Risk Parity Radio

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Episode 408: Rebalancing Frequency, Share Lending, Style Boxes, Strips, And The Golden Ratio Portfolio Mar 19, 2025

Show notes

In this episode we answer emails from Randy, Richard and Jamie. We discuss rebalancing frequency, share-lending at Fidelity, moves in Morningstar's style boxes and strips treasury funds vs. long term treasury bond funds.
And we announce the new listing of the Golden Ratio portfolio at Portfolio Charts and thank Tyler and Van for that.
Links:
Father McKenna Center Donation Page: Donate - Father McKenna Center
Golden Ratio Portfolio at Portfolio Charts: Golden Ratio Portfolio – Portfolio Charts
Golden Ratio Portfolio Write-Up: Beautiful Constants and the Golden Ratio Portfolio – Portfolio Charts
Kitces Article re Rebalancing:
Optimal Rebalancing – Time Horizons Vs Tolerance Bands
Discussion of Changes to Morningstar's Style Boxes: Morningstar redefines growth/value style box criteria - Bogleheads.org
Risk Parity Radio All Episodes Feed Page: Risk Parity Radio RSS Feed

Amusing Unedited AI-Bot Summary:

Exciting news opens this episode as Frank announces the Golden Ratio Portfolio has been officially added to Portfolio Charts, complete with its own dedicated page and insightful write-up. This recognition represents a significant milestone for a portfolio strategy that has been a cornerstone topic throughout Risk Parity Radio's 400+ episodes.
The heart of the episode focuses on answering thoughtful listener questions about portfolio management techniques. Randy inquires about rebalancing frequency and whether to participate in Fidelity's securities lending program for gold ETFs. Frank explains that while rebalancing more frequently than once a year generally doesn't improve performance, coordinating semi-annual rebalancing with tax planning can be advantageous. As for securities lending, Frank shares his personal experience that these programs work smoothly but typically generate minimal income—setting realistic expectations for listeners considering this option.
A particularly detailed discussion explores the nuances between traditional long-term treasury funds and STRIPS funds (GOVZ, ZROZ, EDV). Frank clarifies that STRIPS-based ETFs typically move at approximately 1.5 times the rate of standard long-term treasury funds when interest rates change, effectively functioning as a form of leverage. This characteristic makes them valuable tools for tax-loss harvesting or creating more efficient allocations by achieving similar interest rate sensitivity with smaller position sizes. Rather than focusing on market timing for transitions between these instruments, Frank emphasizes coordinating such moves with broader tax management strategies—practical advice that demonstrates how risk parity investors can implement sophisticated portfolio techniques while maintaining tax efficiency.
Want to connect with other Risk Parity Radio listeners? Frank announces a meetup at the Economy Conference at the Solari Hotel. Email frank@riskparityradio.com for details and to join the community of thoughtful DIY investors exploring alternatives to traditional asset allocation.

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Episode 407: Multi-Asset Funds Like GDE, "Life Cycle" Econ-Models, Historical Interest Rate Musings And Portfolio Reviews As Of March 14, 2025 Mar 16, 2025

Show notes

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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Episode 406: REITs, Vacant Land, Bitcoin Today And Eh, Steve! Mar 13, 2025

