Voices [0:00]

A foolish consistency is the hub goblin 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 [0:37]

Thank you, Mary, and welcome to Risk Parity Radio. If you have just stumbled in here, you will find that this podcast is kind of like a dive bar of personal finance and do-it-yourself investing.

Voices [0:52]

Expect the unexpected.

Mostly Uncle Frank [0:55]

It's a relatively small place. It's just me and Mary in here. And we only have a few mismatched bar stools and some easy chairs. We have no sponsors, we have no guests, and we have no expansion plans.

Voices [1:10]

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

Mostly Uncle Frank [1:14]

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

Voices [1:18]

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

Mostly Uncle Frank [1:23]

The smaller group are those who actually think the host is funny, regardless of the content of the podcast.

Voices [1:30]

Funny how? How am I funny?

Mostly Uncle Frank [1:32]

These include friends and family and a number of people named Abby.

Voices [1:38]

Abby someone. Abby who? Abby Normal. Abby Normal.

Mostly Uncle Frank [1:47]

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.

Voices [2:01]

The best, Jerry. The best.

Mostly Uncle Frank [2:04]

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.

Voices [2:22]

What we do is if we need that extra push over the cliff, you know what we do? Put it up to a nevin, exactly.

Mostly Uncle Frank [2:30]

But whomever you are, you are welcome here.

Voices [2:34]

I have a feeling we're not in Kansas anymore.

Mostly Uncle Frank [2:38]

But now onward, episode 465. Today on Risk Party Radio, we're just gonna do what we do best here, which is answer your emails.

Voices [2:47]

What what would you say you do here? Look, I already told you I have people skills. I am good at dealing with people. Can't you understand that? What goes wrong with you people?

Mostly Uncle Frank [3:03]

And so without further ado.

Voices [3:05]

Here I go once again with the email.

Mostly Uncle Frank [3:09]

And first off. First off, we have an email from Arune.

Mostly Queen Mary [3:14]

No way.

Mostly Uncle Frank [3:16]

And Arune, right?

Mostly Queen Mary [3:18]

Hello, Uncle Frank and Aunt Mary. Really enjoying how this podcast is shedding light on life in general. Loving it. Sweet. I have three questions today. Two about investing and one about life in general. My questions. One, I started a modified golden ratio portfolio about three years ago. Never did rebalancing as I was contributing every month. This past year or so, life has happened and expenses have increased. I have not been able to contribute towards this portfolio. The question is, should I really have to rebalance? Gold is up by 2-3%, bond is down by about 5%, and a few more were which are up 1 to 2% or down from the allocated amount. Part of me says sell high, gold, and buy low, bonds.

Voices [4:05]

Never show any sign of weakness. Always go for the throw. Buy low, sell high. Fair, that's the other guy's problem.

Mostly Queen Mary [4:13]

But the other part is worried about tax consequences. Is it all really worth it? This portfolio has about $90,000 in it and no immediate plans for it. When I started this portfolio, the plan was to stay for five years or so toward a down payment on a second house. As of today, it may not happen in two years. Two, the second question is around retirement accounts. My wife and I are in early 40s, late 30s. Our retirement account value is around $600,000 across all account types. It is all equity with 80 to 90% in total stock market or SP 500 and the remaining in small cap value and small cap blend. We are currently reducing our contribution up to the employer match only. I'm thinking of diverting new contributions towards bonds and starting to build it with tradition within traditional 401k accounts as one option. Alternatively, I'm thinking of selling a portion of the highly appreciated stock funds and buy bond funds and have new contributions go 50-50 towards stocks and bonds. Does cost basis matter within retirement account during withdrawal? Thinking of retiring at age 55, but can extend working if need be. Is a hundred percortio an option during the withdrawal phase? Our current annual expenses are $130,000, so we are targeting $3.2 million for retirement. 3. Lately there's been more discussion on life after achieving financial independence. I wonder if you'd like to share your thoughts on those who are in the middle model, those aged between 35 and 45, with very young kids bringing in all sorts of viruses from daycare and personal life and tug-of-war middle management at work. Life seems really tough during this phase. The question is, even though this seems to be peak earning years, can the career take a step back to focus on health and personal life? Work is challenging enough to keep engaged and interesting, and pay is good enough. It is time that is deficient. Common chores are already outsourced, and we have a nanny in the evening for a couple of hours to help. With all that help, having two boys, three and five, is very, very tiring. Love them, but why don't they listen, especially the little one?

