Risk Parity Radio

Episode 448: The Problem With Simulated Crystal Balls, Cleveland Rocks, And Portfolio Reviews As Of August 22, 2025

• Frank Vasquez • Season 6

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In this episode we answer emails from Dave, Mike, and Andy.  We discuss an inherited IRA, 529s, how historical data provides more reliable investment guidance than simulated data based on crystal balls, particularly when considering economic environments and asset correlations, and the Rock & Roll Hall of Fame.  Cleveland Rocks!

And THEN we our go through our weekly portfolio reviews of the eight sample portfolios you can find at Portfolios | Risk Parity Radio.

Additional Links:

Father McKenna Center Donations:  Donate - Father McKenna Center

Listener Blog Post Describing Risk Parity Concepts And Four Quadrant Model:  15 Uncorrelated Assets | SSiS

Bridgewater Research Paper:   Bridgewater Paper 2009.12 AW Info Pack.doc (granicus.com)

Rock & Roll Hall of Fame Exhibit:  SNL: Ladies & Gentlemen...50 Years of Music | Rock & Roll Hall of Fame

Breathless Unedited AI-bot Summary:

What happens when you try to predict market outcomes using simulated data rather than historical performance? Frank tackles this profound question by explaining why many investment simulations fail to capture the fundamental reality of how assets behave in different economic environments.

Using a brilliant weather metaphor, Frank demonstrates why you "cannot have a drought and rainstorms at the same time" – just as you cannot simultaneously experience a recession and inflation. This insight explains why historical data, which shows how assets perform in specific economic conditions, provides more reliable guidance than simulations that treat each asset class as an independent variable.

The episode also addresses practical financial concerns, including strategies for managing inherited IRAs subject to the 10-year distribution rule and approaches to college savings that balance tax advantages with flexibility. Frank shares his personal approach of using 529 plans primarily for state tax benefits while maintaining additional education funds in more accessible accounts.

Weekly portfolio reviews reveal nearly all asset classes in positive territory this year, with gold shining brightest at +28.47% YTD. This unusual pattern reflects a weakening dollar, demonstrating how macroeconomic conditions influence asset performance across the board. The episode's exploration of base rates in forecasting also explains why predictions based on historical probabilities typically outperform crystal ball prognostications that assign outsized probabilities to possibilities rather than focusing on known patterns.

For investors seeking to build robust portfolios for uncertain times, this episode offers invaluable perspective on understanding economic environments, recognizing asset correlations, and using historical data to prepare for different market conditions. Listen now to discover why the lessons of market history may be your most reliable investment guide.

Support the show

Mary and Voices:

A foolish consistency, is the hobgoblin of little minds, adored by little statesmen and philosophers and divines. If a man does not keep pace with his companions perhaps it is because he hears a different drummer, A different drummer, and now coming to you from dead center on your dial. Welcome to Risk Parity Radio, where we explore alternatives and asset allocations for the do-it-yourself investor, Broadcasting to you now from the comfort of his easy chair. Here is your host, Frank Vasquez.

Mostly Uncle Frank:

Thank you, Mary, and welcome to Risk Parity Radio. If you 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.

Mary and 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.

Mary and Voices:

Top drawer, really top drawer.

Mostly Uncle Frank:

Along with a host named after a hot dog. Lighten up, francis. But now onward, episode 448. Today on Risk Parity Radio, it's time for our weekly portfolio reviews of the eight sample portfolios you can find at wwwriskparityradiocom On the portfolios page.

Mary and Voices:

It's time for the grand unveiling of money.

Mostly Uncle Frank:

But before we get to that, I'm intrigued by this how you say Emails and First off. First off, we have an email from David. How you say Emails and First off, first off, we have an email from David Take, take, take, take, take, take, take, take and David writes Hi, uncle Frank, Love the podcast and your work raising money for the Father McKenna Center.

Mary and Voices:

Given that I recently donated to the center, yes. I have two questions, one about an inherited IRA and another about saving for college with a 529.

Mostly Uncle Frank:

I'm sorry, but all questions must be submitted in writing.

