Voices [0:01]

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, a different drummer.

Mostly Mary And Some Voices [0:19]

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 [0:37]

Thank you, Mary, and welcome to Risk Parity Radio. If you are new here and wonder what we are talking about, you may wish to go back and listen to some of the foundational episodes for this program.

Voices [0:50]

Yeah, baby, yeah.

Mostly Uncle Frank [0:52]

And the basic foundational episodes are episodes 1, 3, 5, 7, and 9. Some of our listeners, including Karen and Chris, have identified additional episodes that you may consider foundational, and those are episodes 12, 14, 16, 19, 21, 56, 82, and 184. Whoa, and you probably should check those out too, because we have the finest podcast audience available.

Mostly Mary And Some Voices [1:26]

Top drawer, really top drawer.

Mostly Uncle Frank [1:31]

Along with a host named after a hot dog.

Voices [1:34]

Lighten up Francis.

Mostly Uncle Frank [1:37]

But now onward, episode 439. Today on Risk Parity Radio, we are at the end of year. Five Inconceivable 439 episodes in five seasons, gosh, and what we always do at the end of the year is rebalancing our first four sample portfolios.

Voices [2:03]

Surely you can't be serious.

Mostly Uncle Frank [2:04]

I am serious and don't call me Shirley. And so we'll be doing that today along with doing our weekly portfolio reviews, and we do have time for one email as well.

Voices [2:15]

I'm intrigued by this how you say Emails.

Mostly Uncle Frank [2:19]

But before we get to that, just a couple items of note here. Before we get to that, just a couple items of note here. First, I recently appeared on not one but two episodes, two consecutive episodes of the BiggerPockets Money podcast with Scott and Mindy.

Mostly Mary And Some Voices [2:34]

Money.

Mostly Uncle Frank [2:42]

And in the first one we talked about principles of risk, parity style portfolio construction and designing portfolios for higher safe withdrawal rates, and also why one might want to do that and how that differed from approaches that were designed for accumulation. And in the second one, I guide Mindy into constructing a risk parity style portfolio Rexquando. We use the buddy system no more flying solo and we used a variation of the golden ratio for that. So they're going to have a sample portfolio over there now and I'm not sure how they're going to run it, but we put $10,000 in it and I think they're going to be taking out 5% annualized on a monthly basis, and so we'll be working with them to show them how that's done. You need somebody watching your back at all times, so stay tuned for more antics and hijinks over at BiggerPocketsMoney.

Voices [3:36]

Did you know something, Orson? I'd like to thank you for letting me see what Mindy's life would be like without me.

Mostly Uncle Frank [3:40]

You know, Mork, I think you're beginning to grow.

Mostly Mary And Some Voices [3:44]

Well sir.

Voices [3:45]

I don't know how much value I have in this universe, but I do know that I made a few people happier than they would have been without me.

Mostly Uncle Frank [3:54]

And as long as I know that I'm as rich as I ever need to be. We are also continuing to collect comments on the new demo website that Luke from Quebec is helping me with.

Voices [4:04]

We have top men working on it right now. Who Top?

Mostly Uncle Frank [4:13]

men. Actually he's doing all the work and I'm just engaged in my usual nonsensical ravings. It's not that I'm lazy, it's that I just don't care. But to find that, go to the webpage any webpage at wwwriskparityradarcom. If you go to the top and on the right, there's a little button there for alt site and that will take you to a demo of the alternative site and we are collecting comments on that until the end of this month and then Luke and I will sit down and figure out exactly what that's going to look like. But it should be good.

Mostly Mary And Some Voices [4:53]

The best, Jerry the best.

Mostly Uncle Frank [4:55]

Or at least a lot better than what we have right now.

Voices [4:58]

Just come up.

Mostly Uncle Frank [4:59]

Not that there's a very high bar there.

Voices [5:02]

Just come up.

Mostly Uncle Frank [5:03]

So if you have comments on that, please send them to the email frankatriskparodyradiocom. The email is frankatriskparodyradiocom and we will collect all those comments and go through them in August. And thirdly or last off in these announcements, if you are new here and have come over from Bigger Pock pockets or elsewhere, I have a feeling we're not in Kansas anymore. Welcome to this podcast.