Voices [6:32]

George, what's wrong? Wrong, everything. Well, you call this a happy family. Why do we have to have all these kids?

Mostly Queen Mary [6:39]

My wife and I wonder what we will what they will do when they are teenagers, in for one hell of a ride. I wonder if I am asking the right questions. I don't want my kids to remember that dad worked late and on the weekends, and I also don't want to be in a position to not afford to meet their needs and wants. A real pickle. Thanks for all that you do, Arun.

Voices [6:58]

Have a hectic day. Ah, yeah. Another big red letter day for the babies. Daddy, the Browns next door have a new car. You should see it. Well, what's the matter with our car? Isn't it good enough for you? Yes, Daddy. Excuse me! Excuse me. Excuse you for what? I burst.

Mostly Uncle Frank [7:16]

Well, I'm glad you're enjoying the podcast, Arun. And I'm glad you have questions. Now let's see if we can answer them. Okay, your first one. So just to orient everyone, what Arun is doing here is using a risk parity style portfolio as an intermediate accumulation portfolio. And this is good for some kind of purchase that it's probably three to five years. You're not sure when it's going to be, but you don't want to leave things in cash. You want some growth out of it, but you don't want it to crash like the stock market might and stay down for a decade. So risk parity style portfolios tend to have maximum drawdowns of only three to four years. And so they make good kind of intermediate accumulation portfolios. And what he's been doing here is saving towards the down payment of a house, a second house. And that's a very good use for a portfolio like this.

Voices [8:12]

And we have the tools, we have the talent.

Mostly Uncle Frank [8:15]

So typically, if you are using a portfolio like this for this kind of intermediate accumulation, you don't rebalance it. All you do is you take your new contributions and buy whatever's on the low side and then take whatever dividends or income are thrown off and also buy what's on the low side and do a partial rebalancing like that. And it is to basically avoid taxes. Now you wrote this in August, and gold has gone up another 10 or 15% since then. So I'm not sure how much of it is accumulated in your portfolio now. I suppose at a certain point, if it gets so far out of whack, like you know, five or ten percent over what it's supposed to be, that you might consider doing some rebalancing. But I don't think it's typically necessary, and I think you do need to be mindful of the taxes that might be involved in it. But also when are you going to be using the money anyway is another consideration. Really, what's different about a portfolio like this is you're not taking regular withdrawals out of it. And in fact, mostly you're putting money into it, so it's not going to have the same kind of volatility that a drawdown portfolio would have, and not need the kind of rebalancing that a drawdown portfolio would have. So you can do it if it's convenient, but if it's not convenient, then you don't need to do it. That's where I stand on that.

Voices [9:32]

Forget about it.

Mostly Uncle Frank [9:34]

Alright, your second question about building out a bond allocation. My first reaction is I don't think it's necessary for you to do that at this point in time because you're in your early 40s and late 30s and not planning on retiring until you're 55 or maybe even a little later. So you don't really need bonds right now.

Voices [9:54]

Necessaire? Is it necessary for me to drink my own urine?

Mostly Uncle Frank [10:00]

Probably not.

Voices [10:01]

No. But I do it anyway because it's sterile and I like the taste.

Mostly Uncle Frank [10:06]

If you do want to have bonds just because you want to have them, you want to sleep better at night and have a lower risk portfolio, yeah, you would put them into your traditional 401k or retirement accounts for two reasons that you don't want to pay taxes on the ordinary income that's being thrown off. And then also considering where things would grow or not grow, you'd rather have more growth outside of those accounts than in Roth's or even taxable accounts than you would in the traditional retirement account because eventually you're gonna have to pay ordinary income taxes on that. So the bonds go in there. And no cost basis does not matter at all within a retirement account because there are no capital gains taxes at all. So you don't need to think about cost basis in a retirement account. And then finally you asked, is a 100% stock portfolio an option during the withdrawal phase? Well, it depends on your level of withdrawals. If you have a hundred percent stock portfolio in your withdrawal phase, what it implies is that your goal is to die with the most money possible and therefore you are underspending your portfolio because that's what you need to do if you're gonna take on that kind of risk. So if you're Warren Buffett, yeah, go right ahead. Or if you're spending under 3% of your portfolio and just want the rest of it to grow until death, then that is the strategy that you would want to adopt, having as close to a 100% stock portfolio or that Warren Buffett 9010 portfolio, something like that. But if you do want to spend more money, then you need a more diversified portfolio because that's how you get higher safe withdrawal rates.

