In this episode we answer questions from Mason, Brian, and Anonymous. We discuss portfolio transitions from a highly overlapped portfolio and related consideration, treasury strips funds and leveraged ETFs (twice), and the power of advice from the great Jim Rohn. UNLIMITED POWER.
Just remember that "Affirmation without discipline is the beginning of delusion."
And we discuss our campaign for the Father McKenna Center and Quebecois updates to our website.
Links:
Father McKenna Center Donation Page: Donate - Father McKenna Center
The Source of the "We Don't Know" Clip: Jim Rohn Join the 3% Club and Walk away from the 97%
Breathless Unedited AI-Bot Summary:
Transforming your portfolio into a risk parity approach doesn't have to be complicated, but it does require both strategy and courage. This episode dives deep into listener questions about making that transition while navigating tax implications and psychological barriers.
When Mason asks about converting his advisor-built collection of funds into a risk parity portfolio, Frank reveals a crucial insight most investors miss: holding multiple similar funds creates "false diversification." Those four large-cap funds in your portfolio? They're basically the same investment with different names. True diversification comes from understanding what's inside each fund, not collecting different tickers.
For those curious about leveraged ETFs like UPRO, Brian's question leads to fascinating observations about why some leveraged products perform better than others. The conversation reveals why Treasury strips funds like GOVZ/ZROZ make reasonable substitutions for standard Treasury allocations, while leveraged gold ETFs might be problematic for long-term investors. Frank shares his personal experience reducing his own UPRO allocation and explains why experimentation with small portions of your portfolio is the wisest approach to newer investment strategies.
The philosophical foundation of the show emerges when a listener asks about the "Nobody Knows" sound clip. The attribution to motivational speaker Jim Rohn opens a window into the mindset that drives successful investing. Rohn's philosophy that "affirmation without discipline is the beginning of delusion" perfectly captures why just thinking about better investment outcomes isn't enough—you must take action to create them.
Ready to reshape your investment approach? This episode provides both the practical steps and the motivational spark to move forward confidently. As Rohn reminds us, "If you think investing is risky, wait till you get the tab for not investing."
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Voices (00:01):
A foolish consistency, is the hobgoblin of little minds
, adored by little statesmen andphilosophers and divines.
If a man does not keep pace withhis companions, perhaps it is
because he hears a differentdrummer, a different drummer.
Mostly Mary (00:19):
And now, coming to you from dead center on your
dial, welcome to Risk ParityRadio, where we explore
alternatives and assetallocations for the
do-it-yourself investorBroadcasting to you now from the
comfort of his easy chair.
Here is your host, frankVasquez.
Mostly Uncle Frank (00:37):
Thank you, Mary, and welcome to Risk Parity
Radio.
If you are new here and wonderwhat we are talking about, you
may wish to go back and listento some of the foundational
episodes for this program.
Voices (00:50):
Yeah, baby, yeah.
Mostly Uncle Frank (00:51):
And the basic foundational episodes are
episodes 1, 3, 5, 7, and 9.
Some of our listeners,including Karen and Chris, have
identified additional episodesthat you may consider
foundational, and those areepisodes 12, 14, 16, 19, 21, 56,
(01:13):
82, and 184.
Whoa, and you probably shouldcheck those out too, because we
have the finest podcast audienceavailable.
Voices (01:26):
Top drawer, really top drawer.
Mostly Uncle Frank (01:30):
Along with a host named after a hot dog.
Voices (01:34):
Lighten up Francis.
Mostly Uncle Frank (01:37):
But now onward to episode 433.
Today, on Risk Parody Radio,we'll just be doing what we do
best here, which is tending toyour emails.
Voices (01:48):
Surely you can't be serious.
Mostly Uncle Frank (01:50):
I am serious and don't call me Shirley.
But before we get to that,let's talk about one of my
favorite people in the worldright now.
Voices (01:58):
The best, jerry the best .
Mostly Uncle Frank (02:00):
Who is our good friend Luke from Quebec?
Voices (02:03):
Here's another one for you.
Say peanut you heard that onebefore.
Who is our good friend Lukefrom Quebec?
Here's another one for you.
Saint Peanut.
You heard that one before.
I heard a lady say that oncewhile I was in a store and I was
mind blown Saint Peanut, saintPeanuts, even peanuts are being
sanctified here.
I want to go to the church ofSaint Peanuts.
I want to know what kind ofmiracles that peanut did that
(02:24):
got sanctified.
That's like peanut, hazelnut,cashew nut, macadamia nut.
That was the one that was senther into going crazy.
Mostly Uncle Frank (02:38):
Luke is a youngish man with some
programming skills.
Luke is a youngish man withsome programming skills, you
know, like nunchuck skills, bowhunting skills, computer hacking
skills, who has taken it uponhimself to volunteer to see if
he can do something to improveour website.
Voices (03:00):
Just come up.
Mostly Uncle Frank (03:02):
And he's already created a kind of demo
placeholder for us to look at.
So if you go to the Risk Paritywebsite, wwwriskparityradiocom,
and then you look at thebuttons at the top and click on
the one that says Alt Site,you'll go to this demo template,
which I'd like as many of youto check out as possible,
(03:25):
because if I can get somecomments from you about what you
think of it, we can improvethis website.
Mostly Mary (03:28):
I think I've improved on your methods a bit
too.
I employed some Chiara Scuroshading.
Mostly Uncle Frank (03:35):
I will warn you that not all the links and
things are working there yet.
So don't look at it for that,just look at it for its
presentation, basically, andwhat's there, and then hopefully
we'll be able to greatlyimprove that website without me
really having to do anything.
It's not that I'm lazy, it'sthat I just don't care.
But good things can happen whenyou have top men volunteering
(03:57):
for men working on it right now?
Voices (04:03):
Who?
Top men.
Mostly Uncle Frank (04:10):
So please check that out and let us know
what you think.
Please send an email for that,and not a comment on the site,
to frankatriskparodyradiocom.
Voices (04:19):
Yes.
Mostly Uncle Frank (04:20):
And Luke and I will take a look at those and
figure out what to do next.
Voices (04:24):
So the literal meaning of voyons is let's see, voyons
voir.
But here it's used often toexpress surprise and even
frustration.
Voyons, ok, gogol, ok, gogol,voyons, ça marche pas là.
Hey, gogol, tu te caves là.
Mostly Uncle Frank (04:38):
C'est technologie de marde, I don't
think we'll be making anychanges to the website for
another couple of months, but inthe meantime we will just play
around with what we've got thereand see what happens and when
you combine it with don't, it'slike damn, Voyons donc qu'est-ce
que tu fais, Voyons donc ça, sepeut-tu du monde de même?
Voices (04:55):
Wow, là, Juste juste wow là.
And maybe we'll include aQuébécois section.
You, little fucking bastard,shut the fuck up, dude, I'm
gonna puke.
I'm gonna puke.
Poo, less, dude, poo in thetrash dude.
And you can even roll the R tomake it that much richer.
You, little fucking bastard.
(05:15):
You, my little Christ, I knowbastard, but now without further
ado.
Here I go once again with theemail and.
Mostly Uncle Frank (05:24):
First off, without further ado, here I go
once again with the email, andFirst off.
First off, we have an emailfrom Mason.
Mostly Mary (05:31):
The other morning I had a talk with Bob.
Bob, you plus other words, islike having a boogish board.
And Mason writes Hi, Frank andMary.
Thank you so much for the workthat you do.
The information in your podcastis like nothing else out there,
and your outlook on life andcharitable work are inspiring.
I just made a donation to theFather McKenna Center through my
(06:03):
donor advised fund.
I just made a donation to theFather McKenna Center through my
donor advised fund confirmationattached.
Here's my question, orquestions.
Most of my portfolio iscurrently in an accumulation
strategy in a taxable brokerageaccount.
This strategy was set up for meby an investment advisor with
whom I no longer work, but ithas done well as an accumulation
portfolio.
I plan to retire in the nextfew years and I want to
(06:26):
transition to a risk paritystyle portfolio.
Ideally, I would transitioneverything now, but I would like
to mitigate taxes if possible,since there is a good amount of
gain in the portfolio.
Here is the breakdown of myentire portfolio across a number
(06:46):
of different accounts TaxableIVV 50.48%.
Qual 14.57%, iyw 5.05%, esgu7.44%, usmv 2.43%, ifra 0.19%,
(07:09):
ira, iau 0.39%, gldm 2.86%, vglt12.53%.
There are two obvious optionsfor transitioning One all at
(07:44):
once, two dollar cost averagingby selling some taxable accounts
each month.
Even if I were to sell myentire taxable account all at
once, I think I may still dollarcost average into assets that
are very high right now, likegold and international equities.
Does that make sense or is itjust market timing?
Recently, inspired by yourexcellent podcast, I've been
(08:07):
wondering if using a treasurystrips fund and a leveraged gold
fund in my IRA could helpbetter approximate a risk parity
portfolio without sellingassets in the taxable account.
For example, I could use GOVZor ZROZ in place of VGLT and UGL
or DGP in place of GLDM.
(08:29):
This could potentially helpstretch my limited IRA funds
further, getting morediversification for every dollar
.
Am I on the right track here ordo I have a gambling problem?
Voices (08:40):
Uh, what it's gone.