Show notes

In this episode, we answer emails from Spencer, Ko and Steve. We discuss REITs as a portfolio allocation, why vacant land is probably not a good investment for most people, "talking your book" with bitcoin for fun and profit and how it looks today in a portfolio, law school education and that infamous Cederburg paper (again but only briefly).
Links:
Father McKenna Center Donation Page: Donate - Father McKenna Center
NAREIT -- Types of REITs: Learn about Investing and Market REIT Sectors Today
Weird Portfolio: Weird Portfolio – Portfolio Charts
Ko's Michael Saylor Video: Michael Saylor’s Big Bitcoin Prediction | Relai Bitcoin Podcast #90
Amusing Unedited AI-Bot Summary:
Ever caught yourself obsessing over a particular asset class? In this engaging episode of Risk Parity Radio, Frank Vasquez tackles three fascinating investment topics that challenge conventional wisdom while providing practical guidance for DIY investors.
We begin with an exploration of REIT allocations beyond the standard 10% recommendation. Frank breaks down why correlation with broader markets matters more than yield history, why individual REITs often outperform REIT index funds for diversification purposes, and why these investments belong in retirement accounts rather than taxable brokerage accounts. A listener's cautionary tale about vacant land investing serves as a powerful reminder that illiquid, non-income-producing assets can become financial quicksand rather than solid foundations for retirement.
The conversation shifts to Bitcoin's evolving role in investment portfolios. Frank cuts through the promotional noise from crypto evangelists, explaining how Bitcoin's behavior has transformed from a true diversifier to essentially "a three times leveraged QQQ fund" highly correlated with tech stocks. This critical insight helps investors properly categorize crypto within their asset allocation rather than viewing it as a separate diversifying asset class.
Finally, we examine the controversial academic paper promoting 100% equity portfolios for retirees. Frank exposes the significant limitations of this research, demonstrating why seemingly groundbreaking financial theories often collapse under real-world scrutiny. Throughout the episode, Frank's pragmatic approach reminds us that successful investing requires looking beyond popular headlines and understanding the fundamental characteristics of what we own.
Whether you're rethinking your REIT strategy, curious about crypto's place in your portfolio, or questioning conventional retirement wisdom, this episode offers clarity amidst the noise of financial media. Share your own investment questions at frank@riskparityradio.com and join our growing community of thoughtful DIY investors.

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Episode 405: Treasury Strips Funds As A Form Of Leverage, A Return Stacked Portfolio, The Golden Ratio And Portfolio Reviews As Of March 7, 2025 Mar 09, 2025

Show notes

In this episode we answer emails from Eli, Garrison and Van. We discuss usig treasury strips ETFs like GOVZ and ZROZ and how they relate to long-term treasury bond funds like TLT and VGLT, a "returned-stacked" portfolio similar to O.P.T.R.A. for accumulation and early retirement and why the Golden Ratio portfolio performs very well on many metrics.
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
Portfolio Charts Portfolio Matrix Tool: Portfolio Matrix – Portfolio Charts
(Note to compare the discussed Golden Ratio portfolio to other portfolios, input 21% LCG, 21% SCV, 26% LT bonds, 16% gold, 10% REITs and 6% t-bills as "My Portfolio")
Amusing Unedited AI-Bot Summary:
Dive into the nuanced world of portfolio construction with insights that challenge conventional wisdom about retirement planning and asset allocation. We kick off with an exploration of treasury bond strategies, examining whether STRIPS funds like ZROZ or GOVZ offer "free" 1.5x leverage compared to standard long-term treasury funds. This seemingly technical distinction opens fascinating possibilities for freeing up portfolio space while maintaining effective recession hedging.
The heart of the episode tackles a young investor's audacious plan for early retirement using a leveraged portfolio containing 11% UPRO (3x leveraged S&P 500) alongside small-cap value, treasuries, gold, and managed futures. We dissect the Monte Carlo simulations suggesting sustainable withdrawal rates above 6% and consider whether such "return stacked" portfolios represent the future for younger investors seeking growth with manageable volatility.
Most surprising is our deep dive into the Golden Ratio portfolio, which a listener discovered ranks #1 overall on Portfolio Charts despite containing just 42% stocks. We unpack the five fundamental rules that drive this portfolio's exceptional performance: strategic stock allocation between 40-70%, balanced growth and value exposure, precise treasury bond positioning, thoughtful alternative asset integration, and minimal cash holdings. The revelation that this construction is essentially an expanded 60/40 portfolio demonstrates how traditional wisdom can be enhanced rather than abandoned.
Our weekly portfolio review reveals gold's dominant performance in 2023 (up 10.89%) while small-cap value struggles (down 6.47%), reinforcing the value of thoughtful diversification in navigating today's market landscape. Whether you're planning for early retirement, optimizing your current portfolio, or simply seeking investment wisdom beyond mainstream advice, this episode delivers practical insights for the serious do-it-yourself investor.

