Risk Parity Radio

Episode 407: Multi-Asset Funds Like GDE, "Life Cycle" Econ-Models, Historical Interest Rate Musings And Portfolio Reviews As Of March 14, 2025

• Frank Vasquez • Season 5 • Episode 407

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In this episode we answer emails from Dustin, MyContactInfo, and Mark.  We discuss the ETF GDE and combo return stacked funds generally, why you probably don't want to use economists' "life cycle model" for personal finance planning due to its unrealistic underlying assumptions, and whether we could use historical high interest rates to create market timing and allocation signals between stocks and bonds.

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:

Article About BTGD:  New ETF Offers Dual Exposure to Bitcoin, Gold | etf.com

Optimized Portfolios Site:  Optimized Portfolio - Investing and Personal Finance

Rational Reminder Podcast Re Lifecycle Model:  Ben Mathew: The Lifecycle Model vs. Safe Withdrawal Rates (SWR) | Rational Reminder 340

Debunking Economics:  Debunking Economics - Revised and Expanded Edition: The Naked Emperor Dethroned?: Keen, Steve: 8601406370678: Amazon.com: Books

Amusing Unedited AI-Bot Summary:

When market turbulence strikes, diversification proves its worth. This week, as the S&P 500 tumbles nearly 4% year-to-date and the NASDAQ falls over 6%, gold emerges as the standout performer—surging past $3,000 an ounce with returns exceeding 13%. These dramatic market movements create a perfect real-world demonstration of why uncorrelated assets matter in portfolio construction.

We dive deep into the limitations of economic models for personal financial planning, examining why the Life Cycle Model—while logically sound in theory—falls apart when confronted with life's inherent unpredictability. The assumption that we can accurately forecast our lifespans, relationships, and changing preferences decades in advance reveals a fundamental disconnect between theoretical economics and practical personal finance.

A thought-provoking listener question explores whether allocation strategies should shift dramatically if interest rates ever reach levels where risk-free returns match or exceed historical stock returns. Drawing on lessons from the early 1980s when Treasury yields exceeded 15%, we consider why developing investment rules based on rare historical anomalies rarely serves investors well.

The weekly portfolio review shows mixed performance across our eight sample portfolios, with those holding significant gold allocations weathering the current volatility far better than stock-heavy alternatives. We also examine rebalancing decisions for the Levered Golden Ratio portfolio, making thoughtful adjustments to improve its value tilt and diversification characteristics.

Whether you're curious about combining assets in hybrid funds, wondering how managed futures perform during market corrections, or simply wanting to see how different portfolio strategies are navigating current conditions, this episode delivers practical insights for the thoughtful, independent investor. Join us for this exploration of asset allocation in uncertain times.

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Voices:

A foolish consistency, is the hobgoblin of little minds, adored by little statesmen and philosophers and divines. If a man does not keep pace with his companions, perhaps it is because he hears a different drummer.

Mary and Voices:

A different drummer and now, coming to you from dead center on your dial, welcome to Risk Parity Radio, where we explore alternatives and asset allocations for the do-it-yourself investor, Broadcasting to you now from the comfort of his easy chair. Here is your host, Frank Vasquez.

Mostly Uncle Frank:

Thank you, mary, and welcome to Risk Parity Radio. If you have just stumbled in here, you will find that this podcast is kind of like a dive bar of personal finance and do-it-yourself investing. It's a relatively small place. It's just me and Mary in here and we only have a few mismatched bar stools and some easy chairs. We have no sponsors, we have no guests and we have no expansion plans. I don't think I'd like another job. What we do have is a little free library of updated and unconflicted information for do-it-yourself investors.

Voices:

Now, who's up for a trip to the library tomorrow?

Mostly Uncle Frank:

So please enjoy our mostly cold beer served in cans and our coffee served in old, chipped and cracked mugs, along with what our little free library has to offer.

Voices:

Welcome.