Mary and Voices:

First question I've been using my inherited IRA to house all the fixed income in my portfolio. He didn't fall BND, currently representing 23% of my net worth. I seek growth via index stock funds in a variety of other accounts, including a taxable brokerage, tsp Roth IRA, an HSA and a high yield savings account. Across all my accounts I hold 66% stocks, 23% bonds and 11% cash. The inherited IRA needs to be drained in seven years to meet the 10-year rule. Given that requirement, I was thinking of switching from BND in the inherited IRA to a golden ratio style portfolio and wanted to get your perspective and you won't be angry. I will not be angry. Would a risk parity style portfolio work well in this case, given the seven-year time frame for withdrawal? More broadly, I believe you recommend treating all the various accounts as one portfolio and investing accordingly, but I'm not sure when I will retire, potentially five to seven years from now.

Mary and Voices:

Second question I have 529s for my two children. One is five years from starting college, the other is nine years from starting. For my older child, the glide path just transitioned from 75-25 stock bond to 50-50. Given the time frame, do you think that is reasonable timing and a good stock bond split? How did you approach saving for your children's college? Thanks for all you do, dj. Well, is anyone else here trying to earn money for college? Your mom goes to college.

Mostly Uncle Frank:

Well, first off, david, thank you for being a donor to the Father McKenna Center. As most of you know, we do not have any sponsors on this program. We do have a charity we support. It's called the Father McKenna Center. As most of you know, we do not have any sponsors on this program. We do have a charity we support. It's called the Father McKenna Center. It supports hungry and homeless people in Washington DC.

Mostly Uncle Frank:

Full disclosure I'm on the board of the charity and I'm the current treasurer. But if you give to the charity, you do get the prize of going to the front of the email line, and so that is what David has done. There are two ways to give to the charity. You can do it at the Father McKenna website on the donations page. I'll link to that again in the show notes. Or you can go to our support page at wwwriskpriorityradiocom and become one of our patrons on Patreon and do a monthly donation. Either way, you get to go to the front of the email line. Didn't you get that memo?

Mostly Uncle Frank:

But now getting to your questions. First, this inherited IRA you have. You say you have 66% in stocks, 23% in bonds, that's all in the inherited IRA and 11% in cash and you need to drain it in seven years, and you wanted to know whether you should move it to a golden ratio style portfolio or something else, and the answer is no. I don't think so, because if all you're doing is taking the money out for the distribution, paying the taxes, obviously, and then reinvesting it in, I assume, bonds again, if that's what you wanted, then there isn't really a reason to be changing the whole portfolio around prior to taking the money out. Now if you were doing something different, for instance, if you were going to go spend the money or something like that, then there'd be a different answer. But I am assuming what you're really doing here is simply dealing with the requirement of getting the money out of there and paying the taxes, in which case you would just reinvest the money as soon as it comes out after paying the taxes. And it is correct to keep your lowest growing assets that are paying ordinary income in the IRA, because less growth in there means less taxes.

Mostly Uncle Frank:

You want your growth somewhere else where you're not subject to this taxation problem, but what I think you really want to do is a kind of asset swap. So you have a TSP, which I assume is a traditional. You didn't mention it being a Roth, so I'm assuming it's a traditional account, traditional retirement account similar to the inherited IRA for tax purposes. So what you probably want to do is keep the bond allocation in the IRA as that comes out, though, instead of buying bonds with it in an ordinary brokerage account, buy stocks with it and then replace the bonds in the TSP. So sell some of the stocks in the TSP and build up the bonds in there, and that way you still end up at the end of the day with all of your bonds in a traditional retirement account, which is where you want them, because you don't really want to be holding bonds in your taxable brokerage account. If you can avoid it, not going to do it Wouldn't be prudent at this juncture.

Mostly Uncle Frank:

But now the other twist is you do mention that you are planning on retiring in five to seven years. Are planning on retiring in five to seven years? In which case you should also be thinking about well, what do I want my whole overall portfolio to look like in retirement? And what I just told you was assuming that you wanted to keep the same allocation you have right now, which is not clear If you do not want to keep the exact same allocation you have right now, then you're going to use that money as it comes out to build out the alternative retirement portfolio that you want, because you want to have that all in place to the extent possible at the point of time when you're actually retiring. I realize there may be some issues with the TSP and its limited investments available in there, but do the best you can. And then, when you retire and you can roll that TSP and its limited investments available in there, but do the best you can. And then when you retire and you can roll that TSP to a traditional IRA, then you can adjust the holdings in there, and I think that's about as good as you can do, given what you told me. But no, I don't think you need to complicate your life by putting a golden ratio style portfolio in the inherited IRA.

