Risk Parity Radio

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Episode 398: Tax Location Decisions, Dealing With Limited Fund Choices And Brokerage Requirements Jan 29, 2025

Show notes

In this episode we answer emails from George, Kyle and Andy. We discuss whether to prioritize DBMF or VGLT (for tax location purposes) in a traditional retirement account, weighing limited choices for small cap funds in a 457, Vanguard's new short-term bond funds and dealing with brokerages' cya requirements for investing in particular funds.
Links:
Father McKenna Center Donation Page: Donate - Father McKenna Center
Vanguard Fund Announcement: Vanguard Expands Fixed Income Lineup with New Actively Managed Bond ETF | Vanguard
Amusing Unedited AI-Bot Summary:
Unlock the secrets to optimizing your investment portfolio and navigate the complex world of power dynamics in our latest podcast episode. Have you ever wondered whether choosing a higher dividend yield or balancing fund fees could impact your financial future? Join us as we guide George through the decision-making process between VGLT and DBMF, ultimately landing on DBMF for its tax-efficient benefits. Meanwhile, Kyle finds himself at a crossroads between a high-fee small-cap value fund and a more budget-friendly Vanguard option. Our advice? Balance is key to managing costs and maintaining a diverse portfolio. And don’t miss our take on Vanguard's new actively managed short-term bond fund—could it be the missing piece in your investment strategy?
Transitioning from the tangible to the philosophical, we embark on a thought-provoking exploration of submission and power through our metaphorical dialogue with "the daughters." Here, we challenge the conventional wisdom of power structures and the humility required to navigate them. Using vivid metaphors and evocative imagery, we invite listeners to question their own roles within these paradigms and consider how such dynamics manifest in financial and legal realms. This episode promises a blend of practical investment insights with deeper musings on the human condition, leaving you with plenty to ponder as we draw parallels between finance and life’s broader themes.

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Episode 397: Small Cap Value Funds, How To Recognize Bad Books, CAOS And Weekly Portfolio Reviews As Of January 24, 2025 Jan 26, 2025

Show notes

In this episode we answer emails from Bones, Paul and Justin. We discuss small cap value funds and their underlying indexes, an odd book from an unreliable source and an alternative ETF called CAOS.
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:
Bankruptcy Case Involving David R. Webb: In re Verus Investment Management, LLC, 344 B.R. 536 | Casetext Search + Citator
CAOS Main Page: CAOS ETF - Alpha Architect ETFs
CAOS Fact Sheet: Factsheet_CAOS.pdf
Amusing Unedited AI-Bot Summary:
What if your investments could outpace market trends with a simple shift in strategy? On Risk Parity Radio, we promise to unravel the complexities of asset allocation, specifically tailored for the DIY investor. We kick off with a deep dive into the world of small-cap value funds, dissecting the evolution of Vanguard’s funds alongside iShares' stalwart, IJS. The competition heats up with new entrants like Avantis and Dimensional, particularly the rising star AVUV. With insights from Paul Merriman's research, we explore why diversifying into small-cap value can be a game-changer for your portfolio, no matter which fund you choose.
Ever wondered if an investment product could thrive in both stable and volatile markets? Enter Wes Gray’s Alpha Architect product, Chaos, which challenges traditional investing with tools like protective puts and box spreads. We bring you a thorough examination of this intriguing product and a candid discussion about its potential and risks. Our analysis extends to sample portfolios, showcasing the power of diversification with assets ranging from the S&P 500 to commodities. We wrap up by contrasting popular portfolios like the All Seasons and Golden Butterfly with the experimental Accelerated Permanent Portfolio, making sure you are equipped with cutting-edge strategies to optimize your investments.