Mostly Uncle Frank:

But now onward, episode 407 Today on Risk Parity Radio. It's time for our weekly portfolio reviews Of the eight sample portfolios you can find at wwwriskparityradiocom On the portfolios you can find at wwwriskpartyradiocom On the portfolios page.

Mary and Voices:

I love gold.

Mostly Uncle Frank:

Yes, this does appear to be the golden year of gold, for whatever reason.

Voices:

But before we get to that, I'm intrigued by this how you say Emails.

Mostly Uncle Frank:

And First off. First off, we have an email from Dustin. What is how you say?

Voices:

emails, and First off, first off, we have an email from Dustin. I just want to say one word to you, just one word. Yes, sir, are you listening?

Mostly Uncle Frank:

Yes, sir yeah, plastics and Dustin writes.

Mary and Voices:

Hi, frank, love the show. Long-time listener, first-time questioner. Plastics and Dustin writes expense ratio Seems like a nice way to free up portfolio space. For instance, I could drop my 10% GLDM and drop my S&P 500 allocation by 10% by picking up GDE at 10%, freeing up 10% for managed futures, or more cowbell or whatever else one wants more space for. I could have used a little more cowbell. Appreciate your thoughts on this and never change the show. It's fantastic, dustin.

Mostly Uncle Frank:

Well, Dustin, I'm glad you're enjoying the show.

Voices:

Would you like me to seduce you? What Is that? What you're trying to tell me?

Mostly Uncle Frank:

We've actually talked about GDE before, but not for a very long time. You have to go back to episodes 167 and 170, which are back in 2022. And I'll say what I've said before, that yes, in theory, you can use something like this, as long as you balance it out with the other things in your portfolio and take into account the specific allocations. The issue I always have with these mixed asset funds is that they are actually more difficult to manage and rebalance in a portfolio, because part of the idea of having a diversified portfolio is that the uncorrelated assets are moving in different directions at different times, giving you rebalancing opportunities. Assets are moving in different directions at different times, giving you rebalancing opportunities. However, if you shove them together in one fund, then you lose that rebalancing opportunity and here, since we're talking about gold and large cap equities, they have a correlation of essentially zero, so half the time they are moving in opposite directions essentially and that's true right now and so you would want to be able to rebalance today out of the gold and into the equities, but you can't do that in a fund like this, so you lose that capability, but you are correct that it's very cost efficient and may free up room for other things in the portfolio.

Mostly Uncle Frank:

The more I think about this, the more I think it makes the most sense, though, to keep stocks equities in particular separate from the other assets in your portfolio, simply because, in most of these portfolios, the stock portion of it is the main driver of returns, and we know the stock market goes up about 70% of the time, so about 70% of the time, the stocks in your portfolio are probably going to be the best or one of the time.

Mostly Uncle Frank:

So about 70 percent of the time, the stocks in your portfolio are probably going to be the best or one of the best performers, but when they perform badly, in that 30 percent of the time, they're probably going to be one of the worst performers in the portfolio, and you want to be able to rebalance in or out of those into the other assets, which are essentially there to lower the overall volatility of the portfolio without taking away too much on the return side. So I would prefer to invest in something that combined gold with, say, bonds or some other assets that wasn't stocks. In that line, there is a brand new ETF called BTGD, which combines gold and Bitcoin, so it's basically two times leverage, with one half of it being gold and one half of it being Bitcoin, for each dollar you put in.

Voices:

You have a gambling problem.

Mostly Uncle Frank:

To me, something like that would be a way to add a little bit of Bitcoin to a portfolio without having to make any space for it.

Voices:

Inconceivable.

Mostly Uncle Frank:

But I'm not sure it's really worth the hassle or the expense fee.

Voices:

Forget about it.