Mostly Uncle Frank:

Okay, next question 529 plans. Well, we took a simplistic approach to this for a couple of reasons. First, we did not use the 529 plan as the exclusive way of saving for college. In fact, all we really used the 529 plans for in our case was to get a state tax deduction in the state of Virginia. Not all states have that, and so we would put the limited amount I think it was $4,000 for each kid in the 529s just to get that deduction. And after that we were generally saving elsewhere in taxable brokerage accounts and other places. And so the simplistic plan we adopted was simply leave them in 100 stocks until they got to high school and then shift that to 100 in bonds. And we did that for a couple of reasons. First, we wanted the amount they had in the account to be a predictable amount as they were going through high school, so we knew exactly how much they had and that it wasn't going to disappear anytime soon before they started college, because we also were using our 529s right away to pay for the first years of college.

Mostly Uncle Frank:

Now I might have done something different, more complicated, as you describe, with a different allocation, if that was going to be all of our money for college, but I probably would have gone even more conservative than 50-50 as we were getting towards there.

Mostly Uncle Frank:

It would have been more like 25-75. But what you want to keep in the back of your mind is that these are not your only assets for college, so that you can make these much more conservative if you like and be more aggressive in some other account or vice versa. I think you need to consider where all of the money for college is coming from if it's not all coming out of this 529 plan. Anyway, sorry, I don't have a more scintillating answer to that, but we did not spend a lot of time thinking about that and at the time 529 plans were less flexible when we were doing this, mostly about 10 years ago. But hopefully that helps some. Thank you for your donation to the Father McKenna Center and thank you for your email. Second off, second off. We have an email from Mike. Let's get Mikey. Yeah, he won't need it, he hates everything.

Mary and Voices:

And Mike writes Dear Frank, thanks so much for your great show. It has been very illuminating for me. I have a question about your confidence in the backtesting and Monte Carlo simulations. What I am worried about is that a lot of the data is only about 50 years old, so any unusual periods might be overrepresented in the simulations. Even taking into account the Monte Carlo method In particular, most portfolios that people construct that fail fail because of the 1970s.

Mary and Voices:

In this period, gold and small cap value thrived. Most other time periods in our data set would support much larger withdrawal rates than we are shooting for. So this time period is really unusual and influential in how we are constructing portfolios. Gold and small cap value were things that did well during the time period, and so when we do these Monte Carlo simulations, there are about 20% of the years where those two look great, and since these are most of the years, that are trouble years when, only looking at the last 50 years, of course you would want to add these to your portfolio. However, if the 1970s were a big anomaly, is this really how we want to weight things? Obviously, we do not know what the future holds or what the real probabilities that things will happen are, so it is hard to know what to do. In an ideal world, one would construct a portfolio that does moderately well in all scenarios, but this seems impossible and all of the constructed portfolios seem to hinge on the stock market rising a lot in the long run. While constructing hedges to mitigate the shorter downturns in the long run, while constructing hedges to mitigate the shorter downturns. Do you do any testing with any sort of simulated data, or do you have any thoughts about how to rigorously consider situations that are not represented in our data set Best, mike PS.

Mary and Voices:

I'm a mathematician and not a statistician. I am a scientist, not a philosopher, so I do not know anything about statistical methods and may have some misunderstanding of the weaknesses of the Monte Carlo method. What am I? A doctor or a moonshotten doctor?

