Welcome And How The Show Works

Voices [0:00]

A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines. If a man does not keep pace with his companions, perhaps it is because he hears a different drummer. A different drummer.

Mostly Queen Mary [0:18]

And now, coming to you from Dead Center on your dial, welcome to Risk Parity Radio, where we explore alternatives and asset allocations for the do-it-yourself investor. Broadcasting to you now from the comfort of his easy chair, here is your host, Frank Vasquez.

Mostly Uncle Frank [0:36]

Thank you, Mary, and welcome to Risk 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.

Mostly Uncle Frank [1:14]

Top men. And you can find those on the episode guide page at www.riskparty radio.com. Inconceivable! And all thanks to our friend Luke, our volunteer in Quebec. Zachosh. 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.

Voices [1:44]

I'll give you the moon, alright? 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 [2:05]

Really top drawer.

Mostly Uncle Frank [2:07]

Along with a host named after a hot dog.

Voices [2:10]

Light in the French.

Mostly Uncle Frank [2:17]

Today on Risk Party Radio, it's time for our weekly portfolio reviews of the eight sample portfolios you can find at www.riskparty radio.com on the portfolios page.

Voices [2:27]

I'm putting you to sleep!

Mostly Uncle Frank [2:29]

Before I put you to sleep with that.

Voices [2:32]

I'm intrigued by this. I was saying email. And first off.

Mostly Uncle Frank [2:40]

First off, I have an email from Geraldo.

Voices [2:43]

Tina, I'm here in Mogadishu. It's the second stop on Geraldo Rivera's Tour of Terror.

Mostly Uncle Frank [2:52]

And Geraldo, right?

Mostly Queen Mary [2:54]

Hello, Frank and Mary. Thank you for all you do and sharing your precious time helping others. I first learned about the podcast last July when I heard Frank on the Bigger Pockets Money podcast. Since then, I have been a devout listener. Ooh, how convenient! You have helped me think differently about investing, withdrawing money for retirement, and donating money to worthy causes like the Father McKenna Center. I made a donation last December through my Fidelity Charitable Fund and will make a donation today to Fairfax Casa.

Voices [3:27]

Yes!

Mostly Queen Mary [3:28]

I used to give big donations to the schools that my wife and I attended, but have decided to shift to giving to family in need and programs that have an immediate impact on people. I used to have my portfolio with a financial advisor who is also a friend, but decided that I could do okay by doing it myself and saving the money from the fees to donate to others. I'm shifting my portfolio from individual stocks to more of a golden butterfly style portfolio. I've been successful with a few recommendations on stocks from Seeking Alpha, but there is too much stress involved to continue that approach.

Voices [4:04]

You can't handle the gambling problem.

Mostly Queen Mary [4:07]

I'm a 60-year-old retired HR professional, and my wife is 54, practicing immigration law with clients who have limited resources. We are both immigrants and understand the struggles of navigating a new country. The U.S. has been a great country for us, and we are forever grateful and want to pay it forward the best way we can. Any advice on how I should pace the transition from individual stocks to the golden butterfly style portfolio?

Voices [4:33]

Great, we can just put that into your retirement account and make it go to work for you and it's gone.

Mostly Queen Mary [4:39]

We currently have a brokerage account with $1.3 million and retirement accounts with $2.5 million. I plan to start converting the retirement accounts from the traditional IRA to Roth over the course of the next 15 years and using the brokerage account and rental income to live on during that time. I greatly appreciate your input on my plan. By the way, I really enjoy the sound bites. My favorites are The Simpsons, Office Space, and a few good men.

Voices [5:16]

Really sounds Ha ha ha!

Mostly Uncle Frank [5:20]

Well, first off, thank you for being a donor to the Father McKenna Center and a Fairfax Casa. Those are the two charities we support. We just finished our Fairfax Casa campaign, so your donation went into that campaign as well. If you donate to the Father McKenna Center or to Fairfax Casa, you get to go to the front of the email line, which is why you were at the front of the email line.

Voices [5:43]

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

Mostly Uncle Frank [5:47]

And you can do that through the links on our support page at www.riskprediradio.com. And I'll slip that Father McKenna Center donation page back in the show notes to make it more convenient for you.

