Voices [0:00]

A foolish consistency is the hobgoblin of little mind, 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 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 [1:07]

We have top men working on it right now. Ooh.

Mostly Uncle Frank [1:14]

Top men. And you can find those on the episode guide page at www.riskpartyrador.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, alright?

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 [2:03]

Top drawer. 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 483. Today on Risk Party Radio, we're just gonna try to do what we do best here, which is answer your emails. Your really lengthy emails. And so without further ado.

Voices [2:39]

Here I go once again with the email.

Mostly Uncle Frank [2:42]

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

Voices [2:49]

How did your group do at the dance tonight?

Mostly Uncle Frank [2:56]

And Gregory Wright's?

Mostly Queen Mary [2:58]

Hi, Frank and Mary. I appreciate the response on the show regarding SPD slash SPYC, Paul Ballinger's ideas, and the helpful references. I have another question and have made another donation to the Father McKenna Center. First, I have some information regarding Paul Bellinger that I wanted to note and I should have included in my first email but left out because it was already a long email. Ballinger only became an affiliate of Monetary Metals after about 10 years of making quite dry, non-clickbait YouTube videos for a quite small subscriber audience and making very little money from it. Just whatever small amount of YouTube ad revenue someone would receive from such a small subscriber list. He did not have any gold-selling affiliations that entire time. That is, he was advocating gold ownership in a portfolio for many years without having any affiliate incentive to do so, and only much later received an affiliate offer from Monetary Medals after their CEO Keith Weiner found much of his analysis interesting and had him on their podcast. In addition, even after becoming an affiliate, he has said that he does not recommend people put majority percentages of their gold allocation into monetary medals. Anyone uncomfortable with the risk should refrain from putting any, and that he himself only puts about 20% of his gold allocation there. He also wrote me multiple very long email responses in a back and forth I had with him, giving his take on so many questions completely for free with no expectation of compensation, and made it clear he would provide more replies for no compensation if I had any more questions. So, while warning listeners to be careful of popular finance ideas from people who may have incentives to advocate for certain investing strategies is absolutely a good rule, I do not think the incentive critique is fair for Paul Bellinger. It was largely my fault for not including this information in my first email. And while I also agree that he has not managed billions of dollars, critique is an important data point. I wish I had included my first email that Nassim Taleb's partner, Mark Spitznagel, who has obviously managed billions of dollars and who seems to have the reputation of a very formable, perhaps even world-class quantitative financier, also came to a similar conclusion in his book Safe Haven, Investing for Financial Storms. That aside from his proprietary tail risk options strategy that small potato DIY investors do not have access to and should absolutely not try to replicate, 80% stocks and 20% gold is the only other strategy that made it to his efficient frontier of cost-effective safe haven strategies. So while Bellinger may be critiqued from the professional finance experience angle, I'm not as certain that the idea can be ruled out from that angle. That said, I am also not claiming that you dismiss the idea on those grounds alone. You clearly backed up your position by referencing other successful money managers and researchers' work that support your position. Just that it is not the case that leaving long-term treasuries out of the portfolio in favor of just gold as the diversifier idea does not have support from any esteemed professional financiers. Also, the artificial intelligence information you cited about Bellinger recommended holding piles of cash is false. He recommends the opposite of that. He recommends having a small cash allocation that covers upcoming expenses plus a small buffer above that and replenishing the cash position when needed by selling some of either the stocks or gold, whichever is above its target portfolio allocation at the time of the necessary cash replenishment. He explicitly states that a high cash allocation is a drag on a portfolio. My question this time for the show, do you think it is unreasonable to own a percentage of one's gold allocation with monetary medals? You didn't seem to have a very favorable opinion in the brief mention of them in your podcast, but I would be interested in more of your reasoning. Using professional custody and getting a significant yield on some portion of the allocation to an otherwise unyielding asset must do good things for a portfolio. Best regards, Gregory.

Voices [7:00]

Remember, Dad, we're talking man-to-man now, not kid-to-man, man-to-man, but man-to-man, man-to-man.

