October 15, 2025 • 28 mins
In this episode we answer emails from Niek, Dustin, Dale, Hydromod and . We discuss adopting a golden ratio mix and not having unrealistic expectations, the plusses and minuses of the AI-version-of-you fad, the new website and why trying to use gold futures for leverage might not be the best choice for your gambling problem.
Link:
Father McKenna Center Donation Page: Donate - Father McKenna Center
Breathless Unedited AI-Bot Summary:
Ever had a month where nearly everything in your portfolio rose and wondered if the universe broke? We unpack why September’s across-the-board lift made sense in a weaker-dollar world, what temporary positive correlation looks like in practice, and how a golden ratio-style allocation helps you ride the wave without refreshing your account every hour.
A listener’s note from the road kicks off a candid conversation about trusting diversified portfolios and ignoring daily noise. From there, we dig into the hype and hazards of AI finance gurus—yes, including Ray Dalio’s “digital Ray.” We talk usefulness, accuracy gaps, and the risk of forming unhealthy attachments to bots that sound wise but miss nuance. Along the way, we challenge a popular myth: that copying successful people’s habits will unlock their results. Extraordinary investors aren’t great because they make their beds; they’re great because they’re extraordinarily skilled. For the rest of us, evidence-based allocations, low costs, and sensible rebalancing are the habits that pay.
We also get practical. You’ll hear our simple distribution shortcut (divide by 240 for a 5% annualized monthly draw), plus a tour of our streamlined website with faster search and full transcripts. Then we roll up our sleeves on gold exposure: why futures create rollover and curve headaches, when ETFs and return-stacked funds can be smarter, and how modest, low-cost margin—or leveraging equities instead—can open room for diversifiers like gold and managed futures. The throughline is clarity over complexity: build a portfolio that bends without breaking, whether the dollar dips, inflation flares, or correlations get weird for a while.
If this resonates, follow the show, leave a quick review, and share it with a friend who’s wrestling with allocation choices. Your questions shape future episodes—send them our way and join the conversation.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Voices (00:00):
A foolish consistency is the hobgoblin of little minds,
adored by little statesmen andphilosophers and divines.
If a man does not keep pacewith his companions, perhaps it
is because he hears a differentdrummer.
A different drummer.
Mostly Queen Mary (00:18):
And now, coming to you from Dead Center
on your dial, welcome to RiskParity Radio, where we explore
alternatives and assetallocations for the
do-it-yourself investor.
Broadcasting to you now fromthe comfort of his easy chair,
here is your host, FrankVasquez.
Mostly Uncle Frank (00:36):
Thank you, Mary, and welcome to Risk Parity
Radio.
If you have just stumbled inhere, you will find that this
podcast is kind of like a divebar of personal finance and
do-it-yourself investing.
Voices (00:52):
Expect the unexpected.
Mostly Uncle Frank (00:59):
And we only have a few mismatched bar stools
and some easy chairs.
We have no sponsors, we have noguests, and we have no
expansion plans.
Voices (01:10):
I don't think I'd like another job.
Mostly Uncle Frank (01:13):
There are basically two kinds of people
that like to hang out in thislittle dive bar.
Voices (01:18):
You see, in this world, there's two kinds of people, my
friend.
Mostly Uncle Frank (01:22):
The smaller group are those who actually
think the host is funnyregardless of the content of the
podcast.
Voices (01:30):
Funny how?
How am I funny?
Mostly Uncle Frank (01:32):
These include friends and family and a
number of people named Abby.
Voices (01:38):
Abby someone.
Abby who?
Abby Normal.
Abby Normal.
Mostly Uncle Frank (01:47):
The larger group includes a number of
highly successful do-it-yourselfinvestors, many of whom have
accumulated multi-million dollarportfolios over a period of
years.
Voices (02:00):
The best, Jerry.
The best.
Mostly Uncle Frank (02:03):
And they are here to share information and
to gather information to helpthem continue managing their
portfolios as they go forward,particularly as they get to
their distribution ordecumulation phases of their
financial life.
Voices (02:22):
What we do is if we need that extra push over the cliff,
you know what we do?
Put it up to a wall.
Mostly Uncle Frank (02:29):
But whomever you are, you are welcome here.
But now onward, episode 457.
Our usual three, I think we'lldo at least five.
(02:51):
Some of them are short.
And so without further ado.
Voices (02:55):
Here I go once again with the email.
And first off.
Mostly Uncle Frank (03:00):
First off, an email from Neek.
Neek from the Netherlands.
Mostly Queen Mary (03:06):
No way.
Mostly Uncle Frank (03:08):
And Neek writes.
Mostly Queen Mary (03:10):
Dear Uncle Frank, while driving home from
Sweden, it takes a while, Istumbled across your podcast
just as I had completelyexhausted my playlist.
Was I in for a ride?
Voices (03:21):
If you change your minds on the first game line.
Mostly Queen Mary (03:38):
Only to discover you're on hiatus.
So, of course, the only thingleft to do was start back at the
beginning again.
Voices (03:45):
You're insane, gold member!
Mostly Queen Mary (03:48):
With all this new knowledge, I decided to
take some chips off the tableand shift my portfolio to a
golden ratio variation thisAugust.
I do love gold.
I love gold.
Watching the different assetclasses move together steadily
upward is almost mind-blowing.
Poof.
(04:09):
Learning to trust theperformance and ignoring the
daily yo ho ho beat of the drumsshould also help me resist the
urge to check too often.
I also really enjoy the soundbites.
May I suggest a few from themovie Old School?
It's full of great lines andmusic.
Thank you, truly, foreverything you and Mary have
(04:32):
done.
Pro bono.
Warm regards, Neek from theNetherlands.
Mostly Uncle Frank (04:36):
Well, Neek, your wish is our command.
Voices (04:39):
We're going streaking through the quad and into the
gymnasium.
Come on, everybody! Woo! Comeon! We're streaking! Come on!
Come on! We're running! Come on!We're streaking!
Mostly Uncle Frank (04:54):
At least for the moment.