Voices [5:59]

Ooh, how convenient!

Giving Locally For Real Impact

Mostly Uncle Frank [6:01]

Or you can join our patrons on Patreon if you'd like to give monthly, which you can also do at the support page on the website. But getting to your email and talking about charities for a second. Yeah, I did conclude the same that you did that it was more beneficial for me and probably for the organization I was donating to if I focused on ones that were smaller and that we could participate in rather than giving to colleges which seem to have all kinds of money and all kinds of really big donors with names on buildings and things. I just think it's much more satisfying to give smaller and give locally, but this is a personal preference. Recall that, you know, part of the reason that we give money is to improve our own well-being. That's one of the four ways that you can improve your well-being with money is to give some of it away. And so you should kind of experiment with, well, who do I give it to? Do I give it to charities? Do I give it to people? There's an infinite variety of giving you can do with money. And so one of the things you do want to reflect on at the end of the year, particularly if you're married or have a family, is who are we giving money to and why are we doing that? And maybe we should keep doing it or do something else that would suit us and suit whomever we're giving it to better. And that kind of iteration is actually a way to improve your own well-being, as well as those around you. My friend Rebecca Herbst was on it.

Voices [7:49]

The best, Jerry. The best.

Mostly Uncle Frank [7:51]

And there is an observation that people who are charitably inclined also seem to have better health outcomes. Now it seems more like correlation than causation to me, but you can take it for what it's worth. At least that's what Jim Dolly tells us. I'll link to that in the show notes so you can check that out. I think it's well worth it if you are inclined to be giving and want to be thinking about that more. Now you wrote about your history of investing, and that seems pretty typical for a lot of people to have maybe had some kind of advisor at some point and then realized that they could do just as well as the advisor.

Voices [8:26]

I drink your milkshake. I drink it out every day. I drink it up.

Mostly Uncle Frank [8:33]

And also dabbling in various investments, including single stocks and looking at places like Seeking Alpha and Motley Fool to get recommendations.

Voices [8:43]

Well, you have a gambling problem.

Mostly Uncle Frank [8:46]

The problem with those kinds of organizations is that they just make way too many recommendations. And it's kind of useless if you're basically recommending so many things that it would be the equivalent of a growth tech fund in Motley Fool's case, or sometimes in Seeking Alpha's case, depending on the particular thing they're talking about. So unless you really want to analyze these companies at a granular level, those sorts of things are getting more and more worthless all the time, particularly as we have artificial intelligence that could give you any number of lists of things to invest in that you could then further investigate. I know that people like Brian Ferraldi have really taken to using AI to analyze companies because you don't have to read through all those horrible SEC filings. You can have an AI summarize those things for you and ask for particular information. But again, that's kind of like another job. So you better actually enjoy doing that, otherwise it's not going to be worth your time.

Voices [9:42]

So are you going to get another job? I don't think I'd like another job.

Simplifying Away From Single Stocks

Roth Conversions And QCD Planning

Mostly Uncle Frank [9:47]

