In this episode we answer emails from Tracy, Mike and "Some Call Me" Tim. We discuss the speculations and gambles of Forex, portfolio transitions, the Vanguard Market Neutral Fund and moving overseas. And we have a mystery guest reader!
Links:
Father McKenna Center Donation Page: Donate - Father McKenna Center
Catching Up To FI Website: Financial Independence - Catching up to FI
VMNFX Testfolio Comparative Analysis: https://testfol.io/analysis?s=eFgblWT8SJO
VMNFX Home Page: VMNFX-Vanguard Market Neutral Fund Investor Shares | Vanguard
Morningstar VMNFX: VMNFX – Vanguard Market Neutral Inv Fund Stock Price | Morningstar
Breathless Unedited AI-Bot Summary:
Navigating the complex world of personal finance often means confronting tough questions about investments we don't fully understand, partners who approach money differently, and life transitions that demand portfolio adjustments. This episode dives deep into three listener questions that illuminate these challenges.
When Tracy's husband becomes deeply invested in forex trading despite a significant loss, she makes the bold decision to split their investment portfolios. This raises fascinating questions about marriage, money, and risk tolerance. Frank unpacks the reality of forex trading, explaining why it's neither an investment nor typically suitable for most individual investors. Drawing from his own trading experience in the 1990s, he distinguishes between disciplined speculation and outright gambling, offering clarity for anyone tempted by the allure of currency trading. As Tracy approaches her financial independence number, Frank provides thoughtful guidance on transitioning from an accumulation portfolio to a more conservative allocation while markets remain strong—wisdom applicable to anyone approaching their financial goals.
The exploration continues with an analysis of Vanguard's Market Neutral Fund, revealing how even traditional investment companies offer alternative strategies that many investors overlook. While this long-short fund provides impressive diversification benefits, its lackluster returns highlight the trade-offs investors must consider when pursuing uncorrelated assets. For listeners curious about expanding beyond conventional index funds, this segment offers valuable perspective on evaluating alternative investments.
Finally, for those contemplating international moves while managing US retirement accounts, Frank provides practical advice that cuts through confusion. By focusing on investment fundamentals rather than geographical considerations, he reminds us that solid financial principles transcend borders. Whether you're wrestling with a spouse's different investment philosophy, considering alternative assets, or planning an international life change, this episode delivers insights to help navigate your financial journey with confidence and clarity.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Mostly Bill (00:01):
A foolish consistency, is the hobgoblin of
little minds, adored by littlestatesmen and philosophers and
divines.
If a man does not keep pacewith his companions, perhaps it
is because he hears a differentdrummer.
Mostly Uncle Frank (00:17):
A different drummer.
Voices (00:19):
And now, coming to you from dead center on your dial,
welcome to Risk Parity Radio,where we explore alternatives
and asset allocations for thedo-it-yourself investor,
Broadcasting to you now from thecomfort 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 (00:52):
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.
And you probably should checkthose out too, because we have
the finest podcast audienceavailable.
Voices (01:26):
Top drawer, really top drawer.
Mostly Uncle Frank (01:31):
Along with a host named after a hot dog.
Voices (01:34):
Lighten up Francis.
Mostly Uncle Frank (01:36):
But now onward to episode 435.
Today, on Risk Parity Radio,we're just going to do what we
do best here, which is attend toyour emails.
But before we get to that, Iwanted to remind you all that we
are working on a revamp of thewebsite with my good friend Luke
from Quebec.
Voices (01:57):
We have top men working on it right now.
Who.
Mostly Uncle Frank (02:04):
Top men and he's created a demo site.
So if you go towwwriskparityradarcom and click
on the alt site button at thetop, you'll go to that site and
it's in demo form, so noteverything works there, but we
are interested in knowing yourreactions to it.
(02:26):
We've gotten some greatcomments so far, but we'd like
to collect a few more and thenwe will put everything together
and hopefully roll out arevamped site in August or
September.
Voices (02:39):
Inconceivable.
Mostly Uncle Frank (02:41):
So you too can be one of our top men
working on it.
Voices (02:46):
You keep using the word.
I don't think it means what youthink it means.
Mostly Uncle Frank (02:51):
If you have comments on that, please send
them to me in an email, not onthe website.
Send it to frank atriskparityradarcom, and we will
put it in the stack with theother ones that we've received
so far, and thank you for yourparticipation in that effort.
We're putting the band backtogether.
Voices (03:12):
You were the backbone, the nerve center of a great
rhythm and blues band.
You can make that live, breatheand jump again.
Jake ain't lying, though we hada band powerful enough to turn
goat piss into gasoline.
Mostly Uncle Frank (03:29):
But now without further ado.
Voices (03:31):
Here I go once again with the email.
Mostly Uncle Frank (03:35):
First off.
First off, we have an emailfrom Tracy.
Voices (03:40):
Dr Tracy speaking.
Dr Tracy speaking.
Mostly Uncle Frank (03:44):
And Tracy writes.
Mostly Bill (03:46):
Hi Frank.
Thank you for your valuablecontent and inspirational
lessons on giving.
I have donated to the FatherMcKenna Center to show my
support.
Voices (03:55):
Yeah, baby, yeah.
Mostly Bill (03:57):
I have sent this email on 4-28-2025 and I'm now
resending it.
Voices (04:02):
I'm gonna pin it on you.
See, I'm gonna pin it on you.
I has been into forex tradingfor about 10 years.
Mostly Bill (04:16):
He took the time to understand it and is still very
deep into it, despite a hugeloss in 2015 that we are still
recovering from.
Voices (04:25):
That's not an improvement.
Mostly Bill (04:27):
It is a big part of his portfolio.
He knows stocks, bonds andindex funds well, but for some
reason he is still choosing toinvest his time and energy into
Forex.
He believes in it so stronglythat he even wanted to teach our
kids about Forex when they growup.
Why?
What have children ever donefor me?
We split up our investmentportfolio last year since I
(04:49):
started to learn about investingthrough the Choose Fi podcast
and started to dabble with bondsand other macro asset classes
from your podcast.