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Episode 396: We're Talkin' Futures, Backtesting Considerations, And That Big Mo (Again) Jan 22, 2025

Show notes

In this episode we answer emails from Lucas, Martijn, and Alexi (a/k/a "the Dude"). We discuss futures contracts and the efforts required to use them, being careful about backtests and interpreting them, and more musings on Big Mo momentum.
Links:
Father McKenna Center Donation Page: Donate - Father McKenna Center
Martijn's Link: testfol.io/?s=aoTgPMqhGQA
Portfolio Matrix (Start Date Sensitivity): Portfolio Matrix – Portfolio Charts
The Dude's First Link: Asset Correlations
The Dude's Second Link: testfol.io/?s=aKrdp1uCnEu
The Dude's Third Link: testfol.io/?s=kUK5djVum0A
Amusing Unedited AI-Bot Summary:
Unlock the secrets of futures trading and leveraged ETFs as we tackle complex investment strategies, inspired by a thought-provoking listener email from Lucas. Discover how you can master the intricacies of futures contracts, from rolling them over to navigating market conditions like backwardation and contango, without getting overwhelmed. Learn why leveraged ETFs were created to simplify leverage acquisition, and get insider recommendations on the best platforms to embark on futures trading. Martain, another keen listener, challenges us with a debate on straightforward 1.5 times equities strategy versus modern portfolio theory, leading to a rich discussion on investment approaches.
Venture further into the world of leveraged risk parity portfolios and how hedge funds are using them to optimize risk-reward profiles during the accumulation phase. Comparing these advanced strategies to more straightforward leveraged S&P portfolios, we emphasize the essential role of historical data in shaping robust investment decisions. Be wary of the allure of short-term gains as we dissect the role of momentum funds in risk parity portfolios and the significance of diversification in securing stable outcomes. Through listener insights and expert analysis, this episode is a treasure trove for anyone seeking to broaden their understanding of strategic investing.

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Episode 395: Canadian Dilemmas, Total Market vs. Large Cap Growth, Gambling Problems And Portfolio Reviews As Of January 17, 2025 Jan 19, 2025

Show notes

In this episode we answer emails from Paul (from Canada), Gary, Ben and Alexi (a/k/a "the Dude"). We discuss finding funds for Canadians, podcast outlet alternatives, the similarities between S&P 500, total market and large cap growth funds and how they can perform the same role in a diversified portfolio, and a gnarly Alpha Exchange podcast about leveraged funds (which the Dude and I both misidentified as "Alpha Architect".) And the Creedence vs. Tina Turner versions of "Proud Mary."
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:
Portfolio Charts Golden Butterfly page: Golden Butterfly Portfolio – Portfolio Charts
Asset Correlations (VTI and VOO and large cap growth): https://testfol.io/analysis?s=63nAL9efMMg
Golden Butterfly With Total Market vs. Large Cap Growth: https://testfol.io/?s=h0ZxYu0txcP
Alpha Exchange Podcast on Leveraged Funds: Michael Green, CFA, Portfolio Manager, Chief Strategist, Simplify Asset Management | Alpha Exchange
Amusing Undedited AI-Bot Summary:
Unlock the secrets of successful portfolio diversification on this episode of Risk Parity Radio. Whether you're navigating the Canadian stock market maze or strategizing with U.S. index funds, our conversation will equip you with the tools to conquer currency conversion challenges and leverage international market access through platforms like Interactive Brokers. We share strategies to optimize your asset mix by combining large cap growth with small cap value funds for a truly diversified and resilient portfolio.
Ever wondered how to differentiate between total market funds and large cap growth funds? Our discussion sheds light on their high correlation and recent performance trends, urging investors to focus on macro allocation principles and informed bond choices rather than getting lost in the minutiae of fund selection. Discover how pairing assets with varying volatilities and correlations can lead to a more robust investment strategy that withstands market turbulence.
Dive into the world of leveraged ETFs and learn about the risks lurking behind these financial instruments. We dissect insights from the Alpha Exchange podcast, stressing the importance of liquidity in minimizing systemic risk. As we share our weekly portfolio reviews, you’ll gain valuable insights into market performance and the art of strategic rebalancing. From conservative to dynamic portfolios, we offer a comprehensive look at maintaining diverse asset allocations to optimize growth and stability. Reach out with your questions and explore our website for more resources on mastering the investment landscape.

