Voices [0:00]

A foolish consistency is the goblin of little mind. A dog by little statesman, a philosopher. 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 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. And the basic foundational episodes are episodes 1, 3, 5, 7, and 9. Yes, it is still in my memory banks. We have also created an additional resource, a collection of additional foundational episodes and other popular episodes.

Voices [1:06]

We have top men working on it right now.

Mostly Uncle Frank [1:14]

Top men. And you can find those on the episode guide page at www.riskpartyrader.com. Inconceivable! All thanks to our friend Luke, our volunteer in Quebec. Sacosh. We'd be helpless without him.

Voices [1:35]

I have always depended on the kindness of strangers.

Mostly Uncle Frank [1:41]

Because other than him, it's just me and Marion here. I'll give you the moon, Mary.

Voices [1:46]

I'll take it.

Mostly Uncle Frank [1:48]

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

Voices [1:52]

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

Mostly Uncle Frank [1:55]

Over the years, our podcast has become very audienced focused, and I must say we do have the finest podcast audience available.

Voices [2:04]

Really top drawer.

Mostly Uncle Frank [2:07]

Along with a host named after a hot dog.

Voices [2:10]

Lighten up Francis.

Mostly Uncle Frank [2:13]

But now onward, episode 478. Today on Risk Party Radio.

Voices [2:19]

It's time for the grand unveiling of money!

Mostly Uncle Frank [2:23]

Which means it's time for our weekly portfolio reviews of the eight sample portfolios you can find at www.riskparty.com on the portfolios page. And we'll get to talk about the small cap value doing well for once. Actually, it's been doing well for a while.

Voices [2:39]

I gotta have more cowbells. I gotta have more cowbells. But before we get to that, I'm intrigued about this. How you say emails.

Mostly Uncle Frank [2:51]

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

Voices [2:57]

Mr Spicoli's name again.

Mostly Uncle Frank [3:01]

And Jeff Wrights.

Mostly Queen Mary [3:03]

Frank, I've been loving your show since I started listening about two years ago. My obsessive nature has me catching up with the bat catalog, narrowing the gap to real-time episodes. It makes for an interesting perspective to see how your responses and strategies have held up to the point I'm hearing it.

Voices [3:20]

It's like you're unraveling a big cable-knit sweater that someone keeps knitting and knitting and knitting and knitting and knitting and knitting and knitting.

Mostly Queen Mary [3:45]

Yeah, baby, yeah. Fingers crossed, I'll get to meet you and Mary. And now to my question. I've recently taken the dive to redirect my accumulation portfolio towards the 50% large cap growth slash 50% small cap value I've heard you suggest many times. The simple approach quickly became more complicated though. About 60% of my assets are in my employer 401k, and it doesn't have either option. I've decided to substitute the total stock market fund for the large cap value, then focus all other accounts outside the 401k to VIOV. After doing this, I have 50% in VITSX and 40% in VIOV. With 10% of my investments remaining to invest, I'm left with the choice of A putting that into the total market for a 60-40 split, B investing in small cap VSMAX, or C investing in one of my other 401k options that come nowhere close to the large cap growth slash small cap value strategy. And to complicate things further, after hearing you and Chris Hutchins from All the Hacks both talk about Freck, I recently opened a direct indexing account focused on tracking VUG. I'm very happy with it, but it's only been two weeks, swinging me even further into this quandary. Certain questions get answered, others spring up. In simplified terms, would you recommend moving closer to the 50-50 approach with about 10% in VSMAX, or go with more of a 60-40 approach that's essentially 60% VTI equivalents and VIOV? Thanks, Jeff.

Voices [5:33]

I know that, dude.

Mostly Uncle Frank [5:36]

Well, first off, welcome to the show. Do you know what I have to say about people that listen to all 400 odd episodes? He's a very sick man. Hope you're enjoying them.

Voices [5:59]

Abby who? Abby normal. Abby normal.

Mostly Uncle Frank [6:06]

Second off, you mentioned economy, so let's talk about that for a second. Or a minute. So yes, uh Mary and I will be attending the Economy Conference again this year, as we do every year. It is the only conference we attend, because I really don't like attending conferences, honestly. But Diana Merriam is a good friend of mine. And so I always like to help her out by going there and doing a little performance of some kind. So I'll be leading another breakout session this year. Diana asked me to do something more on the technical side and more of a presentation format. So I think we're going to be talking about forecasting and base rates and things like that. Shirley, you can't be serious. I am serious.

Voices [6:50]

And don't call me Shirley.

Mostly Uncle Frank [6:52]

But I'm still working that up.

Voices [6:54]

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

Mostly Uncle Frank [6:59]

Last year we also had a little impromptu gathering of Risk Parity Radio listeners on Friday afternoon. And I think we'll probably be doing something like that again. Sweet! Very impromptu.

Voices [7:14]

I guess you could say things are getting pretty serious.

