Cold Open And Welcome

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

Voices [2:29]

Lots of bees!

Mostly Uncle Frank [2:34]

And yes, the bees did show up on Friday with the worst day for the stock market in over a year, at least for the NASDAQ. But we'll get to that presently.

A Listener Nearing Financial Independence

Voices [2:46]

Before we get to that I'm intrigued by this. How you say email? And first off.

Mostly Uncle Frank [2:55]

First off, I have an email from Bill. Optimus Bill.

Voices [3:02]

Oh sure. I think I've improved on your methods a bit too.

Mostly Uncle Frank [3:06]

And Optimus Bill, right?

Mostly Queen Mary [3:08]

Dear Mary and Frank, it has been a long, long, long road less traveled in the last year or so.

Voices [3:15]

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

Mostly Queen Mary [3:19]

As I closed in on possible financial independence and found myself turning 60, I realized that I had almost won the game and needed to find the best, Jerry, the best way to stop playing.

Voices [3:31]

The best, Jerry, the best.

Mostly Queen Mary [3:33]

The question became how to do it and what did that really look like?

Voices [3:38]

And you've gone over something again and again and again and again like I have.

Mostly Queen Mary [3:52]

Having amassed my enough wealth, how could I best preserve and spend it in retirement? I wanted to be able to exit the workforce with less than was traditionally recommended so that I did not have to work any longer than necessary and spend more than what was normally considered safe.

Voices [4:09]

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

Mostly Queen Mary [4:16]

I found myself unsatisfied with conventional traditional wisdom and the old-fashioned 4% rule.

Voices [4:23]

No more flying solo.

Mostly Queen Mary [4:24]

Was 60-40 stock bond really all there was? As I pondered these questions, and probably against my better judgment, I found myself reaching back out to your podcast, Risk Parity Radio. What is pie? I'm killing. What was that quote from The Godfather? Just when I got out, they pulled me back in, or something like that?

Voices [4:53]

Just when I thought I was out, they pulled me back in.

Mostly Queen Mary [4:58]

It's hard to believe that we first met over six years ago at FinCon 19 before Risk Parity Radio was even born.

Voices [5:06]

That is the straight stuff, oh funk master.

Mostly Queen Mary [5:09]

Out of ill-conceived respect for what I thought you might have to say, I listened to the first 40 or so episodes when you first started it. At that time, in the midst of COVID and chaotic late starter accumulation, I guess that I was not yet ready for what you had to say and drifted away. As a prodigal son and curious child, I eventually found my way back to your wisdom, weird sense of humor, and sonorous foghorn laughter. I now set about listening to all 500 plus episodes of Risk Parody Radio. Was I crazy or just plain stupid?

Voices [5:57]

Are you crazy?

Mostly Queen Mary [6:01]

Likely both, but that's just how I roll when I set my mind to something. I guess. I'm happy to finally report that I am finished and up to date. I listened backwards and found it interesting to travel back in time in my wife's hot tub time machine, already knowing what history in the markets had delivered.

Voices [6:20]

Gonna go back in time. Gonna go back in fame. Gonna go back in fame.

Mostly Queen Mary [6:30]

Gosh, that was a bleeping marathon of the nonsensical ravings of a lunatic mind.

Voices [6:36]

Yes!

Mostly Queen Mary [6:37]

Did I get Mary to swear or laugh? Uh no, you did not, Bill.

Voices [6:41]

Forget about!

Mostly Queen Mary [6:43]

My little project could be seen by the few, the proud, the we band of brothers as a colossal waste of time. They are probably right. We few. We happy few. We band of brothers. You spent so much time in my head that I felt like I was talking to a psychotic imaginary friend.

Voices [7:07]

The name's Francis Sawyer. But everybody calls me psycho. Any of you guys call me Francis, and I'll kill you.

Mostly Queen Mary [7:18]

If I am not careful, I still catch myself thinking in clips.