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Episode 394: More Fun With Large Cap Growth Funds And Some Salient Portfolio Comparisons Jan 15, 2025

Show notes

In this episode we party with some of the regulars and answer emails from Pete, Tracey, Ralph and Alexi (a/k/a the "Dude"). We discuss domestic and international large cap growth funds, why we prefer portfolios that due comparatively better when using long series data analyses and not their associations with particular guru people, how the Golden Ratio portfolio relates to the 60/40 portfolio, whether you'll see me on Bluesky or most other social media ("no"), and the Dude's continued gambling problems with his Sixty Sixty Portfolio.
Links:
Father McKenna Center Donation Page: Donate - Father McKenna Center
Pete's Correlation Analysis Link: Asset Correlations
IDMO Fund: IDMO – Invesco S&P International Dev Momt ETF – ETF Stock Quote | Morningstar
International Large Cap Growth Fund Comparison: testfol.io/analysis?s=4PEQ1YvTbAM
Portfolio Matrix Comparison Tool: Portfolio Matrix – Portfolio Charts
The Dude's Sixty-Sixty Portfolio And Comparisons: testfol.io/?s=1bInsY2fEmI
Amusing Unedited AI-Bot Summary:
Can you really diversify your portfolio internationally without getting tangled in global market correlations and geopolitical webs? On this episode of Risk Parity Radio, we promise to unravel the mysteries of international large-cap growth ETFs and share insights on navigating beyond U.S. equities with flair. Listener Pete joins us from an airport terminal, seeking our expertise on innovative sectors like tech and semiconductors. We dissect options such as IMTM and EMQQ, weighing their benefits and risks, particularly in the context of Chinese equities. We keep things lively with a light-hearted approach to managing personal finance, reminding you that while investing is serious, there's always room for a bit of humor and creativity.
Switching gears, we ditch traditional portfolio strategies and explore modern frameworks for reducing retirement drawdowns. By harnessing tools like Portfolio Charts, we dive into strategies like the Golden Ratio and Golden Butterfly, comparing them to the old-school 60-40 portfolios. Our aim is to empower you to base decisions on data, not outdated norms. We also discuss the role of growth ETFs in deaccumulation, and venture into the world of innovative portfolios like the 60-60 model, while examining the influence of social media on investing. Throughout, we champion independent thinking and celebrate the vibrant contributions of our engaged community.

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Episode 393: International Questions From The Europeanish, A Pesky 401a And Portfolio Reviews As Of January 10, 2025 Jan 12, 2025

Show notes

In this episode we answer questions from Anonymous European, Paul, and Ralph. We discuss US vs. Euro treasury bonds, international large cap growth, the overarching currency effect that determines the relative performance between US and international stocks, small cap value for UK investors and what to do with a small 401a with limited investment choices while nearing retirement.
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:
Many Happy Returns Podcast with Tyler: Building a Bulletproof Retirement Portfolio, with Tyler from Portfolio Charts
Global Withdrawal Rates Article: Global Withdrawal Rates – Portfolio Charts
DILRX International Large Cap Growth Fund: DILRX – DFA International Large Cap Growth Fund Stock Price | Morningstar
US vs International Stocks In Strong And Weak Dollar Markets: us-dollar-strength-has-correlated-with-performance-03312023.pdf
ZPRX European Small Cap Value Fund: ZPRX : SPDR® MSCI Europe Small Cap Value Weighted UCITS ETF
Amusing Unedited AI-Bot Summary:
Could US Treasury bonds be the ultimate recession insurance for European investors? We kick off this episode with a provocative question that challenges conventional thinking in the bond market. Joined by Tyler from Portfolio Charts, we dissect the strategic positioning of US Treasury bonds versus European options like the Amundi Euro Government Bond Fund. Discover why many international investors gravitate toward US bonds during economic downturns and learn the crucial role of asset correlations in achieving the optimal portfolio diversification.
Shifting gears, we tackle a common misconception about large-cap investments: does a company's headquarters dictate its investment potential? In a world where global operations blur geographic lines, we question the necessity of strictly international large-cap growth funds. Dive into the fascinating impact of currency fluctuations on stock performance and explore how these shifts often drive diversification, rather than the mere presence of international stocks. Our insights aim to empower you in crafting a more globally balanced portfolio.
As retirement looms for those in their late 50s, the decision between sticking with a 401A or transitioning to an IRA becomes paramount. For someone with multiple pensions covering living expenses, we weigh the merits of various investment strategies. While VINIX may offer benefits within a 401A, the broader options available through an IRA, including ETFs, might better suit your growth and stability needs. For those craving simplicity without sacrificing balance, the Vanguard Wellington Fund emerges as a compelling choice. Tune in for a comprehensive guide to aligning your retirement portfolio with your long-term goals.