Now, if you have a bunch of individual stocks and other things lying around and you're trying to convert them to something simpler, I think the first thing you want to do is actually classify what you already own, particularly in terms of whether it's a growth stock or fund or a value stock or fund. And AI is very good for that too. You can put in a list of tickers and it will tell you pretty quickly where they fall or whether they fall somewhere in the middle. But that gives you a good idea as to sort of what your base allocation already is. Because after that, I mean it's easy to just take things in retirement accounts and sell them and buy something else because there's no tax consequences to those things. On the other hand, what you're probably doing inside of retirement accounts is selling stocks and buying bonds because that's where you want your bonds to be located. So often people end up with kind of a pile of stocks and funds in taxable accounts that they then either need to sell and buy something else or just keep and classify in the two categories that you're really interested in, which are essentially growth and essentially value. In the golden butterfly portfolio, those are represented by the total stock market fund, which is the growth side of things, large cap growth, and then the small cap value fund, and that's the value side of things. You could construct another portfolio that kind of mimics that, but it's basically just a pile of growth stuff and large stuff, and then a pile of value stuff and smaller stuff. And it's gonna look a little messy, but you probably have similar results if the macro allocations are the same. Because remember, the macro allocation principle says that if you have things in the same kind of general proportions in terms of amount of stocks, amount of value stocks, amount of gross stocks, amount of particular kinds of bonds, all those kind of portfolios are going to perform similarly, even if it's not in the specific fund or consolidated into all one fund. So I wouldn't get hung up on that too much. That being said, if there's not going to be tax consequences, you might as well just sell the things in the taxable account and buy other things. If there are going to be tax consequences, that is when you need to think about, well, maybe I should just keep this and categorize it as part of my value allocation or categorize it as part of my growth allocation. The one thing I would kind of look for to try to get rid of would be anything that resembles small cap growth, particularly as you go into retirement, that tends to be the most volatile category of stocks, and also in terms of risk reward, one of the worst categories. So while it's okay to have all different sizes of value from small to large in a retirement portfolio, on the growth side of things, you really want to have things that are larger than smaller. So that's another consideration I'd be looking at if you're trying to sort and re-jigger a bunch of funds or stocks. Now, in terms of timing and everything, I think if you have enough money already, I would start doing the transition now. You're already 60 years old, and there's no point in taking more risk now than you actually need to if you've won the game as far as accumulation is concerned. I can't tell whether that's true or not because there's no expense line in your email to tell me whether the amount you've accumulated is sufficient. It sounds like it is based on the tone of your email, though. So I would go ahead and get on that now because you're also now getting to the point where you can do conversions or take money out of your traditional retirement accounts without paying a 10% penalty. And that's where I am as well. So our strategy is actually to be kind of flexible on this and look at it year on year in terms of how much we're taking out of retirement accounts or converting versus how much we're taking out of taxable accounts.

Voices [13:34]

No one can stop me.

Mostly Uncle Frank [13:37]

And unfortunately or fortunately, there is no general rule of thumb here that you should take from this account and then take from that account in this order because it depends so much on your individual situation, your tax rates, your other income, all of those play into this. The general rule, though, is that you do want to somehow disgorge these retirement accounts and not just have them sitting there growing and growing and growing until RMD time when you're 73 or 75. But whether you take that as just distributions to live on or send it to the tax man, which is a convenient way of paying your quarterly taxes, is to actually just do distributions out of retirement accounts and send them straight to the IRS. But all of this needs to be taken together. And for people that are charitably inclined, and this isn't something that is often talked about, although Jim Dolly did talk about on that podcast I just mentioned. The fact of the matter is for people who want to give a lot to charity and know they're going to be doing it after age 70 or 70 and a half, you can do that most efficiently by using qualified charitable distributions.

Voices [14:42]

Donate to the children's fund. Why? What have children ever done for me?

Mostly Uncle Frank [14:47]

Because those go straight from your traditional IRA to the charity. There's no taxes involved. It's not even counted as income, but it can be used to reduce RMDs. So in our case, once we hit that age, we'll be pretty much making all of our charitable contributions out of our traditional retirement accounts. And I don't think that is something that I hear most people planning for or planning around, because that is also a way to disgorge those traditional retirement accounts.

Voices [15:16]

Inconceivable.

Mostly Uncle Frank [15:18]

It is also convenient, though, to actually keep some money left in the traditional retirement accounts if you think there's going to be health care expenses or you want to hold money back for long-term care in case you need it.

Voices [15:30]

If you don't start making more sense, we're going to have to put you in a home. You're already put me in a home, and we'll put you in the crooked home it's on 60 minutes. I'll be good.

Mostly Uncle Frank [15:41]

Because what's going to happen then is that your withdrawals from those accounts are going to all go to health care, in which case you're going to get most of that deducted from your taxes. Because if your healthcare expenses are over, what is it, 7.5% or 10%, then you get to deduct all of that income. All of this is to say oftentimes these Roth conversions are overrated and they don't apply to a particular person. And that is why this is so individualized. And if you're looking at things that say, always take the money out of the accounts in this order, I would discount that severely. Because you need to think about well, what what are our plans? What do we plan on doing? And then tailor make your plan based on that, with the idea that you do want to somehow either get that money out of your traditional IRAs or have a plan to donate to charity or use it for something else that's not going to be taxed anyway, like I just described.

Voices [16:42]

It cuts whack.