Voices [11:36]

That is the straight stuff, oh funkmaster.

Mostly Uncle Frank [11:39]

Another option people sometimes use is they have a retirement portfolio, a diversified retirement portfolio that's covering their expenses, and then they have some other money that is just to be left to heirs or something like that, and it's like on 100% stocks and it's off on a Roth account somewhere. That's also another possibility if you're splitting out different pots of money for different purposes like that. And your last question: what's it like to be in the middle of life with small children running around and too much to do?

Voices [12:08]

You can't handle the dogs and cats living together.

Mostly Uncle Frank [12:12]

Okay, you first need to have kind of the right attitude here because what you really need to recognize is this situation's not going to go on forever. Your children are not going to be three and five forever. Your job situation isn't going to be the same forever. And if you know that, then you can do what is called embrace the suck, which is just knowing that this is gonna be a hard time, you're gonna get through it, you push on through it, and you think of it in that way that it's like an ordeal you're going through and you're going to survive.

Voices [12:43]

It's gonna suck. It's not gonna be fun. Do something that sucks every single day of your life. That's how you grow. Embrace the suck.

Mostly Uncle Frank [12:55]

But you are correct that the real focus needs to be on how you're using your time and your observation that time is deficient is correct. And so that applies both to your work life and your home life. If there are things you can get out of doing at work that just take up a lot of time, that is one good way to approach that. Or stuff you think is not really going to serve you. At a certain point in my legal career, I decided I was not going to seek the brass ring and become involved in a lot of organizations or conventions or writing of articles or trying to get awards or any of that sort of stuff. And that saved a lot of time. You might think of what is your goal in terms of your work life, and so what are the things that you don't need to be doing anymore because you're not seeking a particular kind of goal. This is going to vary so much from job to job that there's no one advice I could give you that would make sense generally. With the kids, uh, I promise you they do get more interesting as they get older.

Voices [13:58]

Hi friends! It's me, Brie! Today, let's sing a unicorn song together.

Mostly Uncle Frank [14:08]

Mary and I always like to say that we're not really baby people, that we loved our children as babies, but we were glad when they were done being babies, and we were glad when they were done being toddlers, because they became a lot more interesting as they got into school and started participating in activities that we could participate in with them. So, what you do with them right now at ages three and five probably isn't going to matter a whole lot in the grand scheme of things, just as long as you're spending some time with them and having some good experiences. Maybe camping in the backyard or things like that. That's what small children remember. Silly little trips or activities like going to a pumpkin patch, stuff like that. Now, as they went on and got involved in more activities, you sort of needed to pick your spot as to what activities you could be involved with with them. So Mary is the athlete and coach in our family, and so she was heavily involved in all of their sports teams, whether being some kind of administrator or organizer or team mom or being the coach herself. Meanwhile, I became the photographer and videographer for a lot of these teams. Because I'm more of the cheerleader than the coach.

Voices [15:14]

You want to kick it? Let's do it. Spartan chicken. Take a chance, drop your pants, pick it in the cup. Top the spotten's in the mouth, send me cheaper, bring it in the mouth. Take it up. Time to come up.

Mostly Uncle Frank [15:40]

And I also was heavily involved in Boy Scouts with our two younger ones and went to a lot of Boy Scout camps in the summertime, along with a lot of other activities.

Voices [15:50]

Do the chickens have large talons? Do they have what? Large talons. I don't understand a word you just said. Okay, you meet me back here about noon and uh we'll have a little lunch waiting for you.

Mostly Uncle Frank [16:04]

But I do have to say I was gone most of the time when my kids were your kids' ages, and I really didn't have the capability of organizing my work that well until they were a little bit older in order to participate in more of their activities. But you'll figure it out. One thing you might consider is just going away, just you and one of the children, particularly at this point, the five-year-old, for some long weekend somewhere, some little adventure together. You have two kids and two parents, so you can do a kind of a divide and conquer strategy, at least for now. Anyway, I I think as long as you're mindful of all of these choices, if you will, and trade-offs, you'll do a good job. It's the people that get sucked up into one side of things are the ones that tend to miss out on their children's lives and things like that. Anyway, take a deep breath. Embrace the suck, as it were. And hopefully that'll help a little bit. Thank you for your email.

