Risk Parity Radio

Episode 394: More Fun With Large Cap Growth Funds And Some Salient Portfolio Comparisons

• Frank Vasquez • Season 5 • Episode 394

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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 Our aim is to empower you to base decisions on data, not outdated norms.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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Voices:

A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines.

Voices:

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 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 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:

Yeah, baby, yeah.

Mostly Uncle Frank:

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:

Top drawer, really top drawer.

Mostly Uncle Frank:

Along with a host named after a hot dog.

Voices:

Lighten up Francis.

Mostly Uncle Frank:

But now onward to episode 394. Today, on Risk Parity Radio, we're just going to do what we do best here, which is answer your emails.

Voices:

Inconceivable.

Mostly Uncle Frank:

And so without further ado.

Voices:

Here I go once again with the email.

Mostly Uncle Frank:

And First off. First off, we have an email from Pete.

Voices:

I got a little rabbit in this hole and I'm gonna catch the little rabbit and eat him up.

Mostly Uncle Frank:

And Pete writes Team Vasquez.

Mostly Mary:

I'm wrestling with something while waiting for Godot at yet another airport and was hoping you might offer some thoughts.

Voices:

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

Mostly Mary:

I'd like to include an international large cap growth ETF similar to IWY or VUG for US equities to diversify my portfolio internationally. I chose AVDV for international small cap value, yet neither Avantis nor Dimensional Funds offer a growth option for XUS. I'm not a fan of traditional choices like EFG or JIG. Both are highly correlated to US equities and have minimal exposure to the Chinese tech sector, which I view as a viable and innovative competitor for US companies. I'm leaning towards splitting my international large-cap growth ETF evenly between 1. Imtm for developed markets and 2. Emqq for emerging markets, which is composed of 44% Chinese equities.

Mostly Mary:

Neither is ideal, not least because I still consider momentum strategies to be the dark arts and something I can't logically explain beyond the feeling that I'm betting on human behavior, whether irrational fear or exuberance. Maybe an ETF of Chinese A shares like KBA or ASHR, both 0.30 correlated to IWY, would be better than EMQQ, 0.48 correlated. Here's a link to the asset correlation matrix. I'll fund this by reallocating 20% from IWY into IMTM and EMQQ, just as I funded AVDV by reallocating from AVUV. I know you're not a huge fan of international diversification and I have my own concerns on China risks, less so tariff wars, but rather unfriendly heavy-handed government regulations slash interference and potential 2027 military flashpoints like Taiwan and the Philippines.

Voices:

Well, what we'll do. I'll run in first, gather up all the eggs so we can kind of just, you know, blast them all down with AOE. I will use Intimidating Shout to kind of scatter them so we don't have to fight a whole bunch of them at once. When my shout's done, I'll need Anthony to come in and drop his shout too, so we can keep them scattered, not to fight too many. When his is done, bass of course need to run in and do the thing. We're going to need divine intervention on our mages so they can ae. So we can, of course, get them down fast, because we're bringing all these guys. I mean, we'll be in trouble if we don't take them down quick. I think it's a pretty good plan. We should be able to pull it off this time.

Mostly Mary:

Let's do this.

Voices:

Leroy Jenkins. Oh my God, he just ran in.

Mostly Mary:

But are you or your disciples aware of any other large growthy international ETFs, preferably with some sort of quality overlay, focused on innovative tech, semiconductor and internet companies that my screens may have overlooked? Purple Monkey Gizwasher Just wanted to see if Mary will read anything they put on the teleprompt. Well, yes, apparently she will. Deopresso Lieber Pete.

Voices:

Mary, Mary, why you buggin'?

Mostly Mary:

PS, if you're taking requests, I'd love to hear an occasional pre-retirement Jon Stewart of the Daily Show clip.

Voices:

And on Bullshit Mountain. Our problems are amplified and our solutions simplified, and that's why they won't work. We face a debt crisis that we've never faced before. We are merely weeks from being a failed state, or, even worse, greece, and the way to solve it is to kill Big Bird.

Mostly Uncle Frank:

Well, Pete, it's always good to hear from you. I think you're one of the people that really appreciates the zeitgeist of this podcast.

Voices:

I call this alternate reality. I call this place Bullshit Mountain.