I don't understand Forex and Idon't want to invest in what I
don't understand.
We split up our investmentportfolio but we're still making
equal contributions to supportour household with young
children.
I don't understand Forex and Idon't want it in my portfolio.
(05:16):
That's why my husband and Isplit up our investment
portfolio.
My husband is financially soundinto Forex, knows the FI stuff,
but doesn't calculate how muchhis life costs Mostly the same
as mine, except for higherincome, having Forex and
family's rental property Norcalculate his FI number, at
least not yet.
So I want to continue with myown investment portfolio and
(05:38):
trajectory with the goal tocontinue my equal share to
support our household.
To continue my equal share tosupport our household.
My accumulation portfolio was100% total stock market index
funds.
As of May 2025, it's 75% totalstock market index funds, 24%
VGLT, 1% cash with a 401krollover to an IRA.
I am now 75% to my FI numberusing a 4% safe withdrawal rate,
(06:02):
or 89% to FI if using Bangan'slatest 4.7 safe withdrawal rate
with a diversified portfolio.
I have two questions for you.
Number one what is your thoughton Forex?
Is it an investment,speculation or gamble?
Number two at 75% of my FInumber, should I start making
the transition to a portfoliolike the golden ratio?
(06:25):
Thanks, tracy.
Voices (06:29):
A trapdoor, no doubt Very ingenious.
The Tracy is too smart for atrick like that.
I shall ring the bell from here.
Mostly Uncle Frank (06:41):
So, as I promised last time, we do have a
guest reader and a guest in ourhome.
Voices (06:47):
Yeah, hi, it's Bill Lumber.
Yeah.
Mostly Uncle Frank (06:51):
What's happening.
He's Bill Yount from theCatching Up to Five podcast.
We took a picture of him in theeasy chair just as a little
souvenir of his visit here.
Maybe you can get one somedaytoo.
Mostly Bill (07:04):
My name is Bill Yount.
Voices (07:05):
And I'm an alcoholic.
This is a Girl Scout meeting,is it or is it that you girls
can't admit.
Mostly Bill (07:11):
You have a problem and I believe I'm the first one
to appear on Frank's Risk PartyRadio or another voice.
I'm sitting in the easy chairand I am honored.
Lucky For Mary to give up herposition and allow another
person to do it is justfantastic.
I hope you too once get achance to sit in the easy chair
(07:33):
and read some emails.
Voices (07:34):
Yes, well it does sound like fun.
I can't wait to start pawingthrough my garbage like some
starving raccoon.
Mostly Uncle Frank (07:42):
I tried to get his wife, karen to read too,
but was not successful, atleast not this time, or at least
not yet.
Voices (07:49):
Don't be saucy with me, Bernays.
Mostly Uncle Frank (07:52):
Hopefully you enjoy his renditions and you
appreciate that Mary needs abreak sometimes.
Mary, mary, I need your huggin'Well.
First off, thank you for beinga donor to the Father McKenna
Center.
As most of you know here, we donot have any sponsors on this
(08:14):
podcast.
We do have a charity we support.
It's called the Father McKennaCenter.
It supports hungry and homelesspeople in Washington DC.
And full disclosure.
I am the board of the charityand I'm the current treasurer.
We are currently running amatching campaign.
It's called the Top of thecharity and I'm the current
treasurer.
We are currently running amatching campaign.
It's called the Top of theT-Shirt Campaign.
I'll have to go back to episode426 to get the details on that.
Voices (08:37):
Show me the money, jerry , you better yell.
Show me the money, show me themoney.
Mostly Uncle Frank (08:47):
But if you do donate you get to go to the
front of the email line, asTracy has done here, and it's a
pretty long line.
So it's worth something thesedays.
Voices (08:56):
That is the straight stuff.
Oh funk master.
Mostly Uncle Frank (09:00):
And there are two ways to donate.
You can go to the support pageat wwwriskprioritycomcom and
there's a link to Patreon thereand you can become a monthly
donor on Patreon.
Or you can go directly to theFather McKenna website, which I
will link to in the show notes,go to their donation page and
donate there.
(09:20):
Please mention Risk ParityRadio in your commentary when
you make your donation.
There's a little box fordedications or comments, and
then you too might go to thefront of the email line yes but
now getting to your questions.
So you're having fun with forex.
For those who don't know whatthat is, forex stands for
(09:42):
foreign exchange.
It's generally the trading offutures contracts usually
options and futures and yourfirst question is is that an
investment, a speculation or agamble?
Well, it's certainly not aninvestment, because it does not
have a return, like investing ina company or a fixed income
instrument.
So the question is reallywhether it's a speculation or a
(10:05):
gamble and it could be either,depending on how you're
approaching it.
Obviously, what your husband didin 2015 was a gamble, because
you should not be losing a wholelot of money doing this.
One of the ways that you tradeproperly in this area is by
sizing your trades to make surethat you do not lose a lot of
money, because it's very easy tolose a lot of money in
(10:28):
something like this because it'svery highly leveraged.
So a good trader uses somethinglike a Kelly criterion.
I know I'm not going to explainwhat that is, but it is
basically the amount you shouldbe betting, if you will, or
allocating to a particular trade, so you do not face gambler's
ruin and run out of money.
Mostly Bill (10:49):
This is the grandson of the 17th richest man
in California.
Voices (10:53):
Does he drink?
Mostly Bill (10:54):
What he wants is money, because he doesn't know
when to say that's it.
I'm two million ahead, I have acar and a house and a family
and it's all paid for.
Mostly Uncle Frank (11:02):
I mean, even I did that.
So in order to approach this asa speculation and not a gamble,
you need to have a definedsystem.
Usually it's a trend followingsystem with something like this,
although it could be a swingtrading kind of system.
You need to have a disciplinedsystem that is being followed
(11:26):
and then size the individualinvestments appropriately so you
do not go bust.
Oftentimes the best traders areusing options, spreads and
things like that.
This is a lot of work to doproperly.