It's all gone.
What's all gone?
The money in your account itdidn't do too well, it's gone.
Mostly Mary (08:47):
My thinking is that if I use this option, I would
still DCA over time to get to myideal portfolio, but this would
just give me morediversification.
While I'm in the process ofdoing that, is it better to just
pay the taxes now and move on?
Note I know this is a longemail with lots of embedded sub
questions, so please feel freeto break it up and address the
(09:09):
below in another episode, ifneeded.
For context below is theportfolio I'm planning on
transitioning to.
Do you think it has too much ofa value tilt?
Any obvious issues you see withit 16% US LCG, 16% US SCV, 23%
(09:37):
International Developed SCV, 28%LTT, 17% Gold.
This portfolio is inspired byboth the weird portfolio and
your own golden ratio.
A few notes on the tweaks I'vemade.
There is no cash in theportfolio because they have cash
reserves elsewhere.
I own real estate and invest inprivate mortgage lending
(09:59):
outside of this portfolio, so Iopted to drop US REITs, since I
already have a lot of exposureto US real estate.
I looked at international REITsper the weird portfolio but
decided against them because one, I couldn't find good long-term
data to use in backtesting andtwo, I experimented with just
spreading the REIT allocationover the other equity
(10:20):
allocations and the numbersworked very well.
This portfolio allows for a5.3% perpetual withdrawal rate
when backtested on portfoliocharts with data from 1970 to
2024.
Mostly Uncle Frank (10:35):
Thanks again for all you do, mason.
Well, first off, thank you forbeing a donor to the Father
McKenna Center, mason, as mostof you know, we do not have any
(10:57):
sponsors on this program.
We do have a charity we support.
It's called the Father McKennaCenter and it supports hungry
and homeless people inWashington DC.
Full disclosure.
I am on the board of thecharity and am the current
treasurer.
We are currently running apromotion because one of our
listeners put up $15,000 inmatching funds.
Voices (11:11):
Yeah, baby, yeah.
Mostly Uncle Frank (11:13):
We're calling it the Top of the
T-Shirt Campaign and if you wantto know more about that and why
we're calling it that, if youhaven't listened to it already,
go back and listen to episode426 to get filled in on that.
But anyway, if you do donate tothe Father McKenna Center, you
will go to the front of theemail line and there's two ways
to do that.
Either go to the Father McKennawebsite donation page directly
(11:35):
I'll link to that in the shownotes and make sure you mention
Risk Parity Radio in a littlecomment or dedication box that
they provide when you make yourdonation.
Or you can go to our supportpage at wwwriskparityradiocom
and you can join our patrons onPatreon that way who give
monthly, and then we collectthat all and give it to the
(11:56):
center at periodic intervals.
Either way, you get to go tothe front of the email line.
Voices (12:00):
Don't be saucy with me, bernays.
Mostly Uncle Frank (12:03):
But now let's get to your questions.
First, let's talk through whatyou already have here and how it
fits into the grander scheme ofthings.
So, going through these fundsIVV, which is 50% of your
holdings, is an S&P 500 fund.
Qwal is a quality, large capquality focused fund.
(12:23):
Iyw is a tech focused fund, andESGU is also a large cap fund
focused on ESG.
Esgu is also a large cap fundfocused on ESG.
What you should reallyrecognize, though, is all of
these funds are very similar toeach other and they have a lot
of overlap, so there's probablyno reason to hold all of them,
(12:43):
and you will find this to occura lot of times.
Voices (12:46):
Financial advisors will put you in a bunch of different
things like this Am I right oram I right, or am I right, right
, right, right.
Mostly Uncle Frank (12:54):
But there's no reason to be holding all of
them.
If you really want to seewhat's going on, go to
Morningstar, put these things inand look at their portfolios
and you can look at what styleboxes they appear in.
Here we're looking at all largecap blend, large cap growth and
then also look at theindividual holdings which are
listed there and you'll seetremendous overlap with these.
They're all MAG-7 type stuff.
(13:15):
So if you're constructing aportfolio, you would not really
want to have all four of thesethings together because they're
not really doing anything.
Voices (13:23):
That's the fact, Jack.
That's the fact, Jack.
Mostly Uncle Frank (13:27):
It's kind of a false diversification that
people get into because they'renot really looking at what's in
the fund.
They're looking at what thename of the fund is, and that's
not really the way to go whenyou're trying to analyze one of
these things.
So it's not wrong, it's not bad, but it's not any real form of
diversification with those fourthings.
The other two are diversifiedUSMV is a low volatility fund.
(13:49):
It plays kind of like a largecap value fund, and IFRA is an
infrastructure fund, and that isa small cap value fund.
It has some utilities and otherthings in it.
You have such a trivial amountin that, though it doesn't
really matter.
0.19% is not worth holding invirtually anything.
But now we're talking abouttransitioning this thing
(14:13):
virtually anything, but nowwe're talking about
transitioning this thing.
There are a couple of factorsthat are not in your email that
I would want to look at first,and one is basically how much
are your expenses versus howmuch of this portfolio and how
much is covered with somethingelse, because you really need to
know what those things arebefore you do anything.
But as for transitioning this,yeah, you could do it all at
once, particularly at this point, because the stocks are at, or
(14:36):
near an all-time high.
I know gold is too, but it'snot that big a percentage.
I don't think of your overalltarget, but if you were to
dollar cost averaging by sellingsome of the assets and
converting them every month,that would be fine too.
This is not going to matterwhich way you do this.
In the very long term, ifyou're thinking about the next
two or three decades, whetheryou converted today, at one day,
(14:59):
or did it over a period ofmonths or even a couple of years
, is probably a coin flip as towhich one is going to be better,
and there's really no way ofknowing.
So I would do it the way thatfeels most comfortable to you
psychologically, and if that'sselling a little bit and
converting it over time, that'sfine.
Go ahead and do that.
The one thing I would really belooking at, though, is the tax
(15:21):
situation with this, and that'sanother thing.
I don't know from your email asto what tax brackets you're in
and how much this would affectyour tax bill next year.
So there may be some goodreasons to only do part of the
conversion this year and part ofit next year.
I can't see it probably needingto go over more than a couple
of years.
But I don't know your taxsituation and that is a
(15:42):
consideration when you're doingthat you can also think about.
Well, can I sell particular taxlots that will result in lower
taxes, because I think you wantto keep whatever you're keeping
out of this portfolio.
You make that the longest heldtax lots because if you sell
those, like it would do,automatically that would result
(16:04):
in the higher tax bills where ifyou sell more recently
purchased funds, you'll have alower tax bill in this
conversion.
All right, your next questionhas to do with the use of funds
like GOVZ or ZROZ in place ofVGLT, which are basically
treasury strips funds that havea longer duration than something
(16:26):
like VGLT.
And then you also asked aboutleveraged gold funds like UGL or
DGP.
I think I really have twodifferent answers for those.
What I've seen is that the GOVZand ZROZ do tend to mimic
pretty well a one and a halftimes leveraged TLT or VGLT, at
(16:48):
least in terms of how they reactto movements in interest rates,
and they also are relativelyinexpensive, and so I do think
they make a good choice forsomebody who just wants to
minimize the space in theirportfolio for treasury bonds for
whatever reason, but still havethe same kind of impact if we
were to have a recession andfalling interest rates all of a
(17:11):
sudden sometime.
So I think those can be goodchoices, just make sure you use
them in moderation.
I'm less sanguine about theselevered gold funds like UGL or
DGP.
I have to tell you I haven'tlooked at them very closely
recently, but my experience inlooking at them over the past
decade or so is they do tend tohave drags on them.
(17:31):
They don't necessarily performthe same way that gold does,
because they are really designedmore for short-term holdings.
And that's the problem withthese leveraged funds.
Yes, you can use them long-term, but some of them really don't
work that well.
So I don't use those personally, but I know some people do and
don't have a problem with them.
Voices (17:51):
You can't handle the gambling problem.
Mostly Uncle Frank (17:55):
All right, looking at what you're planning
on transitioning to, it's 16%large cap growth, 16% US small
cap value and 23% internationaldeveloped small cap value.
That adds up to 55% in stocks.
Yeah, I do think that's alittle bit overweighted on the
value side, particularly if it'sall in small cap value.
Voices (18:17):
I got a fever and the only prescription is more
cowbell.
Mostly Uncle Frank (18:23):
That is going to give you a more
volatile portfolio overall andit's also going to be heavily
divergent from the US marketitself, which sometimes causes
people some psychologicalconsternation.
So I would probably make ithalf growth and half value, and
then, whether that's in theinternational small cap value or
(18:45):
US small cap value, I'm prettyagnostic about that Just
recognize the currencyspeculation that is always
inherent in those sorts ofthings.
I will say that the Avantis andDFA ETFs now that they have for
international small cap valueare quite good and that is
certainly an option.
I think there's also now aninternational all-value fund
(19:07):
that they've rolled out forAvantis, and it seems like they
keep rolling out things thereevery six months or so.
So take a look at what's thereand see what you really want to
have.
My view is generally that,since we really don't know
what's going to perform best inthe future on terms of growth or
value, it's better just to holdthem both and be agnostic about
(19:28):
that and then rebalance themwhen it becomes appropriate.
Mostly Mary (19:32):
A crystal ball can help you.