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Episode 404: Tax Location Considerations, Old Gold Book, Scottish ETFs, And Diversification Musings On International vs. US Mar 05, 2025

Show notes

In this episode we answer emails from Caleb, Visitor #4565, Paul, Michael (from Scotland) and Jamie. We discuss tax location (or asset location for tax purposes), the zeitgeist of this podcast, an old book by Don Coxe about gold and other things, a good website for finding ETFs in the UK and otherwise outside the US, and how to best incorporate and prioritize (not) international vs. US funds.
Links:

Asset Swaps Video: How to Do an Asset Swap
Sean Mullaney On 72(t): 475 | How to Access Your Retirement Accounts Before 59.5 | Sean Mullaney
Mad Fientist on Accessing Retirement Funds Early: How to Access Retirement Funds Early
Merriman ETF Recommendations: Best-in-Class ETF Recommendations | Merriman Financial Education Foundation
JustETF website and Sample Small Cap Value Fund: SPDR MSCI USA Small Cap Value Weighted UCITS ETF | A12HU5 | IE00BSPLC413

Amusing Unedited AI-Bot Summary:
Get ready for an enlightening episode of Risk Parity Radio, where we unravel complex investing strategies designed for the do-it-yourself investor! In this episode, we dive deep into key topics like the critical distinction between asset allocation and tax location, helping you understand how to manage your investments more efficiently. With listener emails sparking insightful discussions, we shed light on the often-misunderstood role of gold in your portfolio and why it might be a savvy addition during economic uncertainties.
We explore how misconceptions in diversification can derail potential growth and offer tactical advice on choosing between growth and value investments. Listeners will gain a holistic view of their assets, empowering them to make informed decisions that align with their long-term financial goals.
Whether you’re a seasoned investor looking to refine your strategies or a beginner eager to learn, this episode provides valuable insights to enhance your portfolio's performance. Join us for an engaging conversation that invites you to reflect on your approach to investing. Don't miss your chance to redefine your financial strategy today! Subscribe, share, and review—we’d love your thoughts!

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Episode 403: Navigating The New Regime, What Does A Weak Dollar Mean, Inflation In Withdrawals And Portfolio Reviews As Of February 28, 2025 Mar 02, 2025

Show notes

In this episode we answer emails from Andy, Mark and Graham. We discuss what may do well under the current US administration and related concerns, what a weak dollar means for risk assets and allocating to volatility, and how inflation should realistically be accounted for in withdrawals.
And THEN we our go through our weekly and monthly 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
New Catching Up to FI Podcast with Yours Truly: “The Risk Parity Paradox” an Exercise in Simple Complexity? | Frank Vasquez | 124
US vs International Stocks In Strong And Weak Dollar Markets (link from Episode 393: us-dollar-strength-has-correlated-with-performance-03312023.pdf
Spending Trajectories After Age 65 Research Paper and Summary (link from Episode 336): Spending Trajectories After Age 65: Variation by Initial Wealth | RAND
Amusing Unedited AI Bot Summary:
Unlock the secrets of resilient investing with our latest episode of Risk Parity Radio! Join us as we explore the dynamic relationship between risk and reward in today's unpredictable market landscape. With insights from Frank Vasquez, we discuss how various asset classes, including gold and bonds, are performing amid rising economic uncertainty.
We feature an in-depth analysis of eight sample portfolios, shedding light on their performances and the lessons they offer for individual investors. Our host encourages listeners to reflect on their investment strategies and promotes the importance of diversification as a safeguard against market fluctuations.
Listeners are invited to engage with us through insightful emails, tackling current economic concerns such as inflation and its implications for retirees. Wrap up the episode with practical advice, encouraging self-education and proactive engagement in personal financial management.
Don’t miss this opportunity to refine your financial strategies! Subscribe, share your thoughts, or leave a review to join our growing community of informed investors.

