Opening Quotes And Cold Open

Voices [0:01]

A foolish consistency is the goblin of little mind. Adored by little statesmen and philosophers of the mind. 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

Welcome And Where To Start

Mostly Queen Mary [0:19]

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.riskparty radio.com. Inconceivable! All thanks to our friend Luke, our volunteer in Quebec. Sacosh. We'd be helpless without him.

Voices [1:35]

I have always depended on the kindness of strangers.

Mostly Uncle Frank [1:41]

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

Voices [1:46]

I'll take it.

Mostly Uncle Frank [1:48]

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

Voices [1:52]

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

Mostly Uncle Frank [1:55]

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

Voices [2:04]

Really top drawer.

Mostly Uncle Frank [2:07]

Along with a host named after a hot dog.

Voices [2:10]

Lighten up, Francis.

Mostly Uncle Frank [2:13]

But now onward, episode 524. Today on Risk Party Radio, it's time for our weekly portfolio reviews. So the eight sample portfolios you can find at www.riskparty radio.com on the portfolios page.

Voices [2:28]

I could have used a little more cowbell.

Mostly Uncle Frank [2:31]

And we also get to talk about monthly distributions for July. How exciting.

Voices [2:37]

I can't believe it. I couldn't be more excited.

A Listener Retires At 45

Mostly Uncle Frank [2:41]

But before we get to that, we will indulge in your favorite part of the program, which is of course your emails.

Voices [2:48]

It's an entirely different kind of flying. Altogether. It's an entirely different kind of flying.

Mostly Uncle Frank [2:54]

And so without further ado.

Voices [2:56]

Here I go once again with the email.

Mostly Uncle Frank [3:00]

And first off. First off, we have an email from Joe. And Joe writes.

Mostly Queen Mary [3:29]

Frank, I'm writing to share that today is my last day of full-time employment.

Voices [3:34]

Yeah, baby, yeah!

Mostly Queen Mary [3:36]

While this transition at age 45 came about suddenly, I wanted to thank you for the pivotal role you played in reaching this milestone. Since listening to one of your first episodes, and then meeting two years ago to devise my risk parity strategy, your tutelage has set me up for this transition to not be about restriction, but rather true optionality.

Voices [3:58]

The best, Jerry, the best.

Mostly Queen Mary [4:00]

I am deeply grateful for your mentorship. Particularly your focus on the psychological aspects of the transition and drawdown phases. Because of your guidance, I'm entering this next chapter not with fear, but with joy.

Voices [4:14]

This is a song about a play. No. This is a song about being happy. That's right. It's the happy, happy, joy, joy song.

Mostly Queen Mary [4:29]

Time for my health, my family, and giving back through the Choose Fi community and supporting others through coaching and financial literacy.

Voices [4:37]

That's what I'm talking about.

Mostly Queen Mary [4:39]

I bow to you, my sensei, Joe Q.

Voices [4:42]

Bow to your sensei. Bow to your sensei!

Mostly Queen Mary [4:46]

And thank you both, Uncle Frank and Queen Mary, for all that you do to support others directly and indirectly. That's a lot of starfish you've saved.

Voices [4:55]

I'll be all around in the dark. I'll be everywhere. Wherever you can look. Wherever there's a fight so hungry people can eat. I'll be there. I'll be in the way guys yell when they're mad. I'll be in the way kids laugh when they're hungry and they know supper's ready. I'll be there too.

Charity Update And Matching Funds

Mostly Uncle Frank [5:22]

Well, Joe, it sounds like some congratulations are in order.

Voices [5:26]

Winner winner, chicken dinner.

Mostly Uncle Frank [5:31]

But first off, let us 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 support a couple of charities, including the Father McKenna Center, which supports hungry and homeless people in Washington, D.C. Full disclosure, I am the chairman of the board of the Father McKenna Center. And we are in the midst of our Top of the T-shirt campaign, our second round of that, where we raise money for the Walk for McKenna that is held in September and get on the top of the t-shirt if you raise the most money, which we did last year, and we're on our way to doing that again this year. We have two listeners, Matthew 63 and 4J. Yes, those are anonymous designations, who have put up $25,000 in matching funds, and we are matching away on that. You can learn more about this in episode 518. If you give to the Father McKenna Center, you get to go to the front of the email line, in addition to getting my never-ending gratitude.