Mostly Uncle Frank [7:18]

But I'll let you know when we figure that out. But now getting to your question. You are in the accumulation phase, and you are looking at your 401k, which, like a lot of 401ks, has limited offerings. But one of them is VITSX, which is the institutional version of VTSAX for the listeners who are unfamiliar with that. It's also the same thing as VTI. These are all just different versions of the same total market fund. And you were really wondering whether you should take this extra 10% that could go to a blended small cap fund or just leave it in VTSAX, because you have the 40% in a small cap value fund outside of the retirement account. And honestly, it probably doesn't matter, or it doesn't matter in a way that we can calculate. And this is kind of a frequent question. I think people get a little bit hung up sometimes on which combination of stock funds is the best one. And the truth is we don't know which one is the best one for the next period. All we know is the combinations that have worked well in the past. And the real decision is the one you've already made, which goes to the macro allocation principle, where you've chosen to put 100% of your investments here into equity index funds. That's the main decision. Once you have 100% equity index fund invested in low-cost funds, and you're comparing it to a bunch of other choices that are also 100% equity low-cost index funds, which group that is going to outperform in the next 10 or 20 years is almost like flipping a coin. All we know is that things that have small cap value in them and large cap growth historically have tended to outperform over long periods of time. And so it's sort of like, well, if you have that choice, you might as well go with it. You're really talking about just 10% of your portfolio. So this is really a coin flip decision, and you shouldn't spend too much time ruminating over it because either choice is a good choice in your case. I probably would be just more likely to just leave it in the VITSX, the total market fund, as a 60, and try to add more to the fund outside over the long period of time.

Voices [9:44]

I could have used a little more cowbell.

Mostly Uncle Frank [9:47]

And for two reasons. First, it's simpler. And second, that the blended small cap fund is going to be necessarily part small cap growth, which is generally what you want to stay away from in terms of allocations. That's kind of the worst quadrant to be using because it is not as good on a risk-reward basis as just about all of the rest of the quadrants or possibilities in terms of a size factor and a value and growth factor. Now, on the small cap side, I probably would not go with VIOV if you have a choice. Not because it's a bad fund, but because I think something like a DFA small cap value fund or an Avantis small cap value fund is likely to be a bit better. Historically, it has been a bit better than the standard index funds because it has a profitability filter in it. And so that's something like AVUV. And I'll link to again a very useful site, Paul Merriman's group, reviews all of these different kinds of funds and does a best-in-class ETF kind of thing. I think they have AVUV as the top choice in this class these days. I'll link to that in the show notes. You can check that out. But again, that is a minor decision in the grand scheme of things. You will be doing just fine in reaching your goals regardless of which variation you're going with that we're talking about here, because you are doing 100% equities in low-cost index funds. As to your direct indexing account, I can't speak for that, but I would hope you get some entertainment value out of that because that may not be a lemon that's worth squeezing if it's taking up a lot of time and you're not enjoying doing that.

Voices [11:35]

The way you squeeze my lemon up! I'm gonna for out a bit.

Mostly Uncle Frank [11:50]

So I wouldn't discourage you from doing it either if you're interested in something like that. Anyway, it seems to me like you're in good shape, and you shouldn't be worrying about this stuff too much.

Voices [12:01]

Forget about it.

Mostly Uncle Frank [12:02]

I'm glad you're enjoying the podcast. I hope to see you at Economy in March. And thank you for your email.

Voices [12:11]

Oh no! Second off.

Mostly Uncle Frank [12:16]

Second off, we have an email from Chad.

Voices [12:20]

Hello, Chad.

Mostly Uncle Frank [12:22]

Welcome to the afterlife. And Chad writes.

Mostly Queen Mary [12:27]

Hi, I recently started listening to your podcast and have questions about distributions from the portfolio. You often mention taking the distribution from the best performer during the month. Are you taking the distribution from the fund that performed best since the previous distribution? Or are you taking the distribution from the fund that is up the most above its original allocation overall? Also, if at the time of distribution all funds were still at the original allocation percentages, how would you decide which fund to pull the distribution from? I love the podcast. I started from the beginning and am listening to them in order. I also scroll through and pick random episodes based on the subject. I have also listened to your interviews on bigger pockets and afford anything. Thanks, Chad.

Voices [13:15]

Chad, you were taken too soon, which means you have a choice to make.

Mostly Uncle Frank [13:22]

Sounds like we have another binge listener here.

Voices [13:26]

Abby Normal.

