In this episode we answer emails from Ron, Mark, Rick and Keith. We revel in your generosity and discuss the mechanics of monthly withdrawals and how rebalancing smooths that over, modelling portfolio with money going in and money going out, and a follow up on portfolios employing futures contracts as leverage. And gooooold!
And THEN we our go through our weekly portfolio reviews of the eight sample portfolios you can find at Portfolios | Risk Parity Radio.
Additional Links:
Father McKenna Center Donation Page: Donate - Father McKenna Center
Our South Africa Trip Video Playlist: Penguins in Cape Town
Remembering Gov. Schaefer: The Eastern Shore remembers Schaefer
Recent Bigger Pockets Money Episode Mentioning RP Portfolios: FIRE is Dead...and Here's What Replaced It
Portfolio Visualizer Financial Goals Tool: Financial Goals
Accumulating in a Golden Ratio Portfolio Article: Minimize Your Miss – Portfolio Charts
Keith's Portfolio Backtest: https://testfol.io/?s=9Am02OVX6XD
Breathless Unedited AI-Bot Summary:
Gold doesn’t care about narratives, and this year it’s rewriting a lot of them. We walk through what a powerful gold run means for real-world withdrawals, safe withdrawal rates, and the way diversified portfolios shoulder risk when the regime shifts. From the Golden Butterfly and Golden Ratio to return-stacked experiments, we review performance, drawdowns, and why structural diversification—equities, Treasuries, gold, real assets, and managed futures—often beats clever timing when you’re spending from your nest egg.
We also open the donor mailbag with sharp questions from listeners practicing monthly withdrawals ahead of retirement. Should you fund withdrawals from accumulated cash or trim recent winners? How much does trade timing matter at month-end? We share simple rules that reduce friction: let dividends build a cash buffer, sell strength back to targets, and rely on periodic rebalancing to correct small timing errors. For those using volatile tools like UPRO, TMF, or crypto, we explain why defined targets and a steady cadence matter more than chasing the “perfect” price.
Futures curious? We touch on financing costs, collateral choices, and the risk realities of leverage, including why even elegant models must respect max drawdown. Along the way, we challenge the habit of erasing the 1970s from gold analysis and highlight how data-driven diversification can protect retirees from sequence risk. Whether you’re simulating withdrawals or already living on your portfolio, you’ll get practical tactics and a clearer lens for portfolio design.
If this resonates, follow the show, leave a review, and share it with someone planning their retirement drawdown. And if you want your question answered sooner, support the Father McKenna Center through our site—every donation helps and moves you to the front of the line.
Mark as Played
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 (00:37):
Thank you, Mary, and welcome to Risk Parody
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 (00:49):
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 are episodes 12, 14,16, 19, 21, 56, 82, and 184.
(01:16):
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 (01:30):
Along with a host named after a hot dog.
Voices (01:34):
Lighten up Francis.
Mostly Uncle Frank (01:37):
But now onward, episode 458.
Today in Risk Party Radio, it'stime for our weekly portfolio
reviews of the eight sampleportfolios you can find at
www.riskparty radio.com on theportfolios page.
It's a pretty strong theme thisweek.
Voices (02:21):
The man with the mideest touch.
A spidest touch.
Mostly Uncle Frank (02:32):
Yeah, I think according to the financial
media, gold had its best weeksince March 2020.
I wonder what was going on inMarch 2020.
Anyone remember that?
Voices (02:44):
You think anybody wants a roundhouse kick to the face
while I'm wearing these badboys?
Forget about it.
Mostly Uncle Frank (02:50):
Well, we'll talk about that later.
In the meantime.
Voices (02:54):
I'm intrigued by this.
How you say emails.
Mostly Uncle Frank (03:00):
And first off.
First off, we have an emailfrom Ron.
Voices (03:06):
Then time for Bonzo, starring Ronald Regan, Diana
Lynn, and Bonzo, that amazinggym.
Mostly Uncle Frank (03:13):
And Ron writes.
Mostly Queen Mary (03:14):
Good morning, Frank and Mary.
Here is the quarterly updatefor the all-equity McKenna Man
portfolio.
It was another very goodquarter, and the 8% withdrawal
rate is holding strong.
Q3 net results 4.3% afterwithdrawal.
Year-to-date net results 10.9%.
Q3 donation $118.
(03:35):
Sorry, I was a few days late inthis quarter in South America
on vacation.
Have a great day.
Thanks, Ron.
Voices (03:46):
It's a monkey.
Mostly Uncle Frank (03:48):
Well, thank you for being one of our top
drawer donors to the FatherMcKenna Center.
Voices (03:53):
Really top drawer.
Mostly Uncle Frank (03:55):
As most of you know, we do not have any
sponsors on this podcast.
We do have a charity wesupport.
It's called the Father McKennaCenter.
It supports hungry and homelesspeople in Washington, D.C.
Full disclosure, I'm the boardof the charity and am the
current treasurer.
And if you donate to thecharity, you get to go to the
front of the email line, as Ronhas done here, and in fact, all
of our emailers have done today.
Voices (04:17):
Yes!
Mostly Uncle Frank (04:18):
It's a pretty long line.
It goes back to July now.
There are two ways to do that.
You can either donate directlyat the Father McKenna website at
the donation page, which I'lllink to in the show notes, or
you can go to the support pageat www.riskparityradio.com and
become one of our patrons onPatreon.
Either way, you get to go tothe front of the line.
Ron is extra special since heis a repeat donor and set up a
(04:43):
little portfolio which hedistributes to the Father
McKenna Center out of, as he hasdone here for his quarter three
donation.
We first discussed this back onGroundhog Day this year.
Voices (04:56):
That's right, Woodchuck Chuckers.
It's Groundhog Day! Get up andcheck that hog out there! Come
here, Groundhog!
Mostly Uncle Frank (05:05):
And that's episode 399.
And then his next distributionwas in episode 437.
But he is one of our extraspecial listeners who has set up
this little portfolio tobenefit the Father McKenna
Center on a regular basis.
Voices (05:22):
Yes!
Mostly Uncle Frank (05:23):
And it looks like things are going
swimmingly there, given theresults you reported.
I hope you had a good time onvacation in South America.
Interestingly enough, Mary andI were on a vacation in South
Africa at the same time you wereon your vacation in South
America.
And I did just put together allof the little video clips I
(05:57):
took, about 40 of them, mostlyof the animals we saw in South
Africa.
And I made a little playlistand I put it on YouTube if
anybody wants to see a lot ofanimals in South Africa.
I will also link to that in theshow notes for your
entertainment.
Voices (06:14):
The only thing that we we need now, Frank, for your
beautiful photos or best photos.
Is if you maybe go and sit onthat rock.
Yeah, go there.
Yeah, and uh and hang pieces ofmeat on yourself.
Yeah, we'll be taking videos.
Make yourself a nice necklace ofwarthog ribs.
(06:37):
Yeah.
Mostly Uncle Frank (06:39):
You had no questions this time.
Please do submit them when youhave them, because you will
always go to the front of thefront of the email line, given
your generous status here.
Voices (06:50):
You're in the wrong shape, buddy.
Come on.
Oh, I must be in the front ofthe room.
Mostly Uncle Frank (06:55):
Thank you once again for your donation,
and thank you for the email.
Voices (06:59):
They're not gonna catch us.
We're on a mission from God.
Second off.
Mostly Uncle Frank (07:07):
Second off, we have an email from Mark.