Mostly Uncle Frank:

Well, these are some interesting questions that go to some fundamental ideas about what drives investments themselves. And so, if you go back to our first episodes 1, 3, 5, 7, and 9, where we discuss the development of risk parity style investing and the idea of combining uncorrelated assets what you first need to recognize is that returns for various assets are not random and they are based on the specific economic environments. You're dealing with the economic weather, if you will and so the fundamental first step in looking at investments and trying to figure out whether they're correlated or not is to look at how they perform in different economic environments, and the economic environments are generally described as rising or falling inflation and rising or falling growth. So you end up with an axis and four quadrants. Essentially, there was a paper by Bridgewater that we cited to originally I'll see if I can dig that up and there's also a nice blog post that one of our listeners did recently with this illustration of the four quadrants and then with the assets on the quadrants, as to which ones are performing well in which quadrant.

Mostly Uncle Frank:

And this is important because you can only have one kind of weather at a time. You cannot have the equivalent of a drought and a hurricane at the same time. Why that is important is that certain asset classes have a high probability of performing well in certain environments and a high probability of performing poorly in other environments. So, for instance, if you're talking about a recession environment, falling inflation and falling growth, what performs well in that environment is treasury bonds they always have. What performs poorly in that environment is stocks, in particular. That's when you get your biggest market crashes, like 2020 or 2008. And that performance is consistent. So if you know what the economic environment is, you have an idea of how the performance is. You're not going to have an environment where bonds are performing as if it's a recession while, at the same time, stocks are performing as if we're in an inflationary environment. That is the environment you're not going to have. Forget about it, and that is the fundamental problem with a lot of simulated data.

Mary and Voices:

My name's Sonia. I'm going to be showing you the crystal ball and how to use it, or how I use it.

Mostly Uncle Frank:

Because, instead of simulating an economic environment where you know what the probabilities of each asset performing, and they're all in there doing that at the same time, you might be simulating the equivalent of rainstorms and a drought at the same time.

Mary and Voices:

That's not an improvement.

Mostly Uncle Frank:

Especially if you are not aligning all of the assets like you would in a historical time frame, because these performances are not independent, inconceivable. They are all dependent on the current economic environment. That's what I'm talking about, and what that means is if you are taking simulated data and you're using one kind of simulation for one asset class say treasury bonds, and another kind of simulation for, say, gold and another kind of simulation for stocks, but you are not recognizing this fact, you are treating them all as completely independent variables, you're doing it wrong as far as the simulation is concerned.

Mary and Voices:

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

Mostly Uncle Frank:

You cannot have a drought and rainstorms at the same time. You cannot have an inflationary environment and a recession at the same time. Forget about it. But most simulated data does not account for that. Instead, they treat each asset as an independent variable that is not dependent on something larger, namely the macroeconomic environment. And then the other question becomes well, what exactly are you simulating? Fire and brimstone coming down from the skies, rivers and seas boiling, forty years of darkness, earthquakes, volcanoes, the dead rising from the grave.

Mostly Uncle Frank:

And this is a problem. As long as there's been events in the world and predicted reactions in the world, You'll get all kinds of people making up simulations that just are not feasible, accurate or probable. Just come up. A good example of this is the Y2K problem. There were all kinds of people who were effectively simulating catastrophes based on the Y2K problem that things were going to shut down, go away, economic collapse, so on and so forth. Real wrath of God type stuff. Guess what. None of that happened.

Mary and Voices:

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

Mostly Uncle Frank:

And so if you were just kind of making up simulations in these crystal balls, making up an event, and then saying, well, I think in that event stocks are going to perform well and bonds are going to do this, and gold is going to do that, or whatever you're saying, you're just making things up.

Mary and Voices:

You can actually feel the energy from your ball by just putting your hands in and out.

Mostly Uncle Frank:

And there's no point in just making things up, to simulate things that probably are not going to occur, because you have no basis for saying they've occurred that way. Hello, hello, anybody home? I think, mcfly. I think this is why doom and gloom people just get it wrong all the time, because they're constantly coming up with some scenario and then making predictions about what's going to happen in that scenario that don't make any sense and they're all wrong, and then making a prediction or simulation based on that.

Mostly Uncle Frank:

Fat drunk and stupid is no way to go through life son.

