank [23:18]

And that's also where this overweening appeal to simplicity comes in as well. That if it's not the simplest thing I can think of, I'm not gonna be able to stick with it. Or somebody's not gonna be able to stick with it.

Voices [23:30]

I'm not a smart man.

Mostly Uncle Frank [23:32]

Again, that's psychology, it's not finance.

Voices [23:35]

It's all a Fugazi. You know what a Fugazi is?

Mostly Uncle Frank [23:38]

So what I have come to realize is that people who want to do things the way we do here and focus on the finance first are outliers. And that's fine. Because I get the most psychological comfort from knowing I'm doing the best finance possible.

Voices [23:54]

The best, Jerry, the best.

Mostly Uncle Frank [23:56]

And not succumbing to psychological tricks or jargon or window dressing to make me feel good so I can stick with something.

Voices [24:05]

You're so magical, yeah. You're so wonderful, yeah. You're so colorful, yeah. Just like me.

Mostly Uncle Frank [24:17]

I can stick with something if I think it's the best financial decision I can make. And I guess not everybody can do that. And that's fine. Anyway, interesting observations. I do agree with them. Thank you for being a donor to the Father McKenna Center, and thank you for your email. And Ian writes.

Mostly Queen Mary [25:49]

I would like to continue to discuss with you what you feel are the absolute best fund options to establish a risk parity type portfolio for my company-sponsored 401k plan. I've attached documents from my plan to help shed more light on my questions. Please note I would prefer to keep the company I work for confidential. I wanted to add there is a decent chance I may be staying with my company for up to 10 years after I reach my FI number, which is why I continue to follow up on this question with the intent of convincing myself I have figured out the best case scenario regarding a risk parity allocation with what is available. The reason to stay longer would mostly be because of the good medical insurance offered with my wife's medical history. Before I get into it, to answer your question from episode 444, I make approximately $109,000 annually. The reason I do Roth instead of traditional in my wife's and my IRA is because I'm following the recommendations of the Choose a Fi podcast to invest in a Roth once the 401k is maxed out. I've attached a PDF of all the investments available to me in my company-sponsored 401k. You should be able to see performance and expense ratios. I have also attached more in-depth information on the LCVAL fund you had recommended I split with the S P 500 index fund for my stock allocation in episode 444. This would be a good time to bring up that I noticed going through the fund choices as part of sending this new email that my company had changed out all the Vanguard funds with State Street. Any thoughts on this change would be appreciated. With these new options, brings perhaps different answers to what would best constitute a risk parity portfolio. As you mentioned in the last episode, a lot of the funds listed are unique to my company plan and don't have publicly traded tickers. Because of this, I've compared them to what appears to be their publicly traded counterparts ticker. Feel free to agree or disagree with this. The new SP 500 is SS S P 500 Index Lend C L, which appears to be comparable to SVSPX. The new bond fund is SS US Bond Index Lend CLX, which appears to be comparable to SSFDX. I would also like to discuss the new MidCap fund State Street SMMID CAP IDX CL2, which appears to be comparable to SSMHX. Since T Row Price is saying their LCVAL fund tracks the Russell 1000 value TRUSD, this appears to compare to IWD. I have attached pictures from Testfolio where I have back tested these funds to look at their correlations. Other than those times, overall it performs poorly, with a negative 13% return in its 11-year history. I understand comparing it to a Treasury bond is crude, but the point mainly is its poor performance and negative correlation versus an S P 500 index fund. I also wanted to show the correlations to the State Street Mid Cap Fund versus the S P 500 fund that shows a 7% wider correlation than comparing the LCVAL fund versus the S P 500 fund and a lower expense ratio to boot. Please let me know if there are any other funds you think I should be looking at from the list of investments I've attached. I proposed based on the analysis given that I do a modified golden ratio portfolio with the following funds and percentages. 26% bonds, SSFDX, because of poor overall performance and negative correlations similar to T bonds, 38% SP 500, SVSPX, SSMHX, 6% capital preservation, CPP, cash allocation. Please let me know your thoughts and critique of my analysis and what you recommend. Thanks so much for being a great member. To me, albeit from afar, and making me think of different and better ways to invest. Best regards, Ian.

Voices [30:08]

Mary, Mary, I need y'all again.