Mostly Uncle Frank:

Which is that we recognize that personal finance is important, but it's not like firefighting or state secrets or rocket science or open heart surgery, so we can step back and have a little fun with it too.

Voices:

The winters on Bullshit bullshit mountain along and cold. And christmas, the most ubiquitous holiday in the history of mankind, is under threat on bullshit mountain because somewhere, somehow, a parade in tulsa has changed its name from Christmas to holiday.

Voices:

Too much of personal finance is populated by blowhard gurus who bellow about how important personal finance is and you should listen to me and do what I say.

Mostly Uncle Frank:

So I have all the answers in my 12-step program, in my series of courses on sale for only $9.99, which then becomes $999 and then becomes $9,999.

Voices:

A, b, C, a, always B, b, c. Closing, always be closing.

Voices:

Always be closing.

Mostly Uncle Frank:

Our business model is a little bit different here.

Voices:

Here's how it would work. You get a bunch of people around the world who are doing highly skilled work, but they're willing to do it for free and volunteer their time 20, sometimes 30 hours a week oh, but I'm not done. And then what they create? They give it away rather than sell it. It's going to be huge.

Voices:

That was the equation.

Mostly Uncle Frank:

And I see your email is from early in December and I'm sorry I didn't move you to the front of the line, but you did not mention that you were one of our donors to the Father McKenna Center. So I give myself a pass for not flagging it, just so the rest of you know the three of you that don't know we don't have any sponsors here, but we do have a charity we support. It's called the Father McKenna Center and it serves hungry and homeless people in Washington DC. Full disclosure I am on the board of the charity and am the current treasurer. But if you give to the charity, either through their donation page or through our support page where you can go through Patreon, I will move your email to the front of the line. But you do need to flag it, because I'm not that good at determining who is a donor and who isn't just by looking at an email. It's not that I'm not that good at determining who is a donor and who isn't just by looking at an email.

Voices:

It's not that I'm lazy, it's that I just don't care.

Mostly Uncle Frank:

So I would have moved you up, pete, but you didn't mention it. Anyway, here we are. So your question is about international large cap growth funds and I agree with you there isn't a whole lot out there to choose from. This is a good follow-up to our last episode where we were talking a little bit about DILRX, which is a mutual fund from Dimensional, and you mentioned EFG and JIG as ETFs in the non-US developed growth space. If you will developed growth space, if you will Along those lines, there is actually another fund you might consider, although it's not specifically labeled as large cap growth.

Mostly Uncle Frank:

The ticker symbol is IDMO, i-d-m-o, and it's an Invesco fund that is invested in international momentum and it's cap weighted, so it's effectively large cap momentum. When you model it amongst the other factors, it does end up in that box of large cap growth on the Morningstar style boxes, and it has had a better performance than these other ETFs you've been considering, and it also seems to be more diversified from, say, the S&P 500 than some of these other ones. So it ticks a lot of boxes and it's relatively cheap. I think the expense fee is only 0.25, which is not bad for a momentum fund. I'll link to a little comparative analysis and test folio of a few of these things and you can check them out and compare them. It is, I think, a little bit similar to the fund you mentioned, imtm, but it does have better performance characteristics. I'm not sure why that is, but with momentum funds there is no kind of standard formula for momentum, so when I see them they tend to be kind of all over the map in terms of actual performances, as I think their algorithms are just quite different from each other. Performances, as I think their algorithms are just quite different from each other.

Mostly Uncle Frank:

I agree with you that EMQQ is very promising on the emerging market front in this category, because it is essentially an attempt to make something that is analogous to the NASDAQ out of emerging market companies.

Mostly Uncle Frank:

So it does pick up all of the big techs from around the world, from those countries. What I don't like about it is it has a high expense ratio, relatively speaking, and of course it hasn't performed very well. But then again, emerging markets generally have not performed very well in quite a while and they're one of those things that is either top of the heap or bottom of the barrel and doesn't seem to have any in between. Anyway, as I mentioned in the last episode, I'm not sure that exploring this in too much detail makes that much sense, simply because worldwide, us just dominates completely in this area of large cap growth, and so it's hard to say that more than a couple of these international companies are even on the same playing field. But I do think all of these things we've been talking about are a much better option than something like a total market international fund, which really doesn't do any particular job very well in a portfolio.

Voices:

You had only one job.