Voices (07:13):
All hail the commander of his majesty's Roman legions,
the brave and noble MarcusVindictus.
Mostly Uncle Frank (07:20):
Mark from the Eastern Shore.
And Mark from the Eastern Shorewrites.
Mostly Queen Mary (07:25):
Greetings, Frank and Mary.
Thank you for your publicservice to financial education
in the form of Risk ParityRadio.
I am 65 years old, stillworking, and planning to leave
the paycheck world in December.
In preparation, I invested oneof our IRAs in the Risk Parity
(07:47):
Ultimate Portfolio back inApril, and for practice have
gone through the monthlywithdrawal process three times
now.
For this learning exercise, Iam not actually withdrawing out
of the IRA, but moving theproceeds to the cash part of the
IRA and not including the cashportion in the equation going
forward.
I am also reinvesting dividendsinstead of having dividends
(08:09):
going to the cash account, sincethis is a simulation using a
pre-tax account and it makes thetotal return of each investment
a little clearer to me.
I have two observations andquestions regarding the July
31st withdrawal process.
One, I believe that you tookwithdrawals from accumulated
cash.
What I did was to sell ETH,BTC, and UPRO to satisfy the
(08:32):
0.5% withdrawal for that month.
I am interested in yourthoughts on this.
I suspect your account hadsufficient accumulated cash, and
I wanted to leave accumulatedcash out of my equation unless
all the investment returns werein the dump.
2.
I believe your process is toanalyze the monthly performance
at the close of the last day ofeach month and then take
(08:53):
withdrawals on the first day ofthe following month.
There can be a significantchange in the price and
performance before 4 p.m.
on the last trading day of themonth and 9.30 a.m.
on the first trading day of thefollowing month, which was very
noticeable to me for ETH.
To expand on item one, mywithdrawal target of 0.5% was
about $2,723.
(09:16):
I withdrew from the top monthlyperformer down to its target
allocation and then two more inorder to satisfy the total
withdrawal amount.
That was $1,944 from ETH, $230from BTC, and $549 from UPRO.
One-month returns were about55%, 9%, and 8%, which I felt
(09:39):
were all respectable returns.
As a sanity check, I also did athree-month look back and found
the returns to be equallyrespectable at about 105%, 22%,
and 45%.
To expand on item two, as Irecall, at 4 p.m.
on July 31st, ETH was up over50% for the month.
(09:59):
During extended trading hoursit dropped to between 40% and
50%, and at the 9.30 opening itwas below 40%.
Well, this did not change thedecision to withdraw from ETH
first, it could have.
As luck would have it, I did mytrades during extended hours on
July 31st.
Do you recommend using extendedhours on the last day to do the
(10:21):
trade to avoid negativevolatility risk?
As an aside, I recently startedusing Stock Rover to help with
the monthly withdrawal analysisand monitor things throughout
the month.
Many thanks for your enjoyableand educational broadcasting
endeavors.
All the best, Mark.
Voices (10:41):
Remember thou art mortal! Remember thou art
mortal! Remember thou artmortal.
Mostly Uncle Frank (10:48):
Well, first off, thank you for being a donor
to the Father McKenna Center aswell.
Anytime somebody mentions theEastern Shore, Mary and I have
to laugh because there was thisformer governor named William
Donald Schaefer, who was agovernor in the 1990s, who got
into a lot of trouble referringto the Eastern Shore of Maryland
(11:09):
as an outhouse.
And then a lot of people theretook offense and sent a lot of
outhouses to the capital inAnnapolis.
Porta potties, really.
But I'm sure if you were aroundin the 1990s, you remember that
(11:36):
with some amusement.
But getting to the substance ofyour email, yeah, I'm glad
you're taking the opportunity todo a little experimentation to
essentially test run howsomething like this is going to
work.
I think that's a good exerciseif you're a do-it-yourself
investor in particular.
Now that we have no feetrading, you can set up these
accounts pretty easily or use asmall account that's already
(11:59):
working for you.
It's very easy just to set up alittle practice portfolio and
see what it's like to withdrawfrom it.
That is actually what myfriends over at Bigger Pockets
Money are doing, Mindy Jensenand Scott Trench, who both now
have practice risk parity styleportfolios to withdraw from.
And Mindy just mentioned hersin their last episode, which
(12:20):
I'll also link to in the shownotes.
So a couple of thoughts.
First, my overall thought isthis actually is not that fussy
if you're withdrawing on aregular basis from a portfolio
like this.
And the reason it's not thatfussy is because I'm assuming
that you're going to have somerebalancing rules that will
cause you to rebalance once ayear or so.
(12:41):
And that kind of just washesaway any errors you might make
in taking the distributionsbecause you're going to
basically true up the wholeportfolio and get it back to its
original configuration.
Now, when you start doing thisfor real and you're not
reinvesting the dividendsanymore, you will have a lot of
cash buildup.
(13:02):
Usually, most of theseportfolios have between two and
three percent on dividend andincome yields, which basically
is about four or five months outof the year if you're taking a
monthly distribution.
That cash just covers it andyou don't have to worry about
selling anything.
Always money in a banana stand.
And you really do want to do itthat way eventually because you
(13:22):
reduce the number oftransactions and it's just a
whole lot easier to manage thanreinvesting dividends and then
taking money out by selling theshares of whatever it is you're
selling or would be selling.
Now you can run into some funnysituations if you're using
things that are highly volatileto begin with in your portfolio,
(13:44):
such as UPRO orcryptocurrencies, which can go
up or down a lot in a very shortperiod of time.
Voices (13:53):
You have a gambling problem.
Mostly Uncle Frank (13:56):
There isn't really much to say to get around
that because it's a randomevent whether the thing is going
to be going up or down rightaround the time you are selling
it.
It's better just to pick sometime period and deal with it
then.
As I mentioned, it will kind ofwork out in the wash if you are
eventually rebalancing thesethings.
I know some people have applieddifferent rules to these highly
(14:19):
volatile assets and simplydecide to sell them on an
intermediate term basis if theygo up or down by so much.
Well, you can do that, it'sprobably unnecessary.
Again, because it's gonna getrebalanced out in the wash
eventually.
I probably would not engage inany extended hours trading.
(14:40):
And if you do do something likethat, make sure you put in a
limit order because the tradingvolumes in extended hours
trading are often very low,which leads to even more
volatility.
And if you put in market ordersin the extended hours, you can
really get bad prices becausethe spreads become a lot wider.
(15:02):
If you really do want to do itat end of day, I I would look at
it at some point prior to whenthe market closes, say at 2 30,
and then decide what to sellthen and do it by three.
But of course, that requiresmonitoring this in real time,
and I'm not sure that peoplereally want to do this or pay
that much attention to it whenyou don't have to.
(15:22):
But ultimately I would notsweat the details on this too
much, because something is justas likely to go up as it is to
go down overnight, and it doesall work out in the wash, if you
will, at the time ofrebalancing.
Just one other note on thatparticular portfolio.
That portfolio was reallydesigned or not very well
(15:44):
designed as more of a kitchensink because I didn't want to
have too many different sampleportfolios, but did want to have
one with sort of here's a wholebunch of things that people
might use or could think of thatthey might want in a portfolio.
And so that's what thatrepresents.
I would doubt that anyonereally wants to have all of
those things in a portfolio, butyou never know.
(16:06):
This audience likes to do allkinds of things and likes to
experiment, which I do reallyappreciate.