Voices (04:56):
We're streaking! Frank! Hey, honey! Hey! What the hell
are you doing?
We're streaking! Frank, get inthe car! Everybody's doing it!
Now! Mary, Mary! Why youbugging?
Mostly Uncle Frank (05:19):
Neek did get to go to the front of the line
here because he is a donor tothe Father McKinnon Center.
As most of you know, we do nothave any sponsors on this
program.
We do have a charity wesupport.
It's called the Father McKinnonCenter.
It supports hungry and homelesspeople in Washington, D.C.
Full disclosure, I am the boardof the charity and the current
treasurer.
If you give to the charity, youget to go to the front of the
(05:40):
email line.
There are two ways to do that.
You can do it as Neek has donehere by becoming a patron on
Patreon, which you do throughour Risk Party Radio website
page on the support page atwww.riskparty.com, or you can go
directly to the Father McKennawebsite and make a donation
there.
Either way, you get to go tothe front of the line.
(06:01):
Just make sure you mention itin the subject line or your
email itself so that I can moveyou to the front of the line.
Now you didn't really have aquestion.
I do wonder what it was like tobe listening to 455 episodes
all in one sitting or in acouple of sittings.
But uh probably driving backthrough Sweden made it more
(06:27):
palatable.
I recently saw that picture ofthe bridge and tunnel from Malmo
to Copenhagen, which is similarto the bridge tunnel combo over
(06:48):
and under the Chesapeake Bay inNorfolk, Virginia.
But I digress.
As for the recent performancesof watching everything go up in
September, yeah, that is notusual.
And in fact, September wasprobably one of the best months
on record, at least since westarted this podcast for these
(07:11):
kinds of portfolios, mostly dueto the extreme positive
performance in gold.
Voices (07:17):
This is gold, Mr.
Bond.
I think you've made your point,Goldfinger.
Thank you for thedemonstration.
Mostly Uncle Frank (07:24):
But this kind of thing can happen
essentially when you have a weakdollar with everything being
priced in dollars.
That is going to be good forinternational stocks, good for
gold, and good for U.S.
stocks as well.
It's fairly neutral as far asbonds are concerned most of the
time.
So I would not be expectingthat on a regular basis.
Usually there is somethingperforming badly out of the lot,
(07:46):
or if most things areperforming badly, then there's
something performing well.
But you can see everythingbecome positively correlated, at
least for a short period oftime, which is normal in the
probabilistic world that we livein.
A mathematical propertyhardwired into nature.
Voices (08:03):
Secret, secret, secret, secret.
Mostly Uncle Frank (08:06):
So we're very glad you're enjoying the
podcast.
Look forward to your futurequestions.
Thank you for your donation,and thank you for your email.
Did you or did you not have agood time at the party?
Voices (08:19):
I had an awesome time.
Frank, I know that you had anawesome time.
Okay?
I think the entire town knowsthat you had an awesome time.
Second off.
Mostly Uncle Frank (08:29):
Second off?
Voices (08:33):
I just want to say one word to you.
Just one word.
Yes, sir.
Are you listening?
Just so you plastics.
Mostly Uncle Frank (08:46):
And Dustin writes.
Mostly Queen Mary (08:48):
Hi, Frank and Mary.
I continue to enjoy your show.
The clips keep getting better,and the content remains top
drawer.
Really top drawer.
Voices (08:58):
Really top drawer.
Mostly Queen Mary (09:00):
It's been a couple of years since my first
email, and while I've beenmeaning to follow up with
another question, it's going tohave to wait.
Voices (09:07):
I'm sorry, but all questions must be submitted in
writing.
Mostly Queen Mary (09:10):
I saw this email from Ray Dalio and
couldn't resist sending it toyou for your comments.
Do you see this as an actualvaluable contribution to
society, or just an example ofsomeone whose ego has hit an
all-time high?
A really big one, yeah.
Which is huge.
Alternatively, could this bethe beginning of a societal
(09:32):
shift where people of extremewealth seek to eternalize
themselves with AI?
Voices (09:36):
And here's how it works.
I'm going to ask you fourquestions about the film you've
just seen.
Four questions.
They're not difficult.
But being able to count to fourhelps.
Mostly Queen Mary (09:47):
Really?
Good.
Not too far-fetched.
This could be a Black Mirrorepisode.
Voic (09:56):
Flip-flip-flip-flip-flops, flop, flops.
Great.
If you see me, give me a wave.
I love to see style.
Let me also enjoy a good laugh.
Mostly Queen Mary (10:10):
When can we expect a digital Uncle Frank?
Voices (10:13):
Not gonna do it.
Wouldn't be prudent at thisjuncture.
Mostly Queen Mary (10:16):
I bet Mary would love that.
Cue the Run DMC clip.
In all seriousness, I'd loveyour musings on this.
Side note, I just made adonation to the Father McKenna
Center, screenshots attached,because I can't wait two months
(10:38):
to see if this turns into arant.
Best, Dustin.
Voices (10:43):
Would you like me to seduce you?
What?
Is that what you're trying totell me?
Mostly Uncle Frank (10:49):
Well, first off, thank you also for being a
donor to the Father McKennaCenter, which is why you too
moved to the front of the emailline, Dustin.
Now, as for this email, whatDustin is referring to is an
email from Ray Dalio introducingthe new digital Ray Beta with
Voice, which appears to be an AIversion of Ray Dalio that will
(11:12):
answer your questions.
Voices (11:14):
This is pretty much the worst video ever made.
Mostly Uncle Frank (11:17):
This has become actually kind of popular
these days.
I've seen several versions ofthis.
Paul Merriman has one on hiswebsite, which isn't a voice
thing, but a chat bot that'ssupposed to mimic what he would
say.
And Professor Scott Gallowayalso had one of these things.
Although after running it for aweek or two, he actually took
(11:40):
his down because he's actuallyconcerned that people would
develop relationships, unhealthyrelationships with these AI
bots, as apparently some youngerpeople are doing, causing them
to do terrible things tothemselves.