Voices [6:34]

That and a nickel get your hot cup a jack squat.

Mostly Uncle Frank [6:40]

And Joe has done so, as well as actually all the emailers today. And so has gone to the front of the email line. But now getting to your email. I have to say that one of the more gratifying things about making this podcast that I never expected when I started making it, is seeing people being able to implement the principles we talked about around here, and being able to go off and retire and form their risk parity style portfolios, be very comfortable and happy with them, and be able to go off and harvest their portfolios so that they can live their best lives. Oh, about 15 years ago, I thought that everybody was like me and that they actually did want to spend their money in retirement and not work for it anymore. And so I was kind of surprised when I first came up with something like this, and a lot of other people didn't seem to have much interest in it, to the point of not even wanting to actually talk about it or analyze it, like a child who covers their eyes and then thinks people can't see them. But what I learned over the years is that a lot of people that are good at saving money and populate the personal finance media landscape are not interested in actually harvesting their money. They're interested in just continuing to accumulate until they're dead in a hoarding kind of strategy.

Voices [8:13]

Dead is dead.

Mostly Uncle Frank [8:15]

And another subset is just interested in continuing to work in different kinds of jobs, and so their idea is just never retire and always work for money. And his podcast is called Personal Finance for Long-Term Investors. And so the main topic there was why choose this kind of portfolio as opposed to some other kind of portfolio. And it does boil down on what I told him is like, look, it depends on whether you're planning on being a hustler, a hoarder, or a harvester, because there are different setups that apply to each one of those kinds of people. Now I do think it's fairly clear that for most people, harvesting is the best choice to maximize human well-being, because the other two have drawbacks that tend to interfere with things like relationships and trading your time away. So I thought that came out pretty well, and I will link to it in the show notes. I enjoyed it so much that I also made a slideshow with Google Notebook LM and another summary video of the podcast episode, which I will put up on YouTube and you can check that out as well. Shirley, you can't be serious.

Voices [9:48]

I am serious. And don't call me Shirley.

Mostly Uncle Frank [9:50]

I did it in the style of Renoir, so I thought it came out really well.

Voices [9:55]

Well, the frickin' guy!

Spending For Well Being After FI

Mostly Uncle Frank [9:59]

But you really do touch on these factors of well-being, the things you can spend money on to improve your well-being in your email, where you say you're entering this next chapter not with fear, but with joy, and having time for your health, your family, and giving back through the Choose F5 community and supporting others through coaching and financial literacy. And those really hit the big four as described by Daniel Crosby in his book, Soul of Wealth. And the big four things you can spend money on to improve your well-being are relationships, experiences, particularly those involving relationships or flow states, buying your time back, and giving money away. Because you don't need to really figure this stuff out anymore. There's plenty of material written about what maximizes human well-being, whether it's in Daniel Crosby's Soul of Wealth book or in The Five Regrets of the Dying by Bronny Ware, or in The Art of Spending Money by Morgan Housell, or several of the Arthur Brooks books. And it is catching on. I went to a Choose Fi Baltimore meeting last weekend, and the topic of that meeting was the Four Idols, which is what Arthur Brooks talks about. And those are money, power, fame, and pleasure seeking.

Voices [11:49]

Ooh, this one's open.

Mostly Uncle Frank [11:53]

But money tends to be the sticking point for people who have spent the most of their life saving and accumulating and want to shift away from that, as we talked about in episode 436. So for me, these kind of relationships that I've formed through this podcast has been really gratifying and probably the best part of this podcast, other than working with Mary, of course.

Voices [12:15]

Nothing gave Buttercup as much pleasure as ordering Wesley around. Fun boys, polish my horse's saddle. Want to see my face shining in it by morning.

Mostly Uncle Frank [12:27]

As you wish. And you should know that one of your compatriots, another one who has listened to all 500 odd episodes of this podcast, and his name is Jack, and he just retired as well this past weekend. Now he's in his fifties, you're in your forties, and our next emailer is in her thirties. But it's good to see that anybody and everybody can do this if they put their minds to it and make the effort to do a little learning.

Voices [12:58]

That is the straight stuff, O Funkmaster.

Mostly Uncle Frank [13:01]

So congratulations, I hope to see you in the flesh someday. Please stop by.