Voices (16:14):
You are talking about the nonsensical ravings of a
lunatic mind.
Mostly Uncle Frank (16:20):
Because it shows you're really engaged.
Abby normal.
So hopefully that helps.
Happy to answer any furtherquestions you may have.
Thank you for being a donor,and thank you for your email.
Next off, we have an email fromRick.
Voices (16:51):
Just want to tell you how the feeling gotta make you
understand.
Mostly Uncle Frank (16:59):
And Rick writes.
Mostly Queen Mary (17:57):
10% large cap minimum volatility and 10%
cash.
Should I just model this like adrawdown and compare it to
other options withoutconsidering adding to it on a
regular basis?
Keep up the great work.
Rick from Dayton, Ohio.
P.S.
Thank you for all you do toraise awareness and financial
support for the hungry andhomeless.
I recently made a donation tothe Father McKenna Center.
(18:19):
Although I missed it this year,I will make sure that future
donations are dedicated to the2026 Top of the T-shirt
campaign.
Mostly Uncle Frank (18:39):
Well, I'm glad you're enjoying the podcast
and that you are alsoexperimenting with a risk parity
style portfolio.
Now, as for modeling, you canactually do this with the
financial goals calculator atPortfolio Visualizer because
what that allows you to do isstart and stop cash flows.
And what you're really talkingabout in accumulation going to
(19:02):
decumulation is having positivecash flows, cash going in for
some period of time, and thenhaving cash come out after that
for some period of time.
And the portfolio visualizermodeling tool allows you to have
as many cash flows as you wantand to start and stop them
(19:24):
whenever you want.
It does take a little bit ofwork to figure out how it works,
but it's not that hard.
And so if you're looking forsomething that does that, that's
what I would use.
You can also use test folio,but as you surmise or may have
tried out, you can only beeither adding or taking out from
a modeling exercise that youwere doing there.
(19:47):
Now you asked whether youshould just model a drawdown and
compare that to other optionswithout considering adding to it
on a regular basis.
I think ultimately that's goingto be the important thing.
That is why you'd beconstructing one of these
portfolios to begin with to havea better drawdown scenario.
And so I would be focused onthat because accumulation, you
(20:10):
don't need this kind ofportfolio to accumulate in.
Although you can accumulate inone of these kinds of
portfolios.
Tyler over at Portfolio Chartsdid write a recent article about
accumulating in a golden ratioportfolio.
What's the answer?
What's the answer?
Voices (20:27):
What's the answer?
Sacred geometry, sacredgeometry, sacred geometry.
The golden ratio.
The golden ratio.
Mostly Uncle Frank (20:37):
And I'll link to that in the show notes.
I thought that was prettyinteresting.
But since ultimately what we'retrying to do here for the most
part is construct portfolioswith high safe withdrawal rates,
I think it is probably thedrawdown scenario that matters
the most here.
Hopefully that helps.
I'm glad you're enjoying thepodcast and the Trogdoor.
Voices (20:58):
I said consummate vs.
Consummate! I wouldn't knowMajesty if it came up and bit
him in the face.
It happened once.
(21:53):
And their fatched roof cottages.
And the truck door comes in thenight.
Last off last off?
Mostly Uncle Frank (22:14):
We have an email from Keith.
Voices (22:17):
I can't believe it.
Do you realize people wereactually stopping me on the
street for my autograph?
You're the biggest thing that'shappened in this town since they
dedicated the new gas station.
Mostly Uncle Frank (22:28):
And Keith, right?
Mostly Queen Mary (22:30):
Dear Frank and Mary, I made a little
donation to the McKenna Centerin honor of Risk Parity Radio to
encourage Mary to bump thisemail to the top of the list.
Voices (22:38):
Mary, Mary, I need you again.
Mostly Queen Mary (22:46):
In episode 457, Carter asked about gold
futures contracts, and youresponded by saying they have an
embedded financing cost, whichis obscured by the complexities
of the contract pricing and roledynamics.
Voices (23:00):
That's what I'm talking about.
Mostly Queen Mary (23:02):
That is true, but I have good data from the
last four years that lets mecalculate the financing cost of
a rudimentary risk parityportfolio using futures
contracts.
The model that best fits myreal-world result is linked
(23:38):
below.
The exposure to the S P 500,Treasuries, and Gold are all
done with futures.
The cash performance bond isrepresented by ZEROX because
cash in my Schwab account earnsnext to nothing.
The rest of my collateral isheld in the trend following fund
DBMF and a small cap value fundVBR.
(23:58):
Over the last four years, myeffective borrowing rate is the
T-Bill rate plus 75 basispoints.
My question for you, Frank, ishow can I improve the model for
the five-year treasury contract?
I'm using maturity of fouryears in test folio, which seems
to match my results, but Idon't really have any intuition
about how the maturity variablewill affect the results.
(24:20):
Best wishes from one of yourmost loyal listeners, Keith.
P.S.
Carter can find thespecifications for the gold
futures contracts on the CMEwebsite.
Right now the MGC contract isequivalent to 10 ounces or about
$41,000 and rising.
I love gold.
Voices (24:40):
I love gold.
Mostly Uncle Frank (24:44):
Well, Keith, first I also want to thank you
for being a donor to the FatherMcKenna Center.
But looking at your email, Idid click on this link you
provided of your model, and itdid jump out at me that this
model has a portfolio with about400 times leverage in it.
And you know what I have to sayto that?
Voices (25:06):
Well, you have a gambling problem.
Mostly Uncle Frank (25:09):
It was very interesting.
It had an over 19% compoundedannual growth rate, but also a
66% max drawdown over the past20 years or so.
But you really need to be risktolerant to be working such a
thing as I imagined you are.
Voices (25:31):
I'll drive that tanker.
Mostly Uncle Frank (25:35):
Hopefully you're younger.
Better not putting all of yourmoney into such a thing because
I would worry about it blowingup at some point.
Thanks for the information atthe end about the sizing of the
gold futures contracts thatCarter asked last time.
And I kind of punted on.
Voices (25:54):
It's not that I'm lazy, it's that I just don't care.
Mostly Uncle Frank (25:58):
See, my ulterior motive is to get some
of my listeners to answer myother listeners' questions so
that I really don't have to doanything at all.
Voices (26:08):
Yeah, I just stare at my desk.
But it looks like I'm working.
Mostly Uncle Frank (26:13):
And then I can focus on what I'm actually
the best at.
Voices (26:17):
Well, you haven't got the knack of being idly rich.
You say you should do like me,just snooze and dream, dream and
snooze.
The pleasures are unlimited.
Mostly Uncle Fra (26:26):
Unfortunately, I'm gonna have to punt on your
question too, because this isbeyond my pay grade.
For reference, his question washow can he improve the model
for a five-year treasurycontract?
Because I really do not knowthe answer to that.
And if I were to try toconstruct an answer, I'm sure it
would probably be wrong for oneor more reasons.
Voices (26:49):
Wrong!
Mostly Uncle Frank (26:50):
But if any of the rest of you have any
insight into that and want tocheck out Keith's model here,
you're welcome to it.
And I'd be very entertained toknow what the answers are, even
though I'll be watching from thesidelines.
Voices (27:04):
You're not going to amount to Jack Squat!
Mostly Uncle Frank (27:09):
But thank you for answering Carter's
question.
Thank you for your donations,and thank you for your email.
Voices (27:38):
I don't know what it's all about.
I got so much to think about.