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Episode 392: Small Cap Value Indexes, Managed Futures Butterly, And A Mini-Rant On Bucketeering Jan 08, 2025

Show notes

In this episode we answer emails from Kyle, Steve and James. We discuss the three most common small cap value indexes -- S&P 600, CRSP and Russell, modifications to the Golden Butterfly portfolio using managed futures, and the fantasies and follies of portfolio Bucketeering.
Links:
Father McKenna Center Donation Page: Donate - Father McKenna Center
Steve's Modified Golden Butterfly: testfol.io/?s=hJZl3QbaXsj
Merriman's Best In Class ETFs: Best-in-Class ETF Recommendations | Merriman Financial Education Foundation
Kitces Article About Bucket Strategies: Managing Sequence Risk: Bucket Strategies Vs Total Return
Amusing Unedited AI-Bot Summary:
Can equal-weighted ETFs outperform their cap-weighted counterparts? Find out as we break down their impact on factor representation within diversified portfolios, focusing on strategies like the Golden Butterfly. Join me, Frank Vasquez, in our latest episode as I discuss listener questions and share insights on choosing between Invesco's RSP and traditional options like SPY or VOO. I'll also revisit my preference for the small-cap value ETF VIOV over VBR, emphasizing the advantages of the S&P 600 index's unique profitability filter. This episode is packed with knowledge to help you refine your portfolio allocation strategies, with a special focus on the role of managed futures and their influence on compound annual growth rates and drawdowns.
Shatter the myth of bucket strategies as we confront their limitations in mitigating sequence of returns risk. Drawing on Bill Bengen's studies, I argue that excessive cash allocations hinder performance more than they help. We explore the psychological allure of bucket strategies and suggest that true financial security lies in prudent spending rather than complex asset arrangements. Tune in as we offer a fresh perspective on managing your financial future, challenging conventional wisdom and emphasizing smarter, evidence-based approaches to portfolio management. Whether you're a seasoned investor or just starting, this episode promises valuable insights and a chance to rethink traditional investment strategies.

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Episode 391: Musings About Base Rates, Crystal Balls, Dice And Santa, And Annual Portfolio Reviews For 2024 Jan 05, 2025

Show notes

In this episode we conduct our annual reviews of the Eight Sample Portfolios you can find at Portfolios | Risk Parity Radio and compare them with some commercial preparations.
In addition we discuss the year of 2024 in general, the performance of various asset classes, the follies of using the year as a crystal ball to predict the future, and the more effective use of base rates for that purpose. And the missing Santa Claus.
Links:
Portfolio Charts Annual Returns Calculator: Annual Returns – Portfolio Charts
Testfolio Backtesting and Analysis Site: testfol.io
Amusing Unedited AI-Bot Summary:
Uncover the secrets to constructing a resilient investment portfolio while sidestepping the pitfalls of misguided financial predictions. Join me, Frank Vasquez, as I humorously dissect the world of economic forecasts and their accuracy, or lack thereof. Through a historical lens, we’ll examine past events like the 1970s inflation scare and the 1990s dot-com bubble, revealing the wisdom in relying on historical base rates for more stable predictions. This episode promises to arm you with critical insights from Morgan Housel and transform your understanding of market trends, using relatable analogies like dice rolls to make the probabilities clear and engaging.
Engage with a treasure trove of data as we review eight sample portfolios, shedding light on the roller-coaster performances of various assets over the past year. From the triumphs of large-cap growth stocks and gold to the contrasting fates of different sectors, discover the vital role of diversification. With a focus on both domestic and international opportunities, I outline the highs and lows, such as the standout performance of the MAG-7 and the challenges faced by REITs, while emphasizing the benefits of a diversified portfolio.
Finally, I unravel the performance of diverse investment strategies, including risk parity models and experimental leveraged portfolios. Unpack the complexities of asset allocations and the unique challenges posed by leverage, with insights into the successes and lessons learned. To wrap it up, I weave in a playful narrative about a year without Santa Claus, illustrating the importance of cautious investing amidst unexpected events. This episode blends finance, storytelling, and critical insights into an entertaining and informative package that promises to captivate both seasoned investors and newcomers alike.