Mostly Uncle Frank:

So if you're going to do a simulation, what you have to do is say what kind of economic environment are we having? And then, of all my assets, how did they perform in that kind of economic environment? If you're not doing it that way, you're just making things up that are probably not likely to ever occur. If you're not doing it that way, you're just making things up that are probably not likely to ever occur. Are you stupid, or something Almost as stupid as a stupid does? And that's what makes historical data so valuable, because you can go back and say, okay, this was the economic environment in this particular time, this is how these assets performed in that time. Let's compare that to other similar economic environments and see whether we can learn anything about patterns of performance in those kind of economic environments.

Mary and Voices:

There's something new and unfamiliar to most of you.

Mostly Uncle Frank:

Unlike any schooling you've ever been through before. Then the next thing you need to consider are base rates. How often do we have recessions? How often does the stock market have positive years? We have 100 years of data, or more than 100 years of data, simply about things like that, and so we know that over very long periods of time, the stock market tends to go up about 70% of the time after inflation, that there are recessions about 15% of the time. And then there are other strange environments about the other 15% of the time, which includes things like 2022, with a central bank rapidly raising interest rates to counter inflation. That occurs about once every 40 years and has about the same probability as rolling snake eyes on a dice. But all of those also give you base rates for doing any simulation that you would want to simulate.

Mostly Uncle Frank:

So it wouldn't make too much sense to be saying, okay, we're going to have a recession that lasts 15 years, or that suddenly, the probability of recessions is going to be 70% and the probability of the stock market is going to be performing well is going to be 30% Again. That's just made up Bing and has no basis in anything. Bing again, and there is really no point in simulating things that have never occurred and are never likely to occur Human sacrifice, dogs and cats living together, mass hysteria. Other problems are just destructive of the whole economy, like your country gets invaded and it gets partially destroyed. That is also probably not worth simulating, because the only answer is leave, in terms of either physically leaving or moving your assets somewhere else. You know what, napoleon, you can leave, but things like that there's not much point in simulating either, because it's not like you are going to make some kind of magic adjustment to your portfolio to ameliorate that problem. Forget about it. That problem, forget about it.

Mostly Uncle Frank:

So what this all means is that historical data actually is the best data because you can match it up with particular economic environments and get an idea for how a group of assets the group of assets is going to perform in an economic environment, not how every asset is performing differently in different economic environments. That can't all happen at the same time. All right. Now let's get to your point about the 1970s and data being only about 50 years old. Well, I think you're under a misimpression here. You can do these tests back 100 years and you're going to get similar results, and people have done that, whether it's the original Fama-French analysis or the analyses we've done here with the toolbox, from early retirement now. But if we have an inflationary environment, you are likely to get performances out of asset classes that will be similar to the 1970s.

Mary and Voices:

And that's the way.

Mostly Uncle Frank:

I like it, casey and the Sunshine Band. The nice thing about the last 50 years, from the 70s until now, is that you did have an inflationary period the 1970s and you also had a deflationary period the early 2000s. So you do actually have both ends of the spectrum as far as these possibilities are concerned, and then 60 or 70 percent of the time, you have essentially good decades. So the only other period that's really of big interest in the past 100 years, besides the 70s and the early 2000s, is the 1930s, because if you're talking about safe withdrawal rates and worst case scenarios, those are the worst decades. If you are operating in other decades, then you don't have a problem in terms of safe withdrawal rates and, in fact, probably withdraw six, seven, eight percent without batting an eye. What's also very useful about the period since the 1970s is that is when our currency changed and we went off the gold standard, and since everything is measured in dollars, that fundamentally changed the way assets are valued, making the period since then much more relevant to a future where we're having the same kind of currency environment than some other period where we were on a gold standard or something else else, because if you are on a gold standard, a hard money standard. If you go back to the 19th century, what you'll see is just as many periods of deflation as inflation, whereas when you go off a gold standard and go to a fiat money system like we have now, there is a tendency towards more inflation and less deflation. So people like Bob Elliott of Bridgewater have observed that since the 1970s, you could have used gold just as well as bonds as a diversifier from your stocks and had the same kinds of outcomes, because once you floated gold and didn't tie the dollar to gold, it became a different asset class in effect. And then I see you say in an ideal world one would construct a portfolio that does moderately well in all scenarios.