I have done this kind oftrading back in the 1990s,
before the Internet.
We did it on the phone.
This kind of trading back inthe 1990s, before the internet.
Voices (11:52):
We did it on the phone.
Mostly Uncle Frank (11:55):
But you have to have charts, you have to
update your charts and you haveto be patient with it in order
for it to work, and don't expectto be making great gobs of
money doing it.
One of the reasons I quit isbecause it was too much work for
what we were really making onit, which was similar to stock
market returns.
If you are not approaching itthat way, it's probably a gamble
(12:17):
, and I would say, particularlyif you are trying to trade Forex
on a fundamental basis, as inreading news reports about what
is going on in the world andtrying to trade off that that is
really a form of gambling,because you are at an extreme
information disadvantage as anindividual trader in this area.
(12:38):
The big banks and big centralbanks are the ones with all the
information you don't have thatyou can't trade at their level
on a fundamental basis, so youshouldn't really try, because
that's frequently where peopleget into trouble and a lot of
scams are frankly run like this,where you get hot tips about
(12:58):
various currencies or centralbanks or other things that are
supposed to help you make moneyand usually they just generally
lose you a lot of money.
We'll reinvest the earningsinto foreign currency accounts
with compounding interest andit's gone.
Voices (13:12):
Uh, what it's gone?
It's all gone.
What's all gone?
The money in your account?
It didn't do too well, it'sgone.
Mostly Uncle Frank (13:20):
Now, since we live in the golden era of
investing, it's also possible toget exposure to currencies
through ETFs, and there are manyones that will go long or short
a currency, usually against thedollar.
But you can also get exposureto this by investing in managed
futures contracts.
To this by investing in managedfutures contracts.
(13:41):
So that fund DBMF that Ifrequently use has an exposure
to currency contracts, but italso has exposures to interest
rates and to commoditiesgenerally and stock indices.
So if you just want an exposureto this area as a diversifier,
without really getting involvedwith it, that's the way I would
approach it and that's the way Ido in fact approach it, because
(14:04):
I don't want another job.
It's not that I'm lazy, it'sthat I just don't care.
Anyway, I understand why yourhusband likes this, if he likes
it as a hobby or another job,but I also understand why you
have no interest in it, becauseit is a big learning curve and
it is another job, at least ifyou're going to do it properly.
(14:25):
And if you're not doing itproperly, chances are you will
lose money, because most peoplewho invest in that do lose money
.
And it's gone, because it's notas easy as it looks.
Poof.
All right.
Your next question At 75% ofyour FI number, should you start
making the transition to aportfolio like the Golden Ratio
(14:48):
or, I assume, a retirementportfolio generally?
And the answer is probably yesat this point.
You didn't say exactly whatyour timing was.
I assume you're still a fewyears away, but it sounds like
you were going to get there oneway or the other.
The advantage of doing it nowis that the stock market is at
or near an all-time high, andthat is when you want to be
(15:11):
making these kinds oftransitions, because you don't
want to wait until you have astock market that looks like the
one we had in April and thenall of a sudden be trying to
make these transitions.
You want to have this all linedup so that when you do retire,
it's already been set up and isworking.
It will continue to grow.
(15:32):
It will not grow as fast as anaccumulation portfolio, but when
you're that close it doesn'thave to grow that fast anymore.
So I would take some steps todo those kind of conversions,
but make sure you're doing it ina tax-efficient manner.
It sounds like most of it'sgoing to be happening in IRAs,
so that makes it easy, but bemindful of that as you make the
(15:53):
changes here.
When we were doing ourtransitions, we really started
them about 2015 or 2016, eventhough I did not retire until
2020.
But we were all lined up andready to go before retirement
day actually came.
I guess the one thing I'mthinking is that maybe you don't
want to put any managed futuresin your version of the golden
ratio portfolio, since yourhusband's got all of that
(16:16):
exposure already.
But, as I've said in the pastmany times, there are many ways
to structure that portfolio.
Particularly the smallerallocations to the 6% or the 10%
can be flexibly allocated intomany different things, and that
could include the managedfutures, or some REITs, or some
utilities, or perhaps someinternational stocks that are
(16:39):
well diversified from the otherthings that you're already
holding, or maybe someshort-term bonds or something
like that, if you're going to bereally conservative about it.
Anyway, hopefully all thathelps.
Thank you for being a donor tothe Father McKenna Center and
thank you for your email.
Voices (16:58):
Snake eyes, pda teeth.
Hammerhead.
Oh no, pussycat, pussycat puss.
Batman, doubleheader,picklepuss.
Pumpkinhead Neon noodle Jukebox.
Jaw Wolfman, you're all underarrest.
Mostly Uncle Frank (17:24):
Second off.
Second off we have an emailfrom Mike.
Voices (17:29):
Let's get Mikey.
Yeah, he hates everything.
Mostly Bill (17:34):
And Mike writes Hi Frank, thanks for an engaging
podcast and being so manypeople's companion in their way
to financial independence.
Voices (17:42):
That's what's so funny.
I switched glasses when yourback was turned, you fool.
Mostly Bill (17:47):
I recently discovered Vanguard's market
neutral fund and thought itmight be up your alley, but I
can't recall hearing about it onyour podcast.
Do you have any thoughts?
Thanks, Mike.
Voices (17:59):
Looks like I picked the wrong week to quit amphetamines.
Mostly Uncle Frank (18:02):
Well, here's an interesting question the
Vanguard Market Neutral Fund.
Its ticker symbol is VMNFX MN,as in market neutral.
It's been around since 1998.
It does have a $50,000 minimumat least this version of it does
(18:23):
and it's interesting.
Vanguard has this reputationfor being the index fund leader
and having the low-cost indexfunds and things like that.
If you look at Vanguard'scomplete suite of funds, there
are a lot of interesting thingsin there that are anything but a
plain vanilla index fund, andthis is one of those things.
(18:45):
What this fund is is a longshort fund, so it goes long some
stocks and short others, andthat's what they mean when they
say market neutral.
So overall it is neutral versusthe market.