Voices (19:34):
It can guide you.
Mostly Uncle Frank (19:37):
The one thing I think you should avoid
is small cap growth, but youdon't have any of that, so
that's not an issue.
Now, you mentioned you had 28%long-term treasuries.
That is actually on the highside for that allocation Usually
between 15 and 30 percent tendsto be where you want to be.
So this portfolio will doreally well in recessionary
(19:58):
environments, but it will dragit down in non-recessionary
environments is what you shouldrecognize from that kind of
holding and it will create morevolatility in non-recessionary
environments as well.
I think the 17 percent gold isfine if that's your only
alternative asset in thisportfolio.
Also, recognize that it can bevery volatile, and these days
(20:20):
there's a fairly strong negativecorrelation between the
treasuries and the gold.
I don't know how long that'sgoing to last, because sometimes
they're positively correlated,but you can have decades like
the 70s or 80s or this decade,where one of them is obviously
just crushing the other one interms of performance.
Now, as for REITs, I thinkthey're optional.
They would provide a littlemore diversification and I would
(20:42):
treat them as one of your stockallocations if you choose to
hold them, but I'm fairlyagnostic as to whether you
actually want to hold them ornot, as to whether you actually
want to hold them or not.
Just make sure you try to holdthem in a tax-efficient manner,
because they tend to payordinary income and therefore
generally belong in retirementaccounts.
Now you said you've run backtestwith this on portfolio charts.
(21:02):
I would go ahead and usemultiple calculators.
I would use Testfolio, eventhough it's hard to model
small-cap value on there rightnow.
It's interesting, he's got thesectors back to the 1920s but
that hasn't been broken down bygrowth and value yet.
But that site keeps improvingall the time and I would
definitely use it for somemodeling.
I'd also go model at PortfolioVisualizer and then, if you can
(21:27):
pull out the Big Earn Toolboxfrom Early Retirement Now that
is a spreadsheet so it's alittle bit difficult to use and
you really only want to focus onthe data since the 1920s
because that's the robust data.
But I also like modeling thingsthere to the extent I can.
Because, again, ultimately whatyou're comparing here is a
(21:49):
portfolio A choice to aportfolio B choice, and if you
can see that something similarto portfolio A outperforms
something similar to portfolio Bover all of these different
calculators and different timeframes, at least for the
purposes of withdrawing from inparticular, then you know that
you're on the right track there,and, while the multiple
(22:10):
calculator test is tedious, I dothink it's the most robust way
to really get a handle andreally get confidence in
whatever you're thinking ofholding, and so that's what I
would do next in your case, ifyou haven't done that already,
when you use the Testfoliowebsite, go to the help section
and the ticker section, becauseyou can see how he's built out
(22:33):
simulated data sets, even forthings that don't have long time
series in their current ETFform, and some of those go back
to the 60s and some of them goback to the 20s, but it's a very
useful set of data to work with.
Hopefully, all that helps andthank you for your email.
Second off.
(23:04):
Second off we have an emailfrom Brian.
Voices (23:07):
Hey, brian, care to place a wager?
And Brian?
Mostly Uncle Frank (23:09):
Wright.
Hello Frank, I've been waitingto buy into you and Brian right.
Mostly Mary (23:11):
Hello Frank, I've been waiting to buy into YouPro
until it went down to a decentnumber.
Voices (23:17):
You have a gambling problem.
Mostly Mary (23:19):
Once the tariffs hit, I saw my opportunity to
pounce Now.
That being said, my Roth is70-30, with SCV, avuv at 70% and
SPLG at 30%.
This allocation is based offother accounts that I have 457
and my wife's rollover IRA soit's a more diversified
portfolio than just those twofunds.
(23:40):
I wanted just a little morecowbell in my Roth and my wife's
Roth, so I just cut the SP500fund down to 25% and added UPRO
at 5%, so nothing life-changing.
Voices (23:52):
I'm telling you, fellas, you're gonna want that cowbell.
Mostly Mary (23:56):
I plan on rebalancing Upro anytime it's
between 5% to 10% above its 5%allocation to keep it from being
even more risky.
I re-listened to episode 152 onUpro and my question is are you
willing to share what you havein your Roth and what percentage
is you pro?
Also, what rebalancingguidelines do you have for that
(24:17):
specific account?
Is it based on the Roth itselfor your overall portfolio?
I understand you won't betouching that Roth anytime soon,
or that it may be for yourfuture heirs.
I'm just curious, more thananything.
Voices (24:31):
Hey, it's me, knock knock, so you got my money.
Yeah, huh, oh yeah, I'll payyou soon.
Yeah, well, um, here's asuggestion.
Um, have the money by tomorrowand there won't be any problems.
Huh, yeah, 24 hours.
Why, what happens in 24 hours?
I don't know, not psychic man,I'm just saying it would
probably be better for everybodyif you had the money tomorrow.
(24:52):
Yeah, all right, I'll see whatI can do.
Sweet, sweet, great.
Uh, how's everything else goingGood?
All right, all right, see youlater, don't forget.
Nah, you're not going to forget.
Mostly Mary (25:03):
Hopefully you'll get to this before the end of
the year.
Being that you're Mr Popularnow.
Have a great day, brian fromTacoma.
Voices (25:11):
So, uh, it's been 24 hours, got my money.
Mostly Uncle Frank (25:14):
Now, just for reference, Brian sent me
this email on April 10th 2025,sent me this email on April 10th
2025, which is essentially atthe nadir of the spring drop,
after Liberation Day, orObliteration Day, depending on
your perspective.
And yeah, I guess it would havebeen a good time to buy some
Upro at that point in time, atleast if you had it in and knew
(25:37):
which announcement was going tocome next.
Voices (25:40):
Yeah, that's what happens, man.
Oh, come next.
Yeah, that's what happens, man.
Oh my God.
Yeah, that's what happens.
Where's my money?
You're going to give me mymoney.
Where's my money, man?
Mostly Uncle Frank (25:52):
But you know what we say when people start
talking about leveraged fundshere.
Voices (25:56):
Well, you have a gambling problem.
Mostly Uncle Frank (26:00):
For those of you who don't know, you pro is
a three-time leveraged s&p 500fund.
So if you went and headed anddid that, congratulations there
it is winner, winner chickendinner I think we did end up
selling some gold and buyingsome large cap growth around
(26:23):
that time as well, but nothinglike this Upro extravaganza that
you're talking about.
Ramming speed, ramming speed,ramming speed.
Now you asked me about our rothallocation, where I do
(26:48):
experiment with some leveragefunds because I know we really
don't need that money.
I talked about that back inepisode 152 and, yeah, what that
is migrated to these days orlooking more like, is kind of
like that Optra portfolio, thelast sample portfolio, a return
stack portfolio.
So I've cut back on the UPROallocation for that and I do
treat this Roth like anexperimental portfolio because
(27:12):
it's not really a significantportion of our assets.
So I think originally we hadsomething like 20 to 25% in UPRO
in that account and I've cut itback to more like 15.
It's interesting.
One of the other changes wemade with that over time is we
used to have some tmf in thataccount, but I have found that
(27:33):
that leverage bond fund reallydoes not work very well and so
we've gone with zroz or go, Ithink, and I've been wondering
why things like UPRO seem towork fairly well whereas things
like TMF do not work well.
In terms of leveraged funds.
I mean part of it is just thestock market has performed very,
(27:54):
very well and the bond markethas performed very poorly.
But even with that, incomparison to their underlying
assets, the UPRO has performedbetter relative to its
underlying asset the S&P 500,than TMF has performed relative
to its underlying assetsomething like TLT.
I think part of that is likelyto be what you'd call volatility
(28:17):
drag, that if you're workingwith some kind of a leverage
thing that's going up and down alot, that actually will detract
more from its overallperformance.
It's the idea that if somethingdrops 20%, it has to increase
25% to get back to where it was.
So if it's tending to go up andto the right most of the time,
(28:39):
like the S&P 500 or UPRO, thatseems to be less of a problem.
If it tends to be going up anddown all the time, like a bond
fund, as interest ratesfluctuate, then you get more of
that volatility drag as anatural result of that.
I have not analyzed that in anyrigorous or mathematical way,
but I think that's what's goingon with respect to how these
(29:00):
things have been performing.
But it's a good way to learn toactually experiment with small
portfolios like this or smallallocations to things that
you're wondering about, becausewhenever you're dealing with
something relatively new, youdon't want to go whole hog into
something like that.
You won't get hurt if you justhold a little bit of anything,
(29:20):
and I think that's the best wayto approach anything that is new
.
This is also why I found thesample portfolios and, in
particular, the experimentalportfolios on the website to be
particularly interesting, notbecause they succeeded very well
, but because they've failed orthey haven't really failed all
the way, but they certainly havenot performed the way you would
have want them to perform.
(29:42):
But prior to that, when westarted them in 2020, there were
a lot of suggestions, includingthe hedge fundies graded
venture fund or portfolio that,holding a mixture of Bupro and
TMF was going to be somethingthat would have a good long-term
performance and, as it turnsout, it probably doesn't.
And even if it does, it'shighly volatile, as we've seen
(30:04):
those experimental portfolios gofrom the absolute best to the
absolute worst in the time we'vebeen watching them.