Mostly Uncle Frank:

However, in my mind, those are the kind of hybrid funds that would be the most useful in constructing risk parity style portfolios, due to this rebalancing issue, in constructing risk parity style portfolios, due to this rebalancing issue, but for the most part, I would prefer to keep each asset separate in terms of fund allocations. Anyway, it's been a long time since we talked about this, so thank you for bringing it up again. There are more and more funds like this that are coming online, if you will.

Mostly Uncle Frank:

And so I think there's going to be a lot more options to do many different kinds of things. You experimental people? Well, you have a gambling problem and, since I haven't mentioned it recently, there's a nice site called Optimized Portfolios that does regular reviews of all kinds of these leveraged and hybrid funds that you might want to check out. So thank you for participating. Hopefully that helps. And thank you for your email. I'm going home now. I apologize for what I said. I hope you can forget it, but I'm going home right now. Second off. Second off we have an email from MyContactInfo.

Voices:

Oh, I didn't know you were doing one.

Mary and Voices:

Oh sure, I think I've improved on your methods a bit too.

Mostly Uncle Frank:

And MyContactInfo writes.

Mary and Voices:

Hi Frank, the withdrawal methodology discussed in this podcast seems eminently logical, as always. Would appreciate your thoughts. Thank you, ben Matthew. The Life Cycle Model vs Safe Withdrawal Rates the Rational Reminder Podcast.

Mostly Uncle Frank:

All right, this is an excellent topic because it addresses a very broad issue about trying to use economics, or economic theory, and applying it directly to investing.

Voices:

You're moving into a land of both shadow and substance of things and ideas. You've just crossed over into the twilight zone.

Mostly Uncle Frank:

Just to orient everyone here, what my Contact Info is referring to is a podcast, number 340 from the Rational Reminder podcasts, and it's an interview of an economist named Ben Matthew talking about the life cycle model versus safe withdrawal rates. And Ben Matthew has created this tool for using this life cycle model to model out retirement scenarios, at least at a high level, talking about stocks and bonds and things like that, and it all sounds great and it is quite logical. But the issue is this and what was not explained in that podcast, what is usually not explained by economists when they talk about this, and what the public listening to this generally does not understand at all is what is the life cycle model and what are its limitations?

Mostly Uncle Frank:

The life cycle model from economics is the idea that if we were to plan out somebody's entire life, their financial life, in adulthood, what would be kind of the most efficient way of organizing that over the period of decades?

Mostly Uncle Frank:

And the conclusions that you come up with when you apply that model is that you should actually take leverage early on in your life, in your 20s, to both get educated, open up businesses and just invest Because you have so much life left.

Mostly Uncle Frank:

You are in the early stages of the life cycle, and so you want to take as much advantage of leverage and compounding as possible.

Mostly Uncle Frank:

The idea, then, is that you level that off as you go forward and then, as you get to the end of life, you rely on fixed assets like annuities, tips, ladders and things like that towards the end of your life, and, in theory, that is the most efficient way to approach your finances across the entire part of your life cycle.

Mostly Uncle Frank:

So it's eminently logical, but also eminently impractical and really does not apply to any real person in the real world. And the reason is this it's the basic assumption of most economic models is the homo economicus person. This is the person that Kahneman and Tversky attacked as a faulty assumption in most of economics, which is that somebody sitting at age 20 is going to be able to accurately map out both how long they're going to live, what their future preferences are going to be for spending on things, what their married life or not married life is going to be like, how many children are they going to have, basically any meaningful part of their life they are going to be able to rationally know and predict and work on from, say, age 20 forward to the end of life.

Voices:

Surely you can't be serious.

Mostly Uncle Frank:

I am serious and don't call me Shirley. So it basically assumes that life is not uncertain, that life is relatively certain and relatively predictable, even over very long periods of time. Now, if that sounds ridiculous, it's because it is when you're actually planning for personal finances.

Voices:

Are you crazy or?

Mostly Uncle Frank:

just plain stupid. You don't know how long you're going to live. You don't know if you're going to get married. You don't know if you're going to get divorced. You don't know if your preferences are going to change. You don't know.

