Opening Quotes And Podcast Basics

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. 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. 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 [2:05]

Really top drawer.

Mostly Uncle Frank [2:07]

Along with a host named after a hot dog.

Voices [2:10]

Lighten up frenches.

Mostly Uncle Frank [2:14]

But now onward, episode 526. 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. Yeah, not much happened there. But before we get to that.

Voices [2:35]

I'm intrigued by this. How you say email.

Mostly Uncle Frank [2:40]

And first off.

Charity Matching And T-Shirt Rankings

Mostly Uncle Frank [2:44]

First off, we have an email from I Have No Name. I have no name. Well, that right there may be the reason you had difficulty finding gameful employment. And I have no name right.

Mostly Queen Mary [2:59]

It's me again.

Voices [3:02]

It's me again.

Mostly Queen Mary [3:08]

I have made a $10,000 donation to the Father McKenna Center for the top of the t-shirt campaign, which sounds really nice, right? Oh. But would it be so simple? I made it in honor of the Dubliner, not Risk Parody Radio, which last year was right below Risk Parody Radio on the t-shirt. Just to provide you guys something of a challenge.

Voices [3:29]

Yeah, but I like it too. Come again? You know what I'm talking about? Oh hi. Except what you're talking about is Irish. And I'm in fact Scottish. Give it to it, Mr. Buck!

Mostly Uncle Frank [4:02]

Well, I'm highly grateful and also highly amused. Sure, you can't be serious. I am serious. And don't call me surely. This is one of the best presents I've received recently on both counts.

Voices [4:16]

I get this. It's from London. Oh. Mr. Gummer Cable, you need cash. Stop. My office instructed to advance you up to $25,000. Stop. Hey home, and Merry Christmas, Sam Wainwright.

Mostly Uncle Frank [4:33]

As most of you know, we don't have any sponsors on this program. We do have a couple of charities we support, including the Father McKenna Center, which supports hungry and homeless people in Washington, D.C. And full disclosure on that. I am on the board and am currently the chairman of the board.

Voices [4:51]

It's all the same to you. I'll drive that tanker.

Mostly Uncle Frank [4:57]

Now, as we described in episode 518 in detail, we are in the midst of a campaign to raise money for the Father McKenna Center in coordination with the Walk for McKenna that we do in September. And as part of that, everybody that walks gets a t-shirt, and we raise money from sponsors to get their names and logos on the back of that t-shirt. And the higher donations you make, the higher and larger your logo or name will appear on the t-shirt. Hence, we would like to be at the top of the t-shirt as we were last year due to your generous donations.

Voices [5:36]

Yes!

Mostly Uncle Frank [5:37]

Now we have two anonymous donors, Matthew 63 and 4J, who have put up a total of $25,000 in matching funds. And as you can see, we are making a big dent in matching them with some very sizable donations, as we've seen here.

Voices [5:54]

Top drawer. Really top drawer.

Mostly Uncle Frank [5:58]

And this is exactly the kind of charming trickstering that I really appreciate. And I resemble that remark. Because I tend to do things like this too.

Voices [6:09]

That is the straight stuff, oh funk master.

Mostly Uncle Frank [6:12]

So one of the other supporters of the Father McKenna Center is the Dubliner, which is a local Irish pub that's been in the neighborhood since the 1970s. So it was there all the way back when Father McKenna was alive and running the space as a St. Vincent de Paul service center. So the Dubliner is a neighborhood institution that is in the corner of North Capitol and F Street, very close to Union Station. And if you are in DC, in the Capitol here area, I suggest you go to the Dubliner sometime.

Voices [6:44]

So recipe and three when you drink come when we are on the Del meet every day.

Mostly Uncle Frank [6:56]

The Dubliner is owned by the Coleman family and has been owned by the Coleman family since its founding. And as luck would have it, we have a Coleman on our board at the Father McKenna Center right now.

Voices [7:07]

Gavin Coleman. Coleman, I've had the most absurd nightmare. I was poor and no one liked me. And so I promptly sent this message, forwarded it to Gavin, and said, Looks like you owe me, buddy. Lighten up, Francis.