Mostly Uncle Frank [7:06]

And first off, and foremost 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'm in the board of the charity and I'm the current treasurer. If you give to the charity, you get to go to the front of the email line, as Gregory has done here. Two ways to do that. Either you can donate directly at the Father McKenna donation website, which I'll link to at in the show notes, or you can give as a patron on Patreon, which you do at www.riskparty.com on the support page and follow the links there. Either way, you get to go to the front of the email line. Just mention it in your email or the subject line. So this is a follow-up to your email that we just talked about in episode 480. And I think at this point I need to impose kind of a not a rule, but a kind of guideline that in the future I will not be answering emails from the same person right away. That there's gotta be a gap, say at least 10 episodes, before we'll go back to one person. Because there are other people who need to get their emails answered and they are also donors. So we're just gonna do that from now on as our little guideline, just so you're aware. And uh I'll go ahead and make sure you get another copy of that memo. Okay. So I am sure Paul Bellinger is a nice guy and is trying to do his best and has a lot of good ideas, which I agree with. But on the other hand, some of his ideas are just not that great, and so you do need to apply Bruce Lee's adage to him and everyone else. You apply it more stringently to somebody who's not a professional, and that adage is take what is useful, discard what is useless, and add something uniquely your own. So I think you need to stop getting too wound up about any particular person. Because when that happens, people tend to make misstatements and mistakes. And here you said something that frankly was not true. You said that Paul Bellinger explicitly states that a high cash allocation is a drag on a portfolio. Based on my research, with several artificial intelligences reviewing all of his materials, that did not seem correct to me, so I ran it through as a prompt. And the prompt was, does Paul Bellinger state that a high cash allocation is a drag on a portfolio? So I just took your words verbatim, and the answer is no. Paul Bellinger of his YouTube channel, Bellinger P, an author of Evidence-Based Wealth, does not state that high cash allocation is a drag on a portfolio. In fact, his views appear to be the opposite in certain contexts.

Voices [9:46]

That is the straight stuff, O Funkmaster.

Mostly Uncle Frank [9:49]

And if you read the rest of these analyses, you can see that particularly from his book, he has this fixation on having a big cash buffer that is somewhere between two and five years worth in your portfolio, which amounts to 10 to 25% in cash.

Voices [10:04]

Shirley, you can't be serious. I am serious, and don't call me Shirley.

Mostly Uncle Frank [10:09]

That is a high cash allocation, and it will reduce your overall safe withdrawal rate. That's just the reality of the situation.

Voices [10:17]

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

Mostly Uncle Frank [10:21]