Mostly Uncle Frank [13:29]

As we mentioned in the intro, you may also want to go to the episode guide page or just the podcast page at the website www.riskperior.com. Because you can search all of the episodes there, and you can actually search the transcripts for particular phrases. Because there are so many podcasts now that it is difficult to sort through all of them, but you can often narrow them down to particular topics pretty easily and then scan through 10 or 20 of them to figure out which one you want to listen to. But getting to your question, which goes to distributions generally. Now the way we are distributing out of a number of these portfolios is on a monthly basis and deciding, first of all, whether we need to sell anything because if cash is accumulated in the account from dividends or other income, we'll use that first. And then if there isn't enough there to pay the distribution, we'll sell something. And we use that for most of the portfolios. So the general procedure in terms of which one you should pick, it's essentially the one that is the highest in relative terms since your last rebalancing. So you look at all the allocations in your account and you compare them to what they are supposed to be, and look at the ones that are above their designated allocations, and then just pick the one that is the furthest above its designated allocation. And there you go. The truth is this is not that finicky for a couple of reasons. First, you're only taking out a very small percentage of the portfolio anyway. You're talking about maybe one-twelfth of five percent or one-twelfth of four percent or six percent. That's a very small amount of money relative to the size of the portfolio. The second thing is if you happen to take out of the wrong one, this is all going to get taken care of kind of in the wash the next time you rebalance the portfolio. So if you accidentally take out of the wrong one, it is not going to mess up your situation in any meaningful way. Ultimately, what you're really trying to do here is eliminate the number of transactions that you actually have to make. Because by taking out of the thing that is the highest, you're gonna have to rebalance out of that anyway when it comes to rebalancing time. So taking a little bit early isn't gonna make a difference as to how that transaction comes out. And as a matter of practice, you'll see that somewhere between 30 and 40 percent of all the distributions are coming straight out of cash anyway, because the dividends and income coming out of the various funds covers it. Now there is a other simplified way of doing this, which we are doing with the sample golden ratio portfolio. That already has a built-in cash allocation to it of 6%. And so for that one, we simply just take out of cash every month, we don't even look at the rest of the portfolio. And we don't have to look at the rest of the portfolio until it's rebalancing time, and that really minimizes the number of transactions. And that is an example of what was originally called the bucket strategy. Believe it or not, this had a real use at some point before it became convoluted and grossly overused, but it was simply to take out the next year's distributions, put it in cash, and then take out of that. And Harold Ovensky invented that to keep his clients calm so they weren't looking at their portfolio all the time. Because what that system allows you to do is ignore your portfolio entirely and only look at it once a year. I'm not a smart man. Taking it out every month probably is slightly more efficient, but very slightly, and it's probably not going to make a big difference in the grand scheme of things. All right, your side question was if at the time of distribution all funds were still at the original allocation percentages, how would you decide which fund to pull the distribution from? Well, that's never happened.

Voices [17:34]

Forget about it.

Mostly Uncle Frank [17:36]

Because these do go down to the fraction of a percent. And if you have an account at somewhere like Fidelity, it says it right there what the percentage of the amount is in the portfolio. I suppose you would just take from all of them equally if that ever actually happened.

Voices [17:54]

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

Mostly Uncle Frank [17:58]

If this is near the time of rebalancing, what you need to do then is to during the rebalancing process also carve out at least the next distribution in cash so you're not facing this, where you're rebalancing the whole portfolio and then a week later taking out a distribution in cash. You don't want to do that. You want to make sure that you leave enough cash in the portfolio when you rebalance the portfolio that you can at least take the next distribution, and then you'll probably never have this problem. So I'm glad you're enjoying the podcast. Hopefully that answers the questions to your satisfaction. And thank you for your email.

Voices [18:51]

Last off.

Mostly Uncle Frank [18:53]

Last off, we have an email from Matt.

Voices [18:57]

What does Matt Damon say on that Bitcoin commercial? Fortune favors the brave!

Mostly Uncle Frank [19:02]

And Matt Wrights?

Mostly Queen Mary [19:04]

Frank, I was the one who left Don and Tom at Talking Real Money the question that got you a little riled up on your podcast.

Voices [19:11]

I want you to be nice until it's time to not be nice.

Mostly Queen Mary [19:19]

I asked them how they felt about you and your takes on investing. You then proceeded to share a very entertaining take on the podcast. I really like listening to both podcasts, even though there are differing opinions on some things. I think you share far more in common than you realize.

Voices [19:36]

But we've learned by the dust of them all, barter towns learned. Now, when men get to fighting, it happens here and it finishes here.

Mostly Queen Mary [19:47]

Two men enter, one man leaves. I did think it was interesting how you put them down and made fun of them a little bit after you were insulted about what they said about you. Like I said, I I found your take very entertaining, but a bit harsh towards those guys. You painted them as pure salespeople trying to get clients and painted the AUM model as somewhat evil.

Voices [20:10]

I drink your milkshake.

Mostly Queen Mary [20:14]

I will never put my money under an AUM model, but I don't think it's evil. For someone who has no interest in managing their money and can afford it, I think it's perfectly fine. Most good advisors also often a variety of services other than the asset allocation for that 1% fee. While I'm still in the accumulation phase, I will be in the withdrawal phase soon enough as I am 53. I probably won't use your type of portfolio, but I am really enjoying learning about it and trying to stay open-minded. I find your podcast really fun. I love Napoleon Dynamite and Seinfeld as well as Looney Tunes.