So it is similar to the fundBTAL that we've discussed on
(19:06):
this podcast in the past andthat was in episode 114,.
If you're looking for that Now,what would you use this?
As in a risk parity styleportfolio, you would use it as
an alternative asset class, soit would be something like
managed futures in terms of itspurpose in the portfolio, and
(19:27):
its purpose in a portfolio is tosimply have as much
diversification as possible fromeverything else in the
portfolio.
It's not there to drivesubstantial returns, because it
won't Forget about it.
I ran it through the analyzerat Testfolio and compared it
with stocks, bonds, managedfutures, gold, just to see how
(19:50):
it lined up and how thecorrelations looked.
It has a very low correlationto all of those things, so from
that perspective it's areasonable addition to put in a
portfolio.
However, it does not performvery well.
It has recently.
I would say it has recently overits history, since 1998, though
(20:14):
it has a return of about 2%,and since that is less than
bonds and less than managedfutures, I probably would not
choose this over a managedfutures fund, for example,
because the other thing I'm notcertain about is there is no
such thing as like an index forlong short funds.
They are all individuallymanaged, they all have their own
idiosyncrasies and they are allbased on the management of the
(20:35):
fund, so there's no way toreally model this very well as
an asset class.
It simply exists out there.
If I was really looking for along short fund, I would
probably look at a number ofthem, because there are a lot
more ETFs out now that do thissort of thing and I would bet
(20:56):
you could find one that isbetter or cheaper, or some
combination thereof than thisone.
So where I come down is yes,you could use something like
this in a portfolio.
I probably would not use thisversion of this given its
limitations, but it isinteresting all the same, and I
will put a couple more links inthe show notes from Morningstar
and Vanguard so you can check itout at your leisure.
Voices (21:20):
Well, you haven't got the knack of being idly rich.
You see, you should do like mejust snooze and dream, dream and
snooze.
Mostly Uncle Frank (21:26):
The pleasures are unlimited.
Hopefully that helps and thankyou for your email.
Voices (21:33):
He likes it.
Hey, Mikey.
Mostly Uncle Frank (21:37):
Last off.
Last off, we have an email fromTim.
Actually, he says his name isSome call me Tim.
Voices (21:47):
What manner of man are you that can summon up fire
without flint or tinder?
I Am an enchanter.
By what Name are you known?
There are some who call me Timand some call me Tim.
Mostly Uncle Frank (22:04):
And some call me Tim Reitz.
Mostly Bill (22:06):
Hi Frank and Mary, thanks for all.
You do.
Love the podcast, love thesoundbites.
Voices (22:12):
You are talking about the nonsensical ravings of a
lunatic mind.
Mostly Bill (22:17):
I'm planning on moving overseas in the next four
years.
As a 40-year-old with an IRAand 401k in the accumulation
stage, should I start changingto a risk parity portfolio to
exit the US market or leave italone to keep money in US funds
until I reach retirement age inthe US and then transfer that
overseas?
Many thanks, Tim.
Voices (22:38):
All your strength.
Come no further, for deathawaits you all with nasty, big,
pointy teeth.
What an eccentric performance.
Mostly Uncle Frank (22:51):
All right, so you're moving overseas, but
it sounds like you're still inthe accumulation phase and will
continue to be in theaccumulation phase, accumulation
phase and will continue to bein the accumulation phase, in
which case I would leave thosethings alone, although I would
consider rolling the 401k intoan IRA if it doesn't have the
kinds of things you want toinvest in it, because those are
(23:14):
still US retirement accounts.
They're still subject to USretirement rules, regardless of
where you are, and so in orderto get the money out of those,
you would need to use somethinglike 72T or a Roth ladder or
something like that, and whereyou happen to be physically in
the world actually should not bethe determinant on your
(23:37):
investments, or at least not theprimary determinant.
So I think I would just leavethem alone, and if you have a
regular brokerage account, youmight consider moving that or
opening it at InteractiveBrokers, because that is a
brokerage that is designed towork all over the world.
Other than that, I probablywould not change a thing at this
(23:57):
stage of the game.
Just make sure that those areinvested in equities, or mostly
in equities, because you do wantthem to grow and avoid things
like target date funds, four ofthe reasons stated in episode
333,.
If you haven't listened to that,I hope you find working
overseas to be interesting.
I did a lot of that, although Iwas never stationed outside of
(24:20):
the US.
I would just go places and campout for weeks at a time.
Voices (24:36):
What a filthy job.
Could be worse?
How Could be raining?
Mostly Uncle Frank (24:54):
I'm glad you're enjoying the sound bites
and I take it you're a MontyPython fan.
Voices (25:00):
Is uh, is your wife a goer?
Eh, know what I mean.
Know what I mean, nudge, nudge.
Know what I mean.
Say no more.
Beg your pardon, your wife doesshe go?
Eh, know what I mean.
Know what I mean.
Does she go?
Eh, she sometimes goes, andthank you for your email.
Mostly Uncle Frank (25:21):
But now I see our signal is beginning to
fade.
There may or may not be apodcast this weekend.
We've got some stuff going onhere.
Voices (25:28):
That's good, that's good may or may not be a podcast
this weekend.
I've got some stuff going onhere.
I'm afraid I don't quite followyou.
Follow me.
Follow me.
That's good, that's good.
A nod's as good as a wink to ablind bat.
Mostly Uncle Frank (25:36):
Including a visiting Labrador retriever
named Vader.
Voices (25:41):
Vader, how's my favorite Sith?
Mostly Uncle Frank (25:44):
I'd have to say he's not exactly the most
menacing animal.
Voices (25:47):
I'm gonna tell, tell everyone what a whiny bitch you
were, about Potamame or PandaBear or whatever that name is.
Mostly Uncle Frank (25:53):
But in the meantime, if you have comments
or questions for me, please sendthem to frank at
riskparityradarcom.
That email is frank atriskparityradarcom.
Or you can go to the website,wwwriskparityradarcom.
Put your message into thecontact form form and I'll get
it that way.