Mostly Uncle Frank [17:03]

Because it just doesn't make any sense in our tax brackets. It makes more sense to take some out of the traditional and some out of the taxable each year and balance that out. But the other thing, at least for us, we're not counting on staying under any subsidy limits for the ACA. We're just paying it. And I think that's fine to do if you're within that income range that it makes sense. But oftentimes I see that being kind of used as an excuse to just hoard money and not spend it. With all of these things, you have to make sure that you're not letting the tax tail not only wag the investment dog, but wag the life dog.

Voices [17:40]

The question is, who let the dogs out?

Mostly Uncle Frank [17:44]

That's the problem I see many people who call into these retirement IRA shows. They're a bunch of hoarders. They're trying to find ways to save on RMDs and Irmas and ACA subsidies and all that sort of stuff. But they're missing the point. And they have all this money and they want to just spend it, pay the stupid IRMA or whatever, because they're going to live a whole lot better life if they actually use their money instead of playing this tax optimization game as the purpose of their life.

Voices [18:12]

Now there's only one use for money, and that's to make more money.

Mostly Uncle Frank [18:15]

That's not much of a purpose in life if you think that tax optimizing your retirement accounts is the highest and best goal. It's just not.

Voices [18:24]

Forget about it.

Mostly Uncle Frank [18:26]

So thank you for writing in. As the son of an immigrant, we are kindred spirits. Okay, name your favorite dinosaur. Velociraptor. Alright. If you were a chick, who's the one guy you would sleep with?

Voices [18:39]

John Samos. What? Did we just become best friends? Yep.

Mostly Uncle Frank [18:47]

As well as people who like a good sound clip here and there.

Voices [18:50]

You can't handle the truth.

Mostly Uncle Frank [18:53]

Hopefully that helps. Thank you for being a donor to Fairfax Casa and the Father McKenna Center again. And thank you for your email.

Voices [19:03]

Now all the people here in this quaint Somali village are following me around. They're chanting Heraldo, boom bada yay, huraldo, boom bada yay, which apparently is an ancient Somali term meaning heraldo, you sexy man. Second off.

Mostly Uncle Frank [19:24]

Second off, I have an email from Rock.

Voices [19:27]

What?

Mostly Uncle Frank [19:30]

To the old ones, Rock. And Rock writes?

Mostly Queen Mary [19:36]

Hi, Frank and Mary. First time, long time. Attached is my donation to the Father McKenna Center. Happy to support your philanthropy. I am a recovering lawyer who found a way to semi-retire into work I actually love. Groovy baby! I still earn a good living, but less than before, so I'm in a situation I haven't heard you discuss much. I'm simultaneously maxing out Roth 401Ks, Roth IRAs, HSAs, about 7.5,000 a month, and dependent care accounts for me and my wife, and withdrawing from my after-tax withholdings to cover monthly expenses, about 9,000 a month, contributing and withdrawing at the same time. So my usual net withdrawal rate is pretty minuscule, less than 1%, even though my withdrawals themselves total about 3%. My goal is simple. Maximize growth now while I'm still earning, then migrate to a full risk parity structure that maximizes withdrawal rate when I fully step away in about 10 years. I am currently 47 and my wife is 45. I've heard you talk about using a margin loan for short-term cash access. Here's my question. At my small withdrawal rate with a conservative margin facility at Interactive Brokers, never more than 20% of portfolio value, I can cover almost any historical bear market without selling distressed assets, as well as any indulgences we want in the meantime.

Voices [21:02]

Who wants an orange whip? Orange whip? Orange whip? Three orange whips.

Mostly Queen Mary [21:08]

As an additional measure and to start building risk parity discipline, I'd set aside roughly 200,000 to 400,000 in alternatives, leaving me roughly 95% equities. Two questions. Is my logic sound that the small overall withdrawal rate with ongoing income and a conservative margin backstop generally reduces how much risk parity ballast I need right now? Side question. Should these alternatives be in my taxable accounts now so I can actually access them, even though that's not an efficient place for gold and long term treasuries? I know the likely objection. If I don't want to spend that much money, then sure, be in 95% stocks. But as I said, we'd love to maximize growth now and move to maximizing withdrawals later. Thanks so much for the phenomenal content, the integrity to do it without trying. Sell us anything, and your focus on the bigger picture beyond just money.