We've known that from Bill Bangin since the 1990s, and he reconfirmed it in his book. So you really need to put away these things that people say just because you like the person. That is a cognitive bias, an affinity bias that you have, and it has caused you to have a misconception of this person, what he's actually said. And I'm sure he's said more than one thing depending on the context, and part of what you said about that is correct. So we don't need to go back and forth on that anymore. But recognize that when you say things today, it is very easy for the rest of us to simply put it in an AI bot. And the one thing those things are really good at is going through the internet and finding out anything about what somebody has said or written. Because they basically do an hour's worth of searching in about 15 seconds. And sometimes they do hallucinate, but they usually don't hallucinate so much on things like that. So next, your reference to Mark Spitznagel, and you are correct that he is an expert in his field, and his field is running a big hedge fund that specializes in using options as essentially portfolio insurance. And I think the minimum investment in that hedge fund is like five million dollars. What he's really looking for are people at the $50 million level. But basically, his experience illustrates what I've been saying is that that kind of strategy has to be done actively, and you have to be really skilled in order to do something like that, so that you can't do those kind of strategies with the funds you mentioned, which are just more sort of static options buying funds in ETF form. It's just not going to work because some strategies require a high level of skill and do require somebody like a Mark Spitznangle who has been doing that for 20 years or more. So what you're saying essentially is an exception that proves the rule that you're not going to be able to use that kind of strategy as a essentially do-it-yourself passive investor. And you can contrast to that to something like managed futures, which can be packaged up in an ETF form and almost like an index fund form and can be used by us now. And so if you're talking about an 80% stocks and 20% gold portfolio, that is essentially an accumulation portfolio. And I went and ran something like that in portfolio charts because it allows you to see some basic data statistics and then compare it with other portfolios. And what you see from a portfolio like that is that since 1970 it has a 30-year safe withdrawal rate of about 4.7%, which is good, and a perpetual withdrawal rate of 3.9%. But when you compare it to other portfolios in there, it's basically in the middle of the pack, something like that. And it's because it's got this relatively high volatility going on there. And that's what happens when you don't have any treasury bonds in a portfolio, because whenever you hit recessions, you can have both stocks and gold be going down at the same time like they were in 2008. And it's a difficult and miserable experience. So, yes, you could use something like that in accumulation. But what I'm gonna link to is a nice article called The Three Ingredients, which is at portfolio charts as well, and I've linked to in the past, but that talks about how you use various assets, not just two assets, to construct a portfolio that actually is going to have a higher safe withdrawal rate, because that's really what we're talking about here. I agree you could use something like that as an accumulation portfolio, and it's going to work just as well or better than any kind of 80% stock portfolio. And that's because gold is a risk asset. It's a risk-on asset. It's riskier than bonds. It has a compounded annual growth rate of now about 8% since 1970 and has a volatility that is just slightly higher than that of the stock market in the same period. Now, if you want to read more about really talented experts who do things that us mortals can't really do, I would really suggest that you go and read Jack Schwager's or Schwager's Market Wizards books. And the first ones were written back in like 1990, but there was hedge fund market wizards, it was probably written about 10 years ago, and another more recent one. But all of those are basically chapter by chapter discussions of various investor types and what they have done and how they have succeeded. And you'll find out they've succeeded in all kinds of different ways, but they're all pretty idiosyncratic and they all require a great deal of skill and concentration and abilities that most of us don't have. I think Hedgefund Market Wizards features in particular Ed Thorpe and Ray Dalio, and I would definitely want to check that out if you're interested in researching these sorts of people. Another interesting source that I've become kind of addicted to recently is Jim O'Shaughnessy's podcast. It's called Infinite Loops. And he is a famous investor guy. I think he wrote one up on Wall Street, but now he just manages his own family office in terms of investing is concerned. But he's definitely at the top of the game and interviews a lot of other people that are really at the top of the game, including Cliff Asnis in the last one. I'll link to that in the show notes. I will tell you, that podcast goes well above my head often because they're talking about technological innovations and other things like that, as well as philosophy and some of the things I've never heard before myself. So if you really want to go up a level and understanding of a whole lot of different things, I would definitely recommend that. You need to have some patience with it and listen to each one more than once because it's that dense in material. So now let's talk about gold in this outfit, monetary metals.

Voices [16:05]

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

Mostly Uncle Frank [16:09]

That Bellinger is hooked up with now, and I notice he's been writing things that appear on their website. I really view all these people as the equivalent of annuity salesmen, but in the alternatives assets category.

Voices [16:23]

Am I right or am I right or am I right?

Mostly Uncle Frank [16:28]

Essentially, they're selling overpriced stuff with a lot of stories, usually fear-based.

Voices [16:34]

Real wrath of God type stuff. Fire and brimstone coming down from the skies.

Mostly Uncle Frank [16:39]

Or pitches to essentially middle-aged men that have struggled in life and are looking to zig where other people zag and show them all, basically. People with chips on their shoulder are often pitched to by these types of outfits.

Voices [16:54]

I'll show them. I'll show them all. They laughed at me in Paris. They laughed at me in Prague. They laugh at you in London. Shut up, you fool! Take that. I've got over a hundred guests coming tonight. There's only plenty of kitty litter now. Hurry up!

Mostly Uncle Frank [17:11]

So I've ranted and mini-ranted on this before. I would check out episodes 224, 303, and 336 of this podcast in particular. And no, I'm not going to repeat everything I said there.

Voices [17:23]

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

Mostly Uncle Frank [17:30]

But there is a lot of money to be made in promoting physical metals, the storage of physical metals, IRAs that hold physical metals, and then all of the people that surround that who are writing newsletters and putting together scare stories and guruing about various aspects of this.

Voices [17:49]

Rivers and seas boiling. The dead rising from the grave.

Mostly Uncle Frank [17:55]

Which then flows into certain political leanings as well, and conspiracy theories, frankly. This is a conspiracy.

Voices [18:03]

That's what this is. One big conspiracy! And everyone's in on it.

Mostly Uncle Frank [18:11]

So, no, I wouldn't be using that for anything. Just because you can get paid a little bit by putting physical metals over at monetary metals doesn't mean it's a good idea. Because first of all, you have to have the metal. Where are you gonna get that? As soon as you're dealing in physical precious metals, you're paying a big bid ask spread. And then you're asking for storage issues. So you would have already paid that spread, or you're going to pay it to monetary metals, which is not ridiculous about it, but they're making 1% a transaction, I believe, is what they say on their website. They're probably making a little more. It's probably 1% on each side of the spread. So you're just increasing your expenses and creating a liquidity problem when you're using things like this. Because remember, we're using gold just like any other asset in our portfolio. We need to be able to sell that on our phone and get the money tomorrow.