Mostly Uncle Frank [7:26]

I don't know if I can get free Guinness for life out of this, but I can try. And in the end, while I do want to get Risk Parity Radio back at the top of the t-shirt, what's more important is raising money for the center any which way we can. So I'm very grateful for what you've done here. Now I'm wondering how our one employee who's responsible for our development, whose name is Ben and he's a guy in his twenties, will decide to referee this donation. And who it should really be credited to. But that's a conversation to be had in the next couple of months here. So I'm very grateful for what you've done, especially in this very humorous way. And I should say all donors to the top of the t-shirt campaign or to our other charity, which is Fairfax Casa, that's Mary's charity, get to go to the front of email line, which is why this email has been moved to the front of the line. I also have to tell you, I did have a glitch in the messaging service provided through our website. And so you guys have been sending me a bunch of emails these past couple of weeks through the website, and I didn't realize they were there. So we have all these donor emails backed up that I need to get to.

Voices [8:50]

Are you stupid or something?

Mostly Uncle Frank [8:52]

It's supposed to notify me when emails come in, but for whatever reason it did not until I actually went and looked in there and found all of these wonderful messages and donations waiting for me. And there are several more in the queue. Which we will get to in due course, but just not today. So thank you very much again for participating in our campaign. And for amusing me and our audience so well. He haw And thank you for your email.

Voices [9:43]

Second off.

Small Cap Value In A 401(k)

Mostly Uncle Frank [9:45]

Second off, we have an email from Shelly. And Shelley writes.

Mostly Queen Mary [10:02]

Hi Frank. I just donated to the Father McKenna Center. I am a short-term listener, first-time writer. I just discovered your podcast in December 2025, but I've been devouring every episode. I drink your milkshake. I do have a question for you. One, I just looked at my 401k and saw that there's a brand new option for a small cap value fund. However, it's 44% in micro stocks, the rest mostly in small cap stocks. The fund is the Pimco RAE US Small CIT Phi Class SCIT H783. I have a small chunk of cash in my 401k that I'm thinking of investing the cash in this fund, but I'm not sure how micro value compares to small cap value. It says it's 98% US stocks for reference. Two, here's a current breakdown of money, and I'm currently in six more months syndrome. I only just learned about risk parity last November, so I'm transitioning slowly to risk parity from a stock bond cash portfolio. Current stock 48.12%, only about 1% in small cap value so far as I just started investing in AVUV. Bonds 25.16%. Cash 24.11%. I know that's high, but I will keep it over 15% even after getting into a risk parity profile. I know, I know, I'm a wimp.

Voices [11:41]

There's $250,000 lining the walls of the banana stand.

Mostly Queen Mary [11:47]

CTA slash gold 2.61%. I'm investing new money each month into this. I have 55% of my net worth in my 401k and 45% outside of my 401k for reference. What would you do? Oh, as an addendum, I should have mentioned I'm 50 and I'm going to be financially independent early retiring in the next six months.

Voices [12:13]

Excellent!

Using AI To Identify Comparable Funds

Mostly Uncle Frank [12:15]

So you asked what I would do. Well, the first thing I'm gonna do is try to figure out what this PIMCO small cap value fund is. And the easiest way to do that is to take the name of the fund, which is a sort of customized version for the 401k, so it doesn't have a ticker symbol by itself. But if you put the name of the fund into an AI bot, in this case I use Gemini, you can ask it, what is the corresponding mutual fund or ETF for this fund? And it told me. And the corresponding mutual fund for this is called PMJAX. That's the ticker symbol. So then I took that and I put it into Morningstar to take a look at it to see that it was in fact a small cap value fund. And I figured that out by going over and looking at the portfolio selection and the little tic-tac-toe grid thing they have there that tells you what kind of fund these things are. And then I went to test folio and compared PMJAX to a couple other funds, VIOV, a small cap value index fund, and DFSVX, which is the long-running small cap value mutual fund from Dimensional. And you can see that it performs very similarly to both of those. I'm not sure what the expense ratio is in your 401k. It's a little bit high when you look at the Morningstar analysis for it, but I do think it's very serviceable, and I don't see any reason why you can't use that in this circumstance. It's perfectly serviceable, and then at some point you'll be able to roll that 401k into a traditional IRA when you leave employment and then you can buy whatever you want. But for right now, if you need to park some small cap value allocation in the 401k there, that's a perfectly good fund to be using. And so that's how I approach problems like this. I have found that AI chatbots are very good for identifying things like this or identifying things that are similar. So another question that frequently comes up, particularly from people in other countries besides the United States, are what are corresponding funds for our jurisdiction to what we see in some of these sample portfolios? That is a question that is very easily answered by Gemini or ChatGPT or any of the other ones. And they really do a pretty good job at finding those things. And then, of course, you can take them into Morningstar or other things and actually look at them to make sure that they are what the AI bot says they are.