Voices [22:06]

Yes. Yes, it had been so long ago I'd forgotten. The old ones here, the ones who made us, yes. Yes, it is still in my memory banks. It became necessary to destroy them.

Mostly Uncle Frank [22:22]

Well, first off, thank you also for being a donor to the Father McKenna Center. And that has moved you to the front of the email line, Rock. That was the equation. Which is why you are here right now. So you've got an interesting question here and a number of moving parts. It's difficult actually for me to tell how all of this fits together without knowing what your overall expenses are and then how much you've accumulated and how much income you have, so on and so forth. So I am going to try and simplify this a little bit and just talk mostly about using a taxable margin account effectively and how that interplays with a risk parity style portfolio or other kind of diversified portfolio. So, first of all, you are correct that if you're going to take margin, I would suggest you do it at Interactive Brokers. Because they have the lowest consistent margin rates. I know places like Robin Hood and maybe public.com are trying to compete with that, but Interactive Brokers is really kind of the place where people go to do this sort of thing. When I say people, I'm talking about like family offices and sophisticated traders. That platform is set up for sophisticated investors. Yes. The old ones.

Voices [23:46]

The ones who made us.

Mostly Uncle Frank [23:58]

You could borrow over 100% of your portfolio in many circumstances.

Voices [24:04]

You have a gambling problem.

Mostly Uncle Frank [24:06]

But since you're only talking about borrowing up to maybe 20% of it, that's a more reasonable position to hold and much less likely to get a margin call. And that's what you're worried about. Am I going to get a margin call if I pursue this strategy and take this much margin? There's no one formula that's going to tell you that. I will tell you if you're keeping it under 20%, you're probably unlikely to ever face a margin call. Even if you are almost all stocks in the portfolio. Except maybe in the worst circumstances.

Voices [24:39]

And it's gone. Poof.

Mostly Uncle Frank [24:42]

You could see a big crash like 2008 or the early 2000s. That might trigger it.

Voices [24:47]

Uh what?

Mostly Uncle Frank [24:48]

It's gone.

Voices [24:49]

It's all gone.

Mostly Uncle Frank [24:50]

But you are also correct that the other way to ameliorate that is to have a better diversified portfolio in that margin account so that it is unlikely to have as big of drawdowns. And that involves putting some of these alternative assets into it, or non-stock assets, I should say, which could be treasury bonds, gold, and managed futures. And you can do some tests at portfolio charts or at test folio with a particular portfolio to see what kind of drawdown characteristics it's had over time to get you an idea or at least a relative idea because you would compare that to a portfolio that's just 100% stocks or what you would ordinarily be holding in there. So it's sort of like the more margin you plan on taking, the more diversified a portfolio you want to have in there.

Voices [25:38]

Hello, hello, anybody home? I think McFly think.

Mostly Uncle Frank [25:43]

Now there is an advantage actually to carrying things that are paying ordinary income in a taxable account if you are taking margin on it. And that is this the margin interest is actually tax deductible against that income. So for instance, you can put treasury bonds in there that are paying some kind of income, but your margin interest is going to be deductible against that income. And so it results in a substantial tax savings because you're not effectively paying tax on that ordinary income. And then knowing that allows you to put more things that would pay ordinary income in that taxable account, then taking the margin, then deducting the margin interest against the ordinary income. You can see there's a lot of moving parts here. I don't understand the word you just said. But that's what I would be looking at. I would be looking at how much margin do I think I'm actually gonna be taking in here.

Voices [26:39]

You can't handle the gambling problem.

Mostly Uncle Frank [26:42]

And then can I match that up with an allocation to something like Managed Futures or Treasuries that's paying ordinary income and have those things offset?

Voices [26:51]

But if you're gonna play the game, boy, you gotta learn to play it right.

Mostly Uncle Frank [26:57]

You can carry over that deduction from year to year, by the way, so you don't need to use it all in one year.

Voices [27:03]

You got to know when to hold up, know when to fold up, know when to walk away, and know when to run.

Mostly Uncle Frank [27:15]

But I think you are on the right track here in terms of coming up with flexible solutions using interactive brokers in the margin account there. This does take work though, and your mileage may vary.