Voices:

I don't know, nobody knows. And you not only don't know if you're going to get divorced, you don't know if your preferences are going to change. You don't know.

Mostly Uncle Frank:

I don't know, nobody knows, and you not only don't know that for the next 70 years, you probably don't know it for the next 5 or 10. You could be dead, you could be disabled, a whole bunch of other things could happen to you, and so that gives a severe limitation to the practical usefulness of this life cycle model. Am I right, or am I right? Or am I right? Am I right Now, if you smooth that all away and assume that all away, yes, all of the sudden, when you get to retirement and you can predict when you're going to die and everything else about the rest of your life, these kind of fixed annuities and tips ladders and things like that make a whole lot of sense, because your life is eminently predictable, but unfortunately it's not, and so pretending that it is does not make your forecasting or planning better. In fact, it probably makes it a lot worse or significantly worse. And this problem comes through significantly if you analyze the work of most economists that have turned into personal finance gurus or who write books on that subject. This is all over. Lawrence Kotlikoff Hello, no man. And it's one of the reasons a lot of his recommendations don't make much practical sense, even though they sound good in theory. No man, and anyone who is steeped in things like behavioral economics or behavioral finance will recognize very quickly why this is not a useful or practical approach to personal finance, except in limited circumstances, such as you are talking about some kind of pension or inanimate financial thing, in which case these kind of models work.

Mostly Uncle Frank:

Great Newman, to me this does always make a good litmus test for those people who understand economics at a superficial level and those people who understand economics at a deeper level from what are the assumptions inherent in the field and what kind of limitations do those assumptions then create and tells you when economic models make sense to apply and when they don't make sense to apply.

Mostly Uncle Frank:

And usually they make sense to apply when you're talking about large aggregations of things or markets, and make less and less sense to apply when you are talking about individual human behavior, in which case then you do get to behavioral economics, kahneman's system one and system two, and the observation that the default human behavior is not homo economicus but something else which is generally described as predictably irrational.

Mostly Uncle Frank:

So when I see people who are enamored with this, including economists, to me that tells me that they really don't understand the field at a very deep level and don't understand its limitations. Now, if you want a little primer on kind of the history of economics and various theories and how things have been applied, I would recommend a book called Debunking Economics by Steve Keen, who is a heterodox economist I think he's from Australia or and particularly like the first half of it, just describing the history of economic thought and the various theories and why things worked, why things were abandoned, going back to Adam Smith, through Marx, through Javons Marshall, all of those people back in the 19th century, and then up to Keynes and the Austrians and everyone else in between. I gave that book to our youngest son and he is devouring it.

Mostly Uncle Frank:

Because it is that good if you are interested in this topic and really just want to know the lay of the land, so I will link to that in the show notes. As to his personal theories and he's kind of modern monetary theory kind of stuff, I don't think that is that useful either, but I will say he does really understand the foundations and limitations of the subject matter. Anyway, I'll give you a couple links about this in the show notes, including this Rational Reminder podcast. Hopefully you'll check them out and thank you for your email Last off. Last off we have an email from Mark All hail, the commander of his majesty's Roman legions, the brave and noble Marcus Vindictus.

Mostly Uncle Frank:

And this is actually the second in Mark's trifecta of three emails, and so for email number two, Mark writes Happy New Year, frank and Mary.

Mary and Voices:

You reminded us repeatedly when interest rates were near zero that the purpose of treasury bonds was the diversification value of the asset price, not the income from the bonds. But I have a different question regarding the opposite scenario. In September of 1981, the yield on 30-year treasuries hit just over 15%. The stock market returned just under 10% nominal for the 30-year period of 1981 to 2011,. Or 10% nominal for the 30-year period of 1981 to 2011,. Roughly in line with the historical average. So the yield from the 30-year treasuries significantly outperform stocks over that period. I am not asserting that bonds will always outperform stocks when interest rates are high. I am simply making the point that it is not guaranteed that stocks will always demand a risk premium over treasuries. My question is this if we ever enter an interest rate environment where the risk-free rate matches or exceeds the historical returns of stocks again, how should we think about that from an asset allocation perspective? I know we have a strong commitment to the know-nothing portfolio approach at Risk Parity Radio, but I think the main point about the know-nothing approach is trying to predict the future or time the market, and I am talking about a future scenario where we are reacting to a current reality that already exists, and it doesn't have to be precisely September of 1981 again either.