Voices [14:44]

No more flying solo. You need somebody watching your back at all times.

Mostly Uncle Frank [14:50]

But that's a very good process for do-it-yourself investors. And also if you have friends or relatives that have some kind of 401k plan and there's a whole bunch of stuff in there and they can't figure out what's what, a lot of times what you can do is just take that information, throw that into one of these chatbots, and ask it for things like what is the closest thing to a total market index fund or an SP 500 fund or a small cap value fund. And it usually does a pretty good analysis of that as well. Because that question frequently comes up. People start a new job, they get this big printout of a bunch of target date funds and all sorts of other things, and they're like, what do I do with this? Fortunately, chatbots are very good for helping you sift through that without having to sift through all of it yourself. So hopefully that is not only giving you a little fish here, but teaching you about fishing practices.

Voices [15:46]

You have been well trained, my young apprentice.

Mostly Uncle Frank [15:49]

Now moving to question two in terms of these allocations.

Cash Drag And Bucket Strategy Myths

Mostly Uncle Frank [15:53]

Well, other than the cash, I think that these allocations can work pretty well for you. And so what I did there is I put two portfolios into test folio so you can check them out. One is 50% stocks, 25% long-term treasury bonds, and 25% cash. And then the other one, it's the same thing, except I reduce the cash allocation to 10% and put 15% in gold in there. And you can compare the two portfolios and you'll see the one with a little gold in it, does better over time than the other one. But before you get to the cash, I would look at the bond allocation itself and make sure that you are invested in treasury bonds or mostly treasury bonds. I'm looking at either intermediate or long-term treasury bonds. And in terms of asset location, those should go in your traditional 401k. So you might have to use that same process that I just gave you to look at what kind of bond funds are available in there, figure out what their corresponding bond funds would be, and choose the right one for the purpose of being the bond allocation. Now, what a high cash allocation like that does to a portfolio is it's essentially like you're not investing that money. That instead of having, say, a million dollars in a portfolio, if it's 25% in cash, it's like having a portfolio that's only $750,000 in terms of really being invested. The effect that has on a portfolio is that it puts a cash drag on it. And we've known this since the 1990s when Bill Bangin did his first research into safe withdrawal rates, that having more than 10% in cash in a portfolio tends to reduce the overall safe withdrawal rate. So what it is affecting is your long-term viability more than anything else. Because you're basically sacrificing growth. And if you're not comfortable with moving that allocation now, what I would suggest you think about doing is just spending down that cash in the first few years of retirement and not spending any of the other assets and letting them grow and rebalancing into them until you get to an allocation that looks more like 10% in cash and not 25% in cash. But it's not like it's going to blow up your portfolio or anything. What I really object to is the misinformation that people spread about cash.

Voices [18:19]

Liar, liar, plants for hire.

Mostly Uncle Frank [18:22]

That there's a lot of misinformation thinking that, well, if I have this big pile of cash and I arrange it in these buckets, ladders, and flower pots in a certain order, it's going to make my outcomes better and it's going to solve my sequence of returns risk problems.

Voices [18:38]

It's pants on fire, Patrick. Well, you would know.

Mostly Uncle Frank [18:42]

Liar. It's really not. That's not how any of this works.