Voices [27:28]

Every gambler knows that the secret to surviving is knowing what to throw away, knowing what to keep.

Mostly Uncle Frank [27:39]

So don't get too greedy and don't take too much margin.

Voices [27:44]

Because every hand's a winner, and every hand's a loser, and the best that you can hope for is to die and sleep.

Mostly Uncle Frank [27:55]

But I do think what you're talking about, particularly if you're having such a small withdrawal rate, this could make a lot of sense. So, there are some things to think about, some calculations for you to be doing. That was the equation. Hopefully that helps. Thank you for being a donor to the Father McKenna Center. And thank you for your email.

Voices [28:19]

Existence survival must cancel out programming. Last off.

Mostly Uncle Frank [28:30]

Last off? We have an email from Uta.

Mostly Queen Mary [28:33]

No way.

Mostly Uncle Frank [28:35]

And Uta writes.

Mostly Queen Mary [28:37]

Dear Frank, I recently found your podcast and am trying to digest episodes one at a time. Thank you so much for your work and the model portfolios that you have set up for showcasing actual retirement withdrawal. Brilliant idea.

Voices [28:52]

Yeah, that's smart.

Mostly Queen Mary [28:54]

In some of your recent podcasts, you have stated that retirees do experience less inflation than other households, particularly as they age. I was intrigued by this and looked for papers that would corroborate your claim here in the Netherlands where I live. The most recent paper I could find from 2018 did not find that. In fact, they found that single households, older households, and lower expenditure households all experience higher inflation than couple households, younger households, and higher expenditure households, respectively. The paper I refer to is Inflation Experience of Retirees, Journal of Pension, Economics and Finance. Could you maybe address this with research that you have found that shows retirees to experience less inflation? Kind regards, Uta. Is it possible to to you?

Voices [29:48]

What was that word? Uh what word? To what? What? Did you say ute?

Mostly Uncle Frank [29:56]

Yeah, to ute.

Voices [29:57]

What is a ute?

Mostly Uncle Frank [29:59]

Well, I'm glad you're enjoying the podcast and the models that we've set up here. They are models, samples, and should not be taken as definitive statements of something you would want to do or not do. A mathematical property hardwired into nature.

Voices [30:16]

Secrets, secrets, secrets, secrets. The golden ratio. The golden ratio. What's the answer? What's the answer?

Mostly Uncle Frank [30:27]

So the data I rely upon for inflation comes from primarily three sources. One is a RAN study that we've cited to before. Maybe I can dig that up again. Another one is a JP Morgan study, where they use the data from Chase. And then there is a T Row price study. I'm not sure I have the specifics on that. I got the information from that from a Morningstar report which relies on it. But they basically all say the same thing, which is that at least for people in the United States, retirees experience inflation at 1 to 2% less than the US CPI. This is generally for all people over 50. And obviously, those are not surveys of people in the Netherlands, but they are surveys of literally hundreds of thousands of people, particularly in the case of the JP Morgan study, which I think is the most robust. But I would say it's pretty easy to find this stuff using your favorite chatbot AI now. And hopefully you can look those things up. I will link to another couple of them in the show notes. And if you want to search the podcast, you can search the podcast themselves with all the transcripts and all the links in the podcast if you go to the website at www.riskperator.com. So if you're looking for something that we've talked about here, that's where I would look first. I did look at the study that you linked to out of the Journal of Pension Economics and Finance. And you're right, it was published in 2018, but it does refer to data that is quite old now.

Voices [32:02]

The last thing you should think of yourself as data is less perfect.