Voices [20:49]

I'm gonna pivot on you, I'm gonna pivot on you. I'll pivot on you, or my name ain't up twice.

Mostly Queen Mary [21:18]

He's a good dude, but the whole pie cake thing is not great. It's a piece of crap, it doesn't work. Well, I could have told you that. Anywho, keep up the great work, Matt.

Voices [21:46]

It's all one big crapshoot, anywho. Tom, warm up the Viener Schnitzel and put on your laderhosen, because now people are being told to stop making Matt Damon jokes. Opponents are claiming that the jokes are already tired, and Matt Damon had every right to make a Bitcoin commercial, so the jokes need to stop.

Mostly Uncle Frank [22:05]

Well, I'm glad you're enjoying the podcast too, and that you actually like the sound clips. That is the most controversial part of this podcast.

Voices [22:14]

I commend that you shoot me now.

Mostly Uncle Frank [22:22]

And if you look at my reviews, they're very amusing because they're all either five-star or one-star. And almost all of the one-star reviews are due to these sound clips.

Voices [22:34]

Inconceivable!

Mostly Uncle Frank [22:36]

But you have to remember, this is a hobby for me, and so I like to have fun with it, and it wouldn't be worth doing for me unless it was fun and reflected my goofy personality.

Voices [22:47]

Oh vivo, denang, denying me, denying me, I don't think a robe and hang me. Hey, it's a little too early for being that loud. Hey, too late.

Mostly Uncle Frank [22:56]

So I'm glad at least some of you appreciate that.

Voices [23:00]

Girls only want boyfriends who have great skills.

Mostly Uncle Frank [23:03]

Or appreciate it some of the time.

Voices [23:06]

This is pretty much the worst video ever made.

Mostly Uncle Frank [23:09]

So you are referring back to episode 451 most recently, where another listener directed me to listen to Talking Real Money, where your boys over there were commenting on me.

Voices [23:25]

Okay, campers, rise and shine, and don't forget your booties. It's cold out there! It's cold out there every day. What is this? Miami beach, hardly, and you know you can expect hazardous travel later today with that, you know, that uh that blizzard thing. Well, that blizzard thing.

Mostly Uncle Frank [23:42]

I think you need to realize that this isn't the first time these guys have commented about me and actually misrepresented what I say on this program.

Voices [23:52]

Liar, liar, plants for hire. It's pants on fire, Patrick. Well, you would know. Liar.

Mostly Uncle Frank [24:01]

In order to do that, you'll need to go back to episode 147, which is from January 2022, where I referred to them as bully and blowhard.

Voices [24:16]

We were trapped. There he stood between us and the enemy. Scott Farcus staring out at us with his yellow eyes. He had yellow eyes, so help me cut yellow eyes.

Mostly Uncle Frank [24:29]

Because they said some things about this podcast and my website and me that were untrue.

Voices [24:38]

Grover Dill! Farcus' crummy little Toady, mean, rotten, his lips curled over his green teeth.

Mostly Uncle Frank [24:46]

And so, based on their behavior, I just don't have a lot of respect for these guys. And what is the behavior I'm talking about, the specific behavior? You need to understand these people in the context that they live in and that where they came from. These are radio financial media people who originated in the early 2000s. Now, there were a lot of radio shows, local radio shows with finance topics on them at that time. And everybody was trying to be the next Dave Ramsey, who was the most popular thing along with Susie Orman. There were no podcasts, there wasn't much going on on the interwebs. And so it was all about radio personalities and people trying to build out their systems. And so they achieved some level of at least local fame. But they never went really big and ultimately tried to parlay this into a finance practice. But they're really media first and finance second. And the problem with their behavior is that these are the kind of people who will suck up to anybody who they think is more popular than they are because their real goal in life is to be the most popular. They are the wannabe popular kids. What these kind of wannabe popular kids also do is punch down, denigrate anybody who they think is beneath them as in less popular than they are. And that is the behavior I despise. Go read yourself some Paul Merriman stuff, which is DFA light essentially, and you can do exactly what they do. And you won't have to pay some ridiculous AUM fee to do it, or to have them do it.

Voices [27:02]

Forget about it.

Mostly Uncle Frank [27:04]

So now let's move to the AUM model. And the question is not whether the AUM model is evil or not, that's the wrong measurement. Just because something is not evil does not make it good or acceptable. It may not be ugly, but it still is bad, at least from the perspective of a consumer. The good.

Voices [27:32]

The bad.