Voices [13:13]

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

Mostly Uncle Frank [13:18]

We had a little party with cupcakes after dinner.

Voices [13:21]

Sweet cup and cakes.

Mostly Uncle Frank [13:23]

So congratulations again. Check out these links I'm putting up to these other podcasts and related materials. And thank you for your email.

Another Early Retiree Story

Mostly Uncle Frank [14:36]

And a very generous donor indeed. Ashley's one of our younger and more intrepid listeners.

Voices [14:43]

Are you not entertained? Are you not entertained? Is this not why you are here?

Mostly Uncle Frank [14:53]

She retired a couple of years ago in her late 30s, with a risk parody style portfolio, of course.

Voices [15:00]

Yes!

Mostly Uncle Frank [15:01]

And the last we heard of her, she was helping one of her friends open a bar called Wilka's in the Bowery neighborhood in New York City. It is the first women-owned sports bar. No, I don't think Ashley has an interest in the bar. I think she was just helping her friend, which is what you get to do when you don't have to work anymore for money.

Voices [15:22]

Inconceivable.

Mostly Uncle Frank [15:24]

But like our friend Rebecca Herbst, who we talked about in episode 514, and answered her email. Ashley is a very generous soul.

Voices [15:34]

Well, we won't beat about the bush, my friend. I'm not going to stand this sort of thing any longer. Which leaves me no alternative but to raise your salary.

Mostly Uncle Frank [15:57]

And just one of those people I'm really happy to know. You're another one that I need to meet in the flesh someday, and hopefully Mary and I will get up to New York City at some point. Seems like we don't go too many places these days. We're going to Montana soon. But if you come this way to the DC area, make sure you look us up. And we may have some cupcakes for you, too.

Voices [16:20]

Sweet cuppin' cakes!

Mostly Uncle Frank [16:22]

With or without the toddlers to go with them. So thank you for your kindness, Ashley. And your generosity. And for your email.

Voices [16:32]

Oh Ashley. Ashley. I love you.

Mostly Uncle Frank [16:37]

Scarlet.

Voices [16:38]

I love you, I do.

Mostly Uncle Frank [16:42]

Last off.

Near Retirement And Bubble Fears

Mostly Uncle Frank [16:44]

Last off, we have an email from Chris.

Voices [16:48]

Cornbread! Ain't nothing wrong with that.

Mostly Uncle Frank [16:53]

And Chris writes.

Mostly Queen Mary [16:54]

Hi Frank. I donated to the Father McKenna Center last year during the Top of the T-shirt campaign, and now it's time to cash in with a question.

Voices [17:02]

Time is money, boy!

Mostly Queen Mary [17:04]

I've been listening to your podcast for about a year and a half. I am 48 years old and can retire with a pension in a year or work until 56.

Voices [17:14]

OB.

Mostly Queen Mary [17:18]

It's a strange time for me in that I feel like I should still be in the accumulation phase, but if I decide to retire next year, I need to start making some moves now. A little history for context. My uncle retired right before the dot-com bubble and lost vast amounts of his retirement due to being mostly in US tech stocks. This essentially vaporized his retirement plans and he had to work for another 20 years. I am invested in the TSP C, S and I funds and VIOV slash V U G in Raw slash HSA accounts. I also have a gambling problem and I'm speculating in IBIT, Bitcoin, and ETH.

Voices [18:00]

You can't handle the gambling problem.

Mostly Queen Mary [18:03]

I was watching the diary of a young CEO YouTube channel, and they were interviewing Jeremy Grantham, who you and others writing in have mentioned on the show before. He is alerting us of the pending AI bubble. And it's gone. The host asked him what we should invest in, and Jeremy is saying stay out of U.S. equities and invest in foreign markets. What are your thoughts on this advice? He doesn't appear to be selling anything to me other than fear of the U.S. markets. So, if fear is the commodity, what does he have to gain? Are there international alternatives you would recommend to replace VIOV and VUG?

Voices [18:43]

We can put that check in a money market mutual fund, then we'll reinvest the earnings into foreign currency accounts with compounding interest and it's gone.

Mostly Queen Mary [18:52]

Would you have different strategies between using a golden butterfly for retirement diversification versus an accumulation portfolio? Thanks, Chris.