Voices [19:02]

I want an umpa lumpa now.

Mostly Uncle Frank [19:05]

Sell it on my phone and get the money tomorrow. Not be fiddling around with some contract with some people over in some other place who are holding my physical medal. It's ridiculous.

Voices [19:15]

Are you stupid or something?

Mostly Uncle Frank [19:18]

And we need to be able to rebalance in and out of that at zero cost. Zero cost. Anything more than zero cost is unacceptable.

Voices [19:27]

Hello? Hello, anybody home?

Mostly Uncle Frank [19:30]

I'm gonna think, McFly think. So just stop right there. No monetary mentals, no whatever other one you might think about. Forget about it. That's not zero cost. Drunk and stupid is no way to go through lifestyle. And if you're not doing zero cost for this, you're not doing a good job of managing your money.

Voices [19:51]

You need somebody watching your back at all times.

Mostly Uncle Frank [19:55]

So the first gold ETF, GLD, came online in 2005. And right away became one of the most popular ETFs simply because it became the most efficient way for people who are interested in using gold as an investment in a portfolio, aka professionals and other people who know what they're doing. And they all started using that instead of fiddling around with futures contracts and storage and anything else that existed prior to that. Holding physical metals is an obsolete way of handling this investment. It just is.

Voices [20:29]

You are correct, sir. Yes!

Mostly Uncle Frank [20:32]

It's basically like using a fax machine or demanding that your stocks be issued to you in certificate form or demanding that your bonds be issued to you in coupon form so you can physically clip the coupons. I'm not a smart man. That's all you're doing. You're living in another time, in another century, for no good reason other than nostalgia and storytelling and misguided beliefs.

Voices [21:03]

Ha ha, you fool! You fell victim to one of the classic blunders.

Mostly Uncle Frank [21:07]

So, no, any money you make by putting money at monetary metals or giving you interest on it, that's not free. Were you born yesterday? That's not free. They're going to get it another way. Either from transaction cost or storage or some other mechanism. There is no free lunch.

Voices [21:34]

They're covered with free cheese. All I know is Mr. Krabs said, Patrick, don't do that! Cheesy.

Mostly Uncle Frank [21:45]

So stop looking for reasons to find one here.

Voices [21:49]

Forget about it.

Mostly Uncle Frank [21:50]

And I hope Monetary Metals is paying Paul Bellinger enough money to cover the extra costs he is incurring by using an outfit like that. But this is why we don't listen to amateurs without applying Bruce Lee's adages. Because that is something that needs to be discarded as useless.

Voices [22:11]

Everyone in this room is now dumber for having listened to it. I award you no points, and may God have mercy on your soul.

Mostly Uncle Frank [22:22]

Stop trying to be too clever by half. Just use ETFs like every sensible other person does who is using this as an asset in a portfolio and is not using it for prepping or some other purpose or entertainment value of it. Yes, that is a reason to hold physical gold if you have some other purpose that is not involved in investing in a retirement portfolio or other portfolio. But all right, enough of this. Suggest you go back and listen to those other podcasts or look up physical metals in the search function at the website for the podcast, and you'll find about ten more podcasts where I've talked about this. And so I know I'm harsh, but I wish you well, and I hope you do start reading some of these books I mentioned and start listening to that podcast. I think you'll really enjoy that in the long run. So hopefully that helps some. Thank you for being a donor to the Father McKenna Center. And thank you for your email.

Voices [23:23]

Second off.

Mostly Uncle Frank [23:25]

Second off, we have an email from Rick. He's looking at you, kid. And Rick writes.

Mostly Queen Mary [23:32]

Dear Frank and Mary, I have been experimenting with risk party portfolios in my HSA to allow for growth, but also to provide stability for future medical bills. I naively put together something with some differing assets, but never actually simulated the performance using any of the online tools. It's not that I don't care, it's that I am probably a little lazy. Anyway, I finally modeled the portfolio and learned that it was horrible. I think it has too many safe assets and didn't have enough growth to provide a high safe withdrawal rate or a lower max drawdown. And it's gone. I ended up using AI to construct a balanced experiment using five different asset classes, then painstakingly entered every percentage combination into portfolio visualizer. My thought was that I could find the perfect optimized ratio using large cap growth, small cap value, long-term government bonds, gold, and large cap value. And guess what? Guess what? There was not one perfect optimized distribution to lead to the best outcome.