If you haven't had a chance todo it, please go to your
favorite podcast provider andlike subscribe.
(26:14):
Give me some stars, a follow, areview that would be great.
Okay, thank you once again fortuning in.
This is Frank Vasquez, withRisk Party Radio Signing off,
and now it's time for the ginand tonics, your wife interested
(26:35):
in photography, eh, photographs, eh, he asked him knowingly.
Voices (26:40):
Photography, snap, snap, grin, grin, wink, wink, nudge,
nudge, say no more.
Holiday stamps Could be, couldbe taking on holiday, could be
Swimming costumes Nudge, nudge,candid, candid photography.
No, I'm afraid we don't have acamera.
Oh, still, oh, eh, eh, oh, look, are you trying to insinuate
(27:00):
something?
No, no, no, no, no, no, no, yes, well, well, I mean, you're a
man of the world, aren't you?
I mean, you know, you've beenaround, you've been there.
What do you mean?
Well, I mean, like you've doneit with a lady, You've slept
with a lady.
Yes, what's it like?
(27:25):
The Risk Parody Radio Show ishosted 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 littlestatesmen and philosophers and
divines.
If a man does not keep pacewith his companions, perhaps it
is because he hears a differentdrummer.
Mostly Uncle Frank (00:17):
A different drummer.
Voices (00:19):
And now, coming to you from dead center on your dial,
welcome to Risk Parity Radio,where we explore alternatives
and asset allocations for thedo-it-yourself investor,
Broadcasting to you now from thecomfort 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 (00:52):
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.
And you probably should checkthose out too, because we have
the finest podcast audienceavailable.
Voices (01:26):
Top drawer, really top drawer.
Mostly Uncle Frank (01:31):
Along with a host named after a hot dog.
Voices (01:34):
Lighten up Francis.
Mostly Uncle Frank (01:36):
But now onward to episode 435.
Today, on Risk Parity Radio,we're just going to do what we
do best here, which is attend toyour emails.
But before we get to that, Iwanted to remind you all that we
are working on a revamp of thewebsite with my good friend Luke
from Quebec.
Voices (01:57):
We have top men working on it right now.
Who.
Mostly Uncle Frank (02:04):
Top men and he's created a demo site.
So if you go towwwriskparityradarcom and click
on the alt site button at thetop, you'll go to that site and
it's in demo form, so noteverything works there, but we
are interested in knowing yourreactions to it.
(02:26):
We've gotten some greatcomments so far, but we'd like
to collect a few more and thenwe will put everything together
and hopefully roll out arevamped site in August or
September.
Voices (02:39):
Inconceivable.
Mostly Uncle Frank (02:41):
So you too can be one of our top men
working on it.
Voices (02:46):
You keep using the word.
I don't think it means what youthink it means.
Mostly Uncle Frank (02:51):
If you have comments on that, please send
them to me in an email, not onthe website.
Send it to frank atriskparityradarcom, and we will
put it in the stack with theother ones that we've received
so far, and thank you for yourparticipation in that effort.
We're putting the band backtogether.
Voices (03:12):
You were the backbone, the nerve center of a great
rhythm and blues band.
You can make that live, breatheand jump again.
Jake ain't lying, though we hada band powerful enough to turn
goat piss into gasoline.
Mostly Uncle Frank (03:29):
But now without further ado.
Voices (03:31):
Here I go once again with the email.
Mostly Uncle Frank (03:35):
First off.
First off, we have an emailfrom Tracy.
Voices (03:40):
Dr Tracy speaking.
Dr Tracy speaking.
Mostly Uncle Frank (03:44):
And Tracy writes.
Mostly Bill (03:46):
Hi Frank.
Thank you for your valuablecontent and inspirational
lessons on giving.
I have donated to the FatherMcKenna Center to show my
support.
Voices (03:55):
Yeah, baby, yeah.
Mostly Bill (03:57):
I have sent this email on 4-28-2025 and I'm now
resending it.
Voices (04:02):
I'm gonna pin it on you.
See, I'm gonna pin it on you.
I has been into forex tradingfor about 10 years.
Mostly Bill (04:16):
He took the time to understand it and is still very
deep into it, despite a hugeloss in 2015 that we are still
recovering from.
Voices (04:25):
That's not an improvement.
Mostly Bill (04:27):
It is a big part of his portfolio.
He knows stocks, bonds andindex funds well, but for some
reason he is still choosing toinvest his time and energy into
Forex.
He believes in it so stronglythat he even wanted to teach our
kids about Forex when they growup.
Why?
What have children ever donefor me?
We split up our investmentportfolio last year since I
(04:49):
started to learn about investingthrough the Choose Fi podcast
and started to dabble with bondsand other macro asset classes
from your podcast.
I don't understand Forex and Idon't want to invest in what I
don't understand.
We split up our investmentportfolio but we're still making
equal contributions to supportour household with young
children.
I don't understand Forex and Idon't want it in my portfolio.
(05:16):
That's why my husband and Isplit up our investment
portfolio.
My husband is financially soundinto Forex, knows the FI stuff,
but doesn't calculate how muchhis life costs Mostly the same
as mine, except for higherincome, having Forex and
family's rental property Norcalculate his FI number, at
least not yet.
So I want to continue with myown investment portfolio and
(05:38):
trajectory with the goal tocontinue my equal share to
support our household.
To continue my equal share tosupport our household.
My accumulation portfolio was100% total stock market index
funds.
As of May 2025, it's 75% totalstock market index funds, 24%
VGLT, 1% cash with a 401krollover to an IRA.
I am now 75% to my FI numberusing a 4% safe withdrawal rate,
(06:02):
or 89% to FI if using Bangan'slatest 4.7 safe withdrawal rate
with a diversified portfolio.
I have two questions for you.
Number one what is your thoughton Forex?
Is it an investment,speculation or gamble?
Number two at 75% of my FInumber, should I start making
the transition to a portfoliolike the golden ratio?
(06:25):
Thanks, tracy.
Voices (06:29):
A trapdoor, no doubt Very ingenious.