Voices [18:47]

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

Mostly Uncle Frank [18:50]

You cannot rearrange assets in buckets, ladders, and flower pots and expect them to ultimately perform any differently. As I like to say, rearranging the lollipops on the good ship lollipop does not make them taste any better. And instead of trying to fix sequence of return risk problems with big piles of cash arranged in interesting ways as window dressing, what you should be doing is thinking about better diversifying the overall portfolio, because that's really what makes the difference in the end. So having all that cash isn't gonna hurt you very much in the short term, but it could be a problem for long-term you. I'm talking about the person that's gonna be hopefully still walking the earth in 25 or 30 years, may regret the choice you made today. Or they might not, because maybe they don't need to spend hardly any money by that point in time.

Voices [19:56]

Coma? Why I go in and out of comas all the French toast, please. Is a coma painful? Oh heck no! You relive long lost summers. Kiss girls from high school. It's like one of those TV shows where they show a bunch of clips from old episodes.

Mostly Uncle Frank [20:14]

But the other thing I would be concerned about with having a whole bunch of cash is the taxes, particularly if it's in a taxable account. It is just increasing your tax bill, that is, ordinary income coming out of savings accounts or wherever this thing is in. It is the worst kind of income to have in retirement because it just adds on top of everything else. If you do have a choice, I would actually put the cash in the traditional retirement account because it's going to hurt you a lot less there tax-wise than if it's sitting in invested accounts, which means that if you have a big pile of this in some kind of high yield savings account, what you should do is take a lot of that and buy the small cap value with that. And instead of putting the small cap value in your 401k, put that as a cash or short-term bond allocation in there. That is a better setup in terms of asset location than having a big pile of cash sitting in a high yield savings account that's just throwing off all kinds of tax problems. What guy in a suit?

Voices [21:21]

No! It's a tax collector! Hey there, Spongebob!

Mostly Uncle Frank [21:26]

Which, by the way, is another problem with these bucket sladders and flower pots strategies, is they're often extremely tax inefficient. So, that's a lot to chew on. You probably want to listen to those answers more than once.

Voices [21:40]

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

Mostly Uncle Frank [21:43]

Okay. But hopefully they help. I think at least some of them will help. Thank you for being a donor to the Father McKenna Center. And thank you for your email.

Do Bonds Fall If Stocks Rise

Mostly Uncle Frank [22:03]

Next off, we have an email from Midwest Nice.

Voices [22:07]

Oh, yeah, no, I just had a couple hours between taking Bill to the airport and helping Frank move. So I figured, you know, I was already cutting my lawn. Why not just cut your lawn too?

Mostly Uncle Frank [22:17]

We last heard from in about January of this year.

Voices [22:20]

Excuse me, miss. W yeah, sorry, would you mind if it's not too big of an ask? Could you just um you're stepping on my foot? Kinda hurts a little. Thank you. Thank you. And sorry again to ask. If I was wearing shoes, it'd be no big deal, but I'm, you know, I'm wearing sandals, so. And Midwest nice rights.

Mostly Queen Mary [22:38]

Dear Uncle Frank and Aunt Mary, last week I was listening to episode seven again in an effort to solidify my understanding of risk parity principles. It's kind of like how I keep going back to the Sons of Norway Ludafisk and Meatball Dinner every year to solidify my Scandinavian heritage, but I can't quite bring myself to eat the Ludafisk because it's something I don't understand, so I just get the meatballs instead. You never know, this may be the year I fulfill my destiny and eat what I'm told it's fish, but probably not.

Voices [23:11]

Nothing satisfies so many people in so many ways. It's what's for dinner.

Mostly Queen Mary [23:20]

Anyway, as I said, I was listening to episode seven during some errands with my son.

Voices [23:25]

Why? What have children ever done for me?

Mostly Queen Mary [23:28]

During the episode, you talked about how long-term bonds were negatively correlated with stocks. My son piped up from the back seat and asked, Dad, if stocks generally go up over a long period of time and stocks are negatively correlated with bonds, does that mean bonds usually go down over a long period of time?

Voices [23:47]

I got a hundred dollar check from my grandma, and my dad said I need to put it in the bank so it can grow over the years. Well, that's fantastic. A really smart decision, young man. 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 [24:05]

This made me nearly drive off the road because I wasn't expecting that kind of question from my preteen son.

Voices [24:11]

And you, young Skywalker. We will watch your career with great interest.