Mostly Uncle Frank [30:16]

All right, Ian, I did go back and listen to episode 444 to refresh my recollection again about what we were talking about. Ian basically has a 401k plan with very limited choices. Basically, there are about 10 stock funds and two bond funds and then a bunch of target date funds. And most of the stock funds have expense ratios that are 0.3 or above. And there's only a couple of ones that have expense ratios of less than 0.1. Okay, before we get to the funds, just looking at your income, it's $109,000 annually. It wasn't clear to me whether that is the only income in your family. I'm assuming that it is for the purpose of this. If that is correct, then you are in the 12% tax bracket. And you should put as much money in Roths as you can. If you have a Roth option in the 401k, I would definitely use Roth. Because the only tax problem I could see you ever having would be if you put all of your money in traditional accounts and then underspent your portfolio well into your 70s, you might have large RMDs at that point. That can easily be avoided though. The only point I'm trying to make here is you're not getting a whole lot of tax benefits by using the traditional 401k right now. And I did not get the impression that you had a Roth option, but if you do, I would definitely use it. And I would also make sure that you fill up the Roths outside of that, the IRAs, even before putting more money into the 401k. The Roth IRA should be your first priority. And I know you're saying you're following the recommendations of the Choose FI podcast, but if you listen to somebody like Sean Mullaney on that podcast, he would tell you what I'm telling you. You may also want to get their book, which I linked to in the last episode of this podcast about taxes and early retirement, and it will tell you the same things that people who are in the lowest tax brackets to begin with should really focus on Roths and not on traditional. And that's where you are after the standard deductions are taken out of the 109,000 salary. Alright, the next overall planning issue you've got here is that you say that you could be working at the company for up to 10 years after you actually reach your FI number in terms of the money you need to have saved. In that case, you may consider not contributing more to these retirement plans if you really don't think you're going to need the money. It might be more fun to spend some of that money earlier while you're still working. Take a vacation.

Voices [32:59]

Now I owe it to myself to tell you, Mr. Griswold, that if you're thinking of taking the tribe cross country, this is the automobile you should be using, the Wagon Queen family truckster. You think you hate it now, but wait till you drive it.

Mostly Uncle Frank [33:12]

Because otherwise you're just going to be well oversaved at retirement time. And then the question is, well, what was the point of that if you're not going to spend the money? In fact, by that time you'll probably have twice as much money as you need for retirement. If you reach your FI number, you continue to work for 10 years, continuing to accumulate, you will have easily twice as much money as you need for retirement. Which is a good problem to have, but it might not be a very efficient use of your time in life, if you will. And that you should either be spending more money earlier or planning to upscale your lifestyle when you reach retirement. Unless, of course, your goal is to die with the most money, in which case, carry on.

Voices [33:56]

What's with you anyway? I can't help it. I'm a greedy slob. It's my hobby. Save me!

Mostly Uncle Frank [34:03]

Okay, and then looking at these fun choices, yeah, it it's a limited selection here. And what you would really be trying to do, the only thing you really could do with this setup is to just de-risk the part of the portfolio that you're using for retirement assets. And yes, that would involve adding bonds essentially, and I would use that simple bond fund. Either one of those bond funds is actually serviceable, but you might as well use the cheaper one. And then on the other side, yeah, I would put most of it in the SP 500 and any of these other funds. If you wanted the mid-cap, that's fine. It's not going to do a whole lot differently than the SP 500, most likely. If you wanted to reduce the risk, you would use the large cap value fund that's available there, which is another option. And that is the thing, you have so many options here that are not necessarily based on finances, but are based more on personal preferences. Because if you are going to have enough money to retire and then continue to work for another 10 years, you can do all kinds of things.

Voices [35:08]

Johnny, what do you make out of this? This?

Mostly Uncle Frank [35:16]

You could still leave the money mostly invested in stocks. You could move it to a more conservative portfolio. You could do something in between.

Voices [35:30]

Sorry, Henry.

Mostly Uncle Frank [35:34]

What you might consider is just taking that portion that constitutes your financial independence number. When you get to that, put that part in a more conservative portfolio with some bonds in it at that point in time. And then future contributions, you can do whatever you want with it. You can spend it, you can invest it aggressively. You can keep those two things separate, just knowing that your financial independence money is secured. Money was indeed secured. And as long as you're not taking money out of it, it doesn't matter as much that it's not in a fully developed risk parity style portfolio. What matters more is that macroallocation principle that says that the basic performance characteristics are going to be determined by things like what is the percentage of stocks in the portfolio versus bonds and other stuff. And then ultimately, if you do build out those Roth IRAs, you can put anything you want in those and balance out what you've got in here. Because the extent you're holding bonds, I would hold them all in this traditional 401k, even if you can't get the specific funds you want. Because eventually you will roll this into a proper IRA with all of the choices, and then you'll shift it to the exact things you want. But right now, you would just focus on the macro allocations in terms of stocks versus bonds, because that's really all you can do with this. But you're gonna be in good shape regardless here, because if you have enough money to retire, but you plan to work for another 10 years, there's no way you could lose. And the only thing that I would be considering is, well, maybe you should be spending more money because you have enough money to spend more money either now or later. And it might be better to do some of that earlier in life and space out the spending rather than just keep piling it up for some kind of spending at retirement that's well in excess of what you're doing right now. But in your case, I definitely would not sweat the details here, because it's all gonna work out fine. Hopefully that helps. And thank you for your email. And now for something completely different. And yes, it does appear the bees have shown up a little bit at this early point in November. I think the report was the NASDAQ had its worst week since last April. Otherwise, things were not really that bad, though.