Mostly Uncle Frank:

And so it's generally not worth the space it's taking up when you can put something else in there, like one of these small-cap value internationals or tech-focused internationals. Anyway, hope you are well and had good holidays and hopefully this helps a little bit. I will see what I can do about Jon Stewart. I don't have anything in the can and thank you for your email.

Voices:

By the way, how many lumps do you want? Oh better, give me a lot of lumps, a whole lot of lumps.

Mostly Uncle Frank:

Second off. Second off we have an email from Tracy.

Voices:

Dr Tracy speaking. Dr Tracy speaking.

Mostly Uncle Frank:

And Tracy writes.

Mostly Mary:

Hi Frank, I have one of those hideous Bogleheads Collins portfolios composed of 60% total market and 40% total bond funds. I was listening to your episode 385, and clearly you hate those outdated ideas of Jack Bogle and JL Collins. So how do I go about converting this portfolio I have in my brokerage account into a portfolio with the fewest years of drawdown possible? I don't want to keep any cash bucket, as you also advocate against it every episode. Which of your sample portfolios would have these characteristics? Thanks, tracy.

Voices:

I'm going to pin it on you. See, I'm going to pin it on you. I'll pin it on you, or my name ain't Duck Tracy.

Mostly Uncle Frank:

Well, now let's set the record straight a little bit. I don't actually hate those portfolios, I just view them as obsolete. So at one point I had a BlackBerry for work and I used it and I loved it and it was great. The best, Jerry the best.

Mostly Uncle Frank:

But that was a long time ago and there are better options today, and those kind of Bogle head portfolios or simple path to wealth portfolios had their place and were a great step forward at the time, because the war going on at the time was between whether you should use managed funds and index funds. The index funds won that war, but that war's been over for a long time and we should really be moving on to other things. But the other thing I dislike is associating particular portfolios with particular people, although I know that's a natural thing and this gets to a cognitive bias called liking or affinity. That is also used to market products. Your favorite celebrity is going to use this product Makes you want to use this product.

Voices:

That's human nature, because only one thing counts in this life Get them to sign on the line which is dotted.

Mostly Uncle Frank:

That doesn't work either with respect to portfolio construction. Just because you like or admire someone and they use a particular portfolio for a particular purpose or did so at a particular time, particular portfolio for a particular purpose or did so at a particular time, that is really not a basis for using it or not using it. And I'll have to tell you that Jack Bogle actually didn't do what he recommended, but that's another story. But the big advantage we have today is that we have so much more data and performance characteristics that are easily available for free online, which you couldn't either access at all or would have had to pay a lot of money to access, even 10 years ago. And to illustrate this, what you really want to do is go to a place like Portfolio Charts and go to the Portfolio Matrix there. I will link to this in the show notes the portfolio matrix there. I will link to this in the show notes. Now. This allows you to compare 19 sample portfolios, plus one you put in yourself, on a variety of metrics that include average return baseline, long-term return baseline, short-term return, safe withdrawal rate, standard deviation, ulcer index, which is a measure of how painful something can get, the deepest drawdown and start date sensitivity.

Mostly Uncle Frank:

And, while you're there, put in this portfolio, it is a variation of the golden ratio portfolio. Put in 21% large cap growth, 21% small cap value, 26% long-term treasury bonds, 16% gold, 10% REITs and 6% either short-term bonds or T-bills. Take your pick and then sort these things by safe withdrawal rate. You'll see that the golden ratio portfolio I just gave you is at the top of the list for safe withdrawal rate. It's at 6.1% with this data set. After that it's the weird portfolio and the golden butterfly portfolio. And if you look at across all of these metrics, all eight of them, you'll see that it is in the top six on every single metric and the golden butterfly is similarly in the top 10 on every single metric. What is at the bottom of this list on most metrics?

Voices:

Guess what? The very bottom of this list is the 60-40 portfolio.

Mostly Uncle Frank:

The next thing that's at the bottom of this list on most metrics Guess what? The very bottom of this list is the 60-40 portfolio. The next thing that's at the bottom of this list is the total stock market portfolio. That is number one in average return and so it's great for accumulation.