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Episode 402: Getting A Little More Aggressive, A QREARX Redux, And What Does "Value" Mean Anyway Feb 12, 2025

Show notes

In this episode we answer emails from Philip, David and Keith. We discuss an aggressive risk-parity style portfolio (without leverage), review QREARX, which we analyzed in Episode 81, and how the value factor is determined by various funds and indexes.
Links:
Father McKenna Center Donation Page: Donate - Father McKenna Center
Portfolio Matrix Tool at Portfolio Charts: Portfolio Matrix – Portfolio Charts
The Weird Portfolio: Weird Portfolio – Portfolio Charts
Morningstar Page for QREARX: QREARX – TIAA Real Estate Account Fund Stock Price | Morningstar
Amusing Unedited AI-Bot Summary:
Ready to rethink your investment strategies? Discover how pushing the boundaries with aggressive risk parity portfolios can transform your financial growth. Inspired by listener Philip's question, we unravel the potential of a 70% equity allocation, showing you why it might be your ticket to a prosperous retirement with a longer horizon or increased growth needs. Learn how to artfully allocate the remaining 30% across assets like large-cap growth, small-cap value, long-term treasuries, gold, and managed futures for optimal diversification. Plus, get the scoop on our informal meetup at the Economy Conference—it's where finance meets fun.
In this episode, we're not just about strategies but interactions. As we sift through listener emails, we spotlight financial strategies and fund analysis, tackling topics from the intriguing weird portfolio to critiques of funds like QREARX. Unearth the complexities of value stock categorization and challenge the purported benefits of illiquidity premiums in outdated financial structures. As travel plans call for a brief hiatus, we invite you to keep the conversation alive through emails and our website. Tune in for insights, engagement, and a touch of humor designed to entertain and inform our valued listeners.

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Episode 401: Generous Times, More Cowbell, Choosing Appropriate Retirement Role Models, Short Term Bonds, And Portfolio Reviews As Of February 7, 2025 Feb 09, 2025

Show notes

In this episode we answer emails from Richard, Robert and Jacob. We discuss Richard's generosity and excellent example as a role model, an ill-conceived and biased critique of small cap value allocations, why you probably should not use popular personal finance gurus as retirement role models due to their workaholism and hoarding behaviors, and why having too much cash or very short term bonds in a portfolio is not a good idea.
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
ERN Small Cap Value Article of 2 December 2024: Small-Cap Value Stocks: Diversification or Di-WORSE-fication? - Early Retirement Now
First Merriman Response to SCV Article: The True Story About Small Cap Value
Supplemental Merriman Responses To SCV Article: Why should small cap value make higher returns?
Testfolio Comparison Of IWN vs. IJS vs. VISVX vs. DFSVX vs VFINX Since July 2000: https://testfol.io/analysis?s=gkqbgk7mzka
Shannon's Demon Article Re Math Of Diversification: Unexpected Returns: Shannon's Demon & the Rebalancing Bonus – Portfolio Charts
ERN Safe Withdrawal Rate Post of 15 April 2016: Pros and cons of different withdrawal rate rules - Early Retirement Now
Michael Batnick Article re Shifting In CAPE Ratio: Stocks Are More Expensive Than They Used to Be
Rick Ferri Interview: Show Us Your Portfolio: Rick Ferri | Why a Simple Approach Beats 90% of the Pros
Core 4 Portfolios: Process – Core-4
Rob Berger Interview (with transcript): Bogleheads on Investing with Rob Berger – Episode 48 - The John C. Bogle Center for Financial Literacy
Interview of Michael Kitces Re Problems With TIPS Ladders: Michael Kitces: How Higher Yields Affect Asset Allocation and Retirement Planning | Morningstar

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Episode 400: An AI Thingamabob Takes Over To Review And Reconstruct Our First Five Foundational Episodes Feb 05, 2025

Show notes

In this frolic and detour from our regularly scheduled programming, we create a "Reference Episode" by employing two AI podcasters to summarize the information contained in Episodes 1, 3, 5, 7 and 9, which are some of the foundational episodes for this podcast. BTW, choose PFFV instead of PFF if you are interested in that. But the point was to teach you how to analyze investments.
Here are (most of) the original links and notes from those episodes.
Episode 1:
In this episode we answer five basic questions:
1. What is Risk Parity Radio?
2. Who is this podcast for?
3. Gee willikers, what does "Risk Parity" mean anyway, Uncle Frank?
4. How will will make this real and actionable for you?
5. How can you get involved?
Episode 3:

In this episode we explore the ancient origins of asset allocation and diversification.
Bava Metzia 42a: https://steinsaltz.org/daf/bavametzia42/
70-year History of Investment Consulting: https://seekingalpha.com/article/4357226-70-year-history-of-investment-consulting-1950minus-2020
Episode 5:
In this follow-up to Episode 3, we explore the development of risk-parity style investing from the 1980s to the present day.
The All Weather Strategy Paper: Bridgewater Paper 2009.12 AW Info Pack.doc (granicus.com)
Risk Parity Portfolios: Efficient Portfolios Through True Diversification: https://www.panagora.com/assets/PanAgora-Risk-Parity-Portfolios-Efficient-Portfolios-Through-True-Diversification.pdf
Risk Parity: Silver Bullet Or A Bridge Too Far (CFA Multi-Asset Strategies Manual Chapter 4): CFA Manual Risk Parity Chapter-2018.pdf - Google Drive
Episode 7:
In this episode we discuss the three basic principles are (1) the Holy Grail Principle; (2) the Macro-Allocation Principle; and (3) the Simplicity Principle.
March draw-downs for professional risk-parity style portfolios: https://www.markovprocesses.com/blog/risk-parity-funds-in-the-coronavirus-market-rout/
Ray Dalio explains the Holy Grail principle of risk-parity style investing: https://www.youtube.com/watch?v=Nu4lHaSh7D4

Episode 9:

In this episode we discuss how NOT to choose investments and how to employ a good process to analyze an investment. We adopt the process of David Stein's 10 Questions and apply it to an exchange-traded fund of preferred stocks.
Ishares description of PFF: https://www.ishares.com/us/products/239826/ishares-us-preferred-stock-etf
The 10 Questions To Ask When Considering An Investment:
1. What is it?
2. Is it an investment, a speculation, or a gamble?
3. What is the upside?
4. What is the downside?
5. Who is on the other side of the trade?
6. What is the investment vehicle?
7. What does it take to be successful?
8. Who is getting a cut?
9. How does it impact your portfolio?
10. Should you invest?

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Episode 399: A Good Deed Shining In A Weary World, Thoughts On Hoarding, Preferred Shares, Gold And Portfolio Reviews As Of January 31, 2025 Feb 02, 2025

Show notes

In this episode, we celebrate Ground Hog Day and answer emails from Ron, Jay and Pete. We discuss the value of giving and the new McKenna Man portfolio that Ron is constructing, preferred shares vs. REITs, holding gold, what financial advisors really think about their hoarding clients but can't say in front of them but I will, and Pete's risk parity style portfolio and his 6-year old's potato chip gambling problem.
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
Dennis And The McKenna Center Team: Our Team - Father McKenna Center
Andy Panko Interview of Eric Niergarth:
Retirement planner chat, with Eric Niergarth from Retirement Roadmap Financial Planning
Pete's Fund and Correlation Analysis:
https://testfol.io/analysis?s=4Qh1xI3JKMl

Amusing Unedited AI-Bot Summary:
Unlock the secrets of alternative investments and discover a fresh perspective on asset allocation with Risk Parity Radio. Ever wondered how creative financial strategies can transform charitable giving? Listen in as we highlight Ron, a dedicated listener, who proposes an innovative approach to support the Father McKenna Center in Washington, D.C. We'll dissect his all-equity portfolio idea, and explore an alternative inspired by the Rick Ferri Core 4 portfolio, tailored for an 8% withdrawal rate. This episode promises to inspire with its blend of community-focused financial creativity and solid investment insights.
Curiosity piqued? Learn why PFFV trumps PFF in cost-effectiveness and tax benefits, especially for those in higher tax brackets. The episode tackles listener questions head-on, like the VNQ versus PFF debate, and shines a light on the essential role of gold in diversification. A personal tale unfolds as I recount my unexpected removal from Andy Pankow's Facebook group, sparking a discussion on the dynamics of online financial communities. This engaging narrative provides a nuanced view of maintaining a steady allocation amidst the ebb and flow of digital interactions.
Explore the lighter side of finance as we analyze the performance of various portfolios in a quirky review of January's market highlights. With imaginative requests, like a breakfast order for the "bacon man," and the intriguing concept of combining Bitcoin and gold in an ETF, this episode offers both entertainment and education. From the conservative All Seasons to the experimental Golden Ratio, each portfolio reveals unique allocations and outcomes. Join us on this enlightening journey through investment strategies, and uncover the unexpected joys of charitable giving through creative financial planning.

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