Mostly Uncle Frank [27:36]

The ugly. There was a very interesting presentation I saw last week. I'll see if I can find it again and link to it in the show notes. It's by Sarah Catherine Gutierrez, who's a financial advisor in Arkansas. And Mary and I actually met her and had drinks with her at one of the economies in the past few years. I can't remember which one. But she gave this presentation about kind of the state of the financial advisory industry. And it was interesting how it broke down. So about 45% of people who call themselves financial advisors essentially work on commission.

Voices [28:12]

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

Mostly Uncle Frank [28:17]

They are with insurance companies, or they sell insurance products for the most part. They're the Ned Ryersons of the world.

Voices [28:25]

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

Mostly Uncle Frank [28:31]

Another large group, about another 45%, call themselves fee-based.

Voices [28:37]

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

Mostly Uncle Frank [28:45]

And what these people are, these are the hat switchers. These are the people who say they're a fiduciary part of the time and not a fiduciary another part of the time. And you may be having the same conversation with them when they switch hats, but you might not know. They don't have to tell you when they switch hats.

Voices [29:03]

Because only one thing counts in this life. Get them to sign on the line which is dotted.

Mostly Uncle Frank [29:10]

She pointed out that Northwestern Mutuals advisors adhere to this model and presented some of their language showing how that worked.

Voices [29:20]

A guy don't walk on the lot lest he wants to buy.

Mostly Uncle Frank [29:24]

So they're making money both from commissions and from AUM fees and other kind of fee sources. They'll take your money in any way you want to give it to them.

Voices [29:34]

They're sitting out there waiting to give you their money. Are you gonna take it?

Mostly Uncle Frank [29:38]

Kind of another ugly category here.

Voices [29:41]

I kill you! I kill you! Such ingratitude after all the times I've saved your life.

Mostly Uncle Frank [29:48]

And that leaves only about 10% of the rest of finance world. And that is divided into two sections, one large and one small, but growing. The larger one of those sections is people that are independent financial advisors, like our boys, that charge AUM fees.

Voices [30:07]

And I have a straw, there it is. That's a straw, you see. Watching. I drink it up.

Mostly Uncle Frank [30:34]

And then the smaller growing group is the fee-only group, which are people who either charged by the hour or the job, or they have a subscription model where you pay them a flat fee every year for their services. Now, in my mind, only that group of people is worth hiring as a financial advisor, at least from my perspective. Those are the good advisors, the AUM people that you're talking about, who are the milkshake drinkers, those are the bad ones, or suboptimal if you want to use that term. I would just say unacceptable from my perspective. And then 90% of the ugly ones.

Voices [31:13]

See you soon. Idiots. It's for you.

Mostly Uncle Frank [31:27]

So I mean, if you think bully and blowhard are worth the 1% fee they're charging, whatever they're charging AUM, that's your it's your money. If you would rather give your money, or rather tell people they should give money to somebody like that, rather than giving it to their children, rather than giving it to a charity, rather than doing almost anything else with it, than just shoveling it over to Milkshake Drinker, be my guest. It's your money. You can waste it any way you want. But this is not really that defensible in the 2020s when there are other options. So that's the perspective I come at this from as a consumer of financial services. I am not a provider of financial services, I am a consumer of financial services. And so I get to demand whatever I want. And I don't want an AUM fee, and I don't want a commission-based thing, and I don't want some hybrid. Forget about it. I want somebody like my CPA who I pay an hourly fee to. And as far as I'm concerned, if you're not doing that, you are not acceptable to me. You might be acceptable to somebody else, but I don't think we're going to get good service that is unconflicted as consumers until we start making a whole lot more noise. And I intend to keep making noise on this until there are more people offering flat fee services or hourly fee services than there are using AUM models. And if your advisor who's charging that, well, maybe you can get away with it for a while. But there's a lot of people listen to programs like this who have a lot of money who you would be giving your eye teeth to get as clients. But they're not going to come to you until you shape up and start offering a better business model. Because those of us who are in the know just aren't going to take it anymore. Alright, then moving on to your comment that you find it interesting you present your approach as the approach which you put in all caps, and that it is the way.

Voices [33:53]

You must unlearn what you have learned.

Mostly Uncle Frank [33:57]

Well, I'm not sure which approach you're talking about when you say that. But let's talk about what I think would apply to your statement as being true, and when your statement would not be true. It is true that my approach is that personal finance is finance first and personal second. And what I mean by that is that your financial behaviors should match your financial goals. Now it's funny.

Voices [34:26]

What do you mean, funny? Funny how? How am I funny?

Mostly Uncle Frank [34:29]

People who have been good at accumulating money recognize this in spades when it comes to talking about somebody else, particularly somebody younger. Every older person I know wants to instruct the young, like there's not enough people instructing the young. But blame consumer culture for that.

Voices [34:53]

Did you know millions of Americans live with debt they cannot control? That's why I developed this unique new program for managing your debt. It's called Don't Buy Stuff You Cannot Afford. Sounds interesting.