Mostly Uncle Frank:

And it's last or near last in all of the rest of these characteristics which tell you it's a terrible thing to use as a retirement portfolio, the third worst thing in this list is the Bogle Head 3 Fund portfolio, and then there are about 15 other portfolios that are better than those, in addition to the ones I just told you that are at the top of the list, and you will get similar results if you do comparison between these portfolios at just about any other site.

Mostly Uncle Frank:

Go to Portfolio Visualizer, run them in basically anything that has long data sets that go back to the 90s, 80s and 70s or even further. That's the reason I like the portfolios that I talk about, not because they're associated or not associated with anybody's particular name, and I think that's the basis on which we should be choosing things, not on these cognitive biases that are inherent in affinity, kind of marketing or groupthink, or joining some group and being part of some group where everybody thinks the same thing. I would like you to think for yourselves whether you agree with me or not fat, drunk and stupid is no way to go through life son.

Mostly Uncle Frank:

So the short answer to your question is if you are going from a 60-40 kind of portfolio that you would have expected to use in retirement and you want something that's better, as reflected on the portfolio matrix or any other analysis you might run, you're probably going to end up with something that looks like the golden butterfly portfolio or the golden ratio portfolio out of the sample portfolios that you see at the Risk Parity Radio website on the portfolios page.

Voices:

That is the straight stuff. Oh funk master.

Mostly Uncle Frank:

Now the variations of those portfolios on the website do both include some cash. Website do both include some cash. You'll notice that the golden butterfly is 20% in short-term treasury bonds, which are one to three-year bonds. Effectively, that is about 10% cash if you think about the shortest bonds being equivalent to cash, and the variation of the golden ratio portfolio there is in 6% cash, but neither of those are absolute requirements for these portfolios. You could easily change that 6% in cash to other assets in the golden ratio portfolio, either taking more stocks or some other asset or some mix of assets In our personal portfolios. That's where we hold some international stocks and a little bit of Bitcoin and whatever else we have fancy, because that's kind of a good amount to be playing with as long as you're not playing with the rest of your portfolio. And you could easily carve off 10% of those short-term treasury bonds in the golden butterfly and allocate it to other assets, other ones that are already in the portfolio or other things like managed futures or something. Now you mentioned specifically about wanting portfolios that have the fewest years of drawdown possible, and there are two calculators at portfolio charts that model, that sort of thing. One is called the heat map which is all of the years, going back to 1970. When you put a portfolio in. It'll show you how many years it is, down by red or pink in the boxes. And then there's another one that's called the drawdowns calculator, which shows you maximum drawdowns both in length and in depth.

Mostly Uncle Frank:

And what you'll find is that these classic portfolios like the 60-40 or Boglehead 3 fund or total market have drawdowns that can be as long as 13 years, and that's generally modeled by 1999 through 2012. Whereas these types of portfolios like the golden butterfly or the golden ratio have three or four year maximum drawdowns in terms of length, which is another reason they're so much better for retirement. Because what happens is people take one of these classic portfolios and then they try to quote, fix, unquote it with various buckets full of cash saying, oh, this will survive my three-year drawdown. That's not going to work, because your portfolio is bad enough that it could have a 10-year or more drawdown, so you need a better portfolio overall. You're not going to fix that with a bucket of cash, forget about it. Or a flower pot, or a ladder, or a hose, or a cake or any of those things.

Voices:

Forget about it.

Mostly Uncle Frank:

Unless, of course, you just overfund the thing, because if you have your portfolio and then you add more into it, you're effectively saying you're having a lower drawdown rate to begin with. Anything is going to work if your drawdown rate is low enough. So converting a current 60-40 portfolio to one of these other ones isn't actually that hard. You can keep half of your stocks in your total stock market fund that's close enough to a large cap growth fund to be serviceable, and then you just take the other half and invest in value-tilted funds and that could be all small cap value or some combination of other funds, just as long as they're value tilted and they're relatively low cost and they can be international or not. Now you want to get rid of the total bond fund for two reasons. First, it's got corporate bonds in them and those really don't help in this kind of portfolio because they aren't as diversified from your stocks as the treasury bonds. So if you're going to have mostly stock portfolio that is relying on stocks for growth and you're not relying on the bonds for any kind of income, but you're really most interested in diversification and stability, those need to be treasury bonds. That's why the total bond fund is not optimal for that purpose. The other problem with a total bond fund is it's got all of the durations mixed together, so it's one third short duration, one third intermediate duration and one third long duration. You would rather have those split, and so in both of the golden butterfly and golden ratio kind of portfolios there is that split. In the golden butterfly there is 20% in long-term treasury bonds and 20% in short-term, and no intermediates, and that gives you the best diversification on a duration basis between those things and, because they're separate, allows you to rebalance them. In the golden ratio portfolio, you'll notice two things. First, there is the split with the long-term treasury bonds and the cash, which are effectively short-term bonds that are the same animal in terms of how they perform. It's also true that there are fewer bonds overall in the portfolio, and that is the other thing. You don't really need 40% in bonds. In fact, you probably don't want 40% in bonds, although you could have it. It's just a lot of bonds. There are other things out there that are better diversifiers for better purposes, like gold or managed futures or other things you might come up with yourself. So what's going on in a portfolio like the golden ratio is we're making more space and not holding all those bonds so we can put other things in the portfolio to better diversify it.