Now we are going to dosomething extremely fun.
Mostly Uncle Frank (27:49):
And the extremely fun thing we get to do
now is our weekly portfolioreviews of the eight sample
portfolios you can find atwww.riskpartyweaver.com on the
portfolios page.
And it's turning out to be abanner year so far for these
portfolios.
We're just looking at themarkets.
The SP 500, represented by VOO,is up 14.42% for the year so
(28:12):
far.
The NASDAQ 100, represented byQQQ, is up 18.57% for the year
so far.
Small cap value continues to bethe laggard.
Voices (28:22):
I got a FIVA!
Mostly Uncle Fra (28:23):
Representative fund VIOV is up 1.99% for the
year so far.
But gold continues to be thebig winner.
Voices (28:33):
I love gold.
Mostly Uncle Frank (28:37):
As I mentioned, it had the best
performance for a week sinceMarch of 2020.
Our representative fund GLDM isup 60.99% for the year so far.
Voices (28:49):
You're insane, gold member! And that's the way
uh-huh-a-ha.
I like it, Casey and theShunshine Band.
Mostly Uncle Frank (28:58):
And I think this is making a lot of retail
financial advisors very nervousbecause they've essentially been
caught with their pants down asto not recommending any gold in
a portfolio, whereas now a lotof the major outlets and banks
are recommending gold in aportfolio, so they're looking
for excuses as to why theyhaven't done that.
One excuse that's going around,it seems to be some kind of
(29:27):
cheat sheet that I've heardseveral advisors refer to, is
some kind of bogus analysis thatstarts in 1980 as far as a data
analysis of gold is concerned,and completely wipes out or does
not consider the 1970s as ifthe 1970s will never happen
again.
Voices (30:00):
That we like to do.
Mostly Uncle Frank (30:03):
That's just a bad use of data and a form of
coming up with a conclusionfirst and then running around
and finding some data to supportthat conclusion.
As long-term studies haveshown, gold is a very useful
(30:28):
asset to have, particularly in adraw-down portfolio for
diversification purposes, notfor growth purposes, but for
diversification purposes, andthus improve the diversification
properties of a retirementportfolio.
And you might want to go backand listen to episodes 12 and 40
(31:00):
at the beginning of thispodcast.
And so what we are seeing thisyear is kind of a rhyming of
what happened in the 1970s.
Namely, people are gettingnervous about the dollar and
what the Fed is doing and whatthe government and the Fed are
doing together, and who's goingto be the new chair and all that
sort of stuff.
That's a repeat of Nixon goingoff the gold standard in 1971
(31:23):
and his appointment of ArthurBurns as the Fed chair.
We've seen this movie before,and so the consequence of gold
having a great year, the bestyear since 1979, is a small
chance, but it's not out of therealm of possibility.
It just isn't.
And if you have been assumingthat it is outside the realm of
possibility because you wipe outthe data from the 1970s and
(31:47):
whatever analysis of gold you'redoing, you're just doing it
wrong and you're doing adisservice to the people you're
trying to serve.
And you probably do deserve tolose some clients over it,
frankly.
Voices (31:58):
This is gold, Mr.
Bond.
I think you've made your point,Goldfinger.
Thank you for thedemonstration.
Do you expect me to talk?
No, Mr.
Bond, I expect you to die.
Mostly Uncle Frank (32:11):
Maybe time to stop following the herd and
start following the data and theintelligent people that have
already known this for many,many years.
Voices (32:20):
Fat, drunk, and stupid is no way to go through life,
son.
Hello?
Hello, anybody home?
Huh?
Think McFly.
Think.
Mostly Uncle Frank (32:29):
Anyway, moving to the rest of these
assets.
Long-term treasury bondsrepresented by the fund VGLT are
now up 8.03% for the year sofar.
REITs represented by the fundREET are up 9.21% for the year
so far.
Commodities represented by thefund PDBC are up 1.54% for the
year so far.
Preferred shares represented bythe fund PFFV are up 2.36% for
(32:54):
the year so far.
And managed futures aremanaging to be up 9.92% for the
year so far, at least asrepresented by the fund DBMF.
Moving to the sampleportfolios.
First one's the all seasons.
This is a reference portfolio.
It's only 30% in stocks in thetotal stock market fund.
(33:15):
55% in intermediate andlong-term treasury bonds, and
the remaining 15% divided intogold and commodities.
It's up 1.55% for the month ofOctober so far.
It's up 13.19% year to date andup 22.88% since inception in
July 2020.
Moving to these kind of breadand butter kind of portfolios,
first one's golden butterfly.
(33:36):
This one is 40% in stocksdivided into a total stock
market fund and a small capvalue fund.
40% in treasury bonds dividedinto long and short, and 20% in
gold, GLDM.
It's up 2.25% for the month ofOctober so far.
It's up 17.4% year to date, andup 57.23% since inception in
(33:57):
July 2020.
Next one's the Golden Ratio.
The Golden Ratio.
Voices (34:07):
The Golden Ratio.
What's the answer?
What's the answer?
What's the answer?
Mystery.
Sacred geometry.
Sacred geometry.
The Golden Ratio.
Secrets.
The Golden Ratio.
Mostly Uncle Frank (34:23):
This one is 42% in stocks divided into a
large cap growth fund and asmall cap value fund.
26% in treasury bonds, 16% ingold, 10% in a managed futures
fund, and 6% in a money marketin cash.
It's up 2.19% for the month ofOctober.
It's up 17.02%, year to dateand up 52.08% since inception in
(34:46):
July 2020.
Next one's the Risk ParityUltimate, our kitchen sink
portfolio.
I won't go through all 12 ofthese funds, but it's up 1.86%
for the month of October so far.
It's up 16.66% year to date andup 39.23% since inception in
July 2020.
Now we're going to move tothese experimental portfolios
(35:07):
that all involve some leveragedfunds and are very volatile, so
don't try this at home, eventhough I know some of you do.
Voices (35:15):
Tony Stark was able to build this in a cave with a box
of scraps.
Mostly Uncle Frank (35:22):
First one's the accelerated permanent
portfolio.
This one is 27.5% in a leveredbond fund TMF, 25% in a levered
stock fund UPRO, 25% in PFF V, apreferred shares fund, and
22.5% in gold, Gildy M.
It's up 3.64% for the month ofOctober so far.
It's up 23.45% year to date andup 24.72% since inception in
(35:48):
July 2020.
Next one's the aggressive 5050.
This is the most levered andleast diversified of these
portfolios.
It does not have anyalternative assets in it, which
has hampered it over itslifetime.
So it's one-third in a leveredstock fund at UPRO, one-third in
a levered bond fund TMF, andthe remaining third divided into
a preferred shares fund and anintermediate treasury bond fund.
(36:10):
It's up 1.36% for the month ofOctober.
It's up 13.88% year to date,but down 0.15% since inception
in July 2020.
Next one's the levered goldenratio.
This one is a year younger thanthe other ones.
It has 35% in a composite fundcalled NTSX, that is the S P 500
(36:31):
and Treasury Bonds, levered up1.5 to 1%.
15% in AVDV, which is aninternational small cap value
fund.
20% in gold, GLDM, 10% in amanaged futures fund, KMLM, 10%
in TMF, a levered bond fund.
And the remaining 10% in UDOWand UTSL, which are levered
(36:52):
funds that follow the Dow and aUtilities Index.
It's up 3.45% for the month ofOctober so far.