Mary and Voices:

I do understand the challenge around market timing. If we pick a perfect date in the past and that is not what I am intending to do here the rule or principle I am talking about would apply to any date in the future where the yield of long-term treasuries exceeds the historical average return of stocks. Yields wouldn't have to get back to their all-time high for this to be relevant. If we are ever given the opportunity to secure a guaranteed return with no volatility in the income return not the asset price above the average return of stocks again, how do we continue to justify a portfolio with a lot more volatility and a 5% safe withdrawal rate?

Mary and Voices:

I do realize that next time might be different than 1981, and maybe stocks will do better than bonds over a 30-year period next time. But my question holds because of the impact of stocks volatility on a safe withdrawal rate when compared to bond yield volatility. Also, I know the interest rate from treasuries is fixed and doesn't account for inflation, but again, the return we are talking about is above the average return for stocks and we can't predict the future and assert that stock returns will be higher than the bond returns next time. So saying stocks are a better answer because of inflation doesn't make sense to me.

Voices:

Remember thou art mortal. Remember thou art mortal.

Mostly Uncle Frank:

Okay. So your basic question is in the middle, and it's if we ever enter into an interest rate environment where the risk-free rate matches or exceeds the historical returns of stocks. Again, how should we think about that from an asset allocation perspective? And my answer is I don't think that should change our approach, and it's really for a couple of historical reasons.

Mostly Uncle Frank:

If you look at the period of the 1970s, and how inflation rose and rose and wasn't capped for a very long time, and you also think about the 1930s, where the economy was gripped in deflation and that lasted a relatively long time, those are two unique periods, although they do have one thing in common, and the thing they have in common is that the monetary authorities, the government authorities, for a very long time did not take actions to counteract what was going on, and in fact, in a number of respects, what they actually did at those times exacerbated the problems that were beholden to them or in front of them.

Mostly Uncle Frank:

So these were very kind of unique periods in the last hundred years where you had that going on.

Mostly Uncle Frank:

You can see, though, that now we know what that history was, that the likelihood of it being repeated is much lower, and so this is the lesson of recent times that in 2022, after all of this stimulus money flooded the economy and we had supply chain shocks and other things going on that resulted in inflation.

Mostly Uncle Frank:

The Fed was lackadaisical at first, but as soon as it decided that we were in a rising inflation era, it jacked up interest rates even faster than Paul Volcker had done in the late 1970s, because it was learning from that lesson from the past. And so, instead of a decade of higher inflation, we had a year of higher inflation. We are back down to relatively historical norms around 3%, and Fed funds rates between, say, 3% and 5%. What that means for your question is that you only have one data point to look at, essentially. So trying to come up with an investment thesis based on this one data point of what happened in the late 1970s and early 1980s whatever conclusion you come out of that is probably going to be wrong and not work in the next period.

Voices:

That's the fact, Jack. That's the fact, Jack.

Mostly Uncle Frank:

At least if you're talking about timing or adjusting allocations, because I can tell you that after the 1970s, almost nobody thought that interest rates would just keep declining from 1981 for the next 30 years.

Mostly Uncle Frank:

For most of that time the financial world thought that higher inflation was right around the corner.