So yeah, I think this is kindof a fad or a wave of the
future.
I know that Paul Merrimancomplains that his chat bot
(12:02):
doesn't always answer the way hewould have answered, and I
suspect Ray Dalios will sufferfrom that same problem too,
which I think is probablyendemic with these sorts of
things.
Voices (12:11):
That's not an improvement.
Mostly Uncle Frank (12:13):
Now, is this an example of someone whose ego
has hit an all-time high withrespect to Ray Dalio?
I don't know, possibly.
The thing is, Ray Dalio hasconsciously changed his sort of
outlook on life about ten yearsago.
And this happened based on himreading Joseph Campbell's work
about the hero with a thousandfaces and then talking to his
(12:36):
family about the fact that whenyou're done with your hero's
journey, what you're probablysupposed to be is sitting around
telling everybody what youlearned on that hero's journey.
And so that was his originalintent because he actually used
to be a really prickly personthat people did not like
interviewing because he was verycombative, but he decided to
(12:57):
share everything he happened toknow, which is both good and
bad, because there's a lot ofthings he knows that are very
useful, and a lot of things thatprobably aren't that useful.
One of the things that alwaysamuses me or interests me is
that particularly these verytalented investors who have done
very well often want to portraythe idea that it is their
(13:19):
habits that made their success,or kind of the way they run
their business is what madetheir success.
And Ray Dalio is one of thosebecause he's got this weird
management of the way he used todo Bridgewater that people have
talked about and written about.
Warren Buffett does the samething, being this kind of folksy
guy.
The truth is the reason thesepeople are successful has
(13:41):
nothing to do with these kind ofmanagement or personal habits
or whatever.
It's because they just haveenormous talent.
So it's like saying that, well,if I adopted the habits of
Tiger Woods or Roger Federer,suddenly I'd be a great golfer
or a great tennis player.
It's like, no, you wouldn't.
You don't have that talent.
Forget about it.
(14:02):
The same thing is true for alot of these investors or
anybody that's had a great dealof success based on talent in
their particular field.
That I think a lot of thesesort of habits wisdom kind of
thing is way overrated and isnot going to really make you a
very successful person, even ifyou do make your bed every day.
(14:25):
I think that was StanleyMcChrystal's or some other
famous general's book aboutmaking your bed every day.
I think these people probablywould have succeeded regardless
of what habits or managementsystems they ultimately employed
within reason.
So you do need to be carefulabout what you may think you
should be learning from the verysuccessful.
Voices (14:46):
You're not going to amount to Jack Squat!
Mostly Uncle Frank (14:52):
Now, would I ever roll out a bot?
Probably not myself, althoughI've had more than one listener,
including our friend Luke inQuebec, who helped us with the
website, talk about creating AIbot Frank or Ritz Parody Radio
AI bot.
Voices (15:08):
We have top men working on it right now.
Who?
Mostly Uncle Frank (15:16):
Top men.
I certainly probably wouldn'tput a whole lot of effort into
it myself because, as you know,I don't think I'd like another
job.
But if somebody else wants tocreate such a thing, I'd be
entertained to see it andinteract with it.
I would imagine that it wouldsuffer from the same defects
that all these other ones sufferfrom, in which case the
(15:38):
responses it gives are kind of a70 to 80% accurate as to what
the individual would actuallysay.
Voices (15:45):
Have you ever heard of Plato, Aristotle, Socrates?
Yes, morons.
Mostly Uncle Frank (15:51):
So I'd have to say this is certainly not a
priority.
On the other hand, our websitedoes have advanced search
capability now, including all ofthe transcripts that Luke has
uploaded and attached to all thepodcasts themselves.
So that's probably of use tosome people here.
Voices (16:08):
That is the straight stuff, O Funkmaster.
Mostly Uncle Frank (16:12):
And maybe we should just leave it at that,
at least for the moment.
Sack.
So thank you for your donation.
I'll be happy to answerquestions in the flesh when you
have them.
And thank you for your email.
Voices (16:28):
There's more.
Because you are going to see itas well.
Yes, it.
Yes, it, yes.
Namely.
The Max Sedrums are in thestory.
And afterwards, that isdirectly following.
My Max Sedrum.
So sit back.
Relax.
(16:49):
And enjoy.
Mostly Uncle Frank (16:51):
Next off, we have two emails about the
website.
Chris Des Tabarnak.
And the first one of those isfrom Dale.
Voices (17:03):
I'm Chip.
I'm Dale.
With just a couple of crazyrascal ounce to have some fun.
Mostly Uncle Frank (17:11):
And Dale writes.
Mostly Queen Mary (17:13):
Really like the alternative website.
One, not sure how consistentyou are wanting to be, but you
don't give a July 2024 balancetotals for the 2024 Golden
Butterfly, all seasons, orgolden ratio rebalance.
You do for the previous threeyears, and it's nice to have as
a reference.
Two, you don't explain why foryour distributions you divide
(17:33):
the monthly balance by 240.
I assume it's because you havea 20-year time horizon and so
it's 20 times 12.
Maybe explain this.
Otherwise, much cleaner thanthe OG version.
Thanks for all you do, Dale.
Mostly Uncle Frank (17:46):
And the second one is from Hydromod.
Voices (17:50):
Oh, but I don't know you were doing one.
Mostly Uncle Frank (17:53):
And Hydromod writes.
Mostly Queen Mary (17:55):
I looked over the new site.
Seems clean andstraightforward.
I think it meets its purposewell.
Voices (18:01):
Yes!
Mostly Uncle Frank (18:02):
Well, I'm glad you guys are liking the new
website.
I think just about anybody whohas seen the old one and used
the new one prefers the new one.
Voices (18:10):
I could have told you that.
Mostly Uncle Frank (18:12):
As I mentioned, it does have some
advanced search capabilities andit does seem to work a lot
faster the way Luke has set itup.
Voices (18:20):
The best, Jerry.
The best.
Mostly Uncle Frank (18:22):
It's good to have top men that can work on
such things.