Voices [24:40]

I could have told you that.

Mostly Queen Mary [24:42]

There were several different options that provided lower max drawdown and high safe withdrawal rates. I know you have said this in the past, but it was like getting one last roundhouse kick to the face that finally knocked the lesson into my brain.

Voices [24:56]

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

Mostly Queen Mary [25:12]

That's not how it works. That's not how any of this works. We cannot predict which asset classes will do well. We cannot predict black swan events in markets, politics, etc., so these diversified portfolios will be able to do well enough in all the various climates. One thing that I can't figure out is how to model something with managed futures. I have tried using DBMF and then subbing commodities, but it seems like a poison pill for any portfolio that I am constructing. What am I doing wrong? Thanks for all you do, especially with your support of the hungry and homeless. Attached is a copy of my recent donation to the Father McKenna Center, and I also found that it qualified for a matching donation from my employer.

Voices [26:01]

Yeah, baby, yeah.

Mostly Queen Mary [26:03]

I dedicated it to the 2026 Top of the T-shirt campaign. Rick from Dayton. P.S. I have always been a huge fan of the Saturday Night Live cowbell skit, but I think that I may have been quoting it more and more because I hear it so much on your podcast.

Voices [26:19]

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

Mostly Queen Mary [26:23]

Whenever my youngest daughter asks me, guess what? I respond, you have a fever, and the only prescription is more cowbell. While I feel quite proud of the reference, my daughter rolls her eyes, sighs, tells me that she does not have a fever, and that my dad jokes are the worst.

Voices [26:41]

Babies, before we're done here, y'all be wearing gold-plated diapers. What does that mean? Never question Bruce Dickens. Bruce.

Mostly Uncle Frank [26:53]

Well, thank you also for being a donor to the Father McKenna Center. We got a trifecta going on here, and I am very grateful for all of the people who donated to the Father McKenna Center.

Voices [27:05]

Really top drawer.

Mostly Uncle Frank [27:08]

It's a great place, and you guys are great people for participating. So I'm really glad to hear that you've been experimenting with these sorts of things. And this is something I just actually realized this year when I did the Bicker Pockets Money episodes and set up a sample portfolio with Mindy Jensen that a lot of people would really benefit, whether they're testing out a risk parity style portfolio or any kind of portfolio, and just setting it up as some simple experiment, either in one of their smaller accounts or in some account you just open. Since we have no fee trading and fractional shares now, you can do it for very little money. And then you can get a feel for what this is like and if you want to test it by taking money out of it, doing a little withdrawal strategy kind of thing. I think that's very valuable, and I think a lot of people will benefit from it. I know Scott Trench over at Bigger Pockets Money just started his own four different portfolios, one being a risk parity style portfolio experiment that they began, I guess, last month. I'll see if I can find that episode and link to it in the show notes. But they're going to be reviewing those every few months to see what happens. But I think he realized a very interesting truth, which I think is really important to get a handle on in your mind, that a lot of this stuff just can't be optimized. And it's because it's a complex adaptive system that is subject to fractal mathematics and essentially uncertainty.

Voices [28:34]

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

Mostly Uncle Frank [28:38]

And so the best you can do in that kind of environment is close enough, or to essentially use heuristics or rules of thumb, as Gerd Giggerenser, who wrote Risk Savvy, writes about and recommends. So that's why when you construct one of these portfolios, it all seems about the same, and there's just a little bit of difference on whether this is going to be more volatile and have a higher return over time, or a little less volatile and have a lower return over time. But you find out that things like the safe withdrawal rate are pretty close in a lot of these portfolios, whether it's a golden butterfly or a golden ratio or a weird portfolio or some variation along that spectrum. And really it's the big overall decisions that matter the most in terms of what are our macro allocations, and then what is the overall mix of assets that we're actually using. And are they diversified from each other or not, or how well are they diversified or not? That's why I think it's so important to understand that four quadrant model that I also talked about in episode 480 and have talked about before, representing kind of the macroeconomic weather that you can experience, but then not trying to be the super weather forecaster that knows what's going to happen next and is re-jiggering their portfolio to try to take advantage of that. Because that is what a lot of professionals try to do or claim they can do when they're selling their newsletters or whatever. But I think the better approach for most of us is to have what we call a naively diversified portfolio, meaning it's good enough in all of the weathers, but we're not trying to forecast the weather months or years in advance. And basically every time you hear a this time is different story in the news, that is an attempt to forecast the macroeconomic weather years in advance. And it usually doesn't work, and if it does work, it's almost always because of luck and never because of skill.