Mostly Uncle Frank [35:16]

So if you're instructing somebody who says, Well, I want to become financially independent someday, and you tell them, Well, then your financial behavior to match that financial goal needs to be you need to take some of the money you are earning and not spend it and go invest it, and then it will grow and eventually you'll have enough money to be financially independent. And they say, Well, you know, I I want to buy things, I don't know if I have time for that. I I can't add these numbers up. You wouldn't take that as an excuse. You would just say, you're probably not going to succeed at this endeavor of becoming financially independent if you do not save any money and such that your financial behaviors do not match your financial goals. It doesn't work.

Voices [36:04]

It doesn't work for me.

Mostly Uncle Frank [36:06]

That's the approach. That's the approach in capital letters. Financial behaviors match financial goals. The trouble we get to when people are near retirement is they don't want to apply this approach to their own behaviors. To their own goals. It's like people saying they want to be healthy, but they don't want to give up cigarettes or drinking a bottle of vodka every day.

Voices [36:30]

My name is Barney, and I'm an alcoholic. Mr. Gumble, this is a Girl Scout meeting. Is it? Or is it that you girls can't admit you have a problem?

Mostly Uncle Frank [36:40]

But this does get us to hoarding culture. Because once you've achieved financial independence and you are retiring, you basically have some choices. You don't have a choice in not dying. You're going to die at some point. And as far as your money is concerned, you have a choice of how much you're going to spend while you're alive and then where it's going to go after you're dead because somebody else is going to spend it then. Those are basically your two choices. Now, suppose you want to die with the most money possible. Well, that implies a financial behavior then. If you want to die with the most money possible, the financial behavior to match that financial goal is going to be something like keep your money mostly invested in things that grow and don't spend much of it. In particular, underspend your portfolio so that it continues to grow. And so you can look at that from the goal back to the behavior, but you can also look at that from the behavior side to the goal. If somebody is behaving like that, you can imply that their goal is to die with the most money. And that is what economists would call the revealed preference. The revealed preference is the objective likely outcome of your behavior. If you don't save any money, you're not going to become financially independent. If you don't spend any money when it's time to spend money, you're going to die with the most money possible.

Voices [38:02]

You are correct, sir. Yes.

Mostly Uncle Frank [38:05]

Except for those AUM fees you're paying off to bully and blowhart or whomever.

Voices [38:10]

Coffee's for closers only.

Mostly Uncle Frank [38:12]

So I've made a different choice. And my choice is to try to reasonably spend as much as I can while I'm still alive. And so therefore, the approach of the portfolio and the behavior needs to match that goal. And one of the ways of maximizing your spending is to choose a portfolio with a high safe withdrawal rate because that matches a financial behavior with a financial goal. And so that is the overall approach here. Let's try to find portfolios with higher safe withdrawal rates so that we can spend more money while we're alive. And let's also manage our emotions and feelings and whatever to make that happen. Fear, that's the other guy's problem. Now, a lot of people get this all confused because, oh well, personal finance is personal, and I can do this bucket thing over here, and I'm afraid of this, I'm gonna buy that, I'm gonna buffer this, I'm gonna buy this new product that trades in options or make myself a big tipder or whatever. What you should be thinking about when somebody's proposing these behaviors is what does that behavior imply is this person's financial goal? And are there are they really being honest with themselves and other people as to what those financial goals actually are and matching the behaviors with them? Because in most cases, people don't want to admit that their financial goal is to die with the most money. Or that financial goals just aren't their priority, and that their priority is adhering to an identity. I'm a saver, frugal bob, as uh Michael Kitsis and Carl Richards call the saver person, or assuaging some fears. But using your finances to Establish your identity or using your finances to just deal with fears or other emotional issues you're having is probably not the most efficient or effective way to deal with those things because they're not fundamentally financial problems. But now notice I haven't said anything about what we actually do here as the approach, because that's not the approach. You may be confused about what my approach is. My approach is to get a portfolio with a high safe withdrawal rate. Now, how that is done could be done in many ways, and I'd be very happy to see your way or Bully and Blowhard's way or the retirement answer man's way or anybody else's way presented to me showing why their approach yields a higher safe withdrawal rate. But I do demand that they show their work. Because when I model what they do and what they recommend, it does not match portfolios that have high safe withdrawal rates. And if you don't want to have a high safe withdrawal rate, then either you are hoarding money or you have some other approach that is not based on financials. It's based on fears or emotions or some other issue.

Voices [41:14]

Exhibit A. A photograph of the victims. My bike and me. Exhibit B. Another photograph. What's missing from this picture? It's just me. Without my bike. Is this something you could share with the rest of us, Amazing Larry?