Voices [5:30]

You're not going to amount to jack squats.

Mostly Uncle Frank [5:35]

You will find that it sounds a lot different than a lot of podcasts you usually listen to.

Voices [5:39]

You are talking about the nonsensical ravings of a lunatic mind.

Mostly Uncle Frank [5:45]

Mostly because it's a retirement hobby for me, and so I am not trying to build a giant audience or attract sponsors or any of the other things that somebody who is trying to be a professional podcaster might be doing, which gives me a lot of license not only to talk about interesting topics such as portfolio construction, if you find that interesting, but I'm also going to goof off.

Mostly Mary And Some Voices [6:10]

Don't be saucy with me, Bernays.

Mostly Uncle Frank [6:13]

And act silly.

Voices [6:18]

All right, pinhead. Your time is up. Who you calling Pinhead?

Mostly Uncle Frank [6:21]

Which most of my listeners come to appreciate, but still there's a few that do not appreciate that.

Voices [6:27]

You're gonna end up eating a steady diet of government cheese and living in a van down by the river.

Mostly Uncle Frank [6:36]

But I accept that that may reduce the quantity of my audience.

Voices [6:40]

You know what Napoleon?

Mostly Uncle Frank [6:42]

You can leave. You know what, napoleon, you can leave, although I do believe it contributes to the improved quality of my audience, at least from my perspective.

Voices [6:54]

Oh behave.

Mostly Mary And Some Voices [6:57]

Yeah, yeah, baby yeah.

Mostly Uncle Frank [6:59]

But anyway, if you're new here, I'm glad you're here and I hope you get at least a little something out of this. Forget about it.

Voices [7:09]

But now on with the show. Here I go once again with the email.

Mostly Uncle Frank [7:13]

And, as I mentioned, we're just going to have one email today, and so, first off, second off, last off, first, second and third off, we have an email from TheNamelessOne.

Voices [7:28]

I have no name.

Mostly Mary And Some Voices [7:31]

Well, that right there may be the reason you've had difficulty finding gainful employment.

Mostly Uncle Frank [7:36]

And TheNamelessOne writes Hi Frank.

Mostly Mary And Some Voices [7:39]

I made a contribution to the Father McKenna Center via my donor advised fund.

Voices [7:44]

Yeah, baby, yeah.

Mostly Mary And Some Voices [7:46]

I wasn't sure how to identify it as a contribution for the Top of the T-Shirt campaign, so I just did my best with what the form offered. Hopefully it came across without issue.

Voices [7:56]

Yes.

Mostly Mary And Some Voices [7:57]

I donated anonymously, but you can identify the contribution by its amount $5,321.10, a sequence of numbers I expect you'll recognize. I am a few episodes behind, but I am pleased to see that the nonsensical ravings have almost returned to normal levels, since one of your other listeners made a generous $15,000 donation. Kudos to that kind soul.

Mostly Uncle Frank [8:25]

So shines a good deed in a weary world.

Mostly Mary And Some Voices [8:30]

There is no shortage of nonsense in the world, but yours is a rare vintage of high quality. Mary, congratulations on. Of all the kings, god save the King. My nameless partner and I produced a nameless little one. While in utero, my nameless little one contacted me and insisted that I begin saving for their college education, dear eight pound six ounce newborn infant Jesus don't even know a word yet just a little infant, so cuddly but still omnipotent.

Mostly Mary And Some Voices [9:18]

They instructed me to use an allocation of 25% UPRO three times S&P 500 fund, 25% FZROX Fidelity Total Market Index fund, 50% FISVX Fidelity Small Cap Value Index fund. I complied, investing those ETFs via a taxable brokerage account, but seeing an early onset gambling problem, I hedge the bet by also saving into a 529 plan for them. The 529 plan money is invested in an S&P 500 index. My quandary is this should I treat these as separate portfolios or as one? I ask because the 529 money is almost certain to be used for education, but the money in the brokerage has no constraints and if the 529 turns out to be sufficient by itself, then the money in the brokerage could be used later on for other purposes.