Voices [7:22]

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

Mostly Queen Mary [7:28]

You will be happy to know that I now have my life back and my wife has her husband back. SpongeBob, Dirty Harry, Ricky Bobby, and others still occasionally take over and invade my speech. Well the frickin' da! But it is not really a bad form of Tourette's to have. Mother Clucker, did you slip up, Mary? Uh no, Bill, I still have not. Forget about it! This is the long-winded, me not me, way to say thanks to both of you for brain dumping all the insightful and weird stuff that goes on in the mind, heart, and generous soul of yours into the Matrix. Five stars or one star, you are uniquely you. Gosh, idiot. Without Queen Mary to soften the blows, though, the world might not be able to tolerate all that you really have to say, Frank. You guys really make a great team. Warthog Bacon, lions, and mating leopards, oh my. Almost as good of one as Karen and I do. There is still hope in the world. For better, Mary, or worse, Frank. And until death that stalks us at every turn, do us part. Well it does. There it is! Death The lives of those that you both touch are forever changed for the better, including mine and ours. I have no questions. I do not have all the answers yet. I can now handle the truth. May God have mercy on our souls. Time to show me the money. I hope you get the drift of this memo, Optimus Mr. Bill.

Voices [9:11]

You can't handle the truth. I award you no points, and may God have mercy on your soul. Show me the money! Show me the money! And uh, I'll go ahead and make sure you get another copy of that memo.

Mostly Uncle Frank [9:26]

Okay? Well, Optimus Bill, you are nothing if not long-winded.

Voices [9:32]

But enough about me. I hope this hasn't been boring for you. It's just that whenever I start to talk about Elaine, I always get so carried away. I lose all track of time. Well, I could go on for hours, but I'd probably start to bore you. You know, I really couldn't blame Elaine if she wanted a career. When they built those roads, they had never thought of drainage in mine. So we had to take a special Jeep up to the main road. In fact, we were lucky to even get a Jeep since just the day before. Only one that we had broke down in a bad accident.

Mostly Uncle Frank [10:07]

But Optimus Bill has gone to the front of the email line because he's a donor to the Father McKenna Center. And Fairfax Casa, our twin charities we support here. Father McKinnon Center supports hungry and homeless people in Washington, D.C. Full disclosure, I am the board of the center. I'm the current treasurer. But if you give to the center, Ordemary's charity, Fairfax Casa, you get to go to the front of the email line, as Bill has done here, although we do temper Bill's movement to the front of the line since he sends in so many emails. So it's actually not that at the front of the front of the line. This is from back in May, actually. Just make sure you mention your donation in your email so I can duly move you to the front of the line. And the funny thing is, after all that, you don't actually have a question. You did try to trip up Mary, but Mary's on to you. Mary's on to all of us, so that's not gonna happen.

Mostly Queen Mary [11:06]

Nobody's ever gonna get me a swear on a podcast.

Voices [11:10]

Forget about it.

Mostly Uncle Frank [11:12]

Your email did cause me to reflect on our wonderful friendship that has evolved since 2019.

Voices [11:20]

Hey, are you awake? Yeah, I'd hate your guts. As soon as your eyes shut, I'm gonna punch you square in the face. What are you doing? I'm bearing you! I'm alive! You're waking the neighbors! Shut up!

Mostly Uncle Frank [11:34]

And

Friendship Over Fame In Podcasting

Mostly Uncle Frank [11:35]

also what the purpose of this podcast is, as that does seem to evolve as well. Okay, name your favorite dinosaur. Velociraptor. Alright. If you were a chick, who's the one guy you'd sleep with?

Voices [11:48]

John Samos! What? Did we just become best friends? Yup!

Mostly Uncle Frank [11:52]

Originally it was just something for me to do during COVID when there wasn't much else to do. And also because I wanted to record some thoughts about investing that I wanted our children to have access to outside of Lecture Daddy.

Voices [12:07]

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

Mostly Uncle Frank [12:10]

Over time it's kind of evolved not only as just a creative outlet, but also as a way to raise money for charities, which is important to both me and Mary. And to do something meaningful with Mary, even though I don't think she finds most of it that meaningful. I have been able to amp that up more recently with our Fairfax Casa fundraiser.

Voices [12:33]

Nothing gave Buttercup as much pleasure as ordering Wesley around.

Mostly Uncle Frank [12:44]

As you wish. But also I found it's just a really good way to make new friends as an adult, which is particularly difficult, particularly for men. And I had already been able to do some of that through my longstanding participation with various financial independence groups, going back to early retirement extremes, circa 2010. But doing this podcast really has been able to amp up that purpose or intention, if you will, in a way that I didn't anticipate, but has been very rewarding. And it's also influenced the kinds of decisions I've made about what to do or not to do with this podcast.

Voices [13:22]

It's not that I'm lazy, it's that I just don't care.