Mostly Uncle Frank [41:37]

And you're just using money to kind of paper that over because you don't want to deal with the actual problem. Now, if you've listened to that Afford Anything podcast I was on on an episode, you'll recognize I've been working on this for over 15 years because when I looked at what was available at that point in time, people were not addressing this. The standard approach in popular personal finance, whether it's bogleheads or something else, is to work as long as you can, save as much money as you can, and then don't spend it. That implies a goal of dying with the most money. It's an accumulation until death strategy. I didn't want to have that strategy. That's why my approach is different, and what I do works for my approach and my goals. If you have different goals, yes, you should take a different approach. Just make sure that you can articulate why what you are doing from an objective financial perspective matches the objective financial goals that you say you have. Because a lot of people are just hypocrites about this. And a lot of financial advisors are not actually answering this question. Because that's not a very good business model, frankly. In order to make a lot of money in the financial advisory practice area, what you need to do is not what I'm talking about.

Voices [42:59]

What you need to do is either exploit the fears of the public, human sacrifice, dogs and cats, living together, mass hysteria.

Mostly Uncle Frank [43:08]

Or cater to the fears of the public.

Voices [43:10]

Oh, Richard, I'm so happy. Hold me.

Mostly Uncle Frank [43:14]

Yikes.

Voices [43:15]

Don't run away from your feelings.

Mostly Uncle Frank [43:17]

And so the bad and ugly advisors exploit the fears of the public. That's the free steak dinner operations, all those sorts of things.

Voices [43:25]

Always be closing.

Mostly Uncle Frank [43:29]

But even the advisors where you you were calling the good advisors, they in in most circumstances are actually catering to the fears of their clients. That makes for a good business model.

Voices [43:44]

Pizza! Of course we have pizza.

Mostly Uncle Frank [43:47]

And it was funny, the last Kitts and Carl podcast I listened to was talking about this very issue about having to assuage the fears of your clients and how to go about doing that and what you need to say and all that sort of stuff. And that may ultimately be the difference between what I'm talking about here as a do-it-yourself investor without a financial advisor, that I'm not catering to my own fears or trying to exploit my own fears. I'm not even sure how I would do that.

Voices [44:16]

Stupid is, stupid does, sir.

Mostly Uncle Frank [44:19]

And so while I can appreciate that most approaches that most financial advisors use have to cater to people's fears in order for it to work for the audience that they're serving. That audience is not me, it's not other do-it-yourself investors. I would certainly agree that our approach is different here on those grounds. And finally, I think the other thing you should recognize is my background is working with and cross-examining financial experts. So I demand a high degree of backup, if you will, of seeing the work, of showing the work, of going through the work, critiquing the work. That is how I approach finances and reviewing what other people are doing.

Voices [45:04]

We use the Socratic method here. You come in here with a skull full of mush, and you leave thinking like a lawyer.

Mostly Uncle Frank [45:14]

And that's the level of scrutiny I applied to my own stuff because I want it to be the best it can for what I'm trying to accomplish. Which means I'm very heavy on analytical backup for whatever somebody is saying, and very light on storytelling and very critical of crystal balls.

Voices [45:34]

Now the crystal ball has been used since ancient times. It's used for scrying, healing, and meditation.

Mostly Uncle Frank [45:43]

Which is a lot of what goes on in financial services and financial media.

Voices [45:48]

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

Mostly Uncle Frank [45:52]

Anyway, thank you very much for this email.

Voices [45:55]

There is iron in your words of death for all Comanche to see, and so there is iron in your words of life. No signed paper can hold the iron. It must come from men. The words of ten bears carries the same iron of life and death. It is good that warriors such as we meet in the struggle of life. Or death. It shall be life.

Mostly Uncle Frank [46:27]

I hope that clarifies a few things for you, if they needed clarifying. I'm glad you also take an analytical approach. I do appreciate that. And I hope now you better appreciate where I'm coming from.

Voices [46:41]

You're insane, gold member! And that's the way uh uh I like it.

Mostly Uncle Frank [46:48]

And thank you for your email. Because I do very much appreciate emails that give me a chance to expound. As it were. Now we are going to do something extremely fun. And the extremely fun thing we get to do now is our weekly portfolio reviews of the eight sample portfolios you can find at www.riskparty.com on the portfolios page. And the markets have gotten off to a bang in 2026. I think part of this was the rebound from the sell-off right at the end of the year. And you see this kind of frequently, not every year, but sometimes right around year end, you'll see either a big selling push at the end of the year and then a rebound at the beginning of the year, or vice versa. But that's one of the reasons you really don't want to be doing rebalancing of your portfolio at the end of the year because of these market distortions that sometimes occur. But just looking at those markets, the SP 500 represented by VOO is up 1.78% for the year so far. The NASDAQ represented by QQQ is up 2.01% for the year so far. But the big winner already this year is small cap value.

Voices [48:05]

I'm telling you, fellas, you're gonna want that cowbell.

Mostly Uncle Frank [48:09]

Our representative fund VIOV is up 5.94% already this year.