Mostly Uncle Frank [10:12]

You know like nunchuck skills, bow hunting skills, computer hacking skills.

Mostly Mary And Some Voices [10:20]

The money in the brokerage account would not be used ahead of my nameless little one going to college, unless it was unavoidably necessary.

Voices [10:27]

Necessary. Is it necessary for me to drink my own urine? Probably not, no, but I do it anyway because it's sterile and I like the taste.

Mostly Mary And Some Voices [10:39]

I would be interested in your thoughts on my quandary and also on the allocation in the taxable brokerage account. I did some backtesting on the allocation in the taxable brokerage account and found that a smaller allocation to UPRO in a similar portfolio 17% UPRO, 17% total market and 64% small cap value decreased the compound annual growth rate by two percentage points without decreasing the various downside risk indicators much Indicators like the max drawdown and volatility. Perhaps that is just the result of the backtest data being a bit limited. Man's got to know his limitations. In pondering the 25% UPRO, 25% total market, 50% small cap value allocation, it occurred to me that I would probably rarely buy the Upro component since the market is generally up 7 out of 10 years and Upro is up almost triple when it is up. It makes me think that running that allocation would mostly look like me letting Upro sit around and juice returns while I focus on buying up the total market and small cap value assets each year when I put money in as my rebalancing.

Voices [11:49]

Well, you have a gambling problem.

Mostly Mary And Some Voices [11:53]

I hope this email wasn't too long, mary. Thanks the nameless one.

Voices [11:58]

Mary, mary.

Mostly Uncle Frank [11:59]

I need your huggin'. Need you hugging? Now? Here's a listener who ticks all of the boxes.

Voices [12:11]

Battle speed for Tatum Battle speed Attack speed Attack speed Grabbing speed. Attack speed Ramming speed Ramming speed.

Mostly Uncle Frank [12:37]

In terms of engagement, generosity and humor. What do you mean? Funny, funny how. First off, thank you for being a donor to the Father McKenna Center, and a very generous donor at that.

Voices [12:49]

It's gold, jerry gold.

Mostly Uncle Frank [12:51]

As most of you know, we do not have any sponsors on this podcast, but we do have a charity we support. It's called the Father McKenna Center and it supports hungry and homeless people in Washington DC. Full disclosure. I am on the board of the charity and I'm the current treasurer, and we are in the midst of a matching campaign, which we call the Top of the T-Shirt Campaign, to go with our Walk for McKenna. That occurs in September when we hand out the t-shirts with the sponsors on the back, and we want to be at the top of that. To learn more about that entire campaign, you can go back and listen to episode 426. But we will continue this campaign until the end of this month and then we will look at all the totals and they are looking quite impressive. Our matching donor, matthew63, is putting in his 15k in the next week, here or so, in addition to all the money we've collected from all of the rest of you.

Voices [13:45]

Show me the money. I need to feel you, jerry. Show me the money, jerry, you better yell.

Mostly Uncle Frank [13:56]

Show me the money. Now, if you donate to the Father McKenna Center, your prize is to go to the front of the email line, as the nameless one has done here, and that line is getting pretty long now. It's over two months long in terms of all of the emails we have stacked up here. And that line is getting pretty long now. It's over two months long in terms of all of the emails we have stacked up here. So it's becoming more and more valuable as time goes on and the line gets longer and in fact we have a couple of donors, or more than a couple of donors, right behind this one.

Mostly Uncle Frank [14:19]

But anyway, to donate to the Father McKenna Center, you can do that one of two ways. Either go to the donation page of the Father McKenna website, which I will link to in the show notes. You can donate there by credit card, check or otherwise, including via donor-advised funds, or you can do it through our support page at wwwriskpartierradiocom, in which case you can become one of our regular patrons on Patreon, and the link is there to set that up to become a monthly donor. Either way, you will get to go to the front of the email line. Now the nameless one gets extra points as far as being a donor is concerned, because the donation is $5,321.10, which, in fact, is the first few numbers in the Fibonacci sequence backwards 0, 1, 1, 2, 3, and 5, which would be followed by 8, 13, and 21. As most of you math nerds know, you extend that out far enough. That sequence mimics the golden ratio, mimics the golden ratio, and you can also create many interesting portfolio constructions out of the Fibonacci sequence.