Top men.
As for your questions, Dale,yeah, I can probably update
those balance totals.
I need to go back and check.
That shouldn't be a big dealsince I have all of the
screenshots from all of theweeks of recording these things
(18:43):
and putting them up.
As to your question about thedistributions and how we do
that, I think I've answered thisquestion recently in the past.
This is just a mathematicalshortcut.
So that if you are takingdistributions at a 5% annualized
rate and you want to break thatdown into a monthly amount, you
(19:03):
would basically divide by 20,divide the total by 20 to get to
the 5% annualized amount, andthen divide that amount by 12.
Now a shortcut for dividing by20 and then dividing by 12 is
simply to divide by 240 in thefirst place.
And so if you divide by 240,you get to a monthly annualized
(19:24):
distribution of 5%.
I don't think I really need towrite all that out on the
website, but maybe I can atleast indicate that it's just a
mathematical shortcut andthere's no real magic there.
Voices (19:42):
What's the answer?
What's the answer?
What's the answer?
Sacred geometry, sacredgeometry, sacred geometry.
Mostly Uncle Frank (19:50):
But I am glad you are enjoying the new
website because I am too.
It really works well.
Voices (19:57):
Yeah, baby, yeah!
Mostly Uncle Frank (19:59):
And we can all thank Luke again for that.
Voices (20:02):
And we have the tools, we have the talent.
Mostly Uncle Frank (20:06):
And thank you for your emails.
Voices (20:09):
Last off.
Mostly Uncle Frank (20:11):
Last off?
We have an email from Carter.
If you've got a problem withbusiness, you get Carter.
And Carter writes.
Mostly Queen Mary (20:22):
Frank, thanks so much for everything you do.
I've learned a lot.
So amazing and helpful.
Voices (20:28):
Real wrath of God type stuff.
Exactly.
Mostly Queen Mary (20:30):
My question is this
using gold futures contracts toadd exposure to gold?
How can I determine how muchexposure is effectively added by
buying one, two, threelonger-term micro gold future
contracts?
How would I determine whatpercentage of my portfolio a
single contract represents?
I'd like to add a little goldexposure to complement the
(20:51):
equities, but don't want to tieup too much of the portfolio in
a non-productive asset.
I'd rather use leverage ormargin, so I assume futures
contracts is an efficient way todo so.
You have a gambling problem.
Please let us know how toconsider this as a strategy
versus an ETF.
Carter.
Voices (21:10):
Look, it's Jimmy Carter.
Could you build us a house,President Carter?
We can't go back to ours.
I'm sorry.
These are for the truly needy.
Yeah, get your own habit here.
I'm on, Carter.
Build us a house, you lazy bum.
You have offended me, sir.
I challenge you to come back inwhile you yellow belly.
Mostly Uncle Frank (21:29):
Well, Carter, I actually probably
would not attempt this, becauseit seems to make things more
complicated without giving youany particular advantage.
I don't know if you've evertraded futures before.
I have done so in the distantpast.
And in order to figure out howmuch exposure you are having,
(21:50):
you just need to look at thesize of the contract, which,
depending on what exchange youare using, that information
should be available there.
The inherent problem withfutures is that you need to roll
them over, and that embedded inthem is essentially an interest
and volatility component basedon the date in the future that
(22:12):
they are scheduled for delivery.
So futures were typically andare typically used as a
mechanism for trend following ortrading systems, which makes a
lot of sense because they arealso generally what you call
Section 1256 contracts, so thatthey automatically qualify for a
(22:33):
60-40 division of long-termcapital gains versus short-term
capital gains, regardless of howlong you hold them.
So they are really designed asa trading or hedging vehicle and
not so much for something thatyou would be holding in a
long-term portfolio.
Because you're going to haveslippage problems, and also just
(22:55):
when you roll them over, theremay be effectively an interest
rate differential so that ityou're effectively not getting
the same price depending on theshape of the futures curve at
the particular time you aredoing the transactions.
So using futures actuallyprobably is not the most
efficient way of taking leveragein a portfolio.
(23:15):
The most efficient ways wouldbe to simply use a leveraged ETF
or an ETF that combines goldwith something else.
For example, the ETF GDEcombines gold with an exposure
to the S P 500, which is up like62% this year.
And has one of the bestperformances over the past three
(23:39):
years you can imagine.
I think it was up 30% one year,40% one year, and is up 62%
this year.
Shirley, you can't be serious.
I am serious, and don't call meShirley.
But that has an automaticexposure or leverage there to
gold on top of another asset.
There are, in fact, ETFs thatdo two times gold.
(24:01):
I probably would not use thosebecause again, those are based
on futures contracts and therecan be some decay there.
I know the return stacked groupof ETFs also has some products,
and at least one has anexposure to gold and actually
some Bitcoin on top of USstocks.
And I believe the ticker symbolfor that is RSSX.
(24:23):
So you can check that out.
And then the other way youcould get exposure to it without
adding anything more to yourportfolio would be to simply use
margin interest.
And if you're going to do that,I would do it at someplace like
Interactive Brokers, which hasthe smallest margin rates
available.
Now, if you look at the sampleportfolios, you'll see in the
(24:43):
experimental portfoliosessentially ways of doing this.
For instance, if you look atthat OPTRA portfolio, which is
the last one, the way we've usedor taken leverage in that is
through the stock holding.
So instead of having just anexposure to the SP 500, there's
an exposure to UPRO, whicheffectively leverages up the
(25:04):
portfolio.
Then you just reduce the amountof holding of that particular
holding, in this case it's to16%, which then allows us to add
more things like managedfutures and gold in the
portfolio.
So it's not necessary that youactually take the leverage in
the gold that you're talkingabout.
You can take it in somethingelse and get the same kind of
(25:26):
results or exposures, I shouldsay.
So the bottom line is (25:29):
yeah, while you could take an exposure
to straight futures in gold toadd some leverage to a
portfolio, that lemon isprobably not worth the squeeze
here.