Mostly Uncle Frank [19:02]

Well, first off, Chris, thank you also for being a donor to the Top of the T-shirt campaign. I realize it was la the last campaign, but maybe you'll be inspired by people like Ashley who are lapping you to give again to this year's campaign.

Voices [19:19]

Rex Quando, we use the buddy system. No more flying solo.

Mostly Uncle Frank [19:23]

Regardless, you get to go to the front of the email line.

Voices [19:26]

You need somebody watching your back at all times.

Mostly Uncle Frank [19:31]

This is actually a very interesting and entertaining email. I didn't read everything that Chris sent, but the rest of what he sent, he took his email and had Claude rewrite it and then had Claude answer it as if Claude was me. So we'll call this creation Claude Frank, I guess. So I did not make Mary read all of that material, but I am going to refer to it as we go through these questions to see what Claude Frank had to say and to see then whether I agree with it or not.

Voices [20:05]

The 9000 series is the most reliable computer ever made. No 9000 computer has ever made a mistake or distorted information. We are all, by any practical definition of the words, foolproof and incapable of error.

Mostly Uncle Frank [20:22]

So Claude Chris distilled Chris's email into three questions and we'll answer them kind of in that order.

Sequence Risk And When To Shift

Mostly Uncle Frank [20:29]

The first one is Claude Chris is wondering as he approaches potential retirement in one year, should he be transferring the Roth and HSA to a full golden butterfly or golden ratio structure now, while still in the accumulation phase. Or wait till he actually pulls the trigger on his pension.

Voices [20:47]

Shoot him now! Shoot him now! You keep out of this. He doesn't have to shoot you now. He does so have to shoot me now! I demand that you shoot me now!

Mostly Uncle Frank [21:03]

And the first thing Claude Frank said was, Thank you for your generous support of the Father McKenna Center, and for the thoughtful, well-framed questions. You've clearly been doing your homework, and this is exactly the kind of email I love getting. Well, I do agree with Claude Frank and those sentiments. But now moving on to the answer to the first question. Claude Frank says, The sequence of returns risk window does not wait for your last day of work. As we've discussed on the show many times, the five years before and the five years after retirement are the period when a bad drawdown can cause permanent damage to a withdrawal plan.

Voices [21:38]

That's not an improvement.

Mostly Uncle Frank [21:40]

Your Roth and HSA holding only VUG and VIOV is essentially a concentrated bet on U.S. equities with zero ballast. The good news. Those are also the accounts where you can rebalance without triggering a taxable event. This is your ideal place to start building on a golden butterfly or golden ratio structure. Adding long term treasuries. Gold and eventually managed futures or similar to create actual diversification. You don't have to do it all at once, but the time to start is before the next drawdown, not after it.

Voices [22:11]

Did you get that memo?

Mostly Uncle Frank [22:13]

I'd have to say that Claude Frank was spot on with that answer. Must be some good material he was uh looking at there. What I would have to add to that is it wasn't clear to me whether you had actually reached your FI number or were close to it, because that is the other consideration. But if you're already there or close to it, I would definitely transfer at least the part of your portfolio that you plan to live on and use in retirement to a more conservative portfolio, a risk parity style portfolio or an approximation thereof. And then if you still want to take your beatings speculating on Bitcoin and Ether.

Voices [23:01]

The beatings will continue until morale improves.

Mostly Uncle Frank [23:05]

At least that's what it looks like today in crypto winter time. Then you can be free to do that. But yeah, I really do think you want to avoid the fate of your uncle, because that is one of the stress tests that anybody retiring should put their portfolio through. Is what if I retire at the end of 1999? The other one is what if I retired near the end of the 1960s? But those are very important stress tests to take any portfolio through to see how it would have fared. Because as we know, traditional two or three fund portfolios that essentially just have a S P 500 or total market fund and some kind of bond fund really took it on the skids through both of those periods. And that's really not something you want to be holding going into something like that. Now we don't know if we're going to have something like that or not, but the point of this is not to take chances with that, like your uncle did, because you might not like the results. Now moving to the second question, which has been reformulated by Claude Chris to ask whether you should be adding international exposure or going completely to international exposure, as Jeremy Grantham seems to be suggesting.