Mostly Uncle Frank:

One thing you should know about a 60-40 portfolio that actually is a golden ratio portfolio. The ratio between 60 and 40 is very close to 61 and 39, which is the golden ratio. So effectively, that is the original golden ratio. It just has slots for only two things.

Mostly Uncle Frank:

You'll hear a lot of talk these days as saying the 60-40 is dead and we ought to move to something like the 50-30-20, with 50 and 30 being stocks and bonds and 20 being alternative assets. That is also effectively a golden ratio portfolio. That is a golden ratio portfolio with three slots for assets. Now if you move to one with four slots for assets, I think it would be like a 43-28, 17, 12 portfolio. That would be a golden ratio with four slots for assets. The one that we use typically here has five slots for assets, and so the ratios are 42, 26, 16, 10, and 6.

Mostly Uncle Frank:

But that is, in fact, the same general concept that a 60-40 is based on. It's just more diversified. Now, if we were Ray Dalio running a hedge fund, he says find 10 or 15 different assets to construct a portfolio out of. We're not that sophisticated, we're do-it-yourself investors. But I think we need to simplify that idea but not make it too simple. Too simple is a 60-40 portfolio. I think handling five slots and five potential assets is a good number. That is simple enough, but, as Einstein says, not too simple.

Mostly Uncle Frank:

Everything should be made as simple as possible but not simpler, and so that is the compromise between the Holy Grail principle and simplicity principles that we make for the Golden Ratio portfolio. So there is a method to this madness, and it is actually not new. It is simply building on what others have done in the past, using the tools that we have today that we did not have in the past.

Voices:

We had the tools, we had the talent.

Mostly Uncle Frank:

So I hope you continue to listen to the podcast, because what you'll find is that our listeners have all kinds of variations of these portfolios that work well for them, and they frequently tell us about them, so we can check them out and see if there's something there that we'd like to have.

Mostly Mary:

Right about now the Funk Soul Brother. Check it out now, the Funk.

Mostly Uncle Frank:

Soul Brother, and that's what I urge you to do is don't blindly follow gurus or formulas, but understand the principles you're using, because if you understand the principles and put a little effort into this yourself, you are much more likely to be happy with the results and be able to stick with them. And if you have something that you want to ask about, please send it in. I'm sure it'll be very interesting. That's how we roll around here.

Voices:

I don't roll on Shabbos, shabbos, shabbos, shabbos, shabbos hopefully that helps and thank you for your email class is dismissed. Next off you an email from dismissed.

Mostly Uncle Frank:

Next off, we have an email from Ralph. No, no, Ralph. This means you're failing English.

Voices:

Me fail English, that's impossible.

Mostly Uncle Frank:

And Ralph writes Hi Frank.

Mostly Mary:

I found a Risk Parody Radio account on Blue Sky with your logo. It struck me as suspicious because it has no posts and two followers. I'm the second one. Why do people run from me?

Mostly Uncle Frank:

Well, it sounds like Ralph's been stalking me. Actually, yes, that is our account over there. I do not intend to use it at this point. I was wondering what Blue Sky was, and so I went over there to check it out and while I was there I recognized that. Well, maybe I better just claim this space for Risk Parity Radio, so somebody else does not claim it, as you suspected might be the case. I really don't like too much social media. I found that it took up too much of my time so I quit Twitter I guess x about seven years ago now and I don't use Reddit and I probably won't use Blue Sky, and I only really look at Instagram to check out what my younger relatives are doing.