Mostly Uncle Frank [13:26]

One benefit that I've had throughout my life is that I still do have some childhood friends that I go and see every year, and we're still good friends, even though our lives have gone off in all kinds of different directions. But if you have the benefit of something like that, you do realize that if you really want to have good long-standing friendships, you can't be too focused on things like fame and popularity and whether this person is going to help you get ahead.

Voices [13:54]

My, I'll bet you monsters lead interesting lives. I said to my girlfriend just the other day, gee, I'll bet monsters are interesting, I said. The places you must go and the things you must see, my stars. And I'll bet you meet a lot of interesting people, though. I'm always interested in meeting interesting people.

Mostly Uncle Frank [14:14]

All of those money, power, fame, and pleasure-seeking things may help you start friendships, but ultimately they end up being detrimental to friendships if that is what your friendship is based on. And that's why frequently when people leave their place of work, those relationships fall off because they never were based on some kind of enduring relationship or friendship, but merely on the fact that you're both working at the same place on the same kinds of things. The other thing that good friendships or building good friendships requires is some level of vulnerability. And that generally means letting people see you as you really are, kind of warts and all.

Voices [14:55]

This is absolutely gross. That boy is a PIG pig.

Mostly Uncle Frank [15:02]

The good, the bad, and the ugly, as it were. Because if you always present yourself with some kind of polish or some kind of veneer or some kind of public persona, that is really going to stand in the way of you actually developing good friendships. That's why I think a lot of really famous people end up really twisted and weird and often have drug problems.

Voices [15:34]

You're on drugs! I'm your mom, I'm okay, I'm just thinking.

Mostly Uncle Frank [15:42]

Because nobody really knows them for who they are, everybody knows them for their persona, and then everybody's trying to get something out of you because you're famous. So the kinds of people you naturally attract as a famous person are probably not people you actually want to develop friendships with. This is also why I've come to intentionally reject a lot of advice, if you will, about podcasting and what a podcast is supposed to sound like and what you're supposed to be doing with it, because the goal of most podcasters, seemingly to me, is to become more famous, get more clicks, views, listens, whatever, and to make money and to have influence. So we're talking money, fame, and power, which are three of the four idols that you don't want to be worshiping and that are often detrimental to relationships. So I pretty much don't do anything that I'm supposed to do to promote a podcast.

Voices [16:56]

You're not going to amount to Jack Squad.

Mostly Uncle Frank [17:01]

There's no big social media presence. There's no attempt to attract lots of listeners. It's all word of mouth. There's no ads. There's no attempt to get interesting guests to come on. There's no attempts to get awards. Nothing they tell you to do at FinCon is anything I'm doing. But what it has resulted in is a small, dedicated audience of people that are really in Zapatico with me and what I talk about and people who I enjoy company with. And that's fine. No one can stop me. Because the other part of finding good friends is the process of elimination of getting rid of most of the people who aren't interested in you or that you're in Sympatico with. Because if you really want to have a popular, successful podcast, you do need to become a performer. Which means you do need to put on a persona, a veneer, that is likely, if it's done well, to result in more money, fame, or power. But it's probably not going to result in more and better friendships. Which, as we know, is one of the secrets to living a good life and experiencing well-being in life. Because that's what all the studies show. And so, particularly as I've been in retirement, I've really tried to be more intentional about pursuing the things that are likely to actually improve well-being. While avoiding or minimizing the four idols and other things that are likely to detract from that. But that's probably enough on all of that for now. So, thank you for being a good friend. Thank you for your donations to Fairfax Casa and to the Father McKenna Center. And thank you for your email.

Voices [19:10]

Now, how how can you explain this culture that has followed you? And they're so dedicated, they just are still. I can't explain it. I can't explain it. They are the same people, you know. I mean, also it's not it's not as though we have a bunch of uh 40-year-old hippies. No, but it's like it's you know, it's the same kind of people. Uh I think that's the key to it. You know, there's that there's a certain kind of person, you know, maybe in every generation or whatever. I I don't I really don't quite know how to split it up, but there's a certain kind of person that likes what we do. You know, it's like like there are certain kind of people who like licorice, you know, or a certain kind of people who like buttermilk or something, you know. And it might not be something that everybody likes, but there are certain kind of people that really do like it. Second off.

Mostly Uncle Frank [19:48]

Second

A Donor Portfolio Plan And Zoom AMA

Mostly Uncle Frank [19:49]

off, we have an email from Arun.

Mostly Queen Mary [19:52]

No way.