Anyway, the lesson you shouldlearn is you should be careful
with this stuff and use it onlyin moderation.
Voices (30:18):
Where's the money?
Yeah, you like that.
That feel good.
That feel good moderation.
Mostly Uncle Frank (30:36):
Even though I know some of you are a lot
bigger gamblers than I am.
Of course, you're a lot youngertoo.
This is the grandson of the17th richest man in California.
Mostly Mary (30:46):
Does he drink?
Mostly Uncle Frank (30:47):
What he wants is money, because he
doesn't know when to say that'sit.
I'm two million ahead, I have acar and a house and a family
and it's all paid for.
I mean, even I did that.
Now, as for being Mr Popular,now it's good to be the king I
have to tell you, after I appearon a few other podcasts, what
(31:09):
always inevitably happens is afew more people come over to
listen to this, find out howstrange it is, and then I get
some hilarious one-star reviews.
This is pretty much the worstvideo ever made.
Voices (31:23):
Napoleon, like anyone can even know that.
Mostly Uncle Frank (31:26):
But hey, you know, if you don't like my
sense of humor, you know whatNapoleon, you can leave.
Fortunately, since this podcastis non-commercial, I don't have
any pressure to try to expandthe audience in any way, and I'd
rather have a smaller, moreinterested and devoted audience,
and more enthusiastic andinteractive, than worry about
(31:48):
pleasing the masses and growingthe numbers in any significant
way.
Voices (31:53):
Forget about it.
Mostly Uncle Frank (31:54):
We should go over a million downloads later
this year.
I'll let you know when thathappens.
Hopefully that helps.
Be careful out there and thankyou for your email.
Voices (32:08):
So, brian, we're even now right Ready to start a new
life in England.
I've got my money.
Your wounds have healed upnicely.
What do you say?
We let bygones be bygones.
Hmm, you shot me in both myknees then lit me on fire.
Mostly Uncle Frank (32:24):
Last off.
Last off of an email fromAnonymous.
I have no name and Anonymouswrites.
Mostly Mary (32:35):
Silly question when does the nobody knows sound
clip come from and how do I geta copy?
Voices (32:41):
We don't know.
What do we know?
You don't know, I don't know.
Mostly Mary (32:47):
Nobody knows, I don't know, you don't know,
nobody knows Nobody even knowswhere the clip comes from.
Mostly Uncle Frank (32:59):
Now there's an interesting question that
opens up a rabbit hole.
That is actually the great JimRohn, who is one of the best
motivational speakers to everspeak, and he did most of his
work in the 1980s and 1990s.
Voices (33:13):
Let me tell you about the power of association.
You are the average of the fivepeople you spend the most time
with, want to know your future.
Look at your friends, want tochange your future.
Change your friends.
I'm not saying abandon your oldfriends.
(33:33):
I'm saying expand your circle.
Include people who inspire you,challenge you, push you to grow
.
Because here's what I found youcan't soar with the eagles if
you're hanging around with theturkeys.
Mostly Uncle Frank (33:50):
About 10 or 15 years ago I got curious about
these motivational speakerslike Tony Robbins, etc.
And of course, when I getcurious about something, I want
to know the history of it.
So I studied the history ofmotivational speakers for a
while.
It goes all the way back to the19th century.
Actually, in the early 20thcentury you go back to writers
like James Allen, who wrote as aman Thinketh, amongst many
(34:14):
other things, somebody namedWallace D Waddles, who wrote a
book called the Science ofGetting Rich.
And then this flows alongthrough people like Earl
Nightingale in the middle of the20th century and you get to Jim
Rohn and then people like TonyRobbins and many others, and
what you learn is there are kindof two tracks that have been
(34:35):
followed or developed, and oneof them is the think and grow
rich, or only think and growrich track, which is represented
by what they call the secretthese days, and that's this idea
that you can just think things,manifest things is what the
buzzword that is used today andyour life will improve.
Mostly Mary (34:55):
Now you can also use the ball to connect to the
spirit world.
Mostly Uncle Frank (34:59):
I don't think that's true, and Jim Rohn
was one of the people thatpushed back on that.
He said yes, that's great tostart.
If you want to accomplishsomething, you need to start
thinking about how to do it,thinking that you can do it,
because if you think you can'tdo it, then you can't.
Voices (35:15):
You're not going to amount to jack squats.
Mostly Uncle Frank (35:20):
But he also famously said that affirmation
without discipline is thebeginning of delusion.
Affirmation without disciplineis the beginning of delusion I
am a scientist, not aphilosopher which means that you
have to get up and do somethingabout your situation and not
(35:40):
just think about improving yoursituation.
It doesn't work that way.
Voices (35:45):
You're going to end up eating a steady diet of
government cheese and living ina van down by the river.
Mostly Uncle Frank (35:53):
If you need knowledge, you've got to go get
the knowledge.
If you need skills, you've gotto develop the skills.
Whatever it is you need to do,you need to actually go out and
do it after you've been thinkingabout it.
Voices (36:03):
All we know is some get the spark and say I'm going to
change my life.
I'm going to change my health,I'm going to change my
relationship with my family.
I'm going to change everything.
And if it starts with an apple,if it starts with a walk around
the block, if it starts with abook, if it starts with a
journal, whatever it starts with, I'm a candidate.
I'm ready to go and change mylife.
Mostly Uncle Frank (36:19):
And so that's a lot of what that clip
is encapsulating.
If you listen to it in its fullform, it's about three minutes
long.
I will link to it in the shownotes, but I'm also going to
play that whole clip at the endof this podcast, just so you can
hear it.
Because if I'm looking for somemotivation, that is the kind of
thing that I go and listen to,and it is part of the ethos of
(36:42):
this podcast, because if youwant to spend more money in
retirement, the first thing youneed to do is realize that you
can, but you have to go dosomething about that in terms of
constructing a portfolio thatallows you to do that.
If you're going to sit aroundand say it can't be done, then
no, you can't do it and youbetter hoard your money.
Voices (37:03):
This is called the timid approach to life, and my
caution was always the risk.
Risk used to drive me right upthe wall.
I used to say what if thishappens?
What if this happens?
And on top of that, if this wasto happen, look at the fix I'd
be in.
I better not try.
Then I'll tell you what changedmy whole life when I finally
(37:24):
discovered it's all risky.
The minute you were born, itgot risky.
If you think trying is risky,wait till they hand you the bill
for not trying.
If you think investing is risky, wait till you get the tab for
not investing.
See, it's all risky.
Getting married is risky.
Having children is risky.
Going into business is risky.
Investing your money is risky.
It's all risky.
(37:45):
I'll tell you how risky life is.
You're not going to get outalive.
That's risky.
Mostly Uncle Frank (37:55):
Anyway, thank you for bringing that up.
I'm happy to share it with youand thank you for your email,
but now I see our signal isbeginning to fade.
If you have comments orquestions for me, please send
them to frank atriskparityradarcom.
That email is frank atriskparityradarcom.
Or you can go to the website,wwwriskparityradarcom, put your
(38:18):
message into the contact formand I'll get it that way.
If you haven't had a chance todo it, please go to your
favorite podcast provider andlike subscribe.
Give me some stars, a follow, areview.
Voices (38:32):
That would be great.
Mostly Uncle Frank (38:33):
Okay, Thank you once again for tuning in.
Voices (38:36):
This is Frank Vasquez with Risk Party Radio signing
off and neglect, won't even walkaround the block for their
(38:59):
health, won't even eat an applea day, won't even take the time
to refine their philosophy for abetter life.
Walk away and join the threepercent.
Guess how many people canretire from the income of their
own personal resources when itcomes time to retire?
Answer five percent.
In america, five% of the peopleare independent.
(39:21):
95% are dependent.
Take charge of your ownretirement.
You can multiply it at least by5.
Let the government take care ofit.
Some company take care of it.
You got to divide by 5.
I'm asking you take charge ofyour own retirement.
Take charge of your own life.
It happens to be one of thetitles of my own cassette
program.
Take charge of your ownretirement.
Take charge of your own life.
It happens to be one of thetitles of my own cassette
(39:43):
program.
Take charge of your own life.
That's what we've talked abouthere All morning.
Take charge of your own day.
Don't have days like mostpeople have.
You'll wind up broke and poorPennies.
No treasures, trinkets, novalues.
Change it all.
And it starts as simple as anapple a day.
It starts as simple as thefirst book of your new library.
It starts as simple as thefirst journal that you get, and
(40:03):
make the first entry that, whenpeople see it, will say this is
the beginning of a study of aserious student.
They're going to be healthy,they're going to be powerful,
they're going to be rich,they're going to have it all.
Look, they've committedthemselves to a whole new
journey.
I'm asking you to do is whatEasy not to do.
(40:23):
But walk away from the 90%,walk away from the 97%, walk
away from the 95%.
Don't go where they go, don'tdo what they do.
Don't talk like they talk.
Develop you a whole newlanguage.
Be part of the few.
Guess, when I went and got thislittle book, richest man in
Babylon.
Guess, when I went and got itthe same day I heard about it.
(40:43):
I went and got it.
Somebody says well, mr roan,does that make you different
than most everybody else?
The answer is yes.
Somebody says why is that?
We don't know.
What do we know?
You don't know, I don't know,nobody knows.