Mostly Mary And Some Voices [15:31]

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

Mostly Uncle Frank [15:35]

Including one that's 100% equities, one that's 50-50 equities and something else like bonds a 60-40 portfolio represented by the 3 and the 2, a 50-30-40 portfolio represented by the 3 and the 2, a 50-30-20 portfolio and the golden ratio portfolio itself, which is represented by the numbers 3, 5, 8, 13, and 21. So extra kudos for your math nerdery, as well as your very generous donation.

Voices [16:05]

One hundred billion dollars.

Mostly Uncle Frank [16:09]

Now getting to your questions. First, congratulations on your precious little one, my precious, who we might call Nameless Junior at this point. Ha ha, ha, ha, ha ha. So you're planning on starting some savings for nameless junior here, a 529 and another account that I assume you're just working with in your own name at this point, because it's easier to do that than fiddling around with UTMAs or things like that.

Mostly Uncle Frank [16:51]

I would keep these separate. I think that you can't really rebalance a 529 plan. At least most of them have limited allocations, and this is all going to be 100% equities anyway. So to me, the only thing I would consider doing is if one of them grew expansively. If you're going to use leverage, you might have that happen. You might end up taking money out of the experimental portfolio and putting more money into the 529 at some point if you're not already filling that up enough from your other resources. Other than that, I'd just probably leave that 529 alone in the S&P 500 index and then consider moving that when the child gets to high school. If you're going to use that for college money, at which point you probably want to put it in bonds, or mostly bonds, if you're going to spend it soon.

Mostly Uncle Frank [17:43]

Now as for what to do with this taxable brokerage portfolio with leverage in, it should be very exciting fortune favors the brave first, I would not trust the back tests that are using upro as a ticker symbol, mostly just because of timing issues, because upro came about around 2008 or 2009, so the period that we have since then has been such a great period for the stock market it's been, I think, the best 15 years in the last 100 or maybe ever that it may not give a very realistic portrayal of any portfolio that incorporates YouPro into it, that what you would really want to do is go back in time.

Voices [18:28]

I'm going to go back in time.

Mostly Uncle Frank [18:38]

No, I'm going to go back in time. Go back in time. Go back in time. Use a simulated S&P 500 with leverage in it, which you can do a test folio and test out various formulations through the bad decades like the early 2000s or the 1970s, because UPRO itself could easily go down 70, 80 percent or 90 percent in a big downturn. Now you will have a reduction in the volatility of the portfolio overall if you are contributing to it regularly, because under that circumstance, when the portfolio is down, you're effectively buying more shares and you benefit from dollar cost averaging through any downturn.

Mostly Uncle Frank [19:17]

So what I would probably do is kind of let it run hot at first, because the amounts here that you're putting in it are so small.

Mostly Uncle Frank [19:26]

But once it grows to something you deem substantial, then you might start putting a rebalancing rule on it such that you essentially harvest some of the UPRO and put it into the other funds whenever it goes up a lot through me by, say, 10% or some number that you select.

Mostly Uncle Frank [19:56]

So if it goes from 25% to 35%, you would essentially rebalance and harvest that money and put it into the other funds.

Mostly Uncle Frank [20:00]

In theory, your idea here should work pretty well and it is actually a kind of economist approved method which, if you're doing something like consumption smoothing, as an economist would do, it does suggest that early in life you should actually take leverage, simply because you have so much growth potential.

Mostly Uncle Frank [20:21]

I would just make sure that in the event the leveraged product goes to zero, which it could, that is not damaging the overall survival of the portfolio. But if you're talking about 25% or less in the leveraged product, I think you're probably safe or safe enough in that regard, since you are contributing to this portfolio and not taking money out of it. When you do get to the point where you would transfer it or take money out of it, then you would want to make it more conservative. But I think it's a really good idea and I kind of wish I would have thought of it or it existed when our children were babies, because Upro did not exist then and none of these strategies would have really been viable at that point, since we didn't have no fee trading or other modern conveniences, if you will.