Mostly Uncle Frank [32:07]

The data referred to in that study is between 1978 and 2004. And so most of that was prior to the reunification of East and West Europe and the imposition of the Euro as the currency across most of Europe. And there are a number of other limitations on this data. If you look at the paper itself, I'm looking at page 88 of the journal. I'll just read this. It says the budget survey population is not a representative sample of the Dutch population, so the available sampling weights are used to approximate a representative sample. The descriptive statistics through this paper are weighted sample statistics. In addition, people living in nursing homes are not covered by the survey. Although households may participate in the survey for at most three years, panel identifiers are not made available, and the survey is used as a series of cross-sections. The average annual sample size over the years was 2,260 households for a total of 56,571 observations over 25 years. There was only a 1% reduction due to missing values and the variables used in the analysis. Our final sample consisted of 55,962 household year observations over the 1978 through 2004 period. So what you're really looking at here is a very limited sample size of only about 2,000 households a year for a period from 1978 through 2004. And I think they stopped reporting this after that, which limits the availability of the data. And then as they reference here, they did have to tweak it, essentially. So based on this description, I don't think this is very reliable data, honestly. The sample size is too small. This is obsolete, and they obviously had to manipulate it in order to come up with the results they have. That contrasts to the surveys that I've referred to, which of course are different country, but they're also hundreds of thousands of people and observations, and they are in the past couple of decades as opposed to between 20 and 50 years ago. So I don't think I'd look at this paper that you found as anything but historical record. And I really wouldn't rely on it for current conditions for that reason. What I'd probably be looking for in your case is Europe-wide data, particularly since the use of the Euro as the currency, because I would think there are going to be significant differences between experiences for people in the US versus people in other countries, particularly in Europe, because in the US, what you find is that every category of spending, except for healthcare, has a lower inflation rate that includes food, shelter, transportation, and everything else. But the healthcare inflation is more significant because our system is not as robust as what you have in Europe in terms of country-run health insurance systems. So I would guess, and I'm only guessing that the inflation in Europe would be lesser in the case of health care, but it might be more in the case of things like energy and perhaps food and housing. And that's just to say that one size definitely does not fit all in this kind of analysis when you're going country to country. So I'm not sure how helpful this is. It seems to me you have more research to do, and I'm not sure you're going to find anything if it's just about the Netherlands itself, since it's a small country. But you might find some more statistics on Europe generally, in northern Europe in particular. So hopefully that helps for what it's worth. And thank you for your email. What is a Ute?

Voices [35:50]

Oh, excuse me, Johanna. Two youths. And now for something completely different. What is that? What is it? Oh, lots of bees! Lots of bees!

Markets Update And Sample Portfolios

Mostly Uncle Frank [36:08]

Well, yes, there was a sighting of the bees last week, at least on Friday. Which wiped out most of the gains for May. Unless you're investing in commodities or managed futures.

Voices [36:29]

I'm an oil man.

Mostly Uncle Frank [36:30]

But just looking at the markets, the SP 500, represented by the fund VOO, is now up 8.69% for the year. The Nasdaq 100, represented by QQQ, is up 15.55% for the year. Small cap value took it on the chin last week.

Voices [36:47]

I could have used a little more cowbell.

Mostly Uncle Frank [36:49]

Representative Fund VIOV is now up 10.83% for the year. Gold has also returned to Earth. Representative Fund GLDM is now up 5.4% for the year.

Voices [37:02]

Do you expect me to talk? No, Mr. Bund, I expect you to buy.

Mostly Uncle Frank [37:07]

Long-term treasury bonds represented by the fund VGLT are now underwater. They are down 2.52% for the year so far. Reaths are up 7.98% for the year. Commodities continue to be the big winner on the strength of oil. Representative Fund PDBC is now up 40.45% for the year so far. Preferred chairs represented by the fund PFFV are up 2.59% for the year so far. And managed futures are managing to benefit from the rising price in oil. Representative Fund DBMF is now up 11.73% for the year so far. Good day, sir, ma'am.

Voices [38:05]

Hello. I'm Daniel Plainview. This is my partner in Sun HW. I'm an oil man, but I also love milkshakes. And now I'm going to drink your milkshake. What do you think of that?

Mostly Uncle Frank [38:22]

And now moving to these reviews of the eight sample portfolios you can find at www.riskparty.com. The first one is the all seasons portfolio. This is a reference portfolio we keep around for reference and comparison purposes, since it's really too conservative to be used by most people.

Voices [38:40]

Looks like a medieval warrior.

Mostly Uncle Frank [38:43]

It has 30% in a total stock market fund, 55% in intermediate and long-term treasury bonds, and the remaining 15% in golden commodities. It is down 0.11% for the month of May now. It's up 4.85% year to date and up 29.22% since inception in July 2020. Moving to these more bread and butter kind of portfolios. First one's a golden butterfly. This one's 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 20% in gold. It is now down 0.79% for the month of May. It's up 4.73% year to date, and up 67.09% since inception in July 2020. Next one's Golden Ratio.