Mostly Uncle Frank [19:53]

And Arun writes.

Mostly Queen Mary [19:55]

Hi, Frank. Just wanted to thank you and Bill for taking the time to do the Zoom call last weekend. It was a great experience connecting with you and other fellow Risk Parity Radio listeners live. Attaching our perfect number donation of $496 to Fairfax Casa with this email.

Voices [20:21]

I was gonna say it.

Mostly Queen Mary [20:23]

Hoping to get to the next perfect number, $8,192, with our donations in the next few years. Yeah, baby, yeah. Maybe with all the Risk Parity Radio listeners, we can collectively get to the one after that too: $33,550,336. My background. I came to the US in 2003 for graduate school in electrical engineering.

Voices [20:48]

Change the polls from plus to minus and from minus to plus.

Mostly Queen Mary [20:54]

But dropped out in a couple of years and started working in software, more on AI and big data these days. My wife has been working in clinical trial management. We are both in our late 40s and have a 15-year-old ready to start college in three years who wants to start mechanical engineering.

Voices [21:11]

I don't care about the children! I just care about their parents' money.

Mostly Queen Mary [21:15]

We just got past 80% phi, 20 times our annual expenses.

Voices [21:20]

Excellent. Everything is going as planned.

Mostly Queen Mary [21:25]

I am currently in the process of reallocating our approximately 100% stock portfolio to roughly the following: 58% stocks split 50-50 growth value, 6535 US International using VTI, VUG, AVUV, and AVDV, AVEM, AVES, and 2% in IBIT, treating it like a growth stock, 16% G O V Z, 16% GLDM, 10% DBMF in the next few months.

Voices [22:00]

Invention, my dear friend, is 93% perspiration, 6% electricity, 4% evaporation, and 2% butterscotch rifle. That's 105%. Any good?

Mostly Queen Mary [22:17]

Planning to accumulate with this until we reach 25 times our annual expenses. During decumulation, planning to withdraw 1% to 1.25% of the portfolio balance every three months, February, May, August, and November. Then check annually and rebalance only if any asset class is above or below 2% of its target. Without the help of your podcast, along with Choose If I, I would have never gained the tools and the talents to plan for an early retirement. One of the serendipities of listening to your podcast has been how well it has prepared me to take the Series 65 Investment Advisor Representative IAR exam.

Voices [22:56]

Are you not entertained? Are you not entertained? Is this not why you're here?

Mostly Queen Mary [23:07]

Which I'm planning to take this year, mainly for learning and eventually for a potential future career. Of course, if I decide to become anything like an advisor, I will go flat fee or hourly and operate as a milkshake provider and not a milkshake drinker. Thank you for everything you have created and shared. If you and Mary ever happen to visit Southern California, we would love to take you to lunch or dinner.

Voices [23:38]

Ah, good afternoon, sir. And how are we today? Better, better, better than a bucket. I'm gonna throw up. I gaston, a bucket for monsieur.

Mostly Queen Mary [23:48]

I am sure the Orange County LA and San Diego Choose a Fi local groups won't miss the chance to see you either. Warm regards, Arun.

Mostly Uncle Frank [23:56]

Seems like we've got lots of warm fuzzies going on on the Risk Parity Radio podcast today, which is great.

Voices [24:04]

It's me.

Mostly Uncle Frank [24:07]

So Arun has also gone to the front of the email line with his donation to Fairfax Casa. I continue to be impressed with all of the creative number file kind of donations that we've gotten, particularly over the past year or so.

Voices [24:22]

So today I'm going to tell you about how the Fibonacci sequence appears in the Mattelbratsette. Hopefully your mind will be blown by the end of that sentence.

Mostly Uncle Frank [24:30]

Because I encouraged creativity, particularly if it involves $8,192, or even better, $33,550,336.

Voices [24:41]

Show me the money! Show me the money.

Mostly Uncle Frank [24:45]

And I'd even settle for moving the decimal point a few points to the left on that number. So Arun mentioned the Zoom call we had last Sunday, which was a lot of fun, and I'm also indebted to Optimus Bill for setting that all up. I am Optimus Bill. Because it was his idea about a week and a half ago to figure out who had listened to all of the 500 odd podcasts here and get us all together in one kind of Zoom AMA meeting is what it ended up being last Sunday. And so there were over 30 people on the call, including Arun and my good friend Holly from nearby. And we had a nice conversation and a few laughs. And of course, some sound clip references, provided by yours truly. And I'm sure we'll do something like that again in the future, but I am sure I'm going to let Optimus Bill figure that all out. Because guess what?