Mostly Mary And Some Voices [21:09]

And that's the way it was, and we liked it.

Mostly Uncle Frank [21:12]

I am looking forward to your experiment.

Voices [21:16]

It Can't Work it.

Mostly Uncle Frank [21:26]

Hopefully Nameless Jr will not develop too much of a gambling problem.

Voices [21:51]

Thank, you for your generous contributions, your generous sense of humor and your email. Now check this out If you divide 13 by 8, you get 1.625. And if you divide the larger number by the smaller number, then these ratios get closer and closer to about 1.618, known to many people as the golden ratio, a number which has fascinated mathematicians, scientists and artists for centuries. Now I show all this to you because, like so much of mathematics, there's a beautiful side to it that I fear does not get enough attention in our schools. We spend lots of time learning about calculation, but let's not forget about application, including perhaps the most important application of all learning how to think. If I could summarize this in one sentence, it would be this Mathematics is not just solving for X, it's also figuring out why.

Mostly Uncle Frank [22:48]

Now we're going to do something extremely fun, and the extremely fun thing we get to do now is our weekly portfolio reviews and also our annual rebalancings of our first four sample portfolios which are on that schedule. Wow, it's very nice. The other portfolios are rebalanced on bands and so they follow different schedules as laid out on the portfolios page at the website, and so we'll go through that with each portfolio as we go. But looking at the markets for the year so far, the S&P 500, represented VOO, is up 7.78% for the year. The NASDAQ 100, represented by QQQ, is up 10.07% for the year. Small cap value, represented by the fund VIOV, continues to lag but does show its diversification from the other ones. It is down 4.99% for the year so far. Gold continues to shine and is the best performer for the year by quite a large margin.

Voices [23:55]

I love gold.

Mostly Uncle Frank [23:59]

Representative fund GLDM, is up 27.54% for the year. Long-term treasury bonds, represented by the fund VGLT, are up 0.45% for the year so far. Reits, represented by the fund REET, are up 4.66% for the year so far. Commodities, represented by the fund PDBC, are up 3.54% for the year so far and preferred shares, represented by the fund PFFV, are up 1.03% for the year so far. And finally, managed futures have been recovering. Our representative fund DBMF is now down only 0.10% for the year so far, after having been down several percent earlier on, but it's caught some trends recently and actually has done quite well just this month.

Mostly Uncle Frank [24:48]

Now turning to the sample portfolios. The first one is the All Seasons. This is a reference portfolio we really just keep around to compare to others, because this was the original Risk Parity style portfolio, or simplified Risk Parity style portfolio that Ray Dalio gave to Tony Robbins for Money Master the Game, which was published now over 10 years ago, and so it's very conservative and not something you would probably want to hold. It is 30% in a total stock market fund VTI, 40% in a long-term treasury bond fund, vglt, 15% in an intermediate treasury bond fund VGIT, and the remaining 15% is divided into GLDM, a gold fund and PDBC, a commodities fund, 7.5% each. In those it is down to 0.20% for the month of July. So far it's up 5.67% year-to date and is up 14.71% since inception in July 2020. We are distributing out of it at a 4% annualized rate, which is now actually mostly covered simply by the distributions that come out of all of these bonds, which are paying close to 5% in the circumstance of the long-term treasury bonds. And so now, talking about the rebalancing Now we do this annually for these portfolios and that's kind of a standard way of rebalancing a portfolio.

Mostly Uncle Frank [26:19]

The purpose of rebalancing a portfolio is to get it back to its original allocations and it also enforces a discipline where you are selling high for the best performers and buying low for the worst performers each year. So if we go down and look at the percentages which you can see on the website, on the Fidelity printout, we see that the stock fund VTI is at 32.62% right now and the stated allocation is 30%, or the target allocation, if you will, and so we'll be selling from that. It means we'll be selling $271 to get it back down to its 30% allocation. The other thing that has done quite well last year and will be a theme of these rebalancings is gold, which has been the best performer in the past year. It is currently at 9.75% of this portfolio and it should be 7.5% to target it. So we end up selling $221 out of the gold to get it back down to 7.5%. And the other components we are actually adding money to. So the commodities we'll be adding $32 to it to get it back up to 7.5%. It's at 7.12% now. We'll be adding $30 to the Intermediate Treasury Bond Fund, vgit, to get it from 14.5% back up to 15%. And then we'll be adding mostly to the long-term treasury bond holding, vglt. We'll be adding $395 out of that to get it back from 35.6% back up to 40%, and we've set it. So we will continue to have some cash in the portfolio for its next distribution. All of this will be detailed on the website, but you'll actually see the results not in this week's posting but in the next week's posting, because we will do these rebalancings on Monday.