It's up 24.77% year to date andup 19.25% since inception in
July 2021.
And the last one is our newestone, the OPTRA portfolio, which
is a return-stacked kind ofportfolio.
(37:14):
Wow, I use it very nice.
It's 16% in a Levered StockFund UPRO that follows the SP
500, 24% in AVGV, which is aworldwide value tilted fund.
24% in GOVZ, which is aTreasury Strips fund, and the
remaining 36% divided into goldand managed futures.
(37:36):
It's up 2.67% for the month ofOctober so far.
It's up 22.41% year to date,and up 25.97% since inception in
July 2024.
So a very successful showingright out of the gate.
Voices (37:51):
Great success.
Mostly Uncle Frank (37:54):
Which is good because it's intended to
have the same kind of returns asa hundred percent stock
portfolio, but with lessvolatility.
That is the experiment going onthere.
But now I see our signal isbeginning to fade.
(38:14):
If you have comments orquestions for me, please send
them to Frank atRiskPartyRadio.com.
That email is Frank atRiskPartyRadio.com.
Or you can go to the websitewww.riskparty radio.com.
Put your message into thecontact 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.
(38:35):
Give me some stars of follow, areview.
That would be great.
Okay.
Thank you once again for tuningin.
This is Frank Vasquez with RiskParty Radio.
Signing off.
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 (00:37):
Thank you, Mary, and welcome to Risk Parody
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 (00:49):
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 are episodes 12, 14,16, 19, 21, 56, 82, and 184.
(01:16):
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 (01:30):
Along with a host named after a hot dog.
Voices (01:34):
Lighten up Francis.
Mostly Uncle Frank (01:37):
But now onward, episode 458.
Today in Risk Party Radio, it'stime for our weekly portfolio
reviews of the eight sampleportfolios you can find at
www.riskparty radio.com on theportfolios page.
It's a pretty strong theme thisweek.
Voices (02:21):
The man with the mideest touch.
A spidest touch.
Mostly Uncle Frank (02:32):
Yeah, I think according to the financial
media, gold had its best weeksince March 2020.
I wonder what was going on inMarch 2020.
Anyone remember that?
Voices (02:44):
You think anybody wants a roundhouse kick to the face
while I'm wearing these badboys?
Forget about it.
Mostly Uncle Frank (02:50):
Well, we'll talk about that later.
In the meantime.
Voices (02:54):
I'm intrigued by this.
How you say emails.
Mostly Uncle Frank (03:00):
And first off.
First off, we have an emailfrom Ron.
Voices (03:06):
Then time for Bonzo, starring Ronald Regan, Diana
Lynn, and Bonzo, that amazinggym.
Mostly Uncle Frank (03:13):
And Ron writes.
Mostly Queen Mary (03:14):
Good morning, Frank and Mary.
Here is the quarterly updatefor the all-equity McKenna Man
portfolio.
It was another very goodquarter, and the 8% withdrawal
rate is holding strong.
Q3 net results 4.3% afterwithdrawal.
Year-to-date net results 10.9%.
Q3 donation $118.
(03:35):
Sorry, I was a few days late inthis quarter in South America
on vacation.
Have a great day.
Thanks, Ron.
Voices (03:46):
It's a monkey.
Mostly Uncle Frank (03:48):
Well, thank you for being one of our top
drawer donors to the FatherMcKenna Center.
Voices (03:53):
Really top drawer.
Mostly Uncle Frank (03:55):
As most of you know, we do not have any
sponsors on this podcast.
We do have a charity wesupport.
It's called the Father McKennaCenter.
It supports hungry and homelesspeople in Washington, D.C.
Full disclosure, I'm the boardof the charity and am the
current treasurer.
And if you donate to thecharity, you get to go to the
front of the email line, as Ronhas done here, and in fact, all
of our emailers have done today.
Voices (04:17):
Yes!
Mostly Uncle Frank (04:18):
It's a pretty long line.
It goes back to July now.
There are two ways to do that.
You can either donate directlyat the Father McKenna website at
the donation page, which I'lllink to in the show notes, or
you can go to the support pageat www.riskparityradio.com and
become one of our patrons onPatreon.
Either way, you get to go tothe front of the line.
Ron is extra special since heis a repeat donor and set up a
(04:43):
little portfolio which hedistributes to the Father
McKenna Center out of, as he hasdone here for his quarter three
donation.
We first discussed this back onGroundhog Day this year.
Voices (04:56):
That's right, Woodchuck Chuckers.
It's Groundhog Day! Get up andcheck that hog out there! Come
here, Groundhog!
Mostly Uncle Frank (05:05):
And that's episode 399.
And then his next distributionwas in episode 437.
But he is one of our extraspecial listeners who has set up
this little portfolio tobenefit the Father McKenna
Center on a regular basis.
Voices (05:22):
Yes!
Mostly Uncle Frank (05:23):
And it looks like things are going
swimmingly there, given theresults you reported.
I hope you had a good time onvacation in South America.
Interestingly enough, Mary andI were on a vacation in South
Africa at the same time you wereon your vacation in South
America.
And I did just put together allof the little video clips I
(05:57):
took, about 40 of them, mostlyof the animals we saw in South
Africa.
And I made a little playlistand I put it on YouTube if
anybody wants to see a lot ofanimals in South Africa.
I will also link to that in theshow notes for your
entertainment.
Voices (06:14):
The only thing that we we need now, Frank, for your
beautiful photos or best photos.
Is if you maybe go and sit onthat rock.
Yeah, go there.
Yeah, and uh and hang pieces ofmeat on yourself.
Yeah, we'll be taking videos.
Make yourself a nice necklace ofwarthog ribs.
(06:37):
Yeah.
Mostly Uncle Frank (06:39):
You had no questions this time.
Please do submit them when youhave them, because you will
always go to the front of thefront of the email line, given
your generous status here.
Voices (06:50):
You're in the wrong shape, buddy.
Come on.
Oh, I must be in the front ofthe room.
Mostly Uncle Frank (06:55):
Thank you once again for your donation,
and thank you for the email.
Voices (06:59):
They're not gonna catch us.
We're on a mission from God.
Second off.
Mostly Uncle Frank (07:07):
Second off, we have an email from Mark.
Voices (07:13):
All hail the commander of his majesty's Roman legions,
the brave and noble MarcusVindictus.
Mostly Uncle Frank (07:20):
Mark from the Eastern Shore.
And Mark from the Eastern Shorewrites.
Mostly Queen Mary (07:25):
Greetings, Frank and Mary.
Thank you for your publicservice to financial education
in the form of Risk ParityRadio.
I am 65 years old, stillworking, and planning to leave
the paycheck world in December.
In preparation, I invested oneof our IRAs in the Risk Parity
(07:47):
Ultimate Portfolio back inApril, and for practice have
gone through the monthlywithdrawal process three times
now.
For this learning exercise, Iam not actually withdrawing out
of the IRA, but moving theproceeds to the cash part of the
IRA and not including the cashportion in the equation going
forward.
I am also reinvesting dividendsinstead of having dividends
(08:09):
going to the cash account, sincethis is a simulation using a
pre-tax account and it makes thetotal return of each investment
a little clearer to me.
I have two observations andquestions regarding the July
31st withdrawal process.
One, I believe that you tookwithdrawals from accumulated
cash.
What I did was to sell ETH,BTC, and UPRO to satisfy the
(08:32):
0.5% withdrawal for that month.
I am interested in yourthoughts on this.