The way you squeeze my lemonout, I'm gonna fall out of just
(25:55):
because there are other mucheasier ways of doing this that
do not require the kind ofmanagement and calculations that
would be required to do thisthrough futures contracts.
Welcome to the 2020s, where youcan get everything you want
just through ETFs.
Hopefully that helps, at leasta little bit.
And thank you for your email.
(26:16):
But now I see our signal isbeginning to fade.
If you have comments orquestions for me, please send
them to Frank atRiskPartyRear.com.
That email is Frank atRiskPartyRear.com.
Or you can go to the websitewww.riskpartyreader.com, put
(26:37):
your message into the contactform, and I'll get it all that
way.
If you haven't had a chance todo it, please go to your
favorite podcast provider andlike, subscribe, make some
stars, a follow, a review.
That would be great.
Okay.
Thank you once again for tuningin.
This is Frank Vasquez with RiskParty Radio signing off.
Mostly Queen Mary (28:23):
Please consult with your own advisors
before taking any actions basedon any information you have
heard here, making sure to takeinto account your own personal
circumstances.
A foolish consistency is the hobgoblin of little minds,
adored by little statesmen andphilosophers and divines.
If a man does not keep pacewith his companions, perhaps it
is because he hears a differentdrummer.
A different drummer.
Mostly Queen Mary (00:18):
And now, coming to you from Dead Center
on your dial, welcome to RiskParity Radio, where we explore
alternatives and assetallocations for the
do-it-yourself investor.
Broadcasting to you now fromthe comfort of his easy chair,
here is your host, FrankVasquez.
Mostly Uncle Frank (00:36):
Thank you, Mary, and welcome to Risk Parity
Radio.
If you have just stumbled inhere, you will find that this
podcast is kind of like a divebar of personal finance and
do-it-yourself investing.
Voices (00:52):
Expect the unexpected.
Mostly Uncle Frank (00:59):
And we only have a few mismatched bar stools
and some easy chairs.
We have no sponsors, we have noguests, and we have no
expansion plans.
Voices (01:10):
I don't think I'd like another job.
Mostly Uncle Frank (01:13):
There are basically two kinds of people
that like to hang out in thislittle dive bar.
Voices (01:18):
You see, in this world, there's two kinds of people, my
friend.
Mostly Uncle Frank (01:22):
The smaller group are those who actually
think the host is funnyregardless of the content of the
podcast.
Voices (01:30):
Funny how?
How am I funny?
Mostly Uncle Frank (01:32):
These include friends and family and a
number of people named Abby.
Voices (01:38):
Abby someone.
Abby who?
Abby Normal.
Abby Normal.
Mostly Uncle Frank (01:47):
The larger group includes a number of
highly successful do-it-yourselfinvestors, many of whom have
accumulated multi-million dollarportfolios over a period of
years.
Voices (02:00):
The best, Jerry.
The best.
Mostly Uncle Frank (02:03):
And they are here to share information and
to gather information to helpthem continue managing their
portfolios as they go forward,particularly as they get to
their distribution ordecumulation phases of their
financial life.
Voices (02:22):
What we do is if we need that extra push over the cliff,
you know what we do?
Put it up to a wall.
Mostly Uncle Frank (02:29):
But whomever you are, you are welcome here.
But now onward, episode 457.
Our usual three, I think we'lldo at least five.
(02:51):
Some of them are short.
And so without further ado.
Voices (02:55):
Here I go once again with the email.
And first off.
Mostly Uncle Frank (03:00):
First off, an email from Neek.
Neek from the Netherlands.
Mostly Queen Mary (03:06):
No way.
Mostly Uncle Frank (03:08):
And Neek writes.
Mostly Queen Mary (03:10):
Dear Uncle Frank, while driving home from
Sweden, it takes a while, Istumbled across your podcast
just as I had completelyexhausted my playlist.
Was I in for a ride?
Voices (03:21):
If you change your minds on the first game line.
Mostly Queen Mary (03:38):
Only to discover you're on hiatus.
So, of course, the only thingleft to do was start back at the
beginning again.
Voices (03:45):
You're insane, gold member!
Mostly Queen Mary (03:48):
With all this new knowledge, I decided to
take some chips off the tableand shift my portfolio to a
golden ratio variation thisAugust.
I do love gold.
I love gold.
Watching the different assetclasses move together steadily
upward is almost mind-blowing.
Poof.
(04:09):
Learning to trust theperformance and ignoring the
daily yo ho ho beat of the drumsshould also help me resist the
urge to check too often.
I also really enjoy the soundbites.
May I suggest a few from themovie Old School?
It's full of great lines andmusic.
Thank you, truly, foreverything you and Mary have
(04:32):
done.
Pro bono.
Warm regards, Neek from theNetherlands.
Mostly Uncle Frank (04:36):
Well, Neek, your wish is our command.
Voices (04:39):
We're going streaking through the quad and into the
gymnasium.
Come on, everybody! Woo! Comeon! We're streaking! Come on!
Come on! We're running! Come on!We're streaking!
Mostly Uncle Frank (04:54):
At least for the moment.
Voices (04:56):
We're streaking! Frank! Hey, honey! Hey! What the hell
are you doing?
We're streaking! Frank, get inthe car! Everybody's doing it!
Now! Mary, Mary! Why youbugging?
Mostly Uncle Frank (05:19):
Neek did get to go to the front of the line
here because he is a donor tothe Father McKinnon Center.
As most of you know, we do nothave any sponsors on this
program.
We do have a charity wesupport.
It's called the Father McKinnonCenter.
It supports hungry and homelesspeople in Washington, D.C.
Full disclosure, I am the boardof the charity and the current
treasurer.
If you give to the charity, youget to go to the front of the
(05:40):
email line.
There are two ways to do that.
You can do it as Neek has donehere by becoming a patron on
Patreon, which you do throughour Risk Party Radio website
page on the support page atwww.riskparty.com, or you can go
directly to the Father McKennawebsite and make a donation
there.
Either way, you get to go tothe front of the line.