Voices:

Why? What have children ever done for me?

Mostly Uncle Frank:

We have a Facebook site for Risk Parity Radio where I post the podcast, and I also do post a podcast link to Twitter because it's a couple of clicks to do that. But I don't wish to be administrating any groups or anything like that in those fora or anywhere else. The only two groups I'm frequenting, these days at least, that relate to personal finance are the ChooseFI group and the CatchingUpToFi group at Facebook, and you can find me there. But basically that is all my social media and that's more than enough, because it does just become a big time sink. As we say in some of the intros, we have no guests, we have no sponsors and we have no expansion plans, and that really includes social media. But thank you for looking out for me. I really do appreciate that. You're all right, because we don't have any staff either. Not gonna do it Wouldn't be prudent at this juncture, and thank you for your email.

Voices:

Last off.

Mostly Uncle Frank:

Last off, we have an email from Alexi.

Voices:

So that's what you call me. You know that, or his dudeness or duder, or you know, bruce Dickinson, if you're not into the whole brevity thing, and the dude writes Just following up on choices for growth ETFs.

Mostly Mary:

I used XSVM in my analysis because it is the valuest ETF this side of AVUV and has a sufficient history for at least a 15-year backtest. Dfsvx would have been a reasonable stand-in for AVUV for this purpose too. I also used the Fama, french HML and SMB values for measuring value and size factors. In the end, the chief demerit for QQQ is the arbitrariness of the NASDAQ exchange being determinative for what stocks can be included in the index, and it's tough to argue with this criticism. In my mind, it's not too different from the S&P constituents being determined by a committee as opposed to an algorithm. In the end, my interest in the Q's was sparked by my gambling problem. You have a gambling problem. The NASDAQ is such a benchmark and is so heavily speculated upon that it is awash in liquidity. This means when someone wants to make a three times growth ETF, they would, of course, choose the Q's as their benchmark. Hence the existence of TQQQ. As an aside, I've been modeling portfolios for deaccumulation, and my favorite portfolio has just a wee bit of leverage.

Voices:

Well, you have a gambling problem.

Mostly Mary:

It is half stocks 60% and half diversifiers 60%, equally split between long treasuries, gold, managed futures and long volatility. I call it the 60-60 portfolio Backtesting. Subs in parentheses UV, xsvm, 15%, tlt, 15%, gld, 15%, dbmf, mftfx, 7.5% EUO, 7.5% YCS. Here's the back test. Ain't she pretty AZ.

Voices:

You know, this could be a lot more complex. I mean, it's not just, it might not be just such a simple, you know.

Mostly Uncle Frank:

What in God's holy name are you blathering about?

Voices:

All right for those of you who don't know the dude is one of our longtime contributors, going back a number of years, who is also an excellent portfolio constructor. Of course, I'm an excellent driver, you know how to drive.

Mostly Uncle Frank:

Yeah, we met in person for the first time last month.

Voices:

Of course I don't have my underwear. What.

Mostly Uncle Frank:

And had a really nice time.

Voices:

What kind of pancakes do you want, ray Pancakes, yeah, what kind Pancakes?

Mostly Uncle Frank:

Another one of our longtime listeners, justin of Risk Parity Chronicles fame, the now dormant blog, had been bandying about the best large cap growth funds, amongst other things. But, tracy, this is a good example of what happens here, what goes on here. People come up with things on their own and present them, but you'll find that a number of my listeners are enamored with the possibility of putting leverage into a portfolio and just can't resist, and our friend the dude is one of those, although he is measured in his approaches there. I will link to your back test. I don't think there's much more to say about this other than it does perform quite well, but I will let others check it out as food for thought. And, as always, you're a good friend and thank you for your email, take it easy Dude.

Voices:

Oh yeah, I know that dude. Oh yeah, I know that you will.

Mostly Uncle Frank:

Yeah well, the dude abides the dude abides, 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 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. Follow review. That would be great. Okay, thank you once again for tuning in. This is Frank Vasquez with Risk Parity Radio signing off.

Voices:

I'm so glad we're heading back there. I'm so glad we're checking out there.

Mostly Mary:

I'm so glad we're 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. 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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