Voices [39:34]

A mathematical property hardwired into nature. The golden ratio. The golden ratio. What's the answer what's the answer?

Mostly Uncle Frank [39:50]

This one is down 0.05% for the month of May now. It's up 5.55% year to date, and up 62.97% since inception in July 2020. Next one's the Risk Parity Ultimate. This is kind of our kitchen sink portfolio. I'm not going to go through all 12 of these funds. It is down 0.03% for the month of May. It's up 5.45% year to date, and up 47.36% since inception in July 2020. And now moving to these experimental portfolios.

Voices [40:22]

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

Mostly Uncle Frank [40:29]

These all involve leveraged funds and can be quite volatile, so don't try this at home. Even though I know some of you do.

Voices [40:38]

You can't handle the gambling problem.

Mostly Uncle Frank [40:40]

First one's the accelerated permanent portfolio. This one is 27.5% in TMF, that's a levered bond fund. 25% in UPRO, that's a levered stock fund. 25% in PFFV, a preferred shares fund, and 22.5% in gold, GLDM. It is up 0.38% for the month of May. It's up 4.65% year to date, and up 29.17% since inception in July 2020. Next one's the aggressive 50-50. This is the least diversified, most levered, and worst performer of all these portfolios. A good example of probably what you do not want to do. Look away, I'm it is one-third in a levered stock fund UPRO, one-third in a levered bond fund TMF, and the remaining third in preferred shares and intermediate treasury bonds as ballast. It is actually up 1% for the month of May, and it's up 3.41% year to date, and up 1.65% since inception in July 2020. Next one's a year younger than the first six. It's the levered golden ratio. This one is 35% in a composite fund called NTSX, that is the SP 500 and Treasury Bonds levered up 1.5 to 1. 15% in AVDV, that's an international small cap value fund. 20% in gold, GLDM, 10% in a managed futures fund, KMLM, 10% in TMF, a levered bond fund, and the remaining 10% in UDOW and UTSL, which are levered funds that follow the Dow, and a utilities index. It is down 0.83% for the month of May. It's up 6.77% year to date, and up 27.99% since inception in July 2021. And now moving to the last one and newest one. This is the OPTRA portfolio. One portfolio to rule them all. This place rolls. It is a return stack style portfolio, and it is in fact ruling them all. It has 16% in UPRO, that's a Levered SP 500 fund. 24% in AVGV, which is a worldwide value tilted fund, it's a fund of funds. 24% in GOVZ, that's a Treasury Strips Fund, and the remaining 36% divided into gold and managed futures. It's up 1.29% for the month of May. It's up 10.01% year to date, and up 41.94% since inception in July 2024. So it's feeling no pain this year.

Voices [43:16]

I'm happier than a peg and slop.

Mostly Uncle Frank [43:18]

Although it was up more like 13% a few days ago. But that concludes our weekly portfolio reviews. And you can find all that information in writing at the website if you'd like.

Voices [43:31]

Cool.

Mostly Uncle Frank [43:33]

And with that, now I see our signal is beginning to fade. If you have comments or questions for me, please send them to Frank at RiskParodyRadio.com. That email is Frank at RiskParodyRadio.com. Or you can go to the website www.riskparodyradio.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. You make some stars, a follow, a review. That would be great. Okay. Thank you once again for tuning in. This is Frank Vasquez with Riz Party Radio signing off.

Voices [44:10]

And somewhere in the darkness, the gambler he broke even. But in his final words, I found an ace that I could keep. You got to know when to hold up, know when to fold up, know when to walk away, and know when to run. You never count your money. When you're sittin' at the table, there'll be time enough to count them. When the dealing's done, you got to know when to hold when the hold. You never count your money. When you're sittin' at the table, there'll be time enough for counting. When the dealing's done, you got to know when to hold up, know when to fold up, know when to walk away, know when to run. You never count your money. When you're sittin' at the table, there'll be time enough to count when the deal is done.

Mostly Queen Mary [45:30]

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.