(06:01):
Just make sure you mention itin the subject line or your
email itself so that I can moveyou to the front of the line.
Now you didn't really have aquestion.
I do wonder what it was like tobe listening to 455 episodes
all in one sitting or in acouple of sittings.
But uh probably driving backthrough Sweden made it more
(06:27):
palatable.
I recently saw that picture ofthe bridge and tunnel from Malmo
to Copenhagen, which is similarto the bridge tunnel combo over
(06:48):
and under the Chesapeake Bay inNorfolk, Virginia.
But I digress.
As for the recent performancesof watching everything go up in
September, yeah, that is notusual.
And in fact, September wasprobably one of the best months
on record, at least since westarted this podcast for these
(07:11):
kinds of portfolios, mostly dueto the extreme positive
performance in gold.
Voices (07:17):
This is gold, Mr.
Bond.
I think you've made your point,Goldfinger.
Thank you for thedemonstration.
Mostly Uncle Frank (07:24):
But this kind of thing can happen
essentially when you have a weakdollar with everything being
priced in dollars.
That is going to be good forinternational stocks, good for
gold, and good for U.S.
stocks as well.
It's fairly neutral as far asbonds are concerned most of the
time.
So I would not be expectingthat on a regular basis.
Usually there is somethingperforming badly out of the lot,
(07:46):
or if most things areperforming badly, then there's
something performing well.
But you can see everythingbecome positively correlated, at
least for a short period oftime, which is normal in the
probabilistic world that we livein.
A mathematical propertyhardwired into nature.
Voices (08:03):
Secret, secret, secret, secret.
Mostly Uncle Frank (08:06):
So we're very glad you're enjoying the
podcast.
Look forward to your futurequestions.
Thank you for your donation,and thank you for your email.
Did you or did you not have agood time at the party?
Voices (08:19):
I had an awesome time.
Frank, I know that you had anawesome time.
Okay?
I think the entire town knowsthat you had an awesome time.
Second off.
Mostly Uncle Frank (08:29):
Second off?
Voices (08:33):
I just want to say one word to you.
Just one word.
Yes, sir.
Are you listening?
Just so you plastics.
Mostly Uncle Frank (08:46):
And Dustin writes.
Mostly Queen Mary (08:48):
Hi, Frank and Mary.
I continue to enjoy your show.
The clips keep getting better,and the content remains top
drawer.
Really top drawer.
Voices (08:58):
Really top drawer.
Mostly Queen Mary (09:00):
It's been a couple of years since my first
email, and while I've beenmeaning to follow up with
another question, it's going tohave to wait.
Voices (09:07):
I'm sorry, but all questions must be submitted in
writing.
Mostly Queen Mary (09:10):
I saw this email from Ray Dalio and
couldn't resist sending it toyou for your comments.
Do you see this as an actualvaluable contribution to
society, or just an example ofsomeone whose ego has hit an
all-time high?
A really big one, yeah.
Which is huge.
Alternatively, could this bethe beginning of a societal
(09:32):
shift where people of extremewealth seek to eternalize
themselves with AI?
Voices (09:36):
And here's how it works.
I'm going to ask you fourquestions about the film you've
just seen.
Four questions.
They're not difficult.
But being able to count to fourhelps.
Mostly Queen Mary (09:47):
Really?
Good.
Not too far-fetched.
This could be a Black Mirrorepisode.
Voic (09:56):
Flip-flip-flip-flip-flops, flop, flops.
Great.
If you see me, give me a wave.
I love to see style.
Let me also enjoy a good laugh.
Mostly Queen Mary (10:10):
When can we expect a digital Uncle Frank?
Voices (10:13):
Not gonna do it.
Wouldn't be prudent at thisjuncture.
Mostly Queen Mary (10:16):
I bet Mary would love that.
Cue the Run DMC clip.
In all seriousness, I'd loveyour musings on this.
Side note, I just made adonation to the Father McKenna
Center, screenshots attached,because I can't wait two months
(10:38):
to see if this turns into arant.
Best, Dustin.
Voices (10:43):
Would you like me to seduce you?
What?
Is that what you're trying totell me?
Mostly Uncle Frank (10:49):
Well, first off, thank you also for being a
donor to the Father McKennaCenter, which is why you too
moved to the front of the emailline, Dustin.
Now, as for this email, whatDustin is referring to is an
email from Ray Dalio introducingthe new digital Ray Beta with
Voice, which appears to be an AIversion of Ray Dalio that will
(11:12):
answer your questions.
Voices (11:14):
This is pretty much the worst video ever made.
Mostly Uncle Frank (11:17):
This has become actually kind of popular
these days.
I've seen several versions ofthis.
Paul Merriman has one on hiswebsite, which isn't a voice
thing, but a chat bot that'ssupposed to mimic what he would
say.
And Professor Scott Gallowayalso had one of these things.
Although after running it for aweek or two, he actually took
(11:40):
his down because he's actuallyconcerned that people would
develop relationships, unhealthyrelationships with these AI
bots, as apparently some youngerpeople are doing, causing them
to do terrible things tothemselves.
So yeah, I think this is kindof a fad or a wave of the
future.
I know that Paul Merrimancomplains that his chat bot
(12:02):
doesn't always answer the way hewould have answered, and I
suspect Ray Dalios will sufferfrom that same problem too,
which I think is probablyendemic with these sorts of
things.
Voices (12:11):
That's not an improvement.
Mostly Uncle Frank (12:13):
Now, is this an example of someone whose ego
has hit an all-time high withrespect to Ray Dalio?
I don't know, possibly.
The thing is, Ray Dalio hasconsciously changed his sort of
outlook on life about ten yearsago.
And this happened based on himreading Joseph Campbell's work
about the hero with a thousandfaces and then talking to his
(12:36):
family about the fact that whenyou're done with your hero's
journey, what you're probablysupposed to be is sitting around
telling everybody what youlearned on that hero's journey.
And so that was his originalintent because he actually used
to be a really prickly personthat people did not like
interviewing because he was verycombative, but he decided to
(12:57):
share everything he happened toknow, which is both good and
bad, because there's a lot ofthings he knows that are very
useful, and a lot of things thatprobably aren't that useful.