All we know is some get thespark and say I'm going to
(41:03):
change my life, I'm going tochange my health, I'm going to
change my relationship with myfamily, I'm going to change
everything.
And if it starts with an apple,if it starts with a walk around
the block, if it starts with abook, if it starts with a
journal, whatever it starts with, I'm a candidate.
I'm ready to go and change mylife.
I invite you on that journey.
Once you look back on it, youwill never turn back.
You'll never go back to the oldways and the old language and
(41:26):
the old neglect, never.
Cardiovascular problems andalone in America create over a
thousand funerals a day and 70%of it is neglect.
I'm asking you not to hopethey're going to fix this out
here next year so that you'll behealthier.
I'm asking you to pick up somenew disciplines so that you will
(41:47):
be healthier.
Drive yourself to do it, bookby book, entry by entry.
It's all available for you.
Mostly Mary (41:54):
The Risk Parity Radio Show is hosted by Frank
Vasquez.
The content provided is forentertainment and informational
purposes only and does notconstitute financial, investment
tax or legal advice.
Please consult with your ownadvisors before taking any
actions based on any informationyou have heard here, making
sure to take into account yourown personal circumstances.
A foolish consistency, is the hobgoblin of little minds
, adored by little statesmen andphilosophers and divines.
If a man does not keep pace withhis companions, perhaps it is
because he hears a differentdrummer, a different drummer.
Mostly Mary (00:19):
And now, coming to you from dead center on your
dial, welcome to Risk ParityRadio, where we explore
alternatives and assetallocations for the
do-it-yourself investorBroadcasting to you now from the
comfort of his easy chair.
Here is your host, frankVasquez.
Mostly Uncle Frank (00:37):
Thank you, Mary, and welcome to Risk Parity
Radio.
If you are new here and wonderwhat we are talking about, you
may wish to go back and listento some of the foundational
episodes for this program.
Voices (00:50):
Yeah, baby, yeah.
Mostly Uncle Frank (00:51):
And the basic foundational episodes are
episodes 1, 3, 5, 7, and 9.
Some of our listeners,including Karen and Chris, have
identified additional episodesthat you may consider
foundational, and those areepisodes 12, 14, 16, 19, 21, 56,
(01:13):
82, and 184.
Whoa, and you probably shouldcheck those out too, because we
have the finest podcast audienceavailable.
Voices (01:26):
Top drawer, really top drawer.
Mostly Uncle Frank (01:30):
Along with a host named after a hot dog.
Voices (01:34):
Lighten up Francis.
Mostly Uncle Frank (01:37):
But now onward to episode 433.
Today, on Risk Parody Radio,we'll just be doing what we do
best here, which is tending toyour emails.
Voices (01:48):
Surely you can't be serious.
Mostly Uncle Frank (01:50):
I am serious and don't call me Shirley.
But before we get to that,let's talk about one of my
favorite people in the worldright now.
Voices (01:58):
The best, jerry the best .
Mostly Uncle Frank (02:00):
Who is our good friend Luke from Quebec?
Voices (02:03):
Here's another one for you.
Say peanut you heard that onebefore.
Who is our good friend Lukefrom Quebec?
Here's another one for you.
Saint Peanut.
You heard that one before.
I heard a lady say that oncewhile I was in a store and I was
mind blown Saint Peanut, saintPeanuts, even peanuts are being
sanctified here.
I want to go to the church ofSaint Peanuts.
I want to know what kind ofmiracles that peanut did that
(02:24):
got sanctified.
That's like peanut, hazelnut,cashew nut, macadamia nut.
That was the one that was senther into going crazy.
Mostly Uncle Frank (02:38):
Luke is a youngish man with some
programming skills.
Luke is a youngish man withsome programming skills, you
know, like nunchuck skills, bowhunting skills, computer hacking
skills, who has taken it uponhimself to volunteer to see if
he can do something to improveour website.
Voices (03:00):
Just come up.
Mostly Uncle Frank (03:02):
And he's already created a kind of demo
placeholder for us to look at.
So if you go to the Risk Paritywebsite, wwwriskparityradiocom,
and then you look at thebuttons at the top and click on
the one that says Alt Site,you'll go to this demo template,
which I'd like as many of youto check out as possible,
(03:25):
because if I can get somecomments from you about what you
think of it, we can improvethis website.
Mostly Mary (03:28):
I think I've improved on your methods a bit
too.
I employed some Chiara Scuroshading.
Mostly Uncle Frank (03:35):
I will warn you that not all the links and
things are working there yet.
So don't look at it for that,just look at it for its
presentation, basically, andwhat's there, and then hopefully
we'll be able to greatlyimprove that website without me
really having to do anything.
It's not that I'm lazy, it'sthat I just don't care.
But good things can happen whenyou have top men volunteering
(03:57):
for men working on it right now?
Voices (04:03):
Who?
Top men.
Mostly Uncle Frank (04:10):
So please check that out and let us know
what you think.
Please send an email for that,and not a comment on the site,
to frankatriskparodyradiocom.
Voices (04:19):
Yes.
Mostly Uncle Frank (04:20):
And Luke and I will take a look at those and
figure out what to do next.
Voices (04:24):
So the literal meaning of voyons is let's see, voyons
voir.
But here it's used often toexpress surprise and even
frustration.
Voyons, ok, gogol, ok, gogol,voyons, ça marche pas là.
Hey, gogol, tu te caves là.
Mostly Uncle Frank (04:38):
C'est technologie de marde, I don't
think we'll be making anychanges to the website for
another couple of months, but inthe meantime we will just play
around with what we've got thereand see what happens and when
you combine it with don't, it'slike damn, Voyons donc qu'est-ce
que tu fais, Voyons donc ça, sepeut-tu du monde de même?
Voices (04:55):
Wow, là, Juste juste wow là.
And maybe we'll include aQuébécois section.
You, little fucking bastard,shut the fuck up, dude, I'm
gonna puke.
I'm gonna puke.
Poo, less, dude, poo in thetrash dude.
And you can even roll the R tomake it that much richer.
You, little fucking bastard.
(05:15):
You, my little Christ, I knowbastard, but now without further
ado.
Here I go once again with theemail and.
Mostly Uncle Frank (05:24):
First off, without further ado, here I go
once again with the email, andFirst off.
First off, we have an emailfrom Mason.
Mostly Mary (05:31):
The other morning I had a talk with Bob.
Bob, you plus other words, islike having a boogish board.
And Mason writes Hi, Frank andMary.
Thank you so much for the workthat you do.
The information in your podcastis like nothing else out there,
and your outlook on life andcharitable work are inspiring.
I just made a donation to theFather McKenna Center through my
(06:03):
donor advised fund.
I just made a donation to theFather McKenna Center through my
donor advised fund confirmationattached.
Here's my question, orquestions.
Most of my portfolio iscurrently in an accumulation
strategy in a taxable brokerageaccount.
This strategy was set up for meby an investment advisor with
whom I no longer work, but ithas done well as an accumulation
portfolio.
I plan to retire in the nextfew years and I want to
(06:26):
transition to a risk paritystyle portfolio.
Ideally, I would transitioneverything now, but I would like
to mitigate taxes if possible,since there is a good amount of
gain in the portfolio.
Here is the breakdown of myentire portfolio across a number
(06:46):
of different accounts TaxableIVV 50.48%.
Qual 14.57%, iyw 5.05%, esgu7.44%, usmv 2.43%, ifra 0.19%,
(07:09):
ira, iau 0.39%, gldm 2.86%, vglt12.53%.
There are two obvious optionsfor transitioning One all at
(07:44):
once, two dollar cost averagingby selling some taxable accounts
each month.
Even if I were to sell myentire taxable account all at
once, I think I may still dollarcost average into assets that
are very high right now, likegold and international equities.
Does that make sense or is itjust market timing?
Recently, inspired by yourexcellent podcast, I've been
(08:07):
wondering if using a treasurystrips fund and a leveraged gold
fund in my IRA could helpbetter approximate a risk parity
portfolio without sellingassets in the taxable account.
For example, I could use GOVZor ZROZ in place of VGLT and UGL
or DGP in place of GLDM.
(08:29):
This could potentially helpstretch my limited IRA funds
further, getting morediversification for every dollar
.
Am I on the right track here ordo I have a gambling problem?
Voices (08:40):
Uh, what it's gone.
It's all gone.
What's all gone?
The money in your account itdidn't do too well, it's gone.
Mostly Mary (08:47):
My thinking is that if I use this option, I would
still DCA over time to get to myideal portfolio, but this would
just give me morediversification.
While I'm in the process ofdoing that, is it better to just
pay the taxes now and move on?
Note I know this is a longemail with lots of embedded sub
questions, so please feel freeto break it up and address the
(09:09):
below in another episode, ifneeded.
For context below is theportfolio I'm planning on
transitioning to.
Do you think it has too much ofa value tilt?
Any obvious issues you see withit 16% US LCG, 16% US SCV, 23%
(09:37):
International Developed SCV, 28%LTT, 17% Gold.
This portfolio is inspired byboth the weird portfolio and
your own golden ratio.
A few notes on the tweaks I'vemade.
There is no cash in theportfolio because they have cash
reserves elsewhere.