Mostly Uncle Frank:

And what that resulted in was kind of funny that instead of buying these long-term treasury bonds, knowing that they would be the best performers over the next couple of decades, what people actually did was buy a lot of short-term bonds and CDs and things like that. And in the late 1980s the idea was well, CDs are paying like close to 8%, just put all your money in that and sail off into the sunset. And that turned out not working that well, because every time you rolled them over the interest rates were going down and there was not a repeat of the inflation that everybody was looking for around the corner. So the upside is, although I know it's tempting and I'm sure people are doing this or trying to do this or have done it before and probably did not have good results, there probably is no rule that you can base off of that history to say that this is the time to buy more bonds or this is the time to buy more stocks based on these interest rate differentials or comparisons.

Mary and Voices:

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

Mostly Uncle Frank:

And that most of us at least us mere mortals would be best off simply with a naive diversification where we're picking a set of allocations and just sticking with it and rebalancing and not attempting to market time based on these kind of market-based metrics, Because otherwise what we're really doing is looking for a crystal ball.

Mary and Voices:

A really big one here, which is huge.

Mostly Uncle Frank:

With some kind of metric wrapped around it.

Mary and Voices:

I have a calcite ball and I have a black obsidian one here.

Mostly Uncle Frank:

And chances are that's probably not going to work very well.

Mary and Voices:

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

Mostly Uncle Frank:

Sorry, I can't offer you any more than that, but it is an interesting topic and thank you for your email.

Mary and Voices:

Place it over a candle, and it's through the candle that you will see the images into the crystal.

Voices:

And now, for something completely different. What is that? What is that? What is it? Oh, no, not the bees, not the bees. Ah, I don't have my eyes, my eyes.

Mostly Uncle Frank:

And yes, the bees have descended on financial markets again this past week.

Voices:

The week before it was the worst week since September. This week is the worst week in two years at least, according to the financial media.

Mostly Uncle Frank:

Just looking at how bad it was and it is this year so far. The S&P 500, represented by VOO, is down 3.96% for the year. The NASDAQ, represented by QQQ, is down 6.18% for the year. Small Cap Values big loser this year so far. Representative Fund VIOV is down 9.46% for the year. But gold is the big winner.

Voices:

This is gold, Mr Bond. I think you've made your point. Goldfinger, Thank you for the demonstration.

Mostly Uncle Frank:

Representative Fund GLDM is up 13.71% for the year. Long-term Treasury bonds are also doing all right. Representative Fund VGLT is up 3.81% for the year. Reits, represented by the Fund REET, are still positive this year even though they are part of the stock market. They are up 0.96% for the year. Commodities, represented by the fund PDBC, is up 2.54% for the year. Preferred shares, represented by the fund PFFV, is up 1.94% for the year. But managed futures are managing to be down this year so far. Representative fund DBMF is down 3.1% for the year.

Mostly Uncle Frank:

I had a question from somebody who asked me aren't those supposed to go in the opposite direction of the stock market? And the answer is no. They are not negatively correlated with the stock market. Managed futures are uncorrelated with the stock market, meaning that they could both be moving in the same direction or both be moving in different directions and they are not related. And with something like Managed Futures, you will find that it will change throughout the year as it picks up trends and drops other ones. It's like that river that's always there but it's never the same water in the river.

Voices:

Oh, the river knows your name.

Mostly Uncle Frank:

And your tears falling like the rain All around you suffering in pain.

Voices:

Oh, the river knows your name.

Mostly Uncle Frank:

Now moving to these portfolios which generally appear to be hanging in here this year. First one is this reference portfolio, the All Seasons that we keep around for comparison purposes. It's only 30% in stocks in the total stock market fund, 55% in intermediate and long-term treasury bonds and the remaining 15% in golden commodities. It is down 2.06% month to date. It's still up 1.65% year to date and up 10.36% since inception in July 2020.