Voices [30:32]

Random chance seems to have operated in our favor. In plain non-Vulcan English, we've been lucky. I believe I said that, Doctor.

Mostly Uncle Frank [30:41]

And that's why a lot of these crystal balls don't work either.

Voices [30:44]

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

Mostly Uncle Frank [30:53]

I was just listening to an interview of Oswad the Motoran, who's a professor at NYU, who is widely recognized as the god of all things valuation. And they were asking him, you know, whether we can use valuation metrics like Cape Ratios to predict what is going to happen in the future. And he said, absolutely not, that it doesn't work.

Voices [31:12]

That's not how any of this works.

Mostly Uncle Frank [31:15]

And people really need to stop trying to do that. And the other interesting conclusion he's come to recently is that to the extent we think economic environments are getting really weird, you do need things that are like gold that are essentially collectibles or not within the typical stock bond landscape. I'll see if I can find that. I'll link to it in the show notes. It's at the last five minutes of a very long interview. All right, getting your question about modeling managed futures. Yeah, I share your pain in this because commodities kind of model managed futures, but they really don't. Because managed futures can go short commodities as well as long commodities. And that's what happens in a recessionary environment in particular. So they only really track commodities when commodities are going up in value at a steady pace, essentially. Otherwise, they offer much better risk-reward characteristics than a commodities fund. And also that zero correlation with virtually anything else, which is really why you want them. So our next emailer is actually going to tell you a little bit more about how to use test folio to model some things like this. But if I don't have data for a managed futures fund and I'm trying to do a model, I will usually substitute something else. Either put more stocks in there, or a REIT fund or a utilities fund, or something that at least has some sort of diversification characteristics, but also has a better return profile than a strict commodities fund, because they just don't. But in case you're wondering, there is good research showing that trend following strategies, going back a hundred years, have been very good strategies that are uncorrelated with the stock market in particular. And that's been published in investment journals. I've also referred to it in our show notes. So I don't have any qualms about whether I think they're going to perform similarly to how they have in the past. The main problem in the past is the strategy has just been too expensive to implement for mere mortals and do-it-yourself investors. And that's only changed in about the past eight years, really. Which is why we have a whole lot of these funds today that have just come out last year, in fact. There's an interesting one called HFMF, which is from Bob Elliott and his unlimited funds. Then Fidelity's got one, FFUT, iShares has come out with one, ISMF, and there are other ones. So I think this is going to become even more viable as we go forward and have better funds to work with. Anyway, we'll get to this other email so you can learn what other people are doing with test folio to expand their modeling. But I'm glad you're enjoying the podcast, especially the sound bites. We all know that's the most important thing here.

Voices [34:02]

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

Mostly Uncle Frank [34:08]

And I'm really glad for your donations to the Father McKenna Center and the top of the t-shirt campaign. And we will kick off that 2026 version of that, I think, not until late May, early June. We have other things in the pipeline before that, including something special from Mary.

Voices [34:29]

They will keep on turn. We're rolling. Rollin' yes. Rolling on river.

Mostly Uncle Frank [34:49]

But I won't spoil that surprise. But I hope my podcast continues to cause your daughter to roll her eyes.

Voices [34:56]

Hey, how's good?

Mostly Uncle Frank [34:58]

My daughter thinks you're really cute.

Voices [35:01]

Can I get her number?

Mostly Uncle Frank [35:02]

Nah. No, we're good. And thank you for your email.

Voices [35:08]

Guess what? And the only prescription is more cowbelly. Last off.

Mostly Uncle Frank [35:18]

Last off, we have an email from Graham. Hollywood Cracking. And Graham writes.

Mostly Queen Mary [35:28]

Hi Frank and Mary, Tiny Donor here. In these cold days of inclement politics and unknowable international finances, it sure is good to be holding some gold. I love gold. Thank you, Frank. As two years ago, I would have never dreamed of holding anything like it except a digital analog or two, which have turned sour lately.