I own real estate and invest inprivate mortgage lending
(09:59):
outside of this portfolio, so Iopted to drop US REITs, since I
already have a lot of exposureto US real estate.
I looked at international REITsper the weird portfolio but
decided against them because one, I couldn't find good long-term
data to use in backtesting andtwo, I experimented with just
spreading the REIT allocationover the other equity
(10:20):
allocations and the numbersworked very well.
This portfolio allows for a5.3% perpetual withdrawal rate
when backtested on portfoliocharts with data from 1970 to
2024.
Mostly Uncle Frank (10:35):
Thanks again for all you do, mason.
Well, first off, thank you forbeing a donor to the Father
McKenna Center, mason, as mostof you know, we do not have any
(10:57):
sponsors on this program.
We do have a charity we support.
It's called the Father McKennaCenter and it supports hungry
and homeless people inWashington DC.
Full disclosure.
I am on the board of thecharity and am the current
treasurer.
We are currently running apromotion because one of our
listeners put up $15,000 inmatching funds.
Voices (11:11):
Yeah, baby, yeah.
Mostly Uncle Frank (11:13):
We're calling it the Top of the
T-Shirt Campaign and if you wantto know more about that and why
we're calling it that, if youhaven't listened to it already,
go back and listen to episode426 to get filled in on that.
But anyway, if you do donate tothe Father McKenna Center, you
will go to the front of theemail line and there's two ways
to do that.
Either go to the Father McKennawebsite donation page directly
(11:35):
I'll link to that in the shownotes and make sure you mention
Risk Parity Radio in a littlecomment or dedication box that
they provide when you make yourdonation.
Or you can go to our supportpage at wwwriskparityradiocom
and you can join our patrons onPatreon that way who give
monthly, and then we collectthat all and give it to the
(11:56):
center at periodic intervals.
Either way, you get to go tothe front of the email line.
Voices (12:00):
Don't be saucy with me, bernays.
Mostly Uncle Frank (12:03):
But now let's get to your questions.
First, let's talk through whatyou already have here and how it
fits into the grander scheme ofthings.
So, going through these fundsIVV, which is 50% of your
holdings, is an S&P 500 fund.
Qwal is a quality, large capquality focused fund.
(12:23):
Iyw is a tech focused fund, andESGU is also a large cap fund
focused on ESG.
Esgu is also a large cap fundfocused on ESG.
What you should reallyrecognize, though, is all of
these funds are very similar toeach other and they have a lot
of overlap, so there's probablyno reason to hold all of them,
(12:43):
and you will find this to occura lot of times.
Voices (12:46):
Financial advisors will put you in a bunch of different
things like this Am I right oram I right, or am I right, right
, right, right.
Mostly Uncle Frank (12:54):
But there's no reason to be holding all of
them.
If you really want to seewhat's going on, go to
Morningstar, put these things inand look at their portfolios
and you can look at what styleboxes they appear in.
Here we're looking at all largecap blend, large cap growth and
then also look at theindividual holdings which are
listed there and you'll seetremendous overlap with these.
They're all MAG-7 type stuff.
(13:15):
So if you're constructing aportfolio, you would not really
want to have all four of thesethings together because they're
not really doing anything.
Voices (13:23):
That's the fact, Jack.
That's the fact, Jack.
Mostly Uncle Frank (13:27):
It's kind of a false diversification that
people get into because they'renot really looking at what's in
the fund.
They're looking at what thename of the fund is, and that's
not really the way to go whenyou're trying to analyze one of
these things.
So it's not wrong, it's not bad, but it's not any real form of
diversification with those fourthings.
The other two are diversifiedUSMV is a low volatility fund.
(13:49):
It plays kind of like a largecap value fund, and IFRA is an
infrastructure fund, and that isa small cap value fund.
It has some utilities and otherthings in it.
You have such a trivial amountin that, though it doesn't
really matter.
0.19% is not worth holding invirtually anything.
But now we're talking abouttransitioning this thing
(14:13):
virtually anything, but nowwe're talking about
transitioning this thing.
There are a couple of factorsthat are not in your email that
I would want to look at first,and one is basically how much
are your expenses versus howmuch of this portfolio and how
much is covered with somethingelse, because you really need to
know what those things arebefore you do anything.
But as for transitioning this,yeah, you could do it all at
once, particularly at this point, because the stocks are at, or
(14:36):
near an all-time high.
I know gold is too, but it'snot that big a percentage.
I don't think of your overalltarget, but if you were to
dollar cost averaging by sellingsome of the assets and
converting them every month,that would be fine too.
This is not going to matterwhich way you do this.
In the very long term, ifyou're thinking about the next
two or three decades, whetheryou converted today, at one day,
(14:59):
or did it over a period ofmonths or even a couple of years
, is probably a coin flip as towhich one is going to be better,
and there's really no way ofknowing.
So I would do it the way thatfeels most comfortable to you
psychologically, and if that'sselling a little bit and
converting it over time, that'sfine.
Go ahead and do that.
The one thing I would really belooking at, though, is the tax
(15:21):
situation with this, and that'sanother thing.
I don't know from your email asto what tax brackets you're in
and how much this would affectyour tax bill next year.
So there may be some goodreasons to only do part of the
conversion this year and part ofit next year.
I can't see it probably needingto go over more than a couple
of years.
But I don't know your taxsituation and that is a
(15:42):
consideration when you're doingthat you can also think about.
Well, can I sell particular taxlots that will result in lower
taxes, because I think you wantto keep whatever you're keeping
out of this portfolio.
You make that the longest heldtax lots because if you sell
those, like it would do,automatically that would result
(16:04):
in the higher tax bills where ifyou sell more recently
purchased funds, you'll have alower tax bill in this
conversion.
All right, your next questionhas to do with the use of funds
like GOVZ or ZROZ in place ofVGLT, which are basically
treasury strips funds that havea longer duration than something
(16:26):
like VGLT.
And then you also asked aboutleveraged gold funds like UGL or
DGP.
I think I really have twodifferent answers for those.
What I've seen is that the GOVZand ZROZ do tend to mimic
pretty well a one and a halftimes leveraged TLT or VGLT, at
(16:48):
least in terms of how they reactto movements in interest rates,
and they also are relativelyinexpensive, and so I do think
they make a good choice forsomebody who just wants to
minimize the space in theirportfolio for treasury bonds for
whatever reason, but still havethe same kind of impact if we
were to have a recession andfalling interest rates all of a
(17:11):
sudden sometime.
So I think those can be goodchoices, just make sure you use
them in moderation.
I'm less sanguine about theselevered gold funds like UGL or
DGP.
I have to tell you I haven'tlooked at them very closely
recently, but my experience inlooking at them over the past
decade or so is they do tend tohave drags on them.
(17:31):
They don't necessarily performthe same way that gold does,
because they are really designedmore for short-term holdings.
And that's the problem withthese leveraged funds.
Yes, you can use them long-term, but some of them really don't
work that well.
So I don't use those personally, but I know some people do and
don't have a problem with them.
Voices (17:51):
You can't handle the gambling problem.
Mostly Uncle Frank (17:55):
All right, looking at what you're planning
on transitioning to, it's 16%large cap growth, 16% US small
cap value and 23% internationaldeveloped small cap value.
That adds up to 55% in stocks.
Yeah, I do think that's alittle bit overweighted on the
value side, particularly if it'sall in small cap value.
Voices (18:17):
I got a fever and the only prescription is more
cowbell.
Mostly Uncle Frank (18:23):
That is going to give you a more
volatile portfolio overall andit's also going to be heavily
divergent from the US marketitself, which sometimes causes
people some psychologicalconsternation.
So I would probably make ithalf growth and half value, and
then, whether that's in theinternational small cap value or
(18:45):
US small cap value, I'm prettyagnostic about that Just
recognize the currencyspeculation that is always
inherent in those sorts ofthings.
I will say that the Avantis andDFA ETFs now that they have for
international small cap valueare quite good and that is
certainly an option.
I think there's also now aninternational all-value fund
(19:07):
that they've rolled out forAvantis, and it seems like they
keep rolling out things thereevery six months or so.
So take a look at what's thereand see what you really want to
have.
My view is generally that,since we really don't know
what's going to perform best inthe future on terms of growth or
value, it's better just to holdthem both and be agnostic about
(19:28):
that and then rebalance themwhen it becomes appropriate.
Mostly Mary (19:32):
A crystal ball can help you.
Voices (19:34):
It can guide you.
Mostly Uncle Frank (19:37):
The one thing I think you should avoid
is small cap growth, but youdon't have any of that, so
that's not an issue.
Now, you mentioned you had 28%long-term treasuries.
That is actually on the highside for that allocation Usually
between 15 and 30 percent tendsto be where you want to be.
So this portfolio will doreally well in recessionary
(19:58):
environments, but it will dragit down in non-recessionary
environments is what you shouldrecognize from that kind of
holding and it will create morevolatility in non-recessionary
environments as well.
I think the 17 percent gold isfine if that's your only
alternative asset in thisportfolio.
Also, recognize that it can bevery volatile, and these days
(20:20):
there's a fairly strong negativecorrelation between the
treasuries and the gold.
I don't know how long that'sgoing to last, because sometimes
they're positively correlated,but you can have decades like
the 70s or 80s or this decade,where one of them is obviously
just crushing the other one interms of performance.