Mostly Queen Mary [24:18]

After a little discussion, we decided it was best to battle our sensei and seek the knowledge we desire.

Voices [24:24]

Bato your sensei. Bato your sensei.

Mostly Queen Mary [24:28]

Having subjected my son to many of your podcasts over the last year or so, he knew that if he made a donation, he'd go to the front of the email line. You'll find his donation confirmation below. Thank you, and we look forward to hearing your response so this father and son can learn together. Sincerely, Midwest Nice.

Voices [24:47]

Young America, yes sir.

Mostly Uncle Frank [24:50]

Well, thank you for writing in again and being so nice and telling us about your adventures with Ludafisk.

Voices [24:59]

The thought that the smell made my eyeballs start burning. The thought that the taste set my stomach to churning. For I'm one of those who good Swedes rebuff. A Scandiovian boy who can't stand the stuff.

Mostly Uncle Frank [25:17]

It's always very interesting to me that a lot of children like to listen to this podcast, or at least prefer it to the other financial podcasts that their parents listen to. But I guess I am known to engage in childlike behaviors, or rather childish behaviors. It's all part of the fun around here.

Voices [25:39]

What's the matter?

Mostly Uncle Frank [25:41]

I have a headache.

Voices [25:42]

It might be a tumor. It's not a tumor. It's not a tumor at all.

Mostly Uncle Frank [25:48]

But that was a really awesome question that he asked. And I think the best way to answer this question is to look at pictures. What I mean by pictures is look at charts and things at testfolio. And I went ahead and set this up for you, basically just putting in the SP 500 and a long-term treasury bond fund, going back all the way to 1962, in the asset analyzer at testfolio, so you can compare the two and how they performed over time. And you'll see the kind of text-booked results, which are that long-term the stock market tends to yield between 10 and 11% nominal. I think it's 10.52 since 1962. And treasury bonds, at least long-term treasury bonds, tend to yield between 5 and 6%. And so I think it's something like 5.7%. So they both go up. But then you can look at the correlations. They do a little correlation matrix there. So just click on that. And you can see that the treasury bonds are slightly negatively correlated with the stocks. And the reason they can be negatively correlated, but still both have positive returns is that the correlation is just talking about what direction they're moving, but it's not talking about how far they moved in that direction. And they both tend to move up more than they move down over time. So that's kind of the short answer to the basic question. But I think what would be more fun or more interesting, I think, is to then look at different time periods and how they performed relative to each other in those time periods. And you can change the dates there to get different time periods out and look at different graphs at different times. So for instance, you can look at the year 2022 and you will see that they were both positively correlated and both losing money in a year like that. But that's a pretty rare event. The other time you saw something like that in stark detail was near the end of the 1970s, particularly between about 1977 and about 1981 or 82. But then you should also look at a period like 2000 to 2010, where you will see them seriously negatively correlated, and you'll see the treasury bonds going up in value and actually outperforming the stock market over that period of time. So there's a serious negative correlation, and when the stocks are doing bad because it's a recessionary environment, you see the treasury bonds performing well. And so for that 10-year period from January 1, 2000 to January 1, 2010, the stock market actually lost money. It was down slightly less than a percent a year for the period, whereas the treasury bonds actually doubled in value, and so they were going up between 7 and 8% per year. And that is the fundamental reason why you were holding treasury bonds in a long-term portfolio, because periods like that do occur, but we can't predict when they are going to occur.

Voices [28:54]

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

Mostly Uncle Frank [29:01]

And so we don't want to be going through periods where we're losing money on our portfolio for a whole 10 years with nothing to help us out.

Voices [29:11]

That's not an improvement.

Mostly Uncle Frank [29:13]

And what that all plays back into then is what it's called the four quadrant model. And I will see if I can link to a couple of things. I think I've linked to them before that I created on AI about the four quadrant model and how certain assets perform well or better or worse in particular economic environments. And if we could predict which economic environment is going to come next, yeah, we could make moves and buy and sell various asset classes and really do well.

Voices [29:41]

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

Mostly Uncle Frank [29:49]

Our problem is we're not very good at predicting that, and we're better off if we don't try to predict that, but just hold a bunch of different things that can help us survive any kind of weather.