Mostly Uncle Frank:

But this seems impossible and all the constructed portfolios seem to hinge on the stock market rising a lot in the long run, while constructing hedges to mitigate the shorter downturns.

Mostly Uncle Frank:

Well, yes, you do have to assume that stocks are going to rise in the long run, simply because we're living in a capitalist system and that's how our economy works.

Mostly Uncle Frank:

So if you're not assuming that stocks are going to rise in the long run, you are assuming that you're in a different kind of economy, maybe one that's run by the government, like a command economy, like the old Soviet Union or something.

Mostly Uncle Frank:

Or you are one of these doomsdayer type people who just go and hoard physical gold and also bullets and other supplies because they believe the whole economy is going to collapse and the stock market isn't going to perform at all. But those are doomsday collapse of the economy kind of scenarios. You're gonna end up eating a steady diet of government cheese and living in a van down by the river and in fact the portfolios we are constructing are designed to do moderately in all kinds of scenarios at least all kinds of scenarios that we believe we're likely to have, assuming we're living in a capitalist system with a functioning stock market. Because in the end, what you are trying to do with all these kind of simulations and data work is to just try to be less wrong, and using historical data in a Monte Carlo simulation makes you less wrong than making up simulated things that may or may not be able to occur and making simulations or predictions based on those crystal balls.

Mary and Voices:

Now the crystal ball has been used since ancient times. It's used for scrying, healing and meditation.

Mostly Uncle Frank:

And recent history has borne this out that if you were going back, say, 10 years or so, and looked at what everybody was predicting, say, around 2013, as far as the next 10 years of returns in the stock market were going to be, and other predictions a whole lot of people were predicting that the 10 years following 2013 were going to be a very bad decade Worst day of my life, what do you think? Including Vanguard, including anybody trying to use a CAPE ratio or any of those valuation metrics, they were all simulating a future based on what they thought was a crystal ball that worked.

Mary and Voices:

As you can see, I've got several here.

Mostly Uncle Frank:

A really big one here, which is huge, and guess what, guess what? It didn't work and you were way less wrong simply by using historical averages for the stock market. In fact, it performed better than averages. So the chances are, if you're out there simulating things based on whatever crystal balls you have, you are probably going to be more wrong than somebody who's just using historical averages. That's just the way life works. You need somebody watching your back at all times. That is the whole principle of using base rates for the foundation of forecasting, which is what Danny Kahneman tells you, philip Tetlock tells you, annie Duke tells you. That is the basic forecasting 101. And if you're not doing it that way, you're doing it wrong, wrong. Wrong Because, instead of using known probabilities, you are taking possibilities and assigning them outsized probabilities based on whatever crystal ball metrics you have.

Mary and Voices:

The crystal ball is a conscious energy.

Mostly Uncle Frank:

And you're more likely to be more wrong. That way you can't handle the crystal ball Interesting topics. I do encourage you to go back and read some of the papers about this that we cited in the early episodes in that recent blog post, and hopefully that will help. And thank you for your email. Bow to your sensei. Bow to your sensei. Do you think anybody wants a roundhouse kick to the face while I'm wearing these bad boys? Last off, last off. We have an email from Andy and Andy writes Hi Frank.

Mary and Voices:

I've been a listener of the show for about six months now and I've learned a lot from it and always eagerly await new episodes. I'm one of the curators at the Rock and Roll Hall of Fame in Cleveland, ohio, and I also oversee our museum's artifacts and archival collections All the little kids blowing up on the skids.

Mostly Uncle Frank:

They're going. Cleveland Rocks Cleveland.

Mary and Voices:

Rocks. So I was happy to hear Evan's email in episode 447 about how much he enjoyed our new major exhibit, snl Ladies and Gentlemen 50 Years of Music, which features a display of Will Ferrell's costume and cowbell from Saturday Night Live's More Cowbell sketch. It doesn't work for me. I gotta have more cowbell, I gotta have more cowbell. I agree with Evan that everyone should check out the exhibit, which is one of the best we've ever done. The best, jerry, the best. If you and Mary ever find yourselves in Cleveland within the next year or so while the exhibit is open, please don't hesitate to reach out to me. Cleveland rocks, cleveland rocks. Cleveland rocks, cleveland rocks. I'd be happy to show you the exhibit, plus some cool artifacts behind the scenes in our vault, if you're interested. Oh, behave. Yeah, yeah, baby. Take care and thanks for a top drawer, informative show. Best, andy.