Now, as for REITs, I thinkthey're optional.
They would provide a littlemore diversification and I would
(20:42):
treat them as one of your stockallocations if you choose to
hold them, but I'm fairlyagnostic as to whether you
actually want to hold them ornot, as to whether you actually
want to hold them or not.
Just make sure you try to holdthem in a tax-efficient manner,
because they tend to payordinary income and therefore
generally belong in retirementaccounts.
Now you said you've run backtestwith this on portfolio charts.
(21:02):
I would go ahead and usemultiple calculators.
I would use Testfolio, eventhough it's hard to model
small-cap value on there rightnow.
It's interesting, he's got thesectors back to the 1920s but
that hasn't been broken down bygrowth and value yet.
But that site keeps improvingall the time and I would
definitely use it for somemodeling.
I'd also go model at PortfolioVisualizer and then, if you can
(21:27):
pull out the Big Earn Toolboxfrom Early Retirement Now that
is a spreadsheet so it's alittle bit difficult to use and
you really only want to focus onthe data since the 1920s
because that's the robust data.
But I also like modeling thingsthere to the extent I can.
Because, again, ultimately whatyou're comparing here is a
(21:49):
portfolio A choice to aportfolio B choice, and if you
can see that something similarto portfolio A outperforms
something similar to portfolio Bover all of these different
calculators and different timeframes, at least for the
purposes of withdrawing from inparticular, then you know that
you're on the right track there,and, while the multiple
(22:10):
calculator test is tedious, I dothink it's the most robust way
to really get a handle andreally get confidence in
whatever you're thinking ofholding, and so that's what I
would do next in your case, ifyou haven't done that already,
when you use the Testfoliowebsite, go to the help section
and the ticker section, becauseyou can see how he's built out
(22:33):
simulated data sets, even forthings that don't have long time
series in their current ETFform, and some of those go back
to the 60s and some of them goback to the 20s, but it's a very
useful set of data to work with.
Hopefully, all that helps andthank you for your email.
Second off.
(23:04):
Second off we have an emailfrom Brian.
Voices (23:07):
Hey, brian, care to place a wager?
And Brian?
Mostly Uncle Frank (23:09):
Wright.
Hello Frank, I've been waitingto buy into you and Brian right.
Mostly Mary (23:11):
Hello Frank, I've been waiting to buy into YouPro
until it went down to a decentnumber.
Voices (23:17):
You have a gambling problem.
Mostly Mary (23:19):
Once the tariffs hit, I saw my opportunity to
pounce Now.
That being said, my Roth is70-30, with SCV, avuv at 70% and
SPLG at 30%.
This allocation is based offother accounts that I have 457
and my wife's rollover IRA soit's a more diversified
portfolio than just those twofunds.
(23:40):
I wanted just a little morecowbell in my Roth and my wife's
Roth, so I just cut the SP500fund down to 25% and added UPRO
at 5%, so nothing life-changing.
Voices (23:52):
I'm telling you, fellas, you're gonna want that cowbell.
Mostly Mary (23:56):
I plan on rebalancing Upro anytime it's
between 5% to 10% above its 5%allocation to keep it from being
even more risky.
I re-listened to episode 152 onUpro and my question is are you
willing to share what you havein your Roth and what percentage
is you pro?
Also, what rebalancingguidelines do you have for that
(24:17):
specific account?
Is it based on the Roth itselfor your overall portfolio?
I understand you won't betouching that Roth anytime soon,
or that it may be for yourfuture heirs.
I'm just curious, more thananything.
Voices (24:31):
Hey, it's me, knock knock, so you got my money.
Yeah, huh, oh yeah, I'll payyou soon.
Yeah, well, um, here's asuggestion.
Um, have the money by tomorrowand there won't be any problems.
Huh, yeah, 24 hours.
Why, what happens in 24 hours?
I don't know, not psychic man,I'm just saying it would
probably be better for everybodyif you had the money tomorrow.
(24:52):
Yeah, all right, I'll see whatI can do.
Sweet, sweet, great.
Uh, how's everything else goingGood?
All right, all right, see youlater, don't forget.
Nah, you're not going to forget.
Mostly Mary (25:03):
Hopefully you'll get to this before the end of
the year.
Being that you're Mr Popularnow.
Have a great day, brian fromTacoma.
Voices (25:11):
So, uh, it's been 24 hours, got my money.
Mostly Uncle Frank (25:14):
Now, just for reference, Brian sent me
this email on April 10th 2025,sent me this email on April 10th
2025, which is essentially atthe nadir of the spring drop,
after Liberation Day, orObliteration Day, depending on
your perspective.
And yeah, I guess it would havebeen a good time to buy some
Upro at that point in time, atleast if you had it in and knew
(25:37):
which announcement was going tocome next.
Voices (25:40):
Yeah, that's what happens, man.
Oh, come next.
Yeah, that's what happens, man.
Oh my God.
Yeah, that's what happens.
Where's my money?
You're going to give me mymoney.
Where's my money, man?
Mostly Uncle Frank (25:52):
But you know what we say when people start
talking about leveraged fundshere.
Voices (25:56):
Well, you have a gambling problem.
Mostly Uncle Frank (26:00):
For those of you who don't know, you pro is
a three-time leveraged s&p 500fund.
So if you went and headed anddid that, congratulations there
it is winner, winner chickendinner I think we did end up
selling some gold and buyingsome large cap growth around
(26:23):
that time as well, but nothinglike this Upro extravaganza that
you're talking about.
Ramming speed, ramming speed,ramming speed.
Now you asked me about our rothallocation, where I do
(26:48):
experiment with some leveragefunds because I know we really
don't need that money.
I talked about that back inepisode 152 and, yeah, what that
is migrated to these days orlooking more like, is kind of
like that Optra portfolio, thelast sample portfolio, a return
stack portfolio.
So I've cut back on the UPROallocation for that and I do
treat this Roth like anexperimental portfolio because
(27:12):
it's not really a significantportion of our assets.
So I think originally we hadsomething like 20 to 25% in UPRO
in that account and I've cut itback to more like 15.
It's interesting.
One of the other changes wemade with that over time is we
used to have some tmf in thataccount, but I have found that
(27:33):
that leverage bond fund reallydoes not work very well and so
we've gone with zroz or go, Ithink, and I've been wondering
why things like UPRO seem towork fairly well whereas things
like TMF do not work well.
In terms of leveraged funds.
I mean part of it is just thestock market has performed very,
(27:54):
very well and the bond markethas performed very poorly.
But even with that, incomparison to their underlying
assets, the UPRO has performedbetter relative to its
underlying asset the S&P 500,than TMF has performed relative
to its underlying assetsomething like TLT.
I think part of that is likelyto be what you'd call volatility
(28:17):
drag, that if you're workingwith some kind of a leverage
thing that's going up and down alot, that actually will detract
more from its overallperformance.
It's the idea that if somethingdrops 20%, it has to increase
25% to get back to where it was.
So if it's tending to go up andto the right most of the time,
(28:39):
like the S&P 500 or UPRO, thatseems to be less of a problem.
If it tends to be going up anddown all the time, like a bond
fund, as interest ratesfluctuate, then you get more of
that volatility drag as anatural result of that.
I have not analyzed that in anyrigorous or mathematical way,
but I think that's what's goingon with respect to how these
(29:00):
things have been performing.
But it's a good way to learn toactually experiment with small
portfolios like this or smallallocations to things that
you're wondering about, becausewhenever you're dealing with
something relatively new, youdon't want to go whole hog into
something like that.
You won't get hurt if you justhold a little bit of anything,
(29:20):
and I think that's the best wayto approach anything that is new
.
This is also why I found thesample portfolios and, in
particular, the experimentalportfolios on the website to be
particularly interesting, notbecause they succeeded very well
, but because they've failed orthey haven't really failed all
the way, but they certainly havenot performed the way you would
have want them to perform.
(29:42):
But prior to that, when westarted them in 2020, there were
a lot of suggestions, includingthe hedge fundies graded
venture fund or portfolio that,holding a mixture of Bupro and
TMF was going to be somethingthat would have a good long-term
performance and, as it turnsout, it probably doesn't.
And even if it does, it'shighly volatile, as we've seen
(30:04):
those experimental portfolios gofrom the absolute best to the
absolute worst in the time we'vebeen watching them.
Anyway, the lesson you shouldlearn is you should be careful
with this stuff and use it onlyin moderation.
Voices (30:18):
Where's the money?
Yeah, you like that.
That feel good.
That feel good moderation.
Mostly Uncle Frank (30:36):
Even though I know some of you are a lot
bigger gamblers than I am.
Of course, you're a lot youngertoo.
This is the grandson of the17th richest man in California.
Mostly Mary (30:46):
Does he drink?
Mostly Uncle Frank (30:47):
What he wants is money, because he
doesn't know when to say that'sit.
I'm two million ahead, I have acar and a house and a family
and it's all paid for.
I mean, even I did that.
Now, as for being Mr Popular,now it's good to be the king I
have to tell you, after I appearon a few other podcasts, what
(31:09):
always inevitably happens is afew more people come over to
listen to this, find out howstrange it is, and then I get
some hilarious one-star reviews.
This is pretty much the worstvideo ever made.