Voices [25:58]

Guess what? I don't think I'd like another job.

Mostly Uncle Frank [26:01]

And that's what friends are for. So I know you really didn't have a question, but it does seem like you've really been able to take advantage of the information we've provided here and modify it to suit your own circumstances, which is what I can hope that people would want to do. And I haven't been out to Southern California in many years now, probably like fifteen. The last time I went there was for work. Although I did go to college in Pasadena and still have a lot of friends out there.

Voices [26:29]

Your mom goes to college.

Mostly Uncle Frank [26:31]

I just saw one of them back here because his daughter just recently graduated from GW. And that was fun. But I suppose we'll get out there sometime. I just can't say when. I know a lot of you also come to the DC area on occasion. And please look us up if you do that. Because Mary and I actually do prefer to talk to people one-on-one rather than in group settings. And I've discovered my listeners are an extremely interesting group of people with all kinds of life experiences and things to talk about.

Voices [27:03]

Have you ever heard of Plato, Aristotle, Socrates? Yes, morons.

Mostly Uncle Frank [27:09]

And so we welcome seeing you in the flesh. Should that come to pass, and we certainly will look you up if we get to the Southern California area. So thank you for being one of my truly demented listeners who's listened to all 500 odd episodes.

Voices [27:37]

We're mutants. There's something wrong with us. Something's really, really wrong with us. Something seriously wrong with us.

Mostly Uncle Frank [27:46]

Thank you for your donations. Thank you for joining us on that Zoom call last weekend. And thank you for your email. Last

Gold Returns Versus Commodities Explained

Mostly Uncle Frank [28:21]

off we have an email from Aaron.

Voices [28:24]

Now Aaron. No A Aeron, huh? Well, you better be sick, dead, or mute, Aaron. Aaron. Oh man.

Mostly Uncle Frank [28:42]

And Aaron, right?

Mostly Queen Mary [28:45]

Hi, Frank. In episode 315, you mentioned that the expected returns for commodities are lower than the expected returns for gold. My understanding is that gold has an expected real return of around zero, acting primarily as a store of value while still offering a valuable rebalancing benefit and a risk parity style portfolio. Is my understanding on gold's expected real return accurate? And if so, does that imply commodities have a negative expected real return? If so, why? It seems like commodities would also have a positive expectation due to the long-term effects of inflation similar to gold.

Voices [29:24]

We are here to try to explain to you what it is we do here. We are commodities brokers, William. Now, what are commodities? Commodities are agricultural products, like coffee that you had for breakfast, wheat, which is used to make bread, pork bellies, which is used to make bacon, which you might find in a bacon and lettuce and tomato sandwich. And then there are other commodities like frozen orange juice and gold. Though, of course, gold doesn't grow on trees like oranges. Clear so far?

Mostly Uncle Frank [30:07]

Well, Aaron, I think you were on the call last weekend as well. At least there was somebody with your last name on the call. And if that was you, thank you for joining that gathering. I should mention that I actually made a little video and slideshow out of the transcript from the AMA Zoom call, and I think they turned out pretty well. And I will link to those in the show notes. They're in this style of Henri Matisse. So you can check those out at your leisure. But getting to your question, I think you're maybe operating from a kind of false assumption. It's one of these kind of truthy assumptions that people make, which is that the real return of gold is around zero. And that actually depends mostly on what you are measuring that return in. Because if you're on a gold standard, obviously it's around zero. But if you're measuring it in terms of a fiat currency like the ones we use today, I'm not sure that's correct at all.

Voices [31:05]

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

Mostly Uncle Frank [31:09]

I think it's a convenient and handy assumption. It hasn't been true in the time we've had a fiat currency. The return of gold has been seven to eight percent nominal, and subtracting inflation, it's been more like around 4%, at least in this country. If you go outside the US, you'll find that gold's return has been much more substantial. But I think the more interesting question is why, rather than sitting around here arguing a truthy platitude that has not held water since 1970, why don't we just put that aside and start thinking about, well, what are the reasons that gold has had a 7-8% return since 1970 in US dollars and higher in other currencies? I actually ran into a possible explanation for that last week, and this was on the Farnush Tarabi So Money podcast, which is probably the last place you expect to have a discussion of these kind of issues, but she had on a guest named Dominic Frisbee, who had recently written a book called The Secret History of Gold. And one of the things he mentioned in passing was that the growth of the fiat money supply is about seven to eight percent per year, which sounds suspiciously like the returns of gold. And that is a different measure than straight inflation. Straight inflation is actually measuring the price of goods, but it's not accounting for assets or what you are measuring returns in, which is the currency typically as the unit of account. So I thought that was interesting. It could just be coincidence, though. I think ultimately, if you go back to your basic economics, the price of any kind of good or service is ultimately determined by supply and demand. The problem with just saying that is it's almost impossible to actually measure supply and demand directly. You'd have to be a mind reader of the entire world.