Voices [17:07]

And the cats in the cradle and the seals. When you're coming home, that I don't know when. But we'll get together there. You know we'll have a good time there.

Mostly Uncle Frank [17:35]

Second off, we have an email from Neil. And Neil writes.

Mostly Queen Mary [17:50]

Hi, Frank. I just wanted to say I heard an episode of your podcast recently that someone recommended on Reddit, 436 running out of money, and I really enjoyed it as an anxious person. I need your calm, rational approach in my life. Thanks, Neil.

Voices [18:07]

Up in the Hollywood, up in the red across the ocean. Up in a It's such a fine high that keeps me searching for a haunted.

Mostly Uncle Frank [18:34]

Well, you know, Neil, I haven't been always described as having a calm or rational approach to life.

Voices [18:40]

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

Mostly Uncle Frank [18:46]

But I am glad you're enjoying the podcast. Episode 436 has become a really popular one, as has episode 441, because those deal more with the big picture of money in life and things like that.

Voices [19:02]

Everything that has transpired has done so according to my design.

Mostly Uncle Frank [19:08]

I do have a little treat for you in that I have been fiddling around with Google Notebook LM, which now will create little videos out of anything you put into it. And I did create a little video out of episode 436 that's about seven minutes long. And I also did one out of the transcript for 441, which is about the same length. I'll link to those in the show notes so you can check them out. But I think a lot of people have liked them. I thought they turned out pretty well, particularly since they required about five minutes of effort. I just stare at my desk, but it looks like I'm working.

Voices [19:43]

I do that for uh probably another hour after lunch, too. I'd say in a given week, I probably only do about 15 minutes of real actual work.

Mostly Uncle Frank [19:55]

And that's value add.

Voices [19:57]

Well, you haven't got the knack of being idly rich, you say you should do like me, just snooze and dream, dream and snooze. The pleasures are unlimited.

Mostly Uncle Frank [20:06]

So I'm glad you're enjoying the podcast. Hope you like these little videos, and thank you for your email.

Voices [20:44]

Hey, Steve!

Mostly Uncle Frank [20:46]

And Steven writes.

Mostly Queen Mary [20:48]

Hello, Frank. I first came across your Risp Parody Radio in episode 618 of the Afford Anything podcast. I started listening to your podcast two weeks ago and am up to episode 105. I retired at 59 in January of 2022. Hopefully I will provide constructive criticism as I believe I have the ultimate risk parody portfolio. I have read all of Karsten's 60 plus earn series. Having been a Morningstar subscriber for 25 years, I listened to all of their Longview podcasts. So I am up to date on Bill Bangin, Paul Merriman, etc. I also listen to Two Sides of Phi. I've just finished reading the All Weather Retirement Portfolio by Randy L. Thurman. No gold, no long-term treasuries, greater than 5% safe withdrawal rate. I hate TLT. I would like your opinion of Mr. Thurman's portfolio. All of my stock and bond funds are actively managed. I will share in upcoming emails. Thank you, Steven.

Voices [21:50]

I'll get you a Steve, if it's the last thing I'll do.

Mostly Uncle Frank [21:56]

Alright, Stephen. I appreciate your enthusiasm for this topic. But you do need to stop being so cryptic here. If you want me to analyze something, at least you could tell me what it is. That would be nice. As in these are the allocations either to asset classes or to particular funds. And then we could talk about that in detail, and I could give you an opinion of what you're actually talking about as opposed to what I'm guessing you might be talking about.

Voices [22:27]

You know, I had an idea like that once, a long time ago. Really? What was it, Tom? Well, all right. It was a jump to conclusions mat. You see, it would be this mat that you would put on the floor and would have different conclusions written on it that you could jump to. That is the worst idea I've ever heard in my life, Tom. Yes. Yes, it's horrible, this idea.

Mostly Uncle Frank [23:03]

And if you have the ultimate risk parity portfolio, as you say, I'm sure my listeners would like to see that and check it out for themselves. Now you did ask me about my opinion of Mr. Thurman's portfolio. That's an odd question because if you read that book, he's got like 50 portfolios in there. So which one are you talking about?