Voices (31:23):
Napoleon, like anyone can even know that.
Mostly Uncle Frank (31:26):
But hey, you know, if you don't like my
sense of humor, you know whatNapoleon, you can leave.
Fortunately, since this podcastis non-commercial, I don't have
any pressure to try to expandthe audience in any way, and I'd
rather have a smaller, moreinterested and devoted audience,
and more enthusiastic andinteractive, than worry about
(31:48):
pleasing the masses and growingthe numbers in any significant
way.
Voices (31:53):
Forget about it.
Mostly Uncle Frank (31:54):
We should go over a million downloads later
this year.
I'll let you know when thathappens.
Hopefully that helps.
Be careful out there and thankyou for your email.
Voices (32:08):
So, brian, we're even now right Ready to start a new
life in England.
I've got my money.
Your wounds have healed upnicely.
What do you say?
We let bygones be bygones.
Hmm, you shot me in both myknees then lit me on fire.
Mostly Uncle Frank (32:24):
Last off.
Last off of an email fromAnonymous.
I have no name and Anonymouswrites.
Mostly Mary (32:35):
Silly question when does the nobody knows sound
clip come from and how do I geta copy?
Voices (32:41):
We don't know.
What do we know?
You don't know, I don't know.
Mostly Mary (32:47):
Nobody knows, I don't know, you don't know,
nobody knows Nobody even knowswhere the clip comes from.
Mostly Uncle Frank (32:59):
Now there's an interesting question that
opens up a rabbit hole.
That is actually the great JimRohn, who is one of the best
motivational speakers to everspeak, and he did most of his
work in the 1980s and 1990s.
Voices (33:13):
Let me tell you about the power of association.
You are the average of the fivepeople you spend the most time
with, want to know your future.
Look at your friends, want tochange your future.
Change your friends.
I'm not saying abandon your oldfriends.
(33:33):
I'm saying expand your circle.
Include people who inspire you,challenge you, push you to grow
.
Because here's what I found youcan't soar with the eagles if
you're hanging around with theturkeys.
Mostly Uncle Frank (33:50):
About 10 or 15 years ago I got curious about
these motivational speakerslike Tony Robbins, etc.
And of course, when I getcurious about something, I want
to know the history of it.
So I studied the history ofmotivational speakers for a
while.
It goes all the way back to the19th century.
Actually, in the early 20thcentury you go back to writers
like James Allen, who wrote as aman Thinketh, amongst many
(34:14):
other things, somebody namedWallace D Waddles, who wrote a
book called the Science ofGetting Rich.
And then this flows alongthrough people like Earl
Nightingale in the middle of the20th century and you get to Jim
Rohn and then people like TonyRobbins and many others, and
what you learn is there are kindof two tracks that have been
(34:35):
followed or developed, and oneof them is the think and grow
rich, or only think and growrich track, which is represented
by what they call the secretthese days, and that's this idea
that you can just think things,manifest things is what the
buzzword that is used today andyour life will improve.
Mostly Mary (34:55):
Now you can also use the ball to connect to the
spirit world.
Mostly Uncle Frank (34:59):
I don't think that's true, and Jim Rohn
was one of the people thatpushed back on that.
He said yes, that's great tostart.
If you want to accomplishsomething, you need to start
thinking about how to do it,thinking that you can do it,
because if you think you can'tdo it, then you can't.
Voices (35:15):
You're not going to amount to jack squats.
Mostly Uncle Frank (35:20):
But he also famously said that affirmation
without discipline is thebeginning of delusion.
Affirmation without disciplineis the beginning of delusion I
am a scientist, not aphilosopher which means that you
have to get up and do somethingabout your situation and not
(35:40):
just think about improving yoursituation.
It doesn't work that way.
Voices (35:45):
You're going to end up eating a steady diet of
government cheese and living ina van down by the river.
Mostly Uncle Frank (35:53):
If you need knowledge, you've got to go get
the knowledge.
If you need skills, you've gotto develop the skills.
Whatever it is you need to do,you need to actually go out and
do it after you've been thinkingabout it.
Voices (36:03):
All we know is some get the spark and say I'm going to
change my life.
I'm going to change my health,I'm going to change my
relationship with my family.
I'm going to change everything.
And if it starts with an apple,if it starts with a walk around
the block, if it starts with abook, if it starts with a
journal, whatever it starts with, I'm a candidate.
I'm ready to go and change mylife.
Mostly Uncle Frank (36:19):
And so that's a lot of what that clip
is encapsulating.
If you listen to it in its fullform, it's about three minutes
long.
I will link to it in the shownotes, but I'm also going to
play that whole clip at the endof this podcast, just so you can
hear it.
Because if I'm looking for somemotivation, that is the kind of
thing that I go and listen to,and it is part of the ethos of
(36:42):
this podcast, because if youwant to spend more money in
retirement, the first thing youneed to do is realize that you
can, but you have to go dosomething about that in terms of
constructing a portfolio thatallows you to do that.
If you're going to sit aroundand say it can't be done, then
no, you can't do it and youbetter hoard your money.
Voices (37:03):
This is called the timid approach to life, and my
caution was always the risk.
Risk used to drive me right upthe wall.
I used to say what if thishappens?
What if this happens?
And on top of that, if this wasto happen, look at the fix I'd
be in.
I better not try.
Then I'll tell you what changedmy whole life when I finally
(37:24):
discovered it's all risky.
The minute you were born, itgot risky.
If you think trying is risky,wait till they hand you the bill
for not trying.
If you think investing is risky, wait till you get the tab for
not investing.
See, it's all risky.
Getting married is risky.
Having children is risky.
Going into business is risky.
Investing your money is risky.
It's all risky.
(37:45):
I'll tell you how risky life is.
You're not going to get outalive.
That's risky.
Mostly Uncle Frank (37:55):
Anyway, thank you for bringing that up.
I'm happy to share it with youand thank you for your email,
but now I see our signal isbeginning to fade.
If you have comments orquestions for me, please send
them to frank atriskparityradarcom.
That email is frank atriskparityradarcom.
Or you can go to the website,wwwriskparityradarcom, put your
(38:18):
message into the contact formand I'll get it that way.
If you haven't had a chance todo it, please go to your
favorite podcast provider andlike subscribe.
Give me some stars, a follow, areview.
Voices (38:32):
That would be great.
Mostly Uncle Frank (38:33):
Okay, Thank you once again for tuning in.
Voices (38:36):
This is Frank Vasquez with Risk Party Radio signing
off and neglect, won't even walkaround the block for their
(38:59):
health, won't even eat an applea day, won't even take the time
to refine their philosophy for abetter life.
Walk away and join the threepercent.
Guess how many people canretire from the income of their
own personal resources when itcomes time to retire?
Answer five percent.
In america, five% of the peopleare independent.
(39:21):
95% are dependent.
Take charge of your ownretirement.
You can multiply it at least by5.
Let the government take care ofit.
Some company take care of it.
You got to divide by 5.
I'm asking you take charge ofyour own retirement.
Take charge of your own life.
It happens to be one of thetitles of my own cassette
program.
Take charge of your ownretirement.
Take charge of your own life.
It happens to be one of thetitles of my own cassette
(39:43):
program.
Take charge of your own life.
That's what we've talked abouthere All morning.
Take charge of your own day.
Don't have days like mostpeople have.
You'll wind up broke and poorPennies.
No treasures, trinkets, novalues.
Change it all.
And it starts as simple as anapple a day.
It starts as simple as thefirst book of your new library.
It starts as simple as thefirst journal that you get, and
(40:03):
make the first entry that, whenpeople see it, will say this is
the beginning of a study of aserious student.
They're going to be healthy,they're going to be powerful,
they're going to be rich,they're going to have it all.
Look, they've committedthemselves to a whole new
journey.
I'm asking you to do is whatEasy not to do.
(40:23):
But walk away from the 90%,walk away from the 97%, walk
away from the 95%.
Don't go where they go, don'tdo what they do.
Don't talk like they talk.
Develop you a whole newlanguage.
Be part of the few.
Guess, when I went and got thislittle book, richest man in
Babylon.
Guess, when I went and got itthe same day I heard about it.
(40:43):
I went and got it.
Somebody says well, mr roan,does that make you different
than most everybody else?
The answer is yes.
Somebody says why is that?
We don't know.
What do we know?
You don't know, I don't know,nobody knows.
All we know is some get thespark and say I'm going to
(41:03):
change my life, I'm going tochange my health, I'm going to
change my relationship with myfamily, I'm going to change
everything.
And if it starts with an apple,if it starts with a walk around
the block, if it starts with abook, if it starts with a
journal, whatever it starts with, I'm a candidate.
I'm ready to go and change mylife.
I invite you on that journey.
Once you look back on it, youwill never turn back.
You'll never go back to the oldways and the old language and
(41:26):
the old neglect, never.
Cardiovascular problems andalone in America create over a
thousand funerals a day and 70%of it is neglect.
I'm asking you not to hopethey're going to fix this out
here next year so that you'll behealthier.
I'm asking you to pick up somenew disciplines so that you will
(41:47):
be healthier.
Drive yourself to do it, bookby book, entry by entry.
It's all available for you.
Mostly Mary (41:54):
The Risk Parity Radio Show is hosted by Frank
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