Voices [33:05]

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

Mostly Uncle Frank [33:14]

And so typically what people do is try to come up with these platitudes where they're not really measuring supply and demand directly, but trying to come up with some broad statement, which is expected real return of around zero. There's a whole bunch of assumptions underlying that statement, many of which are probably not true, or at least not true a lot of the time, which is why it is a truthy statement and not a true statement. But let's talk about supply and demand with respect to gold in particular. The supply is relatively limited, and that is what differs gold from other commodities like wheat or oil or something like that. The supply of most goods like that fluctuates and actually tends to increase over time as we have better methods of farming, better ways of extracting oil. All of the kind of efficiencies of modern technology lead to the production of more goods and leads to deflation effectively in the price of those goods.

Voices [34:14]

Let's hit rock bottom. Come on, let's buy. It's a big mistake, man. Why shouldn't we buy now, William? Price is gonna keep going down.

Mostly Uncle Frank [34:25]

But that's not true for gold. Gold is different than oil or wheat or pork bellies, or even a base metal like copper, which does respond more to these kind of technological innovations and ways of extraction. The supply of gold is relatively fixed. And although some gets mined every year, it's not a significant amount relative to how much exists in the world. So just looking at the supply functions, you would actually not expect gold to function under the same demand curve as other kinds of commodities where the supply curve is changing all the time and making the price of the good cheaper in most circumstances, at least if you leave demand fixed. So I think that's a key and obvious difference between gold and consumable commodities. Now, what about the demand for gold? Here is where we have this American problem that's very parochial, that we seem to think that our economy is the whole economy of the world, and that the way we buy and sell goods and services and the way we invest is common in the rest of the world, so we can just kind of wave our hands and pretend that the US economy is the whole world economy.

Voices [35:37]

We have become lovers of pleasure rather than lovers of the economy.

Mostly Uncle Frank [35:42]

If you spend even just a little bit of time talking to your favorite AI bot about demand for gold, and particularly go over to Asia, ask this simple question. Does the government of China encourage its citizens to own gold? And you will find, yes, they do. Pretty much the same way the American government encourages us to use IRAs and 401ks and things. The Chinese government encourages their citizens to take some of their money and buy gold with it and go down to the bank, and they make this very easy for people to do, actually.

Voices [36:16]

This is gold, Mr. Barton.

Mostly Uncle Frank [36:18]

Which creates a demand for gold that is very similar to what people talk about, this demand for index funds because of all these monies going into these 401ks that are being used to purchase index funds. Now, that kind of government encouragement is on top of the natural propensity of people who accumulate wealth in most of the world to put some of it in gold. So basically, the more wealth there is in the world, the more demand there is for gold.

Voices [36:47]

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

Mostly Uncle Frank [36:50]

Some of it kind of naturally occurring and some of it encouraged by various governments, who are also often buying gold themselves. But that's a very inconvenient fact if you want to go around with this polemic that the expected real return of gold is about zero. Because if you account for that demand function, it clearly is not zero. It clearly is something else, depending on the fluctuating demand for gold outside of the US in most of the world, based on the behaviors of these other economic actors who are not buying SP 500 index funds. They're buying gold with their excess wealth. And one of the reasons this has accelerated in the past few years was when Russia declared war on Ukraine. The United States government froze dollar-denominated Russian assets all around the world, well, with its allies, froze Russian assets all around the world. That was a wake-up call to a lot of countries who do not want to be dependent on the United States, including countries like China, that maybe they should not be holding so many dollar-denominated assets. And maybe they should be holding something else, and gold is a very convenient something else to hold. So I don't think you can really examine the way gold is bought and sold in the real world, particularly in the kind of monetary system we live in today, and conclude that gold has an expected real return of about zero.

