Risk Parity Radio

Episode 451: Market Musings And Entertaining A Ted Baxter Clone

• Frank Vasquez • Season 6 • Episode 451

Share episode

In this episode we answer emails from Andy, Phil and Brady.  We entertain Andy's musings on small cap value and the economy with crystal balls and complex adaptive systems theory, discuss the foibles of radio personalities attempting to try to be able to comment on what we do -- and their hypocrisies and conflicts of interest --, and touch base with the parent of a special needs child.

Links:

Phil's link to Radio Personality Podcast:  Query Day - Talking Real Money - Investing Talk - Apple Podcasts

Mary Tyler Moore Episode:  The Mary Tyler Moore Show S5E23 Ted Baxter's Famous Broadcasters' School (February 22, 1975)

Comparison of 60/40 and Golden Ratio Portfolios:  https://testfol.io/?s=eUbVJ2frelJ

Apella Wealth Form ADV:  APELLA WEALTH - Investment Adviser Firm

Morningstar Article Re GLDM and DBMF:  How ETF Diversifiers Performed During Market Turmoil | Morningstar

Breathless Unedited AI-Bot Summary:

Ever wonder why financial advisors insist DIY investing is "too complicated" while charging fees that can consume a third of your retirement income? In this eye-opening episode, Frank Vasquez exposes the hypocrisy behind mainstream financial advice and offers practical alternatives for truly resilient portfolios.

When a listener asks whether structural market changes warrant portfolio adjustments, Frank dives into the nature of financial markets as complex adaptive systems. Like a sandpile where it's impossible to predict which grain will cause an avalanche, markets respond to events in unpredictable ways that even the most sophisticated models can't forecast. This reality doesn't mean we should abandon strategy—rather, it underscores why diversification across truly different asset classes matters more than ever.

Frank takes aim at financial media personalities who promote oversimplified solutions while dismissing alternatives they don't fully understand. Through careful analysis of SEC disclosures, he reveals how some advisors criticize strategies on air that their own firms use with paying clients. The fixation on "simplicity" often serves as marketing to convince DIY investors they need professional help, while masking fee structures that can extract 1-1.5% of assets annually—an enormous drain on retirement resources.

The episode highlights recent Morningstar research confirming what Risk Parity Radio has long advocated: portfolios incorporating alternative assets like gold and managed futures demonstrably outperform traditional 60/40 allocations while reducing volatility. As Frank notes, echoing Einstein, we should make investing "as simple as possible, but no simpler." This wisdom proves especially crucial during withdrawal phases when sequence risk poses the greatest threat to retirement security.

Whether you're planning for your own retirement or, like one listener, strategizing for a dependent with special needs who may require lifelong support, this episode offers both practical insights and a framework for evaluating financial advice with clear eyes. In a world where conflicts of interest often distort financial guidance, Frank's independent perspective provides a refreshing and valuable counterpoint.

Support the show

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.

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 have just stumbled in here, you will find that this podcast is kind of like a dive bar of personal finance and do-it-yourself investing.

Voices:

Expect the unexpected.

Mostly Uncle Frank:

It's a relatively small place. It's just me and Mary in here and we only have a few mismatched bar stools and some easy chairs. We have no sponsors, we have no guests and we have no expansion plans.

Voices:

I don't think I'd like another job.

Mostly Uncle Frank:

What we do have is a little free library of updated and unconflicted information for do-it-yourself investors.

Voices:

Now, who's up for a trip to the library tomorrow?

Mostly Uncle Frank:

So please enjoy our mostly cold beer served in cans and our coffee served in old, chipped and cracked mugs, along with what our little free library has to offer.

Voices:

Welcome.

Mostly Uncle Frank:

But now onward, episode 451. Reminds me of that famous novel, fahrenheit 451, that was made into a movie by Francois Truffaut in the 1960s, where books were made illegal and were burned, but at the end of the movie, the people took it upon themselves to preserve their culture by each memorizing a book and becoming living libraries, if you will. So I'll make you listen to that clip before we get to our emails today.

Voices:

Yeah, we're only 50 or so, but there are many, many more scattered around in abandoned railway yards, wandering the roads, tramps outwardly but inwardly, libraries. It wasn't planned. It just so happened that a man here, a man there, loved some book and, rather than lose it, loved some book and rather than lose it, he learned it and we came together. We're a minority of undesirables crying out in the wilderness, but it won't always be so. One day we shall be called on, one by one, to recite what we've learned, and then books will be printed again. And when the next age of darkness comes, those who come after us will do again as we have done, but now without further ado.

Voices:

I'm intrigued by this how you say Emails.