Mostly Uncle Frank [28:22]

All right, our next portfolio, one of what we would call our bread and butter portfolio, something that somebody might actually hold in retirement. This is the golden butterfly. It was invented by Tyler over at Portfolio Charts. It has stocks, bonds and gold in it. Basically, the stocks are one wing, the bonds are another wing and the head of the portfolio is the gold. Tyler has some nice write-ups of this portfolio and the one we just did, the all seasons and the golden ratio that I will link to in the show notes. So this is a evenly allocated portfolio where the target allocation is 20% for each of the components and, looking at what they are right now, the gold is up at 23.94%. Even though we've been selling gold all year out of this portfolio, it is still the best performer and we'll be selling $449 out of it to put into the other components. The next best component is VTI, which is the total stock market fund, and that is at 21.4% right now 21.42. So we'll be selling $169 worth of that to put into the other components. The other components are all below 20% right now. Shy, the short-term bond fund, is at 18.91%, so we'll be adding $112 to that. The long-term treasury bond fund, vt, is at 17.13 percent, and so we'll be adding $310 to that to true it up to 20 percent. And then the small cap value fund, viov, is currently at 18.08 percent and we'll be adding $204 to that to true that up to 20%, and that'll also leave some money left over for our next distribution. There's currently $58 sitting there from dividends and interest payments.

Mostly Uncle Frank [30:18]

I did forget to mention what the performance of this portfolio is so far. It is up 0.67% month to date. It's up 6.89% year to date and up 43.16% since inception in July 2020. This portfolio is on the conservative side for portfolios with high safe withdrawal rates, but that also assists its stability greatly. So if you really want to sleep well at night, this may be the portfolio for you, or something similar. Well, you haven't got the knack of being idly rich. You see, you should do like me just snooze and dream, dream and snooze. The pleasures are unlimited. It's easy to make this one more aggressive simply by cutting back on the short-term bond allocation to SHY and then adding that to another risk component, such as the two stock funds, or even an additional stock fund or refund, something like that. So it's a very good base portfolio to work from if you are trying to construct something but want to make sure that it's on the conservative side.

Mostly Uncle Frank [31:23]

Moving to our next homegrown golden ratio portfolio, this one is 42% in stocks and that's in two funds. We have 21% in VUG. It's a large cap growth fund and 21% in VIOV, which is a small cap value fund, which is a small cap value fund. Then we have 26% in long-term treasury bonds in VGLT, 16% in gold that's in GLDM 10% in a managed futures fund, dbmf and in this version of the golden ratio, we are including 6% in cash in a money market fund, and the reason we do that is to illustrate a kind of portfolio that represents what you would call the original bucket strategy, where you have a cash allocation that you take from all year long in terms of distributions and you never touch anything else in the portfolio until rebalancing day, and so that's the day we are here and we are on right now.

Mostly Uncle Frank [32:29]

For the other portfolios, the other sample portfolios, we are actually looking at it every month and selling things that are high to the extent we need cash for distributions, and you can adopt this kind of withdrawal strategy with virtually any portfolio. You just need to be able to assess how much cash you'll actually need for the next year. In this case, we have a 6% allocation. We're basically taking 5% out of that, but that does not include all the dividends that end up getting paid into it over the course of the year, which end up being between 2% and 3% of the portfolio anyway. So, even though we've been taking cash out of the money market all year long, it is still at 2.92% of the portfolio right now. We will be truing that back up to 6% by adding $330 to it.