The Tracy is too smart for atrick like that.
I shall ring the bell from here.
Mostly Uncle Frank (06:41):
So, as I promised last time, we do have a
guest reader and a guest in ourhome.
Voices (06:47):
Yeah, hi, it's Bill Lumber.
Yeah.
Mostly Uncle Frank (06:51):
What's happening.
He's Bill Yount from theCatching Up to Five podcast.
We took a picture of him in theeasy chair just as a little
souvenir of his visit here.
Maybe you can get one somedaytoo.
Mostly Bill (07:04):
My name is Bill Yount.
Voices (07:05):
And I'm an alcoholic.
This is a Girl Scout meeting,is it or is it that you girls
can't admit.
Mostly Bill (07:11):
You have a problem and I believe I'm the first one
to appear on Frank's Risk PartyRadio or another voice.
I'm sitting in the easy chairand I am honored.
Lucky For Mary to give up herposition and allow another
person to do it is justfantastic.
I hope you too once get achance to sit in the easy chair
(07:33):
and read some emails.
Voices (07:34):
Yes, well it does sound like fun.
I can't wait to start pawingthrough my garbage like some
starving raccoon.
Mostly Uncle Frank (07:42):
I tried to get his wife, karen to read too,
but was not successful, atleast not this time, or at least
not yet.
Voices (07:49):
Don't be saucy with me, Bernays.
Mostly Uncle Frank (07:52):
Hopefully you enjoy his renditions and you
appreciate that Mary needs abreak sometimes.
Mary, mary, I need your huggin'Well.
First off, thank you for beinga donor to the Father McKenna
Center.
As most of you know here, we donot have any sponsors on this
(08:14):
podcast.
We do have a charity we support.
It's called the Father McKennaCenter.
It supports hungry and homelesspeople in Washington DC.
And full disclosure.
I am the board of the charityand I'm the current treasurer.
We are currently running amatching campaign.
It's called the Top of thecharity and I'm the current
treasurer.
We are currently running amatching campaign.
It's called the Top of theT-Shirt Campaign.
I'll have to go back to episode426 to get the details on that.
Voices (08:37):
Show me the money, jerry , you better yell.
Show me the money, show me themoney.
Mostly Uncle Frank (08:47):
But if you do donate you get to go to the
front of the email line, asTracy has done here, and it's a
pretty long line.
So it's worth something thesedays.
Voices (08:56):
That is the straight stuff.
Oh funk master.
Mostly Uncle Frank (09:00):
And there are two ways to donate.
You can go to the support pageat wwwriskprioritycomcom and
there's a link to Patreon thereand you can become a monthly
donor on Patreon.
Or you can go directly to theFather McKenna website, which I
will link to in the show notes,go to their donation page and
donate there.
(09:20):
Please mention Risk ParityRadio in your commentary when
you make your donation.
There's a little box fordedications or comments, and
then you too might go to thefront of the email line yes but
now getting to your questions.
So you're having fun with forex.
For those who don't know whatthat is, forex stands for
(09:42):
foreign exchange.
It's generally the trading offutures contracts usually
options and futures and yourfirst question is is that an
investment, a speculation or agamble?
Well, it's certainly not aninvestment, because it does not
have a return, like investing ina company or a fixed income
instrument.
So the question is reallywhether it's a speculation or a
(10:05):
gamble and it could be either,depending on how you're
approaching it.
Obviously, what your husband didin 2015 was a gamble, because
you should not be losing a wholelot of money doing this.
One of the ways that you tradeproperly in this area is by
sizing your trades to make surethat you do not lose a lot of
money, because it's very easy tolose a lot of money in
(10:28):
something like this because it'svery highly leveraged.
So a good trader uses somethinglike a Kelly criterion.
I know I'm not going to explainwhat that is, but it is
basically the amount you shouldbe betting, if you will, or
allocating to a particular trade, so you do not face gambler's
ruin and run out of money.
Mostly Bill (10:49):
This is the grandson of the 17th richest man
in California.
Voices (10:53):
Does he drink?
Mostly Bill (10:54):
What he wants is money, because he doesn't know
when to say that's it.
I'm two million ahead, I have acar and a house and a family
and it's all paid for.
Mostly Uncle Frank (11:02):
I mean, even I did that.
So in order to approach this asa speculation and not a gamble,
you need to have a definedsystem.
Usually it's a trend followingsystem with something like this,
although it could be a swingtrading kind of system.
You need to have a disciplinedsystem that is being followed
(11:26):
and then size the individualinvestments appropriately so you
do not go bust.
Oftentimes the best traders areusing options, spreads and
things like that.
This is a lot of work to doproperly.
I have done this kind oftrading back in the 1990s,
before the Internet.
We did it on the phone.
This kind of trading back inthe 1990s, before the internet.
Voices (11:52):
We did it on the phone.
Mostly Uncle Frank (11:55):
But you have to have charts, you have to
update your charts and you haveto be patient with it in order
for it to work, and don't expectto be making great gobs of
money doing it.
One of the reasons I quit isbecause it was too much work for
what we were really making onit, which was similar to stock
market returns.
If you are not approaching itthat way, it's probably a gamble
(12:17):
, and I would say, particularlyif you are trying to trade Forex
on a fundamental basis, as inreading news reports about what
is going on in the world andtrying to trade off that that is
really a form of gambling,because you are at an extreme
information disadvantage as anindividual trader in this area.
(12:38):
The big banks and big centralbanks are the ones with all the
information you don't have thatyou can't trade at their level
on a fundamental basis, so youshouldn't really try, because
that's frequently where peopleget into trouble and a lot of
scams are frankly run like this,where you get hot tips about
(12:58):
various currencies or centralbanks or other things that are
supposed to help you make moneyand usually they just generally
lose you a lot of money.
We'll reinvest the earningsinto foreign currency accounts
with compounding interest andit's gone.
Voices (13:12):
Uh, what it's gone?
It's all gone.
What's all gone?
The money in your account?
It didn't do too well, it'sgone.