Voices [38:20]

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

Mostly Uncle Frank [38:26]

At least not if you believe that the wealth of the world overall is growing. Now, what exactly that growth rate will be over time is probably fluctuating. But now that we have data going back to 1970 in the same economic monetary system, we can see that we do have a base rate of about 7 to 8%. And as we know, if you want to do economic forecasting or any kind of forecasting, the best way to do that is to start with base rates. And you need to have really good reasons to not use base rates. And I don't think people from the financial services industry or popular personal finance wandering around mouthing this expected real return of gold is about zero is a good reason to deviate from what we know the base rate returns are for this asset. Because they're not working from data, they're working from theory, and in a lot of respects, they're also working from wishful thinking or marketing.

Voices [39:24]

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

Mostly Uncle Frank [39:27]

Because in many, if not most cases, what these people are doing is trying to sell you something that is not gold. Or convince you not to use it as part of a diversified portfolio.

Voices [39:40]

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

Mostly Uncle Frank [39:47]

Even though all kinds of people at the top of the financial industry food chain actually recommend holding some gold for their more sophisticated clients for diversification purposes.

Voices [39:58]

Do you understand?

Mostly Uncle Frank [40:00]

Anyway, I do encourage you to go to your favorite AI bot and start asking it about what the Chinese government is doing with respect to buying gold and encouraging its citizens to buy gold because it's a very interesting thing that I don't think most Americans appreciate at all. And certainly people in popular personal finance are pretty much completely ignorant about this topic.

Voices [40:22]

Are you stupid or something?

Mostly Uncle Frank [40:27]

They would rather stick to the polemic and the group think, and being in the club.

Voices [40:33]

I've got a good mind to join a club and beat you over the head with it.

Mostly Uncle Frank [40:36]

Then study the issue from a worldwide perspective and draw appropriate conclusions from that.

Voices [40:41]

Hello! Hello, anybody home?

Mostly Uncle Frank [40:47]

So hopefully that helps. Thank you for being a loyal listener. And thank you for your email.

Voices [40:53]

Tell me just why you think the price of pork bellies is going down, William. It's Christmas time. Everybody's uptight. Could we please buy now, Randolph? Right, but if you want to lose money, go ahead. What are you trying to say, William? Okay. Pork belly prices have been dropping all morning. Which means everybody's sitting in their office and they're waiting for them to hit rock bottom so they can buy cheap and go long. So people own the pork belly contracts are thinking, hey, we're losing all our money, and Christmas is around the corner, and I ain't gonna have no money to buy my son the G.I. Joe with the Kung Fu grip. Okay? And my wife ain't gonna make love to me because I ain't got no money, right? So they're sitting there and they're panicking, they're screaming, sell, sell! Because they don't want to lose all their money, right? They out there panicking right now. I can feel it. They out there. They're panicking, look at it. He's right, Mortimer. My God, look at it. I'll wait till you get to about 64, then I'd buy. You'll have cleared out all the suckers by then. Do you realize how much money he just saved us? Money isn't everything, Randolph. Advise our clients interested in bellies to buy at 64. Mr. Valentine has set the price. And now for something completely different. What

The Friday Selloff And Market Scorecard

Voices [42:08]

is that? What is that? What is it? Love the bees!

Mostly Uncle Frank [42:22]

And the bees certainly descended upon the markets, at least on Friday. It was a pretty boring week until then. Then it was reported to be the worst day for the Nasdaq, at least, since April 2025, during the tariff tantrums. And so it turned into a sell almost everything day, with some notable exceptions. Looking at those markets, the SP 500, represented by the fund VOO, is now up 8.46% for the year so far. The NASDAQ, represented by the fund QQQ, is now up 14.92% for the year so far. It was up more than 18 or 19% on Thursday. Small cap value is holding in there nicely.

Voices [43:05]

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

Mostly Uncle Frank [43:08]

Representative fund VIOV is up 14.74% for the year so far, and really didn't decline that much on Friday. There were actually several sectors that were up in value on Friday, and they were part of the value side of things. So REITs were up on Friday, utilities were up on Friday, and my favorite property and casualty insurance companies, represented by the fund KBWP, were actually up about 3.37% just on Friday. But that's why you want to diversify into value tilted stocks. Moving on, gold had a horrible week last week. Representative fund GDLM is now up only 0.06% for the year so far.

Voices [43:51]

Uh what? It's gone. It's all gone.