Voices [30:01]

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

Mostly Uncle Frank [30:06]

So hopefully these links will help you have some fun with your son looking at these pictures and playing around with the charts and things like that. And you can tell him that if he understands how the four quadrant model works, he's gonna understand how investing works better than over 90% of the adult population. And that's why we gotta get him started young.

Voices [30:27]

All we need to do is get your confidence back so you can make me more money.

Mostly Uncle Frank [30:33]

So I'm looking forward to hearing more about what you learn playing with these things. Thank your son very much for his donation to the Father McKenna Center. Thank you for being so nice.

Voices [30:45]

Alright, hey, take care now. Tell your mom I says hi, okay.

Mostly Uncle Frank [30:49]

And thank you for your email.

Voices [30:52]

Then came my plate, and to my fevered brain, there seemed to be enough loot to fest to derail a train. With butter and cream sauce, I tried to conceal it. I salted and peppered, but the smell would reveal it. I drummed up my courage, I tried to be bold, and mama said, before it gets cold. I decided to face it. I sighed. My stomach replied. Then I summoned every salt for which the fighting's is known. My hand took the fork as for the mind of its own, and with white fisk I ate. Within twenty seconds I cleaned up the plate! Uncle Kermit flashed me an ear-to-ear grin as butter and cream sauce ripped from his chin. And to my great shock, he whispered in my ear. I'm sure glad that's over for another year. It was then I learned the great and wonderful truth that Swedes and Norwegians, from old men to youth, must each pay their dues to have the great joy of being known as a good Scandinavian boy. Last off.

Selling Property Tax Location And ACA

Mostly Uncle Frank [32:03]

Last off, we have an email from Mr. Ed. Hello. I'm Mr. Ed. And Mr. Ed writes.

Mostly Queen Mary [32:14]

Hello, Mary and Frank. It's Mr. Ed. It's been a while since we met for dinner back in January on our way to Florida. Of course, I've been listening to every podcast episode, and like Maxwell House, they've been good to the last drop.

Voices [32:28]

Jim never has a second cup of coffee at home. Oh, I should have had that second cup of coffee.

Mostly Queen Mary [32:41]

Jim, your performance at home. Cheryl and I are on our way home from our travels to Florida, Cabo, San Lucas, Mexico, and Vermont. And now we're enjoying the nice weather back in Rhode Island. Mary, thank you for sharing the vignettes during the Casa fundraising campaign. And Frank, congratulations on your new post with the Father McKenna Center. With you at the home, I'm sure the center will be further positioned to help those in need. Best of luck.

Voices [33:09]

You could ask yourself a question. Do I feel lucky?

Mostly Queen Mary [33:13]

I've held off a bit on sending you a question for fear of flower pot strategy reprisal. Joking. We just sold a multifamily house and plan to live off the proceeds for the next three to four years. It was all equity and there's a relatively small federal and state tax liability. We use a portfolio view for asset allocation and rebalancing. However, we're considering a few options with this additional money.

Voices [33:39]

It's time for the grand unveiling of money.

Mostly Queen Mary [33:43]

One, treat it as its own little risk parity portfolio. Two, lump it in with the overall portfolio. And three, put the whole amount in PFFV. Yes, I realize the risks with PFFV and have been using it for three plus years with the 3% to 5% portfolio cash we hold. After these funds are exhausted, we'll be living off our Roth contributions and doing Roth conversions out of the traditional IRAs. We are both 52 years young. As an aside, we intend to keep our income in the right range for ACA premium tax credit purposes. So, what say you? Would you add in the new money as part of the total portfolio? Treat it as a separate account, PFF Vit, or something totally different. Many thanks and best regards to you and yours, Mr. Ed and Cheryl.

Voices [34:37]

Market drops five points. I'm glad my money's tied up in hay.

Mostly Uncle Frank [34:45]

Well, thank you also for being a donor to the Father McKenna Center, and we very much enjoyed having dinner with you about whatever that was six months ago.

Voices [34:55]

Oh, there it is! Winner winner chicken dinner.