I suspect your account hadsufficient accumulated cash, and
I wanted to leave accumulatedcash out of my equation unless
all the investment returns werein the dump.
2.
I believe your process is toanalyze the monthly performance
at the close of the last day ofeach month and then take
(08:53):
withdrawals on the first day ofthe following month.
There can be a significantchange in the price and
performance before 4 p.m.
on the last trading day of themonth and 9.30 a.m.
on the first trading day of thefollowing month, which was very
noticeable to me for ETH.
To expand on item one, mywithdrawal target of 0.5% was
about $2,723.
(09:16):
I withdrew from the top monthlyperformer down to its target
allocation and then two more inorder to satisfy the total
withdrawal amount.
That was $1,944 from ETH, $230from BTC, and $549 from UPRO.
One-month returns were about55%, 9%, and 8%, which I felt
(09:39):
were all respectable returns.
As a sanity check, I also did athree-month look back and found
the returns to be equallyrespectable at about 105%, 22%,
and 45%.
To expand on item two, as Irecall, at 4 p.m.
on July 31st, ETH was up over50% for the month.
(09:59):
During extended trading hoursit dropped to between 40% and
50%, and at the 9.30 opening itwas below 40%.
Well, this did not change thedecision to withdraw from ETH
first, it could have.
As luck would have it, I did mytrades during extended hours on
July 31st.
Do you recommend using extendedhours on the last day to do the
(10:21):
trade to avoid negativevolatility risk?
As an aside, I recently startedusing Stock Rover to help with
the monthly withdrawal analysisand monitor things throughout
the month.
Many thanks for your enjoyableand educational broadcasting
endeavors.
All the best, Mark.
Voices (10:41):
Remember thou art mortal! Remember thou art
mortal! Remember thou artmortal.
Mostly Uncle Frank (10:48):
Well, first off, thank you for being a donor
to the Father McKenna Center aswell.
Anytime somebody mentions theEastern Shore, Mary and I have
to laugh because there was thisformer governor named William
Donald Schaefer, who was agovernor in the 1990s, who got
into a lot of trouble referringto the Eastern Shore of Maryland
(11:09):
as an outhouse.
And then a lot of people theretook offense and sent a lot of
outhouses to the capital inAnnapolis.
Porta potties, really.
But I'm sure if you were aroundin the 1990s, you remember that
(11:36):
with some amusement.
But getting to the substance ofyour email, yeah, I'm glad
you're taking the opportunity todo a little experimentation to
essentially test run howsomething like this is going to
work.
I think that's a good exerciseif you're a do-it-yourself
investor in particular.
Now that we have no feetrading, you can set up these
accounts pretty easily or use asmall account that's already
(11:59):
working for you.
It's very easy just to set up alittle practice portfolio and
see what it's like to withdrawfrom it.
That is actually what myfriends over at Bigger Pockets
Money are doing, Mindy Jensenand Scott Trench, who both now
have practice risk parity styleportfolios to withdraw from.
And Mindy just mentioned hersin their last episode, which
(12:20):
I'll also link to in the shownotes.
So a couple of thoughts.
First, my overall thought isthis actually is not that fussy
if you're withdrawing on aregular basis from a portfolio
like this.
And the reason it's not thatfussy is because I'm assuming
that you're going to have somerebalancing rules that will
cause you to rebalance once ayear or so.
(12:41):
And that kind of just washesaway any errors you might make
in taking the distributionsbecause you're going to
basically true up the wholeportfolio and get it back to its
original configuration.
Now, when you start doing thisfor real and you're not
reinvesting the dividendsanymore, you will have a lot of
cash buildup.
(13:02):
Usually, most of theseportfolios have between two and
three percent on dividend andincome yields, which basically
is about four or five months outof the year if you're taking a
monthly distribution.
That cash just covers it andyou don't have to worry about
selling anything.
Always money in a banana stand.
And you really do want to do itthat way eventually because you
(13:22):
reduce the number oftransactions and it's just a
whole lot easier to manage thanreinvesting dividends and then
taking money out by selling theshares of whatever it is you're
selling or would be selling.
Now you can run into some funnysituations if you're using
things that are highly volatileto begin with in your portfolio,
(13:44):
such as UPRO orcryptocurrencies, which can go
up or down a lot in a very shortperiod of time.
Voices (13:53):
You have a gambling problem.
Mostly Uncle Frank (13:56):
There isn't really much to say to get around
that because it's a randomevent whether the thing is going
to be going up or down rightaround the time you are selling
it.
It's better just to pick sometime period and deal with it
then.
As I mentioned, it will kind ofwork out in the wash if you are
eventually rebalancing thesethings.
I know some people have applieddifferent rules to these highly
(14:19):
volatile assets and simplydecide to sell them on an
intermediate term basis if theygo up or down by so much.
Well, you can do that, it'sprobably unnecessary.
Again, because it's gonna getrebalanced out in the wash
eventually.
I probably would not engage inany extended hours trading.
(14:40):
And if you do do something likethat, make sure you put in a
limit order because the tradingvolumes in extended hours
trading are often very low,which leads to even more
volatility.
And if you put in market ordersin the extended hours, you can
really get bad prices becausethe spreads become a lot wider.
(15:02):
If you really do want to do itat end of day, I I would look at
it at some point prior to whenthe market closes, say at 2 30,
and then decide what to sellthen and do it by three.
But of course, that requiresmonitoring this in real time,
and I'm not sure that peoplereally want to do this or pay
that much attention to it whenyou don't have to.
(15:22):
But ultimately I would notsweat the details on this too
much, because something is justas likely to go up as it is to
go down overnight, and it doesall work out in the wash, if you
will, at the time ofrebalancing.
Just one other note on thatparticular portfolio.
That portfolio was reallydesigned or not very well
(15:44):
designed as more of a kitchensink because I didn't want to
have too many different sampleportfolios, but did want to have
one with sort of here's a wholebunch of things that people
might use or could think of thatthey might want in a portfolio.
And so that's what thatrepresents.
I would doubt that anyonereally wants to have all of
those things in a portfolio, butyou never know.
(16:06):
This audience likes to do allkinds of things and likes to
experiment, which I do reallyappreciate.
Voices (16:14):
You are talking about the nonsensical ravings of a
lunatic mind.
Mostly Uncle Frank (16:20):
Because it shows you're really engaged.
Abby normal.
So hopefully that helps.
Happy to answer any furtherquestions you may have.
Thank you for being a donor,and thank you for your email.
Next off, we have an email fromRick.
Voices (16:51):
Just want to tell you how the feeling gotta make you
understand.
Mostly Uncle Frank (16:59):
And Rick writes.
Mostly Queen Mary (17:57):
10% large cap minimum volatility and 10%
cash.
Should I just model this like adrawdown and compare it to
other options withoutconsidering adding to it on a
regular basis?
Keep up the great work.
Rick from Dayton, Ohio.
P.S.
Thank you for all you do toraise awareness and financial
support for the hungry andhomeless.
I recently made a donation tothe Father McKenna Center.
(18:19):
Although I missed it this year,I will make sure that future
donations are dedicated to the2026 Top of the T-shirt
campaign.
Mostly Uncle Frank (18:39):
Well, I'm glad you're enjoying the podcast
and that you are alsoexperimenting with a risk parity
style portfolio.
Now, as for modeling, you canactually do this with the
financial goals calculator atPortfolio Visualizer because
what that allows you to do isstart and stop cash flows.