Grantham And International Investing

Mostly Uncle Frank [24:18]

And Claude Chris also asks whether AV, D V is a good choice, or is there a simpler, non-leveraged international small cap value option worth considering for a straightforward retirement portfolio. And on Grantham, Claude Frank first says that Grantham is not a crackpot. He has more credibility in his 87-year-old pinky finger than most market commentators have in their entire careers. He called Japan 1989, dot com 2000, and housing 2008. His valuation framework is legitimate, and his concern about U.S. equity concentration at these price to earnings levels is not unreasonable. Which I generally agree with and will supplement after we look at the rest of this answer to number two. And Claude Frank says, Grantham is pointing to world XUS and emerging market indexes, and he's not wrong that non-US valuations look more attractive on a relative basis right now. However, I would not make a wholesale shift to 60% international based on any single interview, even a credible one. What I would note is that our standard golden butterfly uses VTI, total U.S. market, and VIOV small cap value, which already provides a domestic factor diversification. If you want to add international exposure, AVDV, Avantis International Small Cap Value, is the fund that I'd look at for a non-leveraged international small cap value tilt. And it goes on to add some more comments. And so, yes, I agree with Claude Frank here too. I think the important diversification that you need to get straight here is the growth versus value as the most important diversification, not domestic versus international. Because domestic versus international is largely a function of currencies and currency fluctuations. So last year the dollar was weak, so international small cap value and other international stocks did great. This year the dollar is strong, so international is not doing as well. But to the extent you're holding international stocks, a good mix would be something like IDMO, which is an international momentum fund, as the growth portion of that, and AVDV as the small cap value portion of that. And we've talked about that many times before, so I invite you to go search those tickers at the podcast page at www.riskperdire.com if you want to hear more podcasts about IDMO and AVDV together. And two other observations. What Grantham is mainly pointing out is he wants to go invest in things with low valuations, i.e. value tilted. He just sees that the international stocks are more like that these days than domestic stocks, at least if you're looking at the indexes. But if you go beyond looking at the indexes, obviously you can choose domestic stocks with lower valuations, as well as choosing international stocks with lower valuations. And that is in fact a cardinal principle of having a well-diversified portfolio on the stock side of things, because that is actually what would save you if we were in a dot-com era and we had that same kind of crash. What survived and did well in 2001 to 2003 was value-tilted stocks. And if you had just value-tilted stocks, whether they were domestic or international, you did fine through that. That's why when you stress test or back test something like a golden ratio or a golden butterfly through that period, it looks infinitely better than something that does not have a value tilt to it. That's also what saved your bacon in the 1970s. So I would not take Grantham's advice as talking mostly about international. I would take it mostly as talking about not overweighting two things that are overvalued and finding some things that are value tilted and adding them to your portfolio.

Why Opinion Shopping Fails Investors

Mostly Uncle Frank [28:14]

The next observation I have is that this approach you're taking to Grantham is a representation of a bad process. This is something that level two investors commonly do. Instead of actually analyzing portfolios and looking at them, they go shopping for opinions. And so they see an opinion from a famous person like Jeremy Grantham or, I don't know, Michael Burry or any number of people that have called things at some point and think they can make moves based on this opinion that appears on CNBC or wherever it appears. Because the financial media is constantly looking for these kinds of opinions, especially bearish ones. They get so many more clicks and eyeballs. But opinion shopping is really no way to go about investing. Because the truth is you can find an opinion that supports whatever you want to hear. Go compare Grantham's opinions to, say, somebody like Tom Lee, who's on the other side of that. People will pick the opinion that actually matches their feelings instead of really analyzing what they're actually investing in and not relying on the fact that this is a famous investor person. And if you want to get beyond level two, you should never look at a statement by a famous person as definitive of anything. It may tell you something to go look at or consider, but that does not substitute for an actual analysis. So and so said such and such is not an analysis.

Voices [29:44]

Forget about it.

Mostly Uncle Frank [29:46]

And it's not something you should ever act on, whether in this context or another context.