Mostly Uncle Frank:

Guess what? I got a fever, and the only prescription is more cowbell. Now, ordinarily I would have moved this to the back of the email line, but I thought it was so funny and prescient, coming on our email from Evan in the last episode, that I thought we'd throw it in right here, right now.

Mary and Voices:

What do you mean? Funny, funny how. How am I funny?

Mostly Uncle Frank:

But I didn't know. Our podcast had fans at the Rock and Roll Hall of Fame. Ha ha, ha, ha, ha, ha ha. You keep on shouting, you keep on shouting. I want to rock and roll all night and party every day. I feel like it elevates everything we do here.

Mostly Uncle Frank:

What we do is if we need that extra push over the cliff. You know what we do Put it up to 11. 11, exactly, and we definitely will check that out. If we get to Cleveland, at least in the next year or so, I want to rock and roll all night and party every day. Thank you for being a listener and thank you for your email. Now we're going to do something extremely fun, and the extremely fun thing we get to do now is our weekly portfolio review. So the eight sample portfolios you can find at wwwriskpraterioritycom on the portfolios page.

Mostly Uncle Frank:

And, after a blowout Friday, with everybody being very happy about what Jerome Powell had to say, everything is looking up. I saved the economy. We're trillions of dollars in debt. Ha ha, money printer go boom. So just looking at the markets themselves, the S&P 500, represented by VOO, is up 10.82% for the year right now. The NASDAQ 100, represented by QQQ, is up 10.82% for the year right now. The NASDAQ 100, represented by QQQ, is up 12.17% for the year. Small cap value, represented by the fund VIOV, has jumped out of its negative category and is up 2.05% for the year so far. Right now, gold continues to shine as the best performer this year.

Mary and Voices:

I love gold.

Mostly Uncle Frank:

Representative fund GLDM, is up 28.47% for the year. Long-term treasury bonds, represented by the fund VGLT, are up 2.9% this year. Reits, represented by the fund REET, are up 7.45% for the year. Commodities, represented by the fund PDBC, are up 1.31% for the year and preferred shares, represented by the fund PFFV, are up 2.75% for the year. And finally, managed futures, represented by the fund DBMF, are managing to be up also this year at 1.38% for the year.

Mostly Uncle Frank:

So far, it is an odd year in that you have just about all assets in the positive category. Odd year in that you have just about all assets in the positive category. But that really is a consequence of a weak dollar, that when the dollar is weak against other currencies and other things, assets priced in dollars tend to go up in value, at least in dollars, and it's gone Poof. But now moving to these portfolios. First is the all seasons. This is a reference portfolio we keep around for comparison purposes. It is only 30 percent in stocks and a total stock market fund, 55 percent in intermediate and long-term treasury bonds and the remaining 15 percent in gold and commodities. It's up 1.17% month to date. It's up 7.72% year to date and up 16.95% since inception in July 2020.

Mostly Uncle Frank:

Moving to these kind of bread and butter portfolios, first one's Golden Butterfly. This one is 40% in stocks divided into a total stock market fund and a small cap value fund, 40% in bonds divided into long and short treasuries and the remaining 20% in gold. It's up 3% month to date. For the month of August it's up 9.95% year to date and up 47.26% since inception in July 2020. Next one's golden ratio this one's 42% in stocks divided into a large cap growth fund and a small cap value fund, 26% in long-term treasury bonds, 16% in gold, 10% in managed futures and 6% in cash in a money market fund. It's up 2.78% for the month of August. It's up 9.28% year-to-date and up 42.01% since inception in July 2020.

Mostly Uncle Frank:

Next one's the risk parity ultimate. Not going to go through all 12 of these funds, it's kind of a kitchen sink of portfolios. It's up 3.05% for the month of August. So far, it's up 8.9% year-to-date and up 29.97% since inception in July 2020. This one has almost recovered all the way back to its original $10,000. And if it does that by month end, we will resume taking out a higher withdrawal rate. We take out at 6% once it's recovered and we had been taking out 5%, since I guess sometime in 2023 or 2022. I'm not sure, but we may be able to go back to those higher withdrawals we shall see. Now moving to these experimental portfolios that all involve levered funds. Don't try this at home.