Mostly Uncle Frank [43:55]

It still is not liking that war thing going on in the Middle East. Treasury bonds represented by the fund VGLT are now down 0.75% for the year so far. REITs represented by the fund REET are up 9.43% for the year. Commodities represented by the fund PDBC are up 31.77% for the year so far. Still leading the way with the higher price of oil and gas.

Voices [44:22]

Oil.

Mostly Uncle Frank [44:46]

Representative fund DVMF is up 9.69% for the year so far. Moving to these sample portfolios.

Core Sample Portfolios Performance

Mostly Uncle Frank [44:54]

They were all basically flat until Friday, and then they dropped. First one's the all seasons. It's a reference portfolio. We keep around for comparison purposes. It's only 30% in stocks and a total stock market fund, 55% in intermediate and long-term treasury bonds, and the remaining 15% in golden commodities. It's now 1.59% for the month of June. It's up 4.53% year to date and up 28.86% since inception in July 2020. We need these bread and butter kind of portfolios. First one's 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's down 1.85% for the month of June. It's up 4.72% year to date and up 67.08% since inception in July 2020. Next one's Golden Ratio. This one is 42% in stocks, divided into a large cap growth fund and a small cap value fund. 26% in long-term treasury bonds. 16% in gold, 10% in managed futures, and the remaining 6% in cash and a money market fund. That's down 2.19% for the month of June. That's up 5.9% year to date and up 62.43% since inception in July 2020. Next one's the Risk Parity Ultimate, our kitchen sink portfolio. I'm not going to go through all 12 of these funds. The worst performer by far this year, though, has been the Bitcoin Fund, IBIT. Fortunately, there's only a 2% allocation to that. It's down 2.27% for the month of June. It's up 5.15% year-to-date and up 46.94% since inception in July 2020. Now moving to these experimental portfolios.

Leveraged Experiments And Risk Warnings

Mostly Uncle Frank [46:51]

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

Voices [46:57]

You have a gambling problem.

Mostly Uncle Frank [46:59]

First one's the accelerated permanent portfolio. This one's 27.5% in a levered bond fund, TMF, 25% in UPRO, a leverage stock fund, 25% in PFFV, a preferred shares fund, and 22.5% in gold, GLDM. It's down 3.86% for the month of June. It's up 4.45% year to date and up 28.92% since inception in July 2020. Next one's the aggressive 50-50. This is the most levered and least diversified of these portfolios. It's basically half stocks and half bonds. It is one-third in UPRO, a levered stock fund, one-third in TMF, a levered bond fund, and the remaining third divided into preferred shares and an intermediate treasury bond fund. It's down 3.67% for the month of June. It's up 4.41% year to date, and up 2.63% since Inception July 2020. Moving to our next one, the levered golden ratio. This one is a year younger than the first six. It is 35% in NTSX, that is a composite levered fund, divided into the S P 500 and Treasury bonds. 15% in AVDV, that's an international small cap value fund. 20% in gold, GLDM, 10% in KMLM, that's a managed futures fund, 10% in TMF, that is a levered bond fund, and the remaining 10% in UDOW and UTSL. It was one of the few things that was up on Friday. Those are a levered Dow fund and a levered utilities fund. It is down 2.9% for the month of June so far. It's a 5.72% year to date and up 26.73% since inception in July 2021. Last one's the Opter Portfolio, the one portfolio to rule them all. This is a return stacked portfolio. It's only been around since 2024, but has been ruling them all since then. It is 16% in UPRO, that's a levered SP 500 fund. 24% in ABGB, that's a composite worldwide value tilted fund. 24% in GOVZ, that's a Treasury Strips Fund, and the remaining 36% divided into Golden Managed Futures. It is down 3.29% for the month of June so far, but it's still up 9.07% year to date, and up 40.73% since inception in July 2024. And that concludes our portfolio reviews. And what can we say? Although Friday was an ugly day, it is not really that surprising that you'd see a big pullback like that at some point after the big run-up that has gone on in the stock market for the past couple of months. So same old, same old, really.

Voices [49:43]

Well, it's all gone. The money in your account, it didn't do too well, it's gone.

Mostly Uncle Frank [49:47]

But now

How To Reach Us And Sign Off

Mostly Uncle Frank [49:48]

I see our signal is beginning to fade. If you have comments or questions for me, please send them to Frank at RiskPartyRear.com. That email is Frank at RiskPartyRear.com. Go ahead and 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. 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.