Voices [29:51]

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

Mostly Uncle Frank [29:55]

But now let me give you what Claude Frank had no way of knowing, because Claude Frank does not listen to podcasts every week. So this past week we had Jeremy Grantham on the Longview podcast, interviewed by Christine Benz, and he clarified some things about how his approach is. She noted that he always seems to be kind of a permabear as terms of valuations, that he's basically been saying since 2013, which he has, that the U.S. market is overvalued. And that's really not a basis for making any kind of decision because you would have been out of the market or underexposed to the U.S. market if you would have been listening to him just say, oh, the U.S. market looks overvalued. It's another good reason not to just take people's opinions. He actually tried to clarify that. I don't know whether he succeeded or not. He basically said, Yeah, I've been saying that, but that's not a call. He distinguished sort of an observation between actually saying that I observed this and actually saying, okay, now you need to make a move with your investments. And he said the only two calls he's actually really made in the past 15, 20 years are 2008 and January of 2022. And it wasn't all based on valuation metrics, it was based on a number of factors. So even he is saying that his observation that the US market appears to be overvalued is not a basis for making a decision as to move from one thing to another. What he's really advocating for is diversification there, ultimately, which is making sure that you have exposure to these international value-tilted stocks or other value-tilted stocks. But here's a more important thing that he said on this Longview podcast.

Bonds Gold And Real Diversification

Mostly Uncle Frank [31:39]

So Christine Benz also asked him, and this is in the realm of 40-some minute mark, what other things would you buy to diversify a portfolio and insulate it against a big AI crash or tech crash? And you know what he said? He said, first, long-term bonds, 30-year bonds, kind of like the long-term bonds we hold in a risk parity style portfolio. Second thing he said you should hold is gold.

Voices [32:06]

I love gold.

Mostly Uncle Frank [32:10]

Jeremy Grantham says you should hold gold to diversify your portfolio. Were you aware that Jeremy Grantham's real opinion on diversification is that you should be holding gold in your diversified portfolio? I bet you weren't, because the financial media doesn't want to talk about that, do they? No, they want to talk about this crash scenario. They don't want to talk about how to diversify a portfolio. And then the other thing he mentioned was a commodities exposure. He was specifically to pointing to stocks that trade in commodities. But of course, we would cover that with a managed futures fund. So if you go listen to the Longview podcast and follow Jeremy Grantham's recommendations, you'll end up with a portfolio that's got, you know, some exposure to large cap stocks, index fund type things on the growth side of things. You'll end up with a significant exposure to value tilts, and then you'll end up with diversifiers like long-term treasury bonds, gold, and an exposure to commodities. What does that sound like? Sounds like Jeremy Grantham's recommending a risk parity style portfolio.

Voices [33:18]

Yeah. Didn't you get that memo?

Mostly Uncle Frank [33:21]

Now Claude Frank was unaware of that, but Real Frank is aware of that, and Real Frank applies Bruce Lee here. Take what is useful, discard what is useless, add something uniquely your own. What is useful is the totality of Grantham's recommendations for diversification purposes, which leads you to something that looks like a risk parity style portfolio. What is useless is this kind of fear-mongering and trying to make calls.

Voices [33:51]

My name's Sonia. I'm going to be showing you the crystal ball and how to use it or how I use it.

Mostly Uncle Frank [33:58]

Because as Grantham himself acknowledges, just observing that US markets appear to be overvalued is not a basis for making big changes in a portfolio. There's got to be more than that. Because that Cape Ratio stuff really does not work, and it has not worked since the great financial crisis. I'll link to another little article from Josh Brown about the reasons that doesn't work.

Voices [34:22]

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

Mostly Uncle Frank [34:26]

And what can we add that's our own? Well, we can add the specific proportions that we want to have to maximize a safe withdrawal rate, and we can throw in some managed futures there to cover the commodities exposure. And so that's the way real Frank would supplement Claude Frank's answer here.

Voices [34:44]

Any of you guys call me Francis, and I'll kill you. Just made it this, buddy.

Mostly Uncle Frank [34:52]

Alright, third question.

TSP I Fund Gaps And Fixes

Mostly Uncle Frank [34:54]

On the TSP side, the iFund tracks the MSCI EFA, which is Develop Markets XUS. Is that already doing the international diversification work or is it missing something important like small cap value or emerging markets? Claude Frank says that yes, that does have those two notable gaps. It excludes emerging markets, and it is market cap weighted with no small cap value tilt. It's a reasonable starting point, and within TSP's limited fund menu, it's your only international option. But I would not count it as a substitute for a dedicated international small cap value exposure if you have the ability to hold AVDV or a similar fund in your Roth or HSA. And RealFrank agrees with that for the same reasons that RealFrank would hold two funds on the international side, like IDMO and AVDV, and not hold something like VXUS. Because again, it's the growth versus value that's the most important thing for diversification in a drawdown portfolio, not domestic versus international.