Mostly Uncle Frank [35:03]

And meeting Cheryl and your doggy. So this is an interesting question because I actually have the same situation going on right now, or we have the same situation going on right now. The house that we bought for our parents to live in is now no longer necessary for them to live in it since we've recently moved them to assisted living. So we're gonna be selling that house at the beginning of the year and probably realizing some large capital gain on it. And then, like you, we'll have these proceeds to either live on or invest or some combination thereof. I'm mostly looking at this as a tax problem that I need to talk to our CPA and figure out what the tax consequences on that are be. That's why we're not going to actually time the sale until the beginning of next year. But then after that, we're going to be facing the same question that you have is okay, we know we're going to be living on some of this money, so let's carve off at least say a year of that, because there's no point just investing in and taking right back out. So right now, what I'm leaning towards doing, subject to more conversations about taxes, is just carving off a year's worth of cash and living on that and paying whatever capital gains taxes we have to also out of that, and then just investing the rest with the rest of our assets in a risk parity style portfolio. But again, this ends up being another tax question in terms of tax location because it's kind of a reverse asset swap. That since that money is outside of retirement accounts, it really wants to be invested mostly in equities and things that are not paying income that we'd have to pay more taxes on. And then we would shift around some things in our retirement accounts to pick up more income or whatever other diversification we needed on that side of things. So in your case, even though PFFV does throw off qualified dividends for the most part at least, I'm not sure that I would want that in a taxable account. I would be looking at this first in terms of tax location, regardless of whatever you plan to put it in, and figure out where that goes, because what you may end up doing is something like we're doing. Let's take the money we're actually going to spend and then actually invest a bunch of the rest of it in just our equity holdings and then make adjustments in our retirement accounts to maintain our overall asset allocation and diversification. And that's also gonna help you stay under these ACA limits because you really do want to just minimize all taxable income for that purpose. So you don't have to report it on the 1040 and it doesn't go into your Maggie. That's what I'm talking about. So I don't think PFFE is necessarily a bad place to put it. I just think you're probably gonna be better off thinking about the taxes first and the ACA subsidy first, and adjusting your overall portfolio based on those considerations. So that you'll probably end up doing what we'll probably end up doing where you're kind of reverse asset swapping into this new investment, and then when you need the money in another year or two, asset swapping it out. And I think that's likely to be the most tax-efficient way of approaching this. I'll let you all know what we decide to do at some point, but it's gonna be some point in the future, since we're definitely not wanting to do that transaction this year.

Voices [38:34]

Not gonna do it. Wouldn't be prudent at this juncture.

Mostly Uncle Frank [38:37]

Such are the trials and tribulations in the lifestyles of the rich and famous. Or a facsimile thereof.

Voices [38:45]

You're not going to amount to jack squads. You're gonna end up eating a steady diet of government cheese and living in a van down by the river.

Mostly Uncle Frank [38:58]

So, hopefully that helps. We do hope to see you again the next time you pop up in the DC area on your travels. Thank you for being a donor to the Father McKenna Center. And thank you for your email.

Voices [39:12]

A horse is a horse, of course, of course, and this one will talk to his voice is a horse. You never heard of a talking horse. Well, listen to this. I am Mr M. And now for something completely different.

Weekly Returns Across Eight Portfolios

Mostly Uncle Frank [39:34]

And this something completely different we get to do now is our weekly portfolio reviews of the eight sample portfolios you can find at www.riskpartyreader.com on the portfolios page. And just looking at the markets, the SP 500 represented by VOO is now up 11.32% for the year so far. The NASDAQ 100, represented by QQQ, is up 18.38% for the year so far. But small cap value continues to outperform. Representative fund VIOV is up 19.51% for the year so far, and funds like AVUV are up even more.