One of the things that alwaysamuses me or interests me is
that particularly these verytalented investors who have done
very well often want to portraythe idea that it is their
(13:19):
habits that made their success,or kind of the way they run
their business is what madetheir success.
And Ray Dalio is one of thosebecause he's got this weird
management of the way he used todo Bridgewater that people have
talked about and written about.
Warren Buffett does the samething, being this kind of folksy
guy.
The truth is the reason thesepeople are successful has
(13:41):
nothing to do with these kind ofmanagement or personal habits
or whatever.
It's because they just haveenormous talent.
So it's like saying that, well,if I adopted the habits of
Tiger Woods or Roger Federer,suddenly I'd be a great golfer
or a great tennis player.
It's like, no, you wouldn't.
You don't have that talent.
Forget about it.
(14:02):
The same thing is true for alot of these investors or
anybody that's had a great dealof success based on talent in
their particular field.
That I think a lot of thesesort of habits wisdom kind of
thing is way overrated and isnot going to really make you a
very successful person, even ifyou do make your bed every day.
(14:25):
I think that was StanleyMcChrystal's or some other
famous general's book aboutmaking your bed every day.
I think these people probablywould have succeeded regardless
of what habits or managementsystems they ultimately employed
within reason.
So you do need to be carefulabout what you may think you
should be learning from the verysuccessful.
Voices (14:46):
You're not going to amount to Jack Squat!
Mostly Uncle Frank (14:52):
Now, would I ever roll out a bot?
Probably not myself, althoughI've had more than one listener,
including our friend Luke inQuebec, who helped us with the
website, talk about creating AIbot Frank or Ritz Parody Radio
AI bot.
Voices (15:08):
We have top men working on it right now.
Who?
Mostly Uncle Frank (15:16):
Top men.
I certainly probably wouldn'tput a whole lot of effort into
it myself because, as you know,I don't think I'd like another
job.
But if somebody else wants tocreate such a thing, I'd be
entertained to see it andinteract with it.
I would imagine that it wouldsuffer from the same defects
that all these other ones sufferfrom, in which case the
(15:38):
responses it gives are kind of a70 to 80% accurate as to what
the individual would actuallysay.
Voices (15:45):
Have you ever heard of Plato, Aristotle, Socrates?
Yes, morons.
Mostly Uncle Frank (15:51):
So I'd have to say this is certainly not a
priority.
On the other hand, our websitedoes have advanced search
capability now, including all ofthe transcripts that Luke has
uploaded and attached to all thepodcasts themselves.
So that's probably of use tosome people here.
Voices (16:08):
That is the straight stuff, O Funkmaster.
Mostly Uncle Frank (16:12):
And maybe we should just leave it at that,
at least for the moment.
Sack.
So thank you for your donation.
I'll be happy to answerquestions in the flesh when you
have them.
And thank you for your email.
Voices (16:28):
There's more.
Because you are going to see itas well.
Yes, it.
Yes, it, yes.
Namely.
The Max Sedrums are in thestory.
And afterwards, that isdirectly following.
My Max Sedrum.
So sit back.
Relax.
(16:49):
And enjoy.
Mostly Uncle Frank (16:51):
Next off, we have two emails about the
website.
Chris Des Tabarnak.
And the first one of those isfrom Dale.
Voices (17:03):
I'm Chip.
I'm Dale.
With just a couple of crazyrascal ounce to have some fun.
Mostly Uncle Frank (17:11):
And Dale writes.
Mostly Queen Mary (17:13):
Really like the alternative website.
One, not sure how consistentyou are wanting to be, but you
don't give a July 2024 balancetotals for the 2024 Golden
Butterfly, all seasons, orgolden ratio rebalance.
You do for the previous threeyears, and it's nice to have as
a reference.
Two, you don't explain why foryour distributions you divide
(17:33):
the monthly balance by 240.
I assume it's because you havea 20-year time horizon and so
it's 20 times 12.
Maybe explain this.
Otherwise, much cleaner thanthe OG version.
Thanks for all you do, Dale.
Mostly Uncle Frank (17:46):
And the second one is from Hydromod.
Voices (17:50):
Oh, but I don't know you were doing one.
Mostly Uncle Frank (17:53):
And Hydromod writes.
Mostly Queen Mary (17:55):
I looked over the new site.
Seems clean andstraightforward.
I think it meets its purposewell.
Voices (18:01):
Yes!
Mostly Uncle Frank (18:02):
Well, I'm glad you guys are liking the new
website.
I think just about anybody whohas seen the old one and used
the new one prefers the new one.
Voices (18:10):
I could have told you that.
Mostly Uncle Frank (18:12):
As I mentioned, it does have some
advanced search capabilities andit does seem to work a lot
faster the way Luke has set itup.
Voices (18:20):
The best, Jerry.
The best.
Mostly Uncle Frank (18:22):
It's good to have top men that can work on
such things.
Top men.
As for your questions, Dale,yeah, I can probably update
those balance totals.
I need to go back and check.
That shouldn't be a big dealsince I have all of the
screenshots from all of theweeks of recording these things
(18:43):
and putting them up.
As to your question about thedistributions and how we do
that, I think I've answered thisquestion recently in the past.
This is just a mathematicalshortcut.
So that if you are takingdistributions at a 5% annualized
rate and you want to break thatdown into a monthly amount, you
(19:03):
would basically divide by 20,divide the total by 20 to get to
the 5% annualized amount, andthen divide that amount by 12.
Now a shortcut for dividing by20 and then dividing by 12 is
simply to divide by 240 in thefirst place.
And so if you divide by 240,you get to a monthly annualized
(19:24):
distribution of 5%.
I don't think I really need towrite all that out on the
website, but maybe I can atleast indicate that it's just a
mathematical shortcut andthere's no real magic there.
Voices (19:42):
What's the answer?
What's the answer?
What's the answer?