Voices [23:25]

The Inquisition. Let's begin the Inquisition. Look out, Sand.

Mostly Uncle Frank [23:31]

But let's take a look at what he's got there and see what we can learn by checking out a few things. So I went to Randy Thurman's website. He is an advisor, and his firm is called Retirement Investment Advisors. And the first thing you should always look at when you go to an advisor's website is not the website itself. What you want to look for are the disclosures that are filed with the SEC. And usually they will have them tucked into a corner in the fine print somewhere. And I found them in this circumstance. You can also go to the SEC and just look it up because that really tells you about what is this service or person about because they have to disclose everything about their business that's meaningful in these SEC disclosures, at least the registered investment advisors. If they're not an RIA, you start needing to ask whether they are selling insurance or something.

Voices [24:22]

Am I right or am I right or am I right? Right, right, right.

Mostly Uncle Frank [24:25]

Anyway, I looked at his ADV. I'll link to it in the show notes. This is a typical kind of AUM advisor, and so he charges between 1.25%. That's for anybody with a million dollars or less, and then a sliding scale. I think if you have $10 million, he's gonna charge you about 0.8% uh per year. So for most people, they'd be paying about 1% for this. So if you have $5 million, you probably be paying between $40,000 and $50,000 a year for this guy to run your money for you. So typical milkshake drinker.

Voices [25:00]

Hey, if you have a milkshake, and I have a straw, there it is. That's a straw, you see. Watch it. My straw reaches a cru'st room and starts to drink your milkshake. I drink your milkshake. I drink it up.

Mostly Uncle Frank [25:29]

Now, he's written this book, but he's also got on his website essentially the layout of the process for what he does, and he calls this the 10 steps to build an all-weather retirement portfolio. Now, he probably shouldn't have called it an all-weather portfolio because that just inspires confusion because everybody knows that the all-weather portfolio is something from the 1990s that Ray Dalio and Bridgewater came up with. And so if you're doing this 20 or 30 years later, pick another name. Anyway, he's got 10 steps in his process here. I'll just read them to you. Number one, start with intermediate term corporate bonds. Number two, diversify with stocks for a higher return. Number three, diversify stocks internationally. Number four, diversify with growth and value stocks. Number five, diversify with small companies. Number six, eliminate dead wood. Number seven, apply value tilt. Number eight, adjust the ratio of stocks and bonds. Number nine, optimize international stocks with emerging markets. And number ten, apply the eight-year rule. So to me, he's got a lot of good things here, but they're kind of overlapping and redundant in some perspectives, missing some things, and they're in the wrong order for sure. That you would not start building a retirement portfolio by taking out intermediate term corporate bond funds. Because you've probably been accumulating in a bunch of stock funds or something like that. You may not even have any corporate bonds. So why would you erase your entire portfolio and go and buy some intermediate corporate bond fund? Even in retirement, your retirement portfolio is going to be mostly driven by its equity components. So you need to start with the equity component and not fixate on the bonds. You use the bonds as diversifiers, you do that later. You don't start with intermediate corporate bonds because that just causes a screw up later because they're not that well diversified from stocks. That's the problem with corporate bonds. So he should have done number two first, which is diversify with stocks for higher return. And what he talks about there is basically get out a 60-40 portfolio. Why you would put 40% in corporate bonds makes no sense. Okay, then he's got the next three are about diversifying the portfolio. He talks about diversifying internationally between growth and value and with small companies. I think he's got these slightly out of order as well, that for a good drawdown portfolio, the most important one is to diversify with growth and value stocks. And I heartily agree with that. If you only do that for your retirement portfolio, that will put you ahead of the game and will raise your safe withdrawal rate. After that, diversifying with small companies and diversifying stocks internationally are less important. And to the extent you do that, you do want to make sure that you are also maintaining the growth versus value split. So to the extent you're holding international stocks, you would want those split into growth and value, just like your domestic stocks. Now, number six, I really like, which is eliminate dead wood. And what he identifies here is that small cap growth in particular is dead wood, and I agree with that. This is something that Paul Merriman also says, that that particular combination, small cap growth, tends to have a very high volatility, and although it can have a high return, the risk versus reward is generally not worth it. So you're better off for a retirement portfolio to just excise small cap growth from your portfolio. So what that looks like in simple practice is to have a large cap growth fund and a small cap value fund, and then you can have other kinds of value funds or large cap blend if you'd like them. And international you want to follow that same pattern. Next one he says apply value tilt. And I agree you want at least half of your retirement portfolio to be tilted towards value. A 50-50 split between growth or large cap blend and value is a good marker to shoot at. Number eight, he's got to adjust the ratio of stocks and bonds. And here he's messing with a macro allocation and actually going from a 60-40 to a 70-30, at least the way he's written this. This is important, but again, you should do this earlier. You should set up your macro allocations earlier. That's a macro allocation principle. You should start with your stocks because your percentage of stocks is the most important part of the overall characteristics of your portfolio. Then think about the other assets you want to put in there because you're probably putting them in there for diversification. Not for any growth. That's why we're using bonds in a portfolio. We want to take the bonds that are the most diversified from the stocks, which are not corporate bonds, they're treasury bonds.