And what you're really talkingabout in accumulation going to
(19:02):
decumulation is having positivecash flows, cash going in for
some period of time, and thenhaving cash come out after that
for some period of time.
And the portfolio visualizermodeling tool allows you to have
as many cash flows as you wantand to start and stop them
(19:24):
whenever you want.
It does take a little bit ofwork to figure out how it works,
but it's not that hard.
And so if you're looking forsomething that does that, that's
what I would use.
You can also use test folio,but as you surmise or may have
tried out, you can only beeither adding or taking out from
a modeling exercise that youwere doing there.
(19:47):
Now you asked whether youshould just model a drawdown and
compare that to other optionswithout considering adding to it
on a regular basis.
I think ultimately that's goingto be the important thing.
That is why you'd beconstructing one of these
portfolios to begin with to havea better drawdown scenario.
And so I would be focused onthat because accumulation, you
(20:10):
don't need this kind ofportfolio to accumulate in.
Although you can accumulate inone of these kinds of
portfolios.
Tyler over at Portfolio Chartsdid write a recent article about
accumulating in a golden ratioportfolio.
What's the answer?
What's the answer?
Voices (20:27):
What's the answer?
Sacred geometry, sacredgeometry, sacred geometry.
The golden ratio.
The golden ratio.
Mostly Uncle Frank (20:37):
And I'll link to that in the show notes.
I thought that was prettyinteresting.
But since ultimately what we'retrying to do here for the most
part is construct portfolioswith high safe withdrawal rates,
I think it is probably thedrawdown scenario that matters
the most here.
Hopefully that helps.
I'm glad you're enjoying thepodcast and the Trogdoor.
Voices (20:58):
I said consummate vs.
Consummate! I wouldn't knowMajesty if it came up and bit
him in the face.
It happened once.
(21:53):
And their fatched roof cottages.
And the truck door comes in thenight.
Last off last off?
Mostly Uncle Frank (22:14):
We have an email from Keith.
Voices (22:17):
I can't believe it.
Do you realize people wereactually stopping me on the
street for my autograph?
You're the biggest thing that'shappened in this town since they
dedicated the new gas station.
Mostly Uncle Frank (22:28):
And Keith, right?
Mostly Queen Mary (22:30):
Dear Frank and Mary, I made a little
donation to the McKenna Centerin honor of Risk Parity Radio to
encourage Mary to bump thisemail to the top of the list.
Voices (22:38):
Mary, Mary, I need you again.
Mostly Queen Mary (22:46):
In episode 457, Carter asked about gold
futures contracts, and youresponded by saying they have an
embedded financing cost, whichis obscured by the complexities
of the contract pricing and roledynamics.
Voices (23:00):
That's what I'm talking about.
Mostly Queen Mary (23:02):
That is true, but I have good data from the
last four years that lets mecalculate the financing cost of
a rudimentary risk parityportfolio using futures
contracts.
The model that best fits myreal-world result is linked
(23:38):
below.
The exposure to the S P 500,Treasuries, and Gold are all
done with futures.
The cash performance bond isrepresented by ZEROX because
cash in my Schwab account earnsnext to nothing.
The rest of my collateral isheld in the trend following fund
DBMF and a small cap value fundVBR.
(23:58):
Over the last four years, myeffective borrowing rate is the
T-Bill rate plus 75 basispoints.
My question for you, Frank, ishow can I improve the model for
the five-year treasury contract?
I'm using maturity of fouryears in test folio, which seems
to match my results, but Idon't really have any intuition
about how the maturity variablewill affect the results.
(24:20):
Best wishes from one of yourmost loyal listeners, Keith.
P.S.
Carter can find thespecifications for the gold
futures contracts on the CMEwebsite.
Right now the MGC contract isequivalent to 10 ounces or about
$41,000 and rising.
I love gold.
Voices (24:40):
I love gold.
Mostly Uncle Frank (24:44):
Well, Keith, first I also want to thank you
for being a donor to the FatherMcKenna Center.
But looking at your email, Idid click on this link you
provided of your model, and itdid jump out at me that this
model has a portfolio with about400 times leverage in it.
And you know what I have to sayto that?
Voices (25:06):
Well, you have a gambling problem.
Mostly Uncle Frank (25:09):
It was very interesting.
It had an over 19% compoundedannual growth rate, but also a
66% max drawdown over the past20 years or so.
But you really need to be risktolerant to be working such a
thing as I imagined you are.
Voices (25:31):
I'll drive that tanker.
Mostly Uncle Frank (25:35):
Hopefully you're younger.
Better not putting all of yourmoney into such a thing because
I would worry about it blowingup at some point.
Thanks for the information atthe end about the sizing of the
gold futures contracts thatCarter asked last time.
And I kind of punted on.
Voices (25:54):
It's not that I'm lazy, it's that I just don't care.
Mostly Uncle Frank (25:58):
See, my ulterior motive is to get some
of my listeners to answer myother listeners' questions so
that I really don't have to doanything at all.
Voices (26:08):
Yeah, I just stare at my desk.
But it looks like I'm working.
Mostly Uncle Frank (26:13):
And then I can focus on what I'm actually
the best at.
Voices (26:17):
Well, you haven't got the knack of being idly rich.
You say you should do like me,just snooze and dream, dream and
snooze.
The pleasures are unlimited.
Mostly Uncle Fra (26:26):
Unfortunately, I'm gonna have to punt on your
question too, because this isbeyond my pay grade.
For reference, his question washow can he improve the model
for a five-year treasurycontract?
Because I really do not knowthe answer to that.
And if I were to try toconstruct an answer, I'm sure it
would probably be wrong for oneor more reasons.
Voices (26:49):
Wrong!
Mostly Uncle Frank (26:50):
But if any of the rest of you have any
insight into that and want tocheck out Keith's model here,
you're welcome to it.
And I'd be very entertained toknow what the answers are, even
though I'll be watching from thesidelines.
Voices (27:04):
You're not going to amount to Jack Squat!
Mostly Uncle Frank (27:09):
But thank you for answering Carter's
question.
Thank you for your donations,and thank you for your email.
Voices (27:38):
I don't know what it's all about.
I got so much to think about.
Now we are going to dosomething extremely fun.
Mostly Uncle Frank (27:49):
And the extremely fun thing we get to do
now is our weekly portfolioreviews of the eight sample
portfolios you can find atwww.riskpartyweaver.com on the
portfolios page.
And it's turning out to be abanner year so far for these
portfolios.
We're just looking at themarkets.
The SP 500, represented by VOO,is up 14.42% for the year so
(28:12):
far.
The NASDAQ 100, represented byQQQ, is up 18.57% for the year
so far.
Small cap value continues to bethe laggard.
Voices (28:22):
I got a FIVA!
Mostly Uncle Fra (28:23):
Representative fund VIOV is up 1.99% for the
year so far.
But gold continues to be thebig winner.
Voices (28:33):
I love gold.
Mostly Uncle Frank (28:37):
As I mentioned, it had the best
performance for a week sinceMarch of 2020.
Our representative fund GLDM isup 60.99% for the year so far.
Voices (28:49):
You're insane, gold member! And that's the way
uh-huh-a-ha.
I like it, Casey and theShunshine Band.
Mostly Uncle Frank (28:58):
And I think this is making a lot of retail
financial advisors very nervousbecause they've essentially been
caught with their pants down asto not recommending any gold in
a portfolio, whereas now a lotof the major outlets and banks
are recommending gold in aportfolio, so they're looking
for excuses as to why theyhaven't done that.