Voices [40:10]

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

Mostly Uncle Frank [40:14]

Gold continues to be the worst performer of the bunch. Representative fund GLDM is now down 4.78% for the year so far. Long-term treasury bonds represented by the fund VGLT are down 0.91% for the year. REITs are up, representative fund REET is up 12.81% for the year so far. Commodities represented by the fund PDBC or the big winners again, they're up 24.08% for the year so far. Fird shares represented by the fund PFFB are up 2.46% for the year so far. And managed futures represented by DBMF are managing to be up 10.75% for the year so far. They are benefiting now on the weak yen, believe it or not. The only asset class that's really been that interesting, or sub asset class I should say, in the past month, besides these chip stock speculations, is in fact property and casualty insurance companies. Representative fund KBWP is up over ten percent in the last month. And I'm not sure why, but that's what you call diversification. It was flat to down most of the year prior to that. But it does seem to be going up every day that the stock market goes down, and vice versa. Now moving to these portfolios, which are doing very little this month. First one is the all seasons. This is a reference portfolio. 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 gold and commodities. It's up 0.02% for the month of July. It's up 4.52% year to date, and up 28.82% since inception in July 2020. Moving to these bread and butter kind of portfolios, first one's gold and butterfly. This one is 40% in stocks divided into a total stock market fund and a small cap value fund. 40% in treasury bonds divided into long and short, and 20% in gold. It's up 0.03% for the month of July. It's up 5.28% year to date and up 67.97% since inception in July 2020. X1'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 6% in cash and a money market fund. It's up all of 0.09% for the month of July. It's up 5.79% year to date, and up 63.33% since inception in July 2020. X1's the Risk Parity Ultimate. Not going to go through all 12 of these funds. It's kind of our kitchen sink portfolio. It is down this month. It's down 0.01% for the month of July. It's up 5.93% year to date, and up 48.03% since inception in July 2020. Now moving to these experimental portfolios that all involve leveraged funds.

Voices [43:07]

It's impossible. Tony Stark was able to build this in a cave with a box of scraps.

Mostly Uncle Frank [43:15]

Don't try this at home.

Voices [43:17]

You can't handle the gambling problem.

Mostly Uncle Frank [43:20]

First one's the accelerated permanent portfolio. This 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's down 0.13% for the month of July. It's a 4.92% year to date, and up 29.51% since inception in July 2020. Moving to our next one, the dog, known as the aggressive 5050. This is the most levered and least diversified of all these portfolios. And it shows. It's one third in a levered bond fund TMF, one third in a levered stock fund UPRO, and the remaining. It's down 0.59% for the month of July. It's up 6.43% year to date and up 4.62% since inception in July 2020. Moving to the next one, the Levered Golden Ratio. This is a year younger than the first six. It's 35% in NTSX, that is a composite fund of S P 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 KMLM, that's a managed futures fund, 10% in TMF, the Levered Bond Fund, and remaining 10% divided into UDOW and UTSL, which are levered funds that follow the Dow and Utilities Index. It's up 0.66% for the month of July. Leaving the pack for the month of July. It's up 6.24% year to date, and up 27.34% since inception in July 2021. And the last one is the Opter Portfolio, one portfolio to rule them all. It just reached its two-year anniversary. It is 16% in UPRO, that's a levered SP 500 fund. 24% in AVGB, that is a worldwide value tilted fund. 24% in GOVZ, that's a Treasury Strips fund, the remaining 36% divided into gold and managed futures. Actually, this is the best performer this month. It's up 0.83% for the month of July. It's up 10.15% year to date, ruling them all, and up 42.12% since inception in July 2024. Pretty good two-year run there. Lucky. But that does conclude our weekly portfolio reviews. Hope you didn't fall asleep.

Voices [45:52]

I'm putting you to sleep.

Mostly Uncle Frank [45:54]

But now I see our signal is beginning to

Hiatus Note Listener Email And Reviews

Mostly Uncle Frank [45:57]

fade. Just a programming note. Mary and I had planned to be gone next week and half of the week thereafter. And so this podcast is going on hiatus for at least a week and a half. And we were going to visit my parents in Montana. We've just learned that my mother's been hospitalized with congestive heart failure. And so she's 92 years old, and we're gathering my brothers and sisters because we may be saying goodbye to her. But rest assured there will be another podcast before the end of the month. I'm just not sure exactly when at this point. In the meantime, if you have comments or questions for me, please send them to Frank at RiskPartyRoo.com.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 ever managed 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.

Voices [46:54]

Okay.

Mostly Uncle Frank [46:55]

Thank you once again for tuning in. This is Frank Vasquez with Risk Purdy Radio. Signing off.

Mostly Queen Mary [48:37]

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.