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Episode 390: Single Fund Portfolio Follies, Variable Withdrawal Strategies, Basic Portfolio Considerations, And Portfolio Reviews As Of December 27, 2024 Dec 29, 2024

Show notes

In this episode we answer emails from Kyle, Adam, and Steve. We discuss equal weight vs. cap weighted funds and the fallacy that one fund stock portfolios are optimal, a variable withdrawal strategy plan, and what kinds of portfolios work best for which types of people and purposes.
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 Donation Page: Donate - Father McKenna Center
Shannon's Demon Article: Unexpected Returns: Shannon's Demon & the Rebalancing Bonus – Portfolio Charts
Portfolio Charts Retirement Spending Calculator: Retirement Spending – Portfolio Charts
2024 Morningstar Report Analyzing Variable Withdrawal Strategies: State_of_Retirement_Income_2024.pdf
Swedroe Factor Investing Book: Book Review: Your Complete Guide to Factor-Based Investing | CFA Institute Enterprising Investor
Merriman Best In Class ETFs: Best-in-Class ETF Recommendations | Merriman Financial Education Foundation
Amusing Unedited AI-Bot Summary:
Step into the world of Risk Parity Radio, where we unravel the mysteries of asset allocations and personal finance. Ever wonder how equal weight differs from cap-weighted index ETFs? We promise to guide you through this intriguing comparison, emphasizing the importance of utilizing multiple funds for a comprehensive market strategy. Together with my co-host Mary, we explore how concepts like Modern Portfolio Theory and Shannon's Demon can elevate your portfolio's performance beyond a single-fund approach. And, in a nod to community spirit, we encourage our listeners to support the Father McKenna Center, weaving philanthropy into our financial discourse.
This episode goes beyond the basics, challenging the notion that one-size-fits-all in the world of investing. We dissect the benefits of combining growth and value funds, and highlight the risk management advantages of cap-weighted ETFs. Our heartfelt retirement segment touches on a listener's email about crafting a sustainable portfolio through variable withdrawal strategies. We navigate the nuances of personal inflation adjustments, equipping you with the tools to fortify your financial future. Join us as we counter cognitive biases and fine-tune strategies to align investments with economic realities, ensuring that your financial journey is as robust as it is rewarding.

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Episode 389: A Mini-Case Study About Entering Retirement, QSPNX, The Foibles Of Market Timing Bonds And Portfolio Reviews As Of December 20, 2024 Dec 23, 2024

Show notes

In this episode we answer emails from John, Jane and Christoph. We discuss financial and non-financial considerations when transitioning to retirement, the alternative investment strategy fund QSPNX, and revisit why you should not try to time bond investments anymore than you should try to time the stock market.
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:
Choose FI Episode 508 With Yours Truly: 508 | 5% SWR, Revealed Preferences, and the 3 Stories | Frank Vasquez
QSPNX Fund Summary: AQRFunds - AQR Style Premia Alternative Fund
QSPNX Main Page: AQR Style Premia Alternative Fund - QSPNX
Amusing Unedited AI-Bot Summary:
What if your retirement could be as thrilling as a holiday adventure? Tune into our pre-Christmas special on Risk Parity Radio, where we unravel the secrets to crafting a financially stable and fulfilling retirement. Join us as we dissect eight unique sample portfolios, responding to John’s burning questions about transitioning to a risk parity approach. We celebrate John’s upcoming retirement by sharing actionable insights from personal experiences, setting the stage for a journey filled with financial clarity and exciting new opportunities.
Ever wondered how to make your retirement years truly rewarding? Discover the art of lifestyle planning as we weigh the merits of covered call strategies against the traditional buy-and-hold approach. From embarking on early adventure travels to finding joy in volunteering or teaching, we guide you in aligning your financial strategies with your life goals. This is not just about numbers; it's about crafting a retirement that's as enriching as it is financially sound, ensuring your golden years shine brightly.
As we wrap up, we dive into the AQR Style Premia Alternative Fund's niche role in a risk parity portfolio. With a pinch of humor and a dash of nostalgia, we navigate listener emails, including a lighthearted reflection on childhood mishaps and classroom blunders. We end on a playful note, reminding you to embrace the imperfections and enjoy the whimsical side of life. Remember, while our advice aims to enlighten, always turn to your trusted advisors for personalized guidance.

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