Voices [30:10]

Hello! Hello, anybody home? Think McFly think.

Mostly Uncle Frank [30:15]

So he's got that wrong. He just got that wrong.

Voices [30:18]

Wrong!

Mostly Uncle Frank [30:19]

You're holding things like corporate bonds and the stock market crashes like in 2008, you're gonna lose money on both sides. That's not an improvement.

Voices [30:28]

That's not an improvement.

Mostly Uncle Frank [30:30]

Even something like TIPS crashed in 2008. You don't want that either.

Voices [30:34]

You think anybody wants a roundhouse kicked to the face while I'm wearing these bad boys? Forget about it.

Mostly Uncle Frank [30:41]

So, yes, adjust the ratio between stocks and bonds, but also use the right bonds to begin with, and use alternatives because they can also improve the diversification. And that's what he's missing here. There's no consideration of anything that's not a stock or a bond. And that's a very myopic view of the world. That's not how professional investors who run hedge funds and advise pension plans view the world, and that's not how you should either. And then he says optimize international stocks with emerging markets. Yeah, you can take that or leave it. But if you want emerging markets, make sure you are also diversifying that into growth and value. That's probably not going to move the needle much in the great scheme of things. His last one, apply the eight-year rule. I'm not sure what the eight-year rule is, and he doesn't describe it. He says the eight-year rule only applies if the worst financial storm hits in the first eight years after you retire. After that, you are on autopilot. It sounds like what he might be referring to is some kind of guardrail strategy, which would make sense. In reality, the period you're most worried about in the beginning of retirement is the first ten years, ten or eleven years. This also comes out of Bill Bengins' research that when you're talking about safe withdrawal rates, it is really that first whole decade, not the first three years or five years, but a whole decade that you're really worried about in terms of safe withdrawal rates. And then he says, together with retirement investment advisors, we can also explore the best way to buy funds to make up each of the asset classes in your portfolio and then focus on maintaining it so it continues to perform as it should throughout your retirement years. Alright, that's all fine and good, but it's not worth a whole lot of money just telling somebody which funds fit in these categories. Certainly wouldn't want to be paying somebody $40,000 a year for that kind of advice. So I hope there's more to it.

Voices [32:36]

Watch out for that first step, it's and doozy.

Mostly Uncle Frank [32:40]

So I went ahead and constructed a portfolio according to these guidelines to test against other portfolios. And we'll talk about that in a minute. But this portfolio is 10% US large cap growth, 20% U.S. large cap value, 15% US small cap value, 15% international developed X US market, 10% emerging markets, and 30% corporate bonds. And so that conforms with all of the process categories that he laid out in his 10 steps. Now I also went and looked up Thurman portfolios online just to see what else was there. And if you go to Portfolios Lab, that is a site that lists dozens of portfolios and provides some analysis of them. And so the Thurman portfolio on Portfolios Lab is 12% US large cap growth, 23% US large cap value, 14% US small cap value, 15% international developed ex US market, 6% emerging markets, 10% global bonds, 17% US bond market, total US bond market, and 3% high yield corporate bonds. And I imagine that's taken from Thurman's book or somewhere else. But I'm sure you'll correct me if you think it's something else, but you should have provided that information up front. And it was disingenuous of you not to do that. So let's talk about my opinion now. And the way I form my opinions is by actually taking things and running analysis of them. Back tests and other things. So we plop those two portfolios in Portfolio Visualizer along with a golden ratio portfolio. And I used Reaths instead of managed futures in this one because Portfolio Visualizer does not have managed futures. And ran these as a back test with taking out 5% annualized. And the back test runs since 2003 due to the limitations on the data, mostly from the emerging market stuff. And what you see here is that these portfolios are inferior to the golden ratio portfolio. What's the answer? What's the answer? What's the answer, Mr.