Mostly Uncle Frank [33:18]

From the other components. Now the component we are selling the most from this year is gold, of course, gldm. It is currently at 21.31% of the portfolio. It is currently at 21.31% of the portfolio. The target is 16%. So we're going to be selling $569 out of that and then redistributing that to the other components in the portfolio, mostly going into the cash.

Mostly Uncle Frank [33:41]

The other winner since the last rebalancing has been the large cap growth fund, vug. That is currently at 23.73%. The target is 21%. So we'll be selling $292 from that to true that up Now. As for the other components, the managed futures DBMF is slightly down. It is at 9.25% of the portfolio right now. We'll need to add $81 to that to true it back up to 10%. The small cap value fund, viov, is also slightly underwater. It's at 19.66% right now. The target is 21%. So we'll be adding $143 to that to true that back up to 21%.

Mostly Uncle Frank [34:28]

And then the laggard this past year has been VGLT, the long-term treasury bond fund. It is currently at 23.14%. The target is 26%, so we need to add $307 to that to true that one back up. These bond funds always look like they have performed worse than they actually have, because you have to remember that all of their income is paid out in cash over the course of the year and ends up in the money market fund, so its true performance over the past year has been close to flat or slightly up if you included all of the income that's been paid out of it. In any event, we'll be trued up and ready to go for another year taking the distributions out of the cash money market fund. I forgot to mention its performance so far. It's up 0.72% month-to-date, it's up 6.1% year-to-date and up 37.88% since inception in July 2020. And with all of these, you can read about it at the website as well.

Mostly Uncle Frank [35:29]

Now turning to our next one, the one that's going to require the most work. This is the Risk Parity Ultimate Portfolio, and really the purpose of this is to be a kitchen sink where we put lots of little pieces of all sorts of things, mostly just to see how it all does. I wouldn't expect anyone would want a portfolio with this many components in it, so this ends up being more of kind of a testing ground for us than something that I would expect most people would be holding. It currently has 14 funds in it in two accounts. Thankfully, we're going to be able to consolidate it down to one account now that we're able to buy cryptocurrencies in ETF form, because the whole reason we have a separate account is to account for the two crypto assets, which are 1% each in Bitcoin and in Ether. I think we're going to close that account, bring all that money over and just put it in one Bitcoin fund, because, as time goes on, it seems to be looking like Bitcoin itself has a better diversification property than a lot of these other cryptocurrencies that seem to just follow other tech funds. So there's $213 worth of Bitcoin and Ether in that account right now. When we bring it over, we'll be buying IBIT, the iShares Bitcoin fund, and we'll be buying $193 worth of that. So it just ends up we're selling $20 worth of that.

Mostly Uncle Frank [36:53]

The other consolidation I think we're going to do has to do with the two treasury bond funds. Right now, we have 15% in VGLT and 5% in TMF, the levered treasury bond fund. That equals 20% overall. We can consolidate that and get the same kind of effect on the portfolio by consolidating that into a strips fund. So we're going to use GOVZ for that and that's going to end up being 20% of the portfolio. So we'll sell those other two components at about $300 from other sales in the portfolio and end up with $1,930 worth of GOVZ when all that is said and done.

Mostly Uncle Frank [37:36]

Now, going through the rest of these components which we aren't changing in terms of what funds we're using, first one is VUG. That is a Vanguard large cap growth fund. The target for that is 10%. It's currently at 11.91%. So we'll be selling $165 out of that one. In the other winner categories we have USMV. That's a low volatility fund. There's a 5% allocation to that. It's currently at 5.34. We'll be selling $24 out of that to true that up. We have UPRO 5% in that. That's in a levered S&P 500 fund, currently at 6.04%. So we'll be selling $91 from that to true that one up to 5%. We have a Chinese shares fund, kba. That also had a good year last year, currently at 5.54% of the portfolio. We'll be selling $43 out of that to true that up to 5%. And of course, the big winner in this portfolio was also gold GLDM. It is currently at 19.03% of the portfolio. The target is 15%. So we'll be selling $359 worth of that to true that up in this portfolio.