Mostly Uncle Frank:

Moving to these more bread and butter kind of portfolios, first one's Golden Butterfly. This one is 40% in stocks divided into a total stock market fund and a small cap value fund, 40% in treasury bonds divided into long and short versions and 20% in gold yielding M. It is down 1.35% month to date. It's up 0.95% year to date and up 25.2% since inception in July 2020. Next one's the golden ratio. This variation has 42% in stocks in large cap growth and small cap value divided equally, 26% in long-term treasury bonds, 16% in gold, 10% in a managed futures fund and 6% in cash. It is down 2.49% month-to-date, down 0.79% year-to-date and up 28.92% since inception in July 2020.

Mostly Uncle Frank:

Kind of wishing I had the version with REITs in it at the moment, but it is what it is. I'm not a smart man, but it is what it is. I'm not a smart man. Next one is the Risk Parity Ultimate, which is kind of a kitchen sink where we put little bits of everything in it. It has 14 funds in it that I'm not going to go through in detail, but it is down 2.49% month to date. It is down 0.03% year to date, but up 21.01% since inception in July 2020. Now moving to these experimental portfolios that all involve leveraged funds. Interesting to look at, but you probably don't want to try these at home, even though I know some of you do.

Voices:

Am I right or am I right, or am I right, right, right, right.

Mostly Uncle Frank:

First one's the Accelerated Permanent Portfolio. This one is 27.5% in a levered bond fund TMF, 25% in a levered stock fund UPRO, 25% in PFFV, a preferred shares fund, and 22.5% in gold GLDM. It is down 4.94% month to date, but it's still up 2.64% year to date and up 3.7% since inception in July 2020. Next one's the aggressive 50-50. This is the most levered and least diversified of these portfolios and is suffering from its lack of diversification because there's not many gold in it. It is one-third in a levered stock fund, upro, one-third in a levered bond fund, tmf and the remaining third divided into a preferred shares fund and an intermediate treasury bond fund as ballast. It is down 7.74% month-to-date, which is now putting it down 1.78% year-to-date, down 13.5% since inception in July 2020. Next one is the levered golden ratio. This one is currently we'll get to that in a minute it is currently 35% in a composite S&P 500 and Treasury bond fund called NTSX. That is levered up 1.5 to 1. 25% in gold GLDM, 15% in a REIT O, 10% each in a levered bond fund, tmf and a levered small cap fund, tna, and the remaining 5% in a managed futures fund, kmlm. It is down 2.73% month to date. It is up 1. Year-to-date and down 3.14% since inception in July 2021. This one actually triggered a rebalancing this past week oh, really, on Monday, because it happened at the end of the week. This one rebalances whenever one of the holdings moves 5% outside of its target allocation, and in this case, the amount of gold in the portfolio has increased from 25% to over 30% due to gold's recent run up to $3,000 an ounce, and so we are rebalancing the entire portfolio, which we haven't done in quite a while.

Mostly Uncle Frank:

In this context, I took another look at this portfolio because I believe I had made a mistake when we constructed this, because I was looking around for a levered value-tilted fund and I couldn't find one, and there still really isn't a good one, at least as to small cap value. So we've been using TNA. The problem with that fund is that it contains about half small cap growth in it, which is really not something you want in a portfolio like this, because of its lack of diversification from other growthy things like the S&P 500. So in order to make these stock holdings more value tilted than they are and I'm including O in this, so this is O in TNA we are modifying here. I'm going to replace them in this rebalancing operation with three new funds.

Mostly Uncle Frank:

And we'll replace TNA with two levered value tilted funds. One is UTSL and the other one is UDOW, which is the Dow and that is utilities, and the Dow is what they're invested in. These are three times levered funds. We're going to assign 5% each to those allocations. Those are both heavily value tilted. Although they are not small cap, they are large and mid cap is what they are. So to fill in some more small cap value, I'm telling you fellas, you're going to want that cowbell.