Mostly Uncle Frank (13:20):
Now, since we live in the golden era of
investing, it's also possible toget exposure to currencies
through ETFs, and there are manyones that will go long or short
a currency, usually against thedollar.
But you can also get exposureto this by investing in managed
futures contracts.
To this by investing in managedfutures contracts.
(13:41):
So that fund DBMF that Ifrequently use has an exposure
to currency contracts, but italso has exposures to interest
rates and to commoditiesgenerally and stock indices.
So if you just want an exposureto this area as a diversifier,
without really getting involvedwith it, that's the way I would
approach it and that's the way Ido in fact approach it, because
(14:04):
I don't want another job.
It's not that I'm lazy, it'sthat I just don't care.
Anyway, I understand why yourhusband likes this, if he likes
it as a hobby or another job,but I also understand why you
have no interest in it, becauseit is a big learning curve and
it is another job, at least ifyou're going to do it properly.
(14:25):
And if you're not doing itproperly, chances are you will
lose money, because most peoplewho invest in that do lose money
.
And it's gone, because it's notas easy as it looks.
Poof.
All right.
Your next question At 75% ofyour FI number, should you start
making the transition to aportfolio like the Golden Ratio
(14:48):
or, I assume, a retirementportfolio generally?
And the answer is probably yesat this point.
You didn't say exactly whatyour timing was.
I assume you're still a fewyears away, but it sounds like
you were going to get there oneway or the other.
The advantage of doing it nowis that the stock market is at
or near an all-time high, andthat is when you want to be
(15:11):
making these kinds oftransitions, because you don't
want to wait until you have astock market that looks like the
one we had in April and thenall of a sudden be trying to
make these transitions.
You want to have this all linedup so that when you do retire,
it's already been set up and isworking.
It will continue to grow.
(15:32):
It will not grow as fast as anaccumulation portfolio, but when
you're that close it doesn'thave to grow that fast anymore.
So I would take some steps todo those kind of conversions,
but make sure you're doing it ina tax-efficient manner.
It sounds like most of it'sgoing to be happening in IRAs,
so that makes it easy, but bemindful of that as you make the
(15:53):
changes here.
When we were doing ourtransitions, we really started
them about 2015 or 2016, eventhough I did not retire until
2020.
But we were all lined up andready to go before retirement
day actually came.
I guess the one thing I'mthinking is that maybe you don't
want to put any managed futuresin your version of the golden
ratio portfolio, since yourhusband's got all of that
(16:16):
exposure already.
But, as I've said in the pastmany times, there are many ways
to structure that portfolio.
Particularly the smallerallocations to the 6% or the 10%
can be flexibly allocated intomany different things, and that
could include the managedfutures, or some REITs, or some
utilities, or perhaps someinternational stocks that are
(16:39):
well diversified from the otherthings that you're already
holding, or maybe someshort-term bonds or something
like that, if you're going to bereally conservative about it.
Anyway, hopefully all thathelps.
Thank you for being a donor tothe Father McKenna Center and
thank you for your email.
Voices (16:58):
Snake eyes, pda teeth.
Hammerhead.
Oh no, pussycat, pussycat puss.
Batman, doubleheader,picklepuss.
Pumpkinhead Neon noodle Jukebox.
Jaw Wolfman, you're all underarrest.
Mostly Uncle Frank (17:24):
Second off.
Second off we have an emailfrom Mike.
Voices (17:29):
Let's get Mikey.
Yeah, he hates everything.
Mostly Bill (17:34):
And Mike writes Hi Frank, thanks for an engaging
podcast and being so manypeople's companion in their way
to financial independence.
Voices (17:42):
That's what's so funny.
I switched glasses when yourback was turned, you fool.
Mostly Bill (17:47):
I recently discovered Vanguard's market
neutral fund and thought itmight be up your alley, but I
can't recall hearing about it onyour podcast.
Do you have any thoughts?
Thanks, Mike.
Voices (17:59):
Looks like I picked the wrong week to quit amphetamines.
Mostly Uncle Frank (18:02):
Well, here's an interesting question the
Vanguard Market Neutral Fund.
Its ticker symbol is VMNFX MN,as in market neutral.
It's been around since 1998.
It does have a $50,000 minimumat least this version of it does
(18:23):
and it's interesting.
Vanguard has this reputationfor being the index fund leader
and having the low-cost indexfunds and things like that.
If you look at Vanguard'scomplete suite of funds, there
are a lot of interesting thingsin there that are anything but a
plain vanilla index fund, andthis is one of those things.
(18:45):
What this fund is is a longshort fund, so it goes long some
stocks and short others, andthat's what they mean when they
say market neutral.
So overall it is neutral versusthe market.
So it is similar to the fundBTAL that we've discussed on
(19:06):
this podcast in the past andthat was in episode 114,.
If you're looking for that Now,what would you use this?
As in a risk parity styleportfolio, you would use it as
an alternative asset class, soit would be something like
managed futures in terms of itspurpose in the portfolio, and
(19:27):
its purpose in a portfolio is tosimply have as much
diversification as possible fromeverything else in the
portfolio.
It's not there to drivesubstantial returns, because it
won't Forget about it.
I ran it through the analyzerat Testfolio and compared it
with stocks, bonds, managedfutures, gold, just to see how
(19:50):
it lined up and how thecorrelations looked.
It has a very low correlationto all of those things, so from
that perspective it's areasonable addition to put in a
portfolio.
However, it does not performvery well.
It has recently.
I would say it has recently overits history, since 1998, though
(20:14):
it has a return of about 2%,and since that is less than
bonds and less than managedfutures, I probably would not
choose this over a managedfutures fund, for example,
because the other thing I'm notcertain about is there is no
such thing as like an index forlong short funds.
They are all individuallymanaged, they all have their own
idiosyncrasies and they are allbased on the management of the
(20:35):
fund, so there's no way toreally model this very well as
an asset class.
It simply exists out there.