Sacred geometry, sacredgeometry, sacred geometry.
Mostly Uncle Frank (19:50):
But I am glad you are enjoying the new
website because I am too.
It really works well.
Voices (19:57):
Yeah, baby, yeah!
Mostly Uncle Frank (19:59):
And we can all thank Luke again for that.
Voices (20:02):
And we have the tools, we have the talent.
Mostly Uncle Frank (20:06):
And thank you for your emails.
Voices (20:09):
Last off.
Mostly Uncle Frank (20:11):
Last off?
We have an email from Carter.
If you've got a problem withbusiness, you get Carter.
And Carter writes.
Mostly Queen Mary (20:22):
Frank, thanks so much for everything you do.
I've learned a lot.
So amazing and helpful.
Voices (20:28):
Real wrath of God type stuff.
Exactly.
Mostly Queen Mary (20:30):
My question is this
using gold futures contracts toadd exposure to gold?
How can I determine how muchexposure is effectively added by
buying one, two, threelonger-term micro gold future
contracts?
How would I determine whatpercentage of my portfolio a
single contract represents?
I'd like to add a little goldexposure to complement the
(20:51):
equities, but don't want to tieup too much of the portfolio in
a non-productive asset.
I'd rather use leverage ormargin, so I assume futures
contracts is an efficient way todo so.
You have a gambling problem.
Please let us know how toconsider this as a strategy
versus an ETF.
Carter.
Voices (21:10):
Look, it's Jimmy Carter.
Could you build us a house,President Carter?
We can't go back to ours.
I'm sorry.
These are for the truly needy.
Yeah, get your own habit here.
I'm on, Carter.
Build us a house, you lazy bum.
You have offended me, sir.
I challenge you to come back inwhile you yellow belly.
Mostly Uncle Frank (21:29):
Well, Carter, I actually probably
would not attempt this, becauseit seems to make things more
complicated without giving youany particular advantage.
I don't know if you've evertraded futures before.
I have done so in the distantpast.
And in order to figure out howmuch exposure you are having,
(21:50):
you just need to look at thesize of the contract, which,
depending on what exchange youare using, that information
should be available there.
The inherent problem withfutures is that you need to roll
them over, and that embedded inthem is essentially an interest
and volatility component basedon the date in the future that
(22:12):
they are scheduled for delivery.
So futures were typically andare typically used as a
mechanism for trend following ortrading systems, which makes a
lot of sense because they arealso generally what you call
Section 1256 contracts, so thatthey automatically qualify for a
(22:33):
60-40 division of long-termcapital gains versus short-term
capital gains, regardless of howlong you hold them.
So they are really designed asa trading or hedging vehicle and
not so much for something thatyou would be holding in a
long-term portfolio.
Because you're going to haveslippage problems, and also just
(22:55):
when you roll them over, theremay be effectively an interest
rate differential so that ityou're effectively not getting
the same price depending on theshape of the futures curve at
the particular time you aredoing the transactions.
So using futures actuallyprobably is not the most
efficient way of taking leveragein a portfolio.
(23:15):
The most efficient ways wouldbe to simply use a leveraged ETF
or an ETF that combines goldwith something else.
For example, the ETF GDEcombines gold with an exposure
to the S P 500, which is up like62% this year.
And has one of the bestperformances over the past three
(23:39):
years you can imagine.
I think it was up 30% one year,40% one year, and is up 62%
this year.
Shirley, you can't be serious.
I am serious, and don't call meShirley.
But that has an automaticexposure or leverage there to
gold on top of another asset.
There are, in fact, ETFs thatdo two times gold.
(24:01):
I probably would not use thosebecause again, those are based
on futures contracts and therecan be some decay there.
I know the return stacked groupof ETFs also has some products,
and at least one has anexposure to gold and actually
some Bitcoin on top of USstocks.
And I believe the ticker symbolfor that is RSSX.
(24:23):
So you can check that out.
And then the other way youcould get exposure to it without
adding anything more to yourportfolio would be to simply use
margin interest.
And if you're going to do that,I would do it at someplace like
Interactive Brokers, which hasthe smallest margin rates
available.
Now, if you look at the sampleportfolios, you'll see in the
(24:43):
experimental portfoliosessentially ways of doing this.
For instance, if you look atthat OPTRA portfolio, which is
the last one, the way we've usedor taken leverage in that is
through the stock holding.
So instead of having just anexposure to the SP 500, there's
an exposure to UPRO, whicheffectively leverages up the
(25:04):
portfolio.
Then you just reduce the amountof holding of that particular
holding, in this case it's to16%, which then allows us to add
more things like managedfutures and gold in the
portfolio.
So it's not necessary that youactually take the leverage in
the gold that you're talkingabout.
You can take it in somethingelse and get the same kind of
(25:26):
results or exposures, I shouldsay.
So the bottom line is (25:29):
yeah, while you could take an exposure
to straight futures in gold toadd some leverage to a
portfolio, that lemon isprobably not worth the squeeze
here.
The way you squeeze my lemonout, I'm gonna fall out of just
(25:55):
because there are other mucheasier ways of doing this that
do not require the kind ofmanagement and calculations that
would be required to do thisthrough futures contracts.
Welcome to the 2020s, where youcan get everything you want
just through ETFs.
Hopefully that helps, at leasta little bit.
And thank you for your email.
(26:16):
But now I see our signal isbeginning to fade.
If you have comments orquestions for me, please send
them to Frank atRiskPartyRear.com.
That email is Frank atRiskPartyRear.com.
Or you can go to the websitewww.riskpartyreader.com, put
(26:37):
your message into the contactform, and I'll get it all that
way.
If you haven't had a chance todo it, please go to your
favorite podcast provider andlike, subscribe, make some
stars, a follow, a review.
That would be great.
Okay.
Thank you once again for tuningin.
This is Frank Vasquez with RiskParty Radio signing off.
Mostly Queen Mary (28:23):
Please consult with your own advisors
before taking any actions basedon any information you have
heard here, making sure to takeinto account your own personal
circumstances.
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