Mostly Uncle Frank [38:52]

And then going to the other ones that we need to add something to. First one is VIOV. That's a small cap value fund from Vanguard. It is currently at 14.12%. The target is 15%, so we'll be adding $107 to that one. Next one is REET, which is a REIT fund. The target for that is 5% of the portfolio. It's currently at 4.96, so we'll add $9 to that to chew that one up.

Mostly Uncle Frank [39:19]

We have PFFV, a preferred shares fund. It's currently at 4.65% of the portfolio. We'll need to add $41 to that to make it up to its 5% target allocation. Up to its 5% target allocation. Dbmf is the next one. That is a managed futures fund, currently at 8.59% of the portfolio. We'll need to add $115 to that to true that one up. And then the last one is a long short fund called BTAL, which essentially goes long value stocks and short growth stocks. It is currently at 2.53% of the portfolio. The target allocation for that is 3%, so we'll be adding $49 to that to true that up and all of that will be reported at the website, since I know listening to it is probably very confusing if it and looking at how the portfolio performed so far this year.

Mostly Uncle Frank [40:38]

It's up 0.7% month-to-date. It's up 5.91% year-to-date and up 26.31% since inception in July 2020. I'm looking forward to having it all back in one account again, which will make things a lot easier for me All. Right. Now let's move to the portfolios we're not rebalancing, which are all these experimental portfolios that have levered funds in them and do very strange things at strange times. So don't try these at home, but they're interesting experiments to look at.

Voices [41:10]

Tony Stark was able to build this in a cave with a box of scraps.

Mostly Uncle Frank [41:17]

So the first one is the accelerated permanent portfolio. This one's 27.5% in a levered bond fund TMF, 25% in UPRO that's a levered S&P 500 fund, 25% in PFFV, a preferred shares fund, and 22.5% in gold and GLDM. It's down 0.9% month to date, it's up 6% year to date and up 7.09% since inception in July 2020. Moving to our next one, the aggressive 50-50. This is half stocks and half bonds. This is our most levered and least diversified of these portfolios and also the worst performer. It is one-third in a levered stock fund, upro, one-third in a levered bond fund TMF, and the remaining third in PFFV, a preferred shares fund, and VGIT, an intermediate treasury bond fund, and those serve as ballast in this portfolio. It's down 1.37% month-to-date. It's up 0.63% year-to-date and down 11.37% since inception in July 2020. It has not been aided by all of its volatility. All right, moving to the levered golden ratio, it's our next one that's a year younger than the other ones. So this one is 35% in a composite fund, ntsx, which is the S&P 500 and treasury bonds, levered up 1.5 to 1. It's got 15% in AVDV, which is an international small cap value fund. 20% in gold, gldm. 10% in a managed futures fund, kmlm. 10% in TMF, a levered bond fund, and the remaining 10% in two leveraged funds, udow and UTSL, which follow the Dow and a utilities index. Respectively, it's up 0.32% month-to-date. It's up 9.64% year-to-date. It's doing the best of all these portfolios this year so far, but it's only up 4.79% since inception in July 2021, which was a very bad time to start withdrawing from a portfolio.

Mostly Uncle Frank [43:31]

And now moving to our last one, the Optra portfolio. One portfolio to rule them all. This one's only a year old. This is a return stacked portfolio which takes its ideas from Corey Hofstein and the people over at Resolve Asset Management. It is 16% in a leveraged stock fund, upro. 24% in AVGV, which is a worldwide value fund. It's a fund of funds from Avantis. 24% in GOVZ, which is a treasury strips fund, and the remaining 36% is divided into 18% each in gold and managed futures. That's GLDM and DVMF. It's up 0.28% month-to-date. It's up 7.7% year-to-date and up 10.83% since inception in July 2024. And that concludes our weekly portfolio reviews and our annual rebalancings for the first four portfolios. Our annual rebalancings for the first four portfolios.

Mostly Uncle Frank [44:42]

As I mentioned, all of that is going to be recorded on the website and will be transferred over to the revamped website when we get there. But now I see our signal is beginning to fade. 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 all 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 Party Radio Signing off.

Voices [45:30]

So I'll catch you on the rebound, your magnitude, until next week. Nanu Nanu.

Mostly Mary And Some Voices [46:07]

The Risk Parody 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. Thank you.