Voices [35:50]

It's gold, Jerry, gold.

Mostly Queen Mary [35:52]

Amidst this, our portfolio is hung along, and I've been enjoying revisiting your late 2022 episodes in an attempt to relearn old wisdom and inoculate myself against whatever bad times might or might not come. The portfolio reviews and their commentary are quite the snapshot. Managed Futures did do well in 2022, but were too new to be in any sample portfolio. Nowadays, testfolio leads us to backtest dBMF to 2000 and KMLM to 1992. I think you're aware that Testfolio added a new feature recently, allowing FB or fallback on their ticker symbols. For example, since you typically use DBMF but would want to backtest further, one can write DBMFSIM question mark FB equals KMLM S IM, which will use DBMF as far back as it can, then fall back to using KMLM. Did you know these can be chained? One can fall back onto commodities beyond the KMLM simulation like this. DBMFSIM question mark FB equals KMLM SIM question mark FB equals G S G S I M. That will let you back test the golden ratio another decade to 1979. If Frank had retired in 1980 with this golden ratio, he'd have no trouble as it performs well during the 1980s despite a rough couple of years. After much tinkering, is anyone immune to that? I've been settling on a portfolio that I call the full house since there's a poker theme here. It's 52 cards, sorry, 52% stocks, split into the usual pair of suspects, and three of a kind, 16% each in gold, strips, and managed futures. A pair and three of a kind gets you a full house and a portfolio with a good safe withdrawal rate. Link comparing a 6% withdrawal rate at test folio. May your balls ever be May your balls ever be crystal clear, Graham.

Voices [38:06]

I want to hold them like I do in Texas plays. Fold them. Let them hit me, raise it, baby. Stay with me, I love it. Luck and intuition play the cards with spades to start. And after he's been hooked, I'll play the one that's in his heart.

Mostly Uncle Frank [38:26]

Oh well, Graham, thank you also for being a donor of the Father McKenna Center. And it's okay if you're smaller than other donors. We don't discriminate by ability. And I know everybody's doing their best out there.

Voices [38:40]

James is right, little Thomas. James is a big engine. You, Thomas, are small. Small, small, small, teeny weenie, weenie. And I, I'm a big blue engine who knows everything. Ha ha ha.

Mostly Uncle Frank [38:53]

But I'm really happy you mentioned this feature, these features of testfolio, because I was unaware of this until just last month, that you can use this little FB function to essentially augment your back test to pick up different assets in the slot if you run out of data. As you mentioned, you can only go back so far for DMF and only go back so far for KMLM and then substitute something else before that. If you put in their utilities fund, that goes back to 1928. So you can get even more data out of it. I will link to that little formula in the show notes so people can check that out. But I think that's a very powerful and useful tool. And I think Rick might be able to make good use of it once he hears this podcast. Well, here's a great deal about Rick and Casablanca. So I enjoyed looking at your full house portfolio. And I will link to your link in the show notes so people can check that out. But I'm always glad to see people experimenting with things. Because now that we have all these tools, we should experiment. Experiment with things as long as it's not costing us too much.

Voices [40:04]

And we have the tools, we have the talent.

Mostly Uncle Frank [40:07]

And just looking at things online on a free tool is not costing you anything. Then if you want to spend a little bit on it, you can do the test portfolios at Fidelity or elsewhere to your heart's content. So I'm glad you're in the spirit, and may your crystal ball also ever be crystal clear.

Voices [40:28]

A really big one, yeah. Which is huge.

Mostly Uncle Frank [40:33]

And thank you for your rebels. But now I see our signal is beginning to fade. If you have comments or questions for me, please send them to Frank at RiskPartyWader.com. Then email us Frank at RiskPartyWader.com. Or you can go to the website www.riskparty.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, and be 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.

Voices [41:33]

Play it once Sam. For all time's sake. I don't know what you mean, Miss Elton. Played Sam. Play as time goes by. Oh, I can't remember myself. I'm a little rusty on it. I'll hum it for you. Sing it, Sam. You must remember this. A kiss is just a kiss. A sigh is just a sigh. The fundamental things apply as time goes by. And when to love us, they still say I love you. On that you can rely. No matter what the future brings. As time goes by. Sam, I thought I told you never to play.

Mostly Queen Mary [42:57]

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.