One excuse that's going around,it seems to be some kind of
(29:27):
cheat sheet that I've heardseveral advisors refer to, is
some kind of bogus analysis thatstarts in 1980 as far as a data
analysis of gold is concerned,and completely wipes out or does
not consider the 1970s as ifthe 1970s will never happen
again.
Voices (30:00):
That we like to do.
Mostly Uncle Frank (30:03):
That's just a bad use of data and a form of
coming up with a conclusionfirst and then running around
and finding some data to supportthat conclusion.
As long-term studies haveshown, gold is a very useful
(30:28):
asset to have, particularly in adraw-down portfolio for
diversification purposes, notfor growth purposes, but for
diversification purposes, andthus improve the diversification
properties of a retirementportfolio.
And you might want to go backand listen to episodes 12 and 40
(31:00):
at the beginning of thispodcast.
And so what we are seeing thisyear is kind of a rhyming of
what happened in the 1970s.
Namely, people are gettingnervous about the dollar and
what the Fed is doing and whatthe government and the Fed are
doing together, and who's goingto be the new chair and all that
sort of stuff.
That's a repeat of Nixon goingoff the gold standard in 1971
(31:23):
and his appointment of ArthurBurns as the Fed chair.
We've seen this movie before,and so the consequence of gold
having a great year, the bestyear since 1979, is a small
chance, but it's not out of therealm of possibility.
It just isn't.
And if you have been assumingthat it is outside the realm of
possibility because you wipe outthe data from the 1970s and
(31:47):
whatever analysis of gold you'redoing, you're just doing it
wrong and you're doing adisservice to the people you're
trying to serve.
And you probably do deserve tolose some clients over it,
frankly.
Voices (31:58):
This is gold, Mr.
Bond.
I think you've made your point,Goldfinger.
Thank you for thedemonstration.
Do you expect me to talk?
No, Mr.
Bond, I expect you to die.
Mostly Uncle Frank (32:11):
Maybe time to stop following the herd and
start following the data and theintelligent people that have
already known this for many,many years.
Voices (32:20):
Fat, drunk, and stupid is no way to go through life,
son.
Hello?
Hello, anybody home?
Huh?
Think McFly.
Think.
Mostly Uncle Frank (32:29):
Anyway, moving to the rest of these
assets.
Long-term treasury bondsrepresented by the fund VGLT are
now up 8.03% for the year sofar.
REITs represented by the fundREET are up 9.21% for the year
so far.
Commodities represented by thefund PDBC are up 1.54% for the
year so far.
Preferred shares represented bythe fund PFFV are up 2.36% for
(32:54):
the year so far.
And managed futures aremanaging to be up 9.92% for the
year so far, at least asrepresented by the fund DBMF.
Moving to the sampleportfolios.
First one's the all seasons.
This is a reference portfolio.
It's only 30% in stocks in thetotal stock market fund.
(33:15):
55% in intermediate andlong-term treasury bonds, and
the remaining 15% divided intogold and commodities.
It's up 1.55% for the month ofOctober so far.
It's up 13.19% year to date andup 22.88% since inception in
July 2020.
Moving to these kind of breadand butter kind of portfolios,
first one's golden butterfly.
(33:36):
This one is 40% in stocksdivided into a total stock
market fund and a small capvalue fund.
40% in treasury bonds dividedinto long and short, and 20% in
gold, GLDM.
It's up 2.25% for the month ofOctober so far.
It's up 17.4% year to date, andup 57.23% since inception in
(33:57):
July 2020.
Next one's the Golden Ratio.
The Golden Ratio.
Voices (34:07):
The Golden Ratio.
What's the answer?
What's the answer?
What's the answer?
Mystery.
Sacred geometry.
Sacred geometry.
The Golden Ratio.
Secrets.
The Golden Ratio.
Mostly Uncle Frank (34:23):
This one is 42% in stocks divided into a
large cap growth fund and asmall cap value fund.
26% in treasury bonds, 16% ingold, 10% in a managed futures
fund, and 6% in a money marketin cash.
It's up 2.19% for the month ofOctober.
It's up 17.02%, year to dateand up 52.08% since inception in
(34:46):
July 2020.
Next one's the Risk ParityUltimate, our kitchen sink
portfolio.
I won't go through all 12 ofthese funds, but it's up 1.86%
for the month of October so far.
It's up 16.66% year to date andup 39.23% since inception in
July 2020.
Now we're going to move tothese experimental portfolios
(35:07):
that all involve some leveragedfunds and are very volatile, so
don't try this at home, eventhough I know some of you do.
Voices (35:15):
Tony Stark was able to build this in a cave with a box
of scraps.
Mostly Uncle Frank (35:22):
First one's the accelerated permanent
portfolio.
This one is 27.5% in a leveredbond fund TMF, 25% in a levered
stock fund UPRO, 25% in PFF V, apreferred shares fund, and
22.5% in gold, Gildy M.
It's up 3.64% for the month ofOctober so far.
It's up 23.45% year to date andup 24.72% since inception in
(35:48):
July 2020.
Next one's the aggressive 5050.
This is the most levered andleast diversified of these
portfolios.
It does not have anyalternative assets in it, which
has hampered it over itslifetime.
So it's one-third in a leveredstock fund at UPRO, one-third in
a levered bond fund TMF, andthe remaining third divided into
a preferred shares fund and anintermediate treasury bond fund.
(36:10):
It's up 1.36% for the month ofOctober.
It's up 13.88% year to date,but down 0.15% since inception
in July 2020.
Next one's the levered goldenratio.
This one is a year younger thanthe other ones.
It has 35% in a composite fundcalled NTSX, that is the S P 500
(36:31):
and Treasury Bonds, levered up1.5 to 1%.
15% in AVDV, which is aninternational small cap value
fund.
20% in gold, GLDM, 10% in amanaged futures fund, KMLM, 10%
in TMF, a levered bond fund.
And the remaining 10% in UDOWand UTSL, which are levered
(36:52):
funds that follow the Dow and aUtilities Index.
It's up 3.45% for the month ofOctober so far.
It's up 24.77% year to date andup 19.25% since inception in
July 2021.
And the last one is our newestone, the OPTRA portfolio, which
is a return-stacked kind ofportfolio.
(37:14):
Wow, I use it very nice.
It's 16% in a Levered StockFund UPRO that follows the SP
500, 24% in AVGV, which is aworldwide value tilted fund.
24% in GOVZ, which is aTreasury Strips fund, and the
remaining 36% divided into goldand managed futures.
(37:36):
It's up 2.67% for the month ofOctober so far.
It's up 22.41% year to date,and up 25.97% since inception in
July 2024.
So a very successful showingright out of the gate.
Voices (37:51):
Great success.
Mostly Uncle Frank (37:54):
Which is good because it's intended to
have the same kind of returns asa hundred percent stock
portfolio, but with lessvolatility.
That is the experiment going onthere.
But now I see our signal isbeginning to fade.
(38:14):
If you have comments orquestions for me, please send
them to Frank atRiskPartyRadio.com.
That email is Frank atRiskPartyRadio.com.
Or you can go to the websitewww.riskparty radio.com.
Put your message into thecontact 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.
(38:35):
Give me some stars of follow, areview.
That would be great.
Okay.
Thank you once again for tuningin.
This is Frank Vasquez with RiskParty Radio.
Signing off.
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