Voices [48:15]

I gotta have more cowbells. I gotta have more cowbells.

Mostly Uncle Frank [48:19]

And it's interesting if you look back to the middle of last year, small cap value actually has outperformed the S P 500 since about last July, even though it didn't really reflect that in last year's results, because the first half of the year was so bad for small cap value.

Voices [48:37]

Guess what? I got a fever, and the only prescription is small cowbell.

Mostly Uncle Frank [48:44]

Gold is doing what it's been doing. Our representative fund GLDM is up 4.52% for the year so far.

Voices [48:52]

I love gold.

Mostly Uncle Frank [48:56]

Long-term treasury bonds represented by the fund VGLT are up 0.66%. REITs represented by REET are up 1.52%. Commodities represented by PDBC are up 2.34%. Preferred shares represented by PFFV are up 1.22% for the year so far. And managed futures are also managing to be up. Representative fund DBMF is up 1.57% for the year so far. Moving to these portfolios, all doing quite well already. First one is this reference portfolio, the all seasons. This one is only 30% in stocks and a total stock market fund, 55% in intermediate and long-term treasury bonds, and 15% in golden commodities, split halfway. It's up 1.47% for the month of January and the year so far. It's up 25.09% since inception in July 2020. Next one is the 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, GLDM. It's up 2.76% for the month and the year so far, and it's up 63.95% since inception in July 2020. Next one's the golden ratio.

Voices [50:19]

A number so perfect, perfect. We find it everywhere, everywhere. A mathematical property hardwired into nature. The golden ratio. What's the answer? What's the answer? The golden ratio. The golden ratio.

Mostly Uncle Frank [50:55]

This one is 42% in stocks, in a large cap growth fund and a small cap value fund, split evenly, 26% in long-term treasury bonds, 16% in gold, 10% in managed futures, and 6% in cash and a money market fund. It's up 2.58% for the month and the year so far, and up 58.38% since inception in July 2020. Next one's the Risk Parity Ultimate. I'm not going to go through all 12 of these funds in this portfolio, but it's up 2.69% for the month and the year so far, and up 43.50% since inception in July 2020. Now moving to these experimental portfolios.

Voices [51:38]

Tony Stark was able to build this in a cave with a bunch of scraps.

Mostly Uncle Frank [51:46]

These all involve leveraged funds, so don't try this at home. First one's the accelerated permanent portfolio. This one's 27.5% in a levered bond fund, TMF, 25% in UPRO, a levered SP 500 fund, 25% in PFFB, a preferred shares fund, and 22.5% in gold, GLDM. It is up 3.45% for the month and the year so far, and up 27.61% since inception in July 2020. Next one's the Aggressive 50-50. This is the least diversified and most levered of these portfolios and worst performer. It's one-third in a levered bond fund, TMF, one-third in a levered stock fund UPRO, and the remaining third divided into a preferred shares fund and an intermediate treasury bond fund. It's up 2.6% for the month and the year so far, and up 0.85% since inception in July 2020. Moving to our next one, which is a year younger than the first six. This is the Levered Golden Ratio. This one is 35% in NTSX, which is a composite SP 500 and Treasury Bond Fund that is levered up 1.5 to 1. It has 15% in AVDV, which is an international small cap value fund, 20% in gold, GLDM, 10% in KMLM, 10% in TMF, a levered bond fund, and the remaining 10% divided into UDOW and UTSL, a levered DAO fund and a levered utilities fund. It's up 2.83% for the month and the year so far, and it's up 23.26% since inception in July 2021. And the last one is the newest one, the OPTRA portfolio. One portfolio to rule them all.

Voices [53:37]

What has it got in its purchases?

Mostly Uncle Frank [53:43]

And it actually is ruling them all, at least so far. It's got 16% in UPRO, which is a levered SP 500 fund, 24% in AVGV, which is a worldwide value tilted fund, 24% in GOVZ, which is a government strips fund, and the remaining 36% divided into a managed futures fund and a gold fund. It is up 3.48% month to date and year to date, and up 33.52% since inception in July 2024. And so continues to be kicking it.

Voices [54:22]

Yes. Now it's time to kick it.

Mostly Uncle Frank [54:31]

And with that, we've completed our weekly portfolio reviews. But now I see our signal is beginning to fade.

Voices [54:40]

Okay, well then we'll do it later. We'll be back to kick it later.

Mostly Uncle Frank [54:47]

Mary and I'll be going out to dinner this Saturday night with one of our listeners, Mr. Ed.

Voices [54:54]

Hello. I'm Mr. Red. We'll see how much hay he consumes.

Mostly Uncle Frank [55:07]

In the meantime, if you have comments or questions for me, please send them to Frank at RiskPartyRadio.com. That email is Frank at RiskPartyRadio.com. Or you can go to the website www.riskpartyradio.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 Risk Party Radio. Signing off.

Mostly Queen Mary [56:57]

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.