Mostly Uncle Frank:

We're going to replace O the 15% in O with the fund AVDV, which is International Small Cap Value. I probably would ordinarily just use US Small Cap Value, but since these are experimental portfolios, we could experiment with them a little bit and I thought it would be more interesting to have an International Small Cap value allocation in at least one of these portfolios. That's explicit, and so this one gets to be that guinea pig. So instead of 15% in the REIT-O, we will have 15% in AVDV, in AVDV. And then we'll make one more tweak, which is to take 5% of the allocation that's currently in gold and move it over to the managed futures to make that a more significant allocation than just 5%. So instead of 25% in gold and 5% in managed futures, we'll have 20% in gold and 10% in the managed futures fund, and you will see that all in another week or so. But I will be making the trades on Monday to iron this all out and get it back to its target allocations. And now, moving to the last experimental portfolio and the youngest one, this is the Optra portfolio, one portfolio to rule them all. This one is 16% in a leveraged stock fund, upro, 24% in a worldwide value-tilted fund, avgv, 24% in a treasury strips fund, govz, and the remaining 36% divided into gold and managed futures. It is down 3.59% month-to-date. It's up 0.09% year to date and up 3% since inception in July 2024. It's only been around about eight months, but that concludes our portfolio reviews for the week.

Mostly Uncle Frank:

Could be a lot worse, I would say Could be a lot worse, but we are seeing some of the benefits of diversification, particularly into alternative assets. I love gold, but you can also see that the treasury bonds are becoming very negatively correlated with the stock funds, and that is generally what they do when people start talking about recessions, which they're talking about these days. So I think the Atlanta Fed has forecast a negative GDP for the first quarter so far and it's gone Poof, but now I see our signal is beginning to fade. Just some programming notes. I am going to try and get out another podcast midweek, but I can't promise that I actually will. We are going off to the Economy Conference later in the week and so there will not be a podcast next weekend. If you are at the Economy Conference, I hope to see you there. I'll be doing the same breakout session both Saturday and Sunday at 4 pm in the theater.

Voices:

We got a scary one for you this week.

Mostly Uncle Frank:

If you are coming to that and want to join some of us for a little informal meetup on Friday at the Solaire Hotel that's what they tell me it's called now. It's not the Solari, it's the Solaire.

Voices:

Well, la-dee-freaking-da.

Mostly Uncle Frank:

I like the Ricardo Montalban-s sounding one Solari much better.

Voices:

If you're looking for a career where you can earn a six-figure salary and get the opportunity of wearing suits just like this one, then come see me at the Ricardo Mantelban School of Fine Acting, where I give personal instruction in theater, film, commercials, mime, musicals and, of course, television. To be a good salesman, you must be a good actor.

Mostly Uncle Frank:

Sweet, nutritious and crunchy.

Voices:

Crunchy, nutritious and crunchy, nutritious and crunchy, yes.

Mostly Uncle Frank:

But I was mistaken.

Voices:

About a great many things. About a great many things.

Mostly Uncle Frank:

Anyway, I have a little group email list that I've put together for that For those who have emailed in. If you are interested in that and have not emailed me yet, send an email to frankatriskparodyrodecom and I'll put you on the email list. I plan on sending out a scheduling email to that list, I think on Monday, and if my slide presentation isn't ready, I will also send you that as an added bonus feature.

Voices:

Yes.

Mostly Uncle Frank:

In the meantime, if you have comments or questions for me, please send them to frank at riskparityradarcom. That email is frank at riskparityradarcom. Or you can go to the website, wwwriskparityradarcom. Put your message into the contact form and I'll get it that way. If you haven't had a chance to do it, please go to your favorite podcast provider and like subscribe. Give me some stars, a follow, a review. That would be great. Okay, thank you once again for tuning in. This is Frank Vasquez with Risk Parity Radio signing off.

Voices:

Hey, hey, hey.

Mary and Voices:

The Risk Parity Radio Show is hosted by Frank Vasquez. The content provided is for entertainment and informational purposes only and does not constitute financial, investment tax or legal advice. Please consult with your own advisors before taking any actions based on any information you have heard here, making sure to take into account your own personal circumstances.

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Frank Vasquez

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