Voices [38:22]

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

Mostly Uncle Frank [38:30]

Looking at the markets, the SP 500 represented by the fund VOO is now up 15.57% for the year. The NASDAQ represented by QQQ, the NASDAQ 100, is now up 19.71% for the year. Small cap value, represented by the fund VIOV, is still the laggard or one of the laggards. It's only up 3.14% for the year so far. Gold continues to shine. It didn't really move very much last week.

Voices [39:00]

I love gold.

Mostly Uncle Frank [39:04]

Representative fund at GLDM is up 52.45% for the year so far. Long-term treasury bonds represented by the fund VGLT are up 6.76% for the year so far. REITs represented by the fund RET are up 8.78% for the year so far. Commodities represented by the fund PDBC are up 4.93%. Preferred shares represented by the fund PFFV are up 2.8%. And managed futures are still managing to be up. A representative fund DBMF is up 9.65% for the year so far. Moving to these portfolios, first one is this reference portfolio called the All Seasons. It's only 30% in stocks in a total stock market fund, 55% in intermediate and long-term treasury bonds, and the remaining 15% in golden commodities. It is down 0.57% for the month of November so far. It's up 12.64% year to date and up 22.28% since inception in July 2020. Moving to these bread and butter kind of portfolios, first one's golden butterfly. This one is 40% in stocks divided into a total stock market fund and a small cap value fund, 40% in treasury bonds divided into long and short, and the remaining 20% in gold. It's down 0.32% for the month of November. It's up 16.14% year to date, and up 55.54% since inception in July 2020. Next one's the Golden Ratio.

Voices [40:40]

A number so perfect.

Mostly Uncle Frank [40:42]

Perfect.

Voices [40:43]

We find it everywhere, everywhere.

Mostly Uncle Frank [40:50]

This one is 42% in stocks, in a large cap growth fund, and a small cap value fund, half and half. It's 26% in long-term treasury bonds, 16% in gold, 10% in a managed futures fund, and 6% in cash. It was down or is down 0.75% for the month of November so far. It's up 16.09% year to date, and up 50.87% since inception in July 2020. Next one's the Risk Parity Ultimate. Not going to go through all 12 of these funds. We use this as kind of a kitchen sink of various and sundry assets. It is down 0.75% for the month of November. It is up 15.51% year to date and up 37.86% since inception in July 2020. Moving to these experimental portfolios that all involve leverage funds. It's down 1.74% for the month of November. It's up 20.83% year to date, and up 22.02% since inception in July 2020. Next one's the aggressive 5050. This 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 divided into preferred shares fund and an intermediate treasury bond fund as ballast. It's down 2.44% for the month of November. It's up 12.66% year to date and down 0.78% since inception in July 2020. And this is an example of volatility drag, as we discussed in the last episode. Moving to the next one, which is a year younger than the first six. This is the levered golden ratio. This one is 35% in a composite levered fund called NTSX, that's the SP 500 and Treasury Bonds. 15% in AVDV, which is an international small cap value fund, 20% in GLDM, that's gold, 10% in KMLM, a managed futures fund, 10% in TMF, a levered bond fund, and the remaining 10% divided into a levered Dow fund and a levered utilities fund. It is down 1.03% for the month of November. It's up 22.29% year to date and up 16.88% since inception in July 2021. And now moving to the last one and newest one, the OPTRA portfolio. One portfolio to rule them all. This one is 16% in UPRO, that is a levered SP 500 fund, 24% in AVG, which is a worldwide value fund, 24% in GOVZ, which is a Treasury Strips From the remaining 36% divided into gold and a managed futures fund. It's down 1.31% month to date for the month of November. It's up 21.1% year to date and up 24.63% since inception in July 2024. And that concludes our portfolio reviews. But now I see our signal is beginning to fade. If you have comments or questions for me, please send them to Frank at RiskPardyRadio.com. That email is Frank at RiskPardyRadio.com. Or you can go to the website www.riskpardyRadio.com. Put your message into the contact form and I'll get it all 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 follow, a review. That would be great. Okay. Thank you once again for tuning in. This is Frank Basquez with Frisk Party Radio. Signing off.

Mostly Queen Mary [46:12]

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