Voices [34:50]

Sacred Geometry, Sacred Geometry, Sacred Geometry?

Mostly Uncle Frank [34:53]

The Golden Ratio Secretary. The Golden Ratio. Briefly, they all started with $10,000. At the end of the run from 2003 until now, the Golden Ratio one had $35,000 in it. The Thurman one that I constructed has $31,000 in it. The Thurman one from Portfolios Labs has $28,500 in it. The annualized returns are 5.72% for the Golden Ratio, 5.11% for the Thurman I did, and 4.7% for the Thurman for Portfolios Labs. The standard deviation for Golden Ratio is lower than the other two, so it's less risky. The drawdowns for the Thurman ones are 41.45% and 40.75% in that time frame, whereas the drawdown for the golden ratio is only 24.23%. And that's a damning statistic. These thurman portfolios are terrible. You don't want to lose 40% of your retirement portfolio and some drawdown. That's not a good retirement portfolio.

Voices [36:01]

Forget about it.

Mostly Uncle Frank [36:02]

If you're going to hold that, you might as well just hold a simple 6040 or three fund thing, get the same results. So what you've got here at the end of the day is just kind of an average retirement portfolio with average results. When I ran it through the portfolio matrix analyzer at portfolio charts, it kind of came out in the middle of the pack. A similar portfolio had a safe withdrawal rate since 1970 of around 4.6 or 4.7, which makes sense because the diversification between growth and value is really the strength of this kind of portfolio. Where it falls down on the job is by using corporate bonds and emerging market bonds and international bonds, and then not having any other diversifiers besides that. So my overall opinion of this is that it's got some good features to it, but you can do a lot better with a simpler but more diversified portfolio. And I certainly would not be paying somebody forty or fifty thousand dollars a year to create something like this.

Voices [36:58]

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

Mostly Uncle Frank [37:02]

Because then you have to subtract that fee from your safe withdrawal rate as well.

Voices [37:06]

Uh what? It's gone.

Mostly Uncle Frank [37:08]

It's all got and you're down between three and four then. So that's not a very good solution for retirement.

Voices [37:16]

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

Mostly Uncle Frank [37:20]

And I think what you're gonna find, if you take one of his portfolios and you add 10 or 15% gold in it and change the bonds to intermediate or long-term treasury bonds, you're going to get better results across the board. You just tweak that part of the portfolio and you'll get better results with higher safe withdrawal rates. I would expect that'd be something you would know though if you've read the entire safe withdrawal rate series at early retirement. Now you must have run into blog entry number 34, which is the analysis of gold that's showing that adding 10 to 15% in gold in a portfolio increases its safe withdrawal rate. So I don't know why you would not want gold if that's your goal. If you want to hear more about that, listen to episodes 12 and 40 of this podcast. Because that analysis goes back a hundred years. But getting back to your email, I think your problem is you're approaching this the wrong way. You're approaching these assets as if they were like sports teams that you root for.

Voices [38:20]

That's not how it works. That's not how any of this works.

Mostly Uncle Frank [38:24]

And so your objective is to exclude things you don't subjectively like. So when you say I hate TLT, what I'm thinking in my mind is, well, I hate the Denver Broncos.

Voices [38:37]

Oh, thou can shop in a sporting goods store, but knowest thou that the economy will take away thy Broncos cap from thine head.

Mostly Uncle Frank [38:46]

I'm a longtime Kansas City Chiefs fan, long suffering before Patrick Mahomes showed up. And so I've always hated the Denver Broncos because they were always good and they were always winning, and the Kansas City Chiefs were not for many decades. But if I were investing in NFL teams like asset classes, would I exclude the Denver Broncos because I hate them? No, I wouldn't exclude them. They're still a valuable asset class if you were in that context. And that's really the way you should be thinking about these things. Assets are not like sports teams that you root for and you get all emotional about. They're more like screwdrivers. So stocks are like a flathead screwdriver and bonds are like a Phillips screwdriver. But sometimes you run into screws that are neither one of those things. They might have a hex head or they might have a star head. And you want the alternative screwdriver for that.