Voices [35:58]

And uh I'll go ahead and make sure you get another copy of that memo.

Mostly Uncle Frank [36:02]

Okay. That's a secondary or tertiary characteristic, and the reason it's less important is it's is so dependent on the random fluctuations of the US dollar versus these foreign currencies. The truth is that that fund in your TSP is going to be highly correlated with other large cap U.S. market type stuff because the companies that we're talking about are all these global exposed companies. It's just the U.S. is heavy on tech and the international total market fund is light on tech. And finally, Claude Frank provides this big picture takeaway, which is Grantham's warning is not the reason to diversify. The reason to diversify is that you are one year from retirement with a portfolio that is 100% U.S. equity and no ballast. Whether the crash comes from AI euphoria, a geopolitical shock, a recession, or a quiet decade of low returns, a portfolio without long-term treasuries, gold, and alternatives is not built to be drawn down on in perpetuity. Your uncle's story is the case study. Build the diversified structure now, while you have the runway. And then the question of whether Grantham is right or wrong becomes largely irrelevant. And please put the crypto in the quote entertainment budget, unquote, column, and keep it small. You already know this.

Voices [37:22]

Well, you have a gambling problem.

Mostly Uncle Frank [37:25]

Good luck, and thank you again for your support of the Father McKenna Center. And so real Frank agrees with all of that and simply supplements to say that Jeremy Grantham's real views as expressed on the Longview podcast are that you should have this diversified risk parity style portfolio anyway.

Voices [37:43]

And that's the way uh-huh uh-huh. I like it, Casey on the Shunshine Band.

Mostly Uncle Frank [37:49]

So, hopefully that helps. Thank you for this very interesting exercise. But I am wondering whether Frank Claude dreams of electric sheep. And thank you for your email.

Voices [38:13]

A blade runner's job is to hunt down replicants. Manufactured humans, you can't tell from the real thing. What's this? Really bad. Probably the leader. There was just one outfit making replicants. That's super human. The Terrell Corporation. Commerce is a local here in Tyrell. More humans than a human is a model. What I didn't know was they were looking for me. I did die.

Market Snapshot And Portfolio Results

Mostly Uncle Frank [39:04]

And the something completely different we get to do now is our weekly and monthly portfolio reviews of the eight sample portfolios you can find at www.riskpartyrew.com on the portfolios page. Just looking at these markets again for the year. The SP 500, represented by VOO, is up 9.87% for the year so far. The Nasdaq 100, represented by the fund QQQ, is up 16.27% for the year so far. Small cap value continues to shine. Representative fund VIOV is up 19.81% for the year so far.

Voices [39:44]

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

Mostly Uncle Frank [39:48]

Gold continues to be quite dull. Representative fund GLDM is now down 4.49% for the year so far. Long-term treasuries represented by the fund VGLT are up 0.27% for the year. REITs, represented by the fund REET, are up 13.5%. Commodities represented by the fund PDBC are still up considerably, although not as much as small cap value now. They are up 19.77% for the year so far. Preferred shares represented by the fund PFFV are up 2.72%, and managed futures are managing to be up now 9.06% for the year so far. Moving to these portfolios, first ones the all seasons. This is a reference portfolio. It's only 30% in stocks in a total stock market fund, 55% in intermediate and long-term treasury bonds, and the remaining 15% in golden commodities. It was down 1.62% for June. It's up 4.40% year to date and up 28.70% since inception in July 2020. For the month of July, we will be withdrawing $35 out of it. It's going to come out of accumulated cash. That'll be $242 year to date and $2,316 since inception in July 2020. Moving to these bread and butter kind of portfolios, first one's gold and 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, GLDM. It was down 1.35% for the month of June. It's up 5.4% year to date, and up 68.17% since inception in July 2020. We are taking out $52 out of it. It'll come out of the small cap value fund VIOV, which has been performing well recently. That's for July, that's at a 5% annualized rate. So that'll be $367 year to date and $3,230 since inception in July 2020. Next one's golden ratio. This one's 42% in stocks, divided into a large cap growth fund and a small cap value fund, 26% in treasury bonds, 16% in gold, 10% in managed futures, and 6% in cash and a money market fund. It was down 1.73% for the month of June. It's up 5.52% year to date, and up 62.93% since inception in July 2020. For the month of July, we are withdrawing $51. It always comes out of cash out of this portfolio, the way we've set it up. That's at a 5% annualized rate. It'll be $355 year to date and $3,158 since inception in July 2020. Next one's a risk parity ultimate. Not going to go through all 12 of these funds, although we will be rebalancing it later this month. It was down 1.54% for the month of June. It's up 5.63% year to date and up $47.61% since inception in July 2020. For the month of July, we are withdrawing $54. It's coming out of accumulated cash. It's at a 6% annualized rate. So it'll be $378 year to date and $3,614 since inception in July 2020.