Mary and Voices:

You have a gambling problem.

Mostly Uncle Frank:

The first one is the accelerated permanent portfolio. It is 27.5% in a levered bond fund TMF, 25% in UPRO, a levered stock fund, 25% in PFFV, a preferred shares fund, and 22.5% in gold. It's up 2.32% for the month of August. It's up 10.11% year-to-date and up 11.25% since inception in July 2020. Next one's the aggressive 50-50. This is the least diversified and most levered of these portfolios and the worst performer by far. Well, you have a gambling problem. It is one-third in a levered stock fund UPRO, one-third in a levered bond fund TMF, and the remaining third divided into preferred shares fund and intermediate treasury bond fund. As Ballast, it's up 2.41% for the month of August. It's up 5.52% year-to-date, but still down 7.07% since inception in July 2020.

Mostly Uncle Frank:

Next one's the levered golden ratio. This one is a year younger than the other ones. It's 35% in a composite fund called NTSX that's the S&P 500 and treasury bonds levered, up 1.5 to 1. 15% in AVDV, an international small cap value fund, 20% in gold GLDM, 10% in KMLM in gold GLDM, 10% in KMLM, a managed futures fund, 10% in TMF, a levered bond fund, and the remaining 10% in two leveraged funds, one that follows the Dow and one that follows a utilities index. It's up 3.34% month to date. It's up 13.83% year to date and up 8.8% since inception in July 2021.

Mostly Uncle Frank:

And the last one is our newest one, the Optra portfolio. One portfolio to rule them all. It's a return stacked kind of portfolio. It consists of 16% in UPRO, that's a levered stock fund, follows the S&P 500, 24% in AVGV, which is a worldwide value fund, 24% in GOVZ, which is a US Treasury Strip's fund, and the remaining 36% divided into gold and managed futures. It's up 3.14% month-to-date. For the month of August, it's up 11.56% year-to-date and up 14.81% since inception in July 2024. And that concludes our weekly portfolio reviews. Well, la-dee-frickin'-da, but now I see our signal is beginning to fade. It looks like we may be rolling out our revised website next week At least. Luke and I have a short meeting on Monday to discuss the possibilities and the time frame, but I'm sure you'll all be excited, since we were able to take most of the suggestions at least the ones that were not conflicting and create the alt site, which will become the new Risk Parity Radio website. Thank you all for participating in that effort, and especially the top man. I have working on it.

Mary and Voices:

We have top men working on it right now.

Mostly Uncle Frank:

Who Top men. I'll have to buy him some poutine the next time I see him. I've got a meeting in the ladies' room. I'll be back real soon the next time I see him, which would be the first time I would see him in the flesh. Surely you can't be serious. I am serious and don't call me Shirley.

Mostly Uncle Frank:

Anyway, in the meantime, if you have comments or questions for me, please send them to frankatriskparityradarcom. That email is frankatriskparityradarcom. Or you can go to the website wwwriskpar risk party radiocom. That email is frank at risk party radiocom. Or you can go to the website wwwriskpartyradiocom. Put your message into the contact form and I'll get it that way. Please use the contact form on the regular site and not the one on the alt site. If you haven't had a chance to do it, please go to your favorite podcast provider and like subscribe. Leave me some stars, a review, a follow. That would be great. Okay, thank you once again for tuning in. This is Frank Vasquez, with Risk Clarity Radio signing off. I got some records from World War II. I play them, just like me granddad do. He was a rocker and I am too. Oh, cleveland Rocks, yeah, cleveland Rocks, cleveland Rocks, cleveland Rocks, cleveland Rocks, cleveland Rocks, cleveland Rocks, cleveland Rocks, cleveland Rocks, cleveland Rocks, cleveland Rocks, cleveland Rocks, cleveland Rocks.

Mary and Voices:

Oh, harlow, harlow, Harlow, harlow, harlow. 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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