Voices [39:41]

Can we fix it? Yes, we can!

Mostly Uncle Frank [39:45]

These are just tools in a toolbox. You don't get emotional about, oh, I'm not gonna use that star screwdriver. I'm just gonna take these flatheads and monkey around with it and MacGyver it, and it'll be great. Look, it's MacGyver. Do you know how to pick locks? That's not an adult way of approaching this.

Voices [40:07]

Brush, brush, brush your rainbow hair, make a sparkle poo. Bake, bake, bake, cupcakes do you share? Make wishes come true.

Mostly Uncle Frank [40:19]

The other good analogy is like kitchen utensils. There are a lot of different kitchen utensils that serve different purposes, but we don't get emotional about them or hate them. We don't hate spatulas. Sometimes you need that spatula for the antimima treatment.

Voices [40:36]

You know what the rest of your problem is? You've never had anybody give you the antimima treatment. No, I certainly haven't. First, you get a jump to cruising speech.

Mostly Uncle Frank [41:02]

Maybe if you had a little more anchor mima treatment, you'd see the value of a specialism. Or TLT or gold.

Voices [41:10]

Maybe you need this. What are you gonna do with that? This and this. Who's your friend? Who's your buddy? I am, aren't I? You're crazy about me, aren't you? No.

Mostly Uncle Frank [41:26]

Anyway, we're happy to entertain whatever you'd like us to look at here. And my listeners are very curious, and they do want to know about a better mousetrap if somebody's found a better mousetrap. But you can't keep the mousetrap in a bag and not tell us what it is while dancing around saying you don't like star-headed screwdrivers or spatulas or something.

Voices [41:47]

I'm your post bank. That's what I am. I'm here to whatever I can.

Mostly Uncle Frank [41:56]

Because the purpose we have for portfolios here is to be able to spend the most money possible in retirement. It's not to join a club or create a portfolio that specifically excludes certain kinds of assets.

Voices [42:11]

You want to be a public nuisance? Sure. How much does the job pay? I've got a good mind to join a club and beat you over the head with it.

Mostly Uncle Frank [42:18]

And if you get that, you will start looking at assets as just tools or kitchen utensils, if you will. Save the rooting for your favorite sports teams, not the assets in your portfolio.

Voices [42:31]

Big Sag95. I got it from the town. OG like the old job.

Mostly Uncle Frank [42:45]

I look forward to your next email where I'm sure you will share with us exactly what you are holding and what job each asset or fund is doing in particular in your portfolio.

Voices [42:58]

You had only one job, a door handle that says pull. So it has a door handle. It says pull, but you have to push it. This has gotta be one of the most misleading things I've ever seen. This is frustrating.

Mostly Uncle Frank [43:12]

In the meantime, if you haven't done it already, you should really be checking out things at Portfolio Visualizer, Portfolio Charts, and now Testfolio. And if you're familiar with the early retirement now site, download that toolbox. Because you should be able to analyze your portfolio and other portfolios in all of those different kinds of calculators and get similar results as to whether portfolio A is better than portfolio B. And that's how you decide whether one portfolio is better than the other one. That's the analytical way to approach this. Without just using narratives or crystal balls or anything like that.

Voices [43:51]

A crystal ball can help you, it can guide you.

Mostly Uncle Frank [43:56]

Hopefully that will set you down a path of exploration. And thank you for your email.

Voices [44:03]

Now witness the fire power of this fully armed and operational battle station.

Mostly Uncle Frank [44:12]

But now I see our signal is beginning to fade. Just a little programming note there will not be a podcast this weekend. I am off to covort with some childhood friends in Chicago.

Voices [44:25]

Why? What have children ever done for me?

Mostly Uncle Frank [44:28]

But assuming I return from that, we'll resume podcasting next week. I will update the website. However, in the meantime, if you have comments or questions for me, please send them to Frank at RiskPartyRear.com. Email us frank at riskpertyrear.com. Or you can go to the website www.riskpertyrearder.com. Put your message into the contact form and I'll get it that way. If you haven't had a chance to do it, please go to your favorite podcast provider and like, subscribe, give me some stars, a follow, a review. That would be great. Okay. Thank you once again for tuning in. This is Frank Vasquez with Riskardi Radio.

Mostly Queen Mary [45:10]

Signing off the Risk Parody 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.