Leveraged Portfolios And Withdrawal Plans

Mostly Uncle Frank [43:02]

Now moving to these experimental portfolios that all involve leverage funds.

Voices [43:07]

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

Mostly Uncle Frank [43:15]

And are quite volatile, so don't try this at home, even though I know some of you do.

Voices [43:20]

You have a gambling problem.

Mostly Uncle Frank [43:22]

First one's the accelerated permanent portfolio. It's 27.5% in TMF, that's a levered bond fund. 25% in UPRO, a levered stock fund, 25% in PFFV, a preferred shares fund, and 22.5% in gold, GLEM. It's down 3.3% for the month of June. It's up 4.89% year to date, and up 29.46% since inception in July 2020. For the month of July, we are withdrawing $44 out of accumulated cash. It's at a 6% annualized rate. That'll be $308 year to date and $3,415 since inception. July 2020. Next one's the Aggressive 5050. This is the least diversified and most levered of these funds and worst performer by far. It's one-third in a levered stock fund UPRO, one-third in a levered bond fund TMF, and the remaining third in ballast in a preferred shares fund and an intermediate treasury bond fund. It's down 1.21% for the month of June. It's up 6.19% year to date and up 4.38% since inception July 2020. For the month of July, we're removing $36 from accumulated cash instead of 6% annualized rate. That'll be $241 year to date and $3,304 since inception in July 2020. Moving to the next one, it's the levered golden ratio. This one is 35% in NTSX, that is a composite fund of the SP 500 and Treasury bonds, levered up 1.5 to 1. It's got 15% in AVDV, that is an international small cap value fund. 20% in gold, GLDM, 10% in KMLM, that's a managed futures fund, 10% in TMF, it's a levered bond fund. And the remaining 10% divided into UDOW and UTSL, which are levered funds following the Dow and a Utilities Index. It was down 3.06% for the month of June. It's up 6.33% year-to-date and up 27.46% since inception in July 2021. For the month of July, we are withdrawing $57 out of it out of accumulated cash. That is at a 7% annualized rate. So it'll be $371 year to date and $2,331 since inception in July 2021. And the last one is the Opter Portfolio, one portfolio to rule them all. And it is ruling them all still. This is a return-stacked kind of portfolio. It has 16% in UPRO, which is a levered SP 500 fund. 24% in AVGV, which is a worldwide value tilted fund. 24% in GOVZ, that's a Treasury strips fund, and the remaining 36% divided into gold and managed futures. It was down 3.14% for the month of June. It's up 9.23% year-to-date and up 40.93% since inception in July 2024. For the month of July, we are withdrawing $63 out of accumulated cash. That's at a 6% annualized rate. It'll be $436 year-to-date and $1,331 since inception in July 2024. And that concludes our weekly and monthly portfolio reviews. We won't be doing that until near the end of the month. And we'll have a whole episode devoted to that, as usual.

Voices [46:52]

Well I say he does have to shoot me now! Oh shoot me now!

How To Reach Us And Support

Mostly Uncle Frank [46:59]

But now I see our signal is beginning to fade. If you have comments or questions for me, please send them to Frank at RiskPartyRarear.com. Email is Frank at RiskPartyRarear.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, 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 the bottom of the book.

Advisor Disclaimer

Mostly Queen Mary [48:47]

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.