If I was really looking for along short fund, I would
probably look at a number ofthem, because there are a lot
more ETFs out now that do thissort of thing and I would bet
(20:56):
you could find one that isbetter or cheaper, or some
combination thereof than thisone.
So where I come down is yes,you could use something like
this in a portfolio.
I probably would not use thisversion of this given its
limitations, but it isinteresting all the same, and I
will put a couple more links inthe show notes from Morningstar
and Vanguard so you can check itout at your leisure.
Voices (21:20):
Well, you haven't got the knack of being idly rich.
You see, you should do like mejust snooze and dream, dream and
snooze.
Mostly Uncle Frank (21:26):
The pleasures are unlimited.
Hopefully that helps and thankyou for your email.
Voices (21:33):
He likes it.
Hey, Mikey.
Mostly Uncle Frank (21:37):
Last off.
Last off, we have an email fromTim.
Actually, he says his name isSome call me Tim.
Voices (21:47):
What manner of man are you that can summon up fire
without flint or tinder?
I Am an enchanter.
By what Name are you known?
There are some who call me Timand some call me Tim.
Mostly Uncle Frank (22:04):
And some call me Tim Reitz.
Mostly Bill (22:06):
Hi Frank and Mary, thanks for all.
You do.
Love the podcast, love thesoundbites.
Voices (22:12):
You are talking about the nonsensical ravings of a
lunatic mind.
Mostly Bill (22:17):
I'm planning on moving overseas in the next four
years.
As a 40-year-old with an IRAand 401k in the accumulation
stage, should I start changingto a risk parity portfolio to
exit the US market or leave italone to keep money in US funds
until I reach retirement age inthe US and then transfer that
overseas?
Many thanks, Tim.
Voices (22:38):
All your strength.
Come no further, for deathawaits you all with nasty, big,
pointy teeth.
What an eccentric performance.
Mostly Uncle Frank (22:51):
All right, so you're moving overseas, but
it sounds like you're still inthe accumulation phase and will
continue to be in theaccumulation phase, accumulation
phase and will continue to bein the accumulation phase, in
which case I would leave thosethings alone, although I would
consider rolling the 401k intoan IRA if it doesn't have the
kinds of things you want toinvest in it, because those are
(23:14):
still US retirement accounts.
They're still subject to USretirement rules, regardless of
where you are, and so in orderto get the money out of those,
you would need to use somethinglike 72T or a Roth ladder or
something like that, and whereyou happen to be physically in
the world actually should not bethe determinant on your
(23:37):
investments, or at least not theprimary determinant.
So I think I would just leavethem alone, and if you have a
regular brokerage account, youmight consider moving that or
opening it at InteractiveBrokers, because that is a
brokerage that is designed towork all over the world.
Other than that, I probablywould not change a thing at this
(23:57):
stage of the game.
Just make sure that those areinvested in equities, or mostly
in equities, because you do wantthem to grow and avoid things
like target date funds, four ofthe reasons stated in episode
333,.
If you haven't listened to that,I hope you find working
overseas to be interesting.
I did a lot of that, although Iwas never stationed outside of
(24:20):
the US.
I would just go places and campout for weeks at a time.
Voices (24:36):
What a filthy job.
Could be worse?
How Could be raining?
Mostly Uncle Frank (24:54):
I'm glad you're enjoying the sound bites
and I take it you're a MontyPython fan.
Voices (25:00):
Is uh, is your wife a goer?
Eh, know what I mean.
Know what I mean, nudge, nudge.
Know what I mean.
Say no more.
Beg your pardon, your wife doesshe go?
Eh, know what I mean.
Know what I mean.
Does she go?
Eh, she sometimes goes, andthank you for your email.
Mostly Uncle Frank (25:21):
But now I see our signal is beginning to
fade.
There may or may not be apodcast this weekend.
We've got some stuff going onhere.
Voices (25:28):
That's good, that's good may or may not be a podcast
this weekend.
I've got some stuff going onhere.
I'm afraid I don't quite followyou.
Follow me.
Follow me.
That's good, that's good.
A nod's as good as a wink to ablind bat.
Mostly Uncle Frank (25:36):
Including a visiting Labrador retriever
named Vader.
Voices (25:41):
Vader, how's my favorite Sith?
Mostly Uncle Frank (25:44):
I'd have to say he's not exactly the most
menacing animal.
Voices (25:47):
I'm gonna tell, tell everyone what a whiny bitch you
were, about Potamame or PandaBear or whatever that name is.
Mostly Uncle Frank (25:53):
But in the meantime, if you have comments
or questions for me, please sendthem to frank at
riskparityradarcom.
That email is frank atriskparityradarcom.
Or you can go to the website,wwwriskparityradarcom.
Put your message into thecontact form form and I'll get
it that way.
If you haven't had a chance todo it, please go to your
favorite podcast provider andlike subscribe.
(26:14):
Give me some stars, a follow, areview that would be great.
Okay, thank you once again fortuning in.
This is Frank Vasquez, withRisk Party Radio Signing off,
and now it's time for the ginand tonics, your wife interested
(26:35):
in photography, eh, photographs, eh, he asked him knowingly.
Voices (26:40):
Photography, snap, snap, grin, grin, wink, wink, nudge,
nudge, say no more.
Holiday stamps Could be, couldbe taking on holiday, could be
Swimming costumes Nudge, nudge,candid, candid photography.
No, I'm afraid we don't have acamera.
Oh, still, oh, eh, eh, oh, look, are you trying to insinuate
(27:00):
something?
No, no, no, no, no, no, no, yes, well, well, I mean, you're a
man of the world, aren't you?
I mean, you know, you've beenaround, you've been there.
What do you mean?
Well, I mean, like you've doneit with a lady, You've slept
with a lady.
Yes, what's it like?
(27:25):
The Risk Parody Radio Show ishosted 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.
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
The Joe Rogan Experience
The official podcast of comedian Joe Rogan.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Special Summer Offer: Exclusively on Apple Podcasts, try our Dateline Premium subscription completely free for one month! With Dateline Premium, you get every episode ad-free plus exclusive bonus content.