Mostly Uncle Frank:

And First off. First off, we have an email from Andy, and Andy writes.

Mostly Mary:

Oh mighty lord of finances that are personal. Oh rememberer of all things rational. Oh powerful chooser of FI, oh vengeful afforter of anything.

Voices:

You're that smart.

Mostly Mary:

Your humble subject prostrates himself on the overly sticky floor of that dive bar to ask a question.

Voices:

Everything that has transpired has done so according to my design.

Mostly Mary:

At what point is looking to past performance become a foolish consistency? I am thinking of two very specific things that I am unclear as to whether are true structural changes that warrant taking evasive action, or whether I am just crystal ball gazing and need to hand over the keys to the car. The first pertains to how much longer companies are staying private. It used to be that IPOs were the big exit for the founders and staff, but, for example, OpenAI has a valuation of $500 billion now and I've not heard one word about it going public.

Voices:

Not going to do it Wouldn't be prudent at this juncture.

Mostly Mary:

If more value is being captured by private investors, one might imagine small-cap value would be less cowbelly. Are there historical precedents to this, or could we consider this a sea change?

Voices:

I could have used a little more cowbell.

Mostly Mary:

I could imagine that this might only be a phenomenon caused by long-growth mega-cap-dominant period and that when money dries up more, we might see a snap back to public markets. The second is a little more speculative. Trump will get to replace the Federal Reserve Chair next year. I believe it is fair to say that he massively favors loyalists. The Fed's job is to balance stable prices with maximum employment. Them being able to do that with minimal executive branch pressure seems key in maintaining faith in the US system. Maybe I'm just down the same rabbit hole that I emailed the show about in January, but how many signals of structural change can we afford to skip by before we are being foolishly consistent? Take care, andy. Crystal ball can help you, it can guide you.

Mostly Uncle Frank:

Well, first off, thank you for being a donor to the Father McKenna Center. Andy, 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 and it supports hungry and homeless people in Washington DC. Full disclosure. I am in the board of the charity and I'm the current treasurer.

Mostly Uncle Frank:

But if you give to the charity, you get to go to the front of the email line, as Andy has done here. You can do that two ways you can go directly to the Father McKenna Center webpage and donate there, or you can become a patron on Patreon, as Andy has done, and you do that by going to the Risk Party Radio website and going to the support page where you can sign up for that there. Either way, you get to go to the front of the email line and, of course, accumulate my eternal gratitude. You have been well trained, my young apprentice. But now getting to your email. I think this follows up on the one that I read and answered from you in episode 403, where you were wondering what the new administration had in store for us. And, as with that one, it sounds like you really want me to get out a crystal ball from our friend Sonia.

Mostly Mary:

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:

But unfortunately, you know what my crystal ball always says in the end.

Voices:

We don't know. What do we know? You don't know, I don't know, nobody knows.

Mostly Uncle Frank:

And really the reason for that is because financial markets in particular are what is known as a complex adaptive system, and so even if you know what an event is, there's no real way of telling what kind of effect that event will have on the entire system, and sometimes the same event could have completely varying effects. This is frequently known as the sand pile or rice pile model of reality, where you think about somebody dropping grains of sand or rice into a pile and naturally they stack up, but eventually one or more grains actually causes some kind of avalanche on the pile, even though the grains are all the same pretty much, and it's impossible to predict which grain will cause the avalanche. And so a lot of musings are like that, where people inappropriately attach some kind of causal meaning to a particular event simply because it has an attractive story that goes with it. This also goes to what's known as the possibility effect, which is a cognitive bias we all hold, where we convert attractive stories into actual probabilities when it's not warranted. And with that backdrop, I don't think the issue with IPOs is going to be that important with respect to small cap value, and what you need to understand about that is that there is no one small cap value index that rules all. There are actually several of them. The Russell Index is different from the S&P 500 Index, is different from the CRSP Index and then is different from the algorithms that say Avantis and DFA are using, and the one that is least discriminative is the Russell, which includes all of these horrible bad companies that aren't making any money.

Mostly Uncle Frank:

The CRSP and S&P 500 make some effort to filter out unprofitable companies, but the DFA and Avantis funds do even more of that, and so I think the cure, if you will, for this problem to extent it's a problem is simply to use funds with better profitability filters, because we do see that these funds, particularly from Avantis and DFA, do seem to outperform the other indexes and have consistently over many years now, and the real difference between them is this profitability filter. For the most part. They also have some flexibility as to when they're buying and selling and how they're managing the fund, which also helps them out, since they're not slavishly following an index that can be front run by traders. So I don't see this as a big concern that companies are staying private longer, or that would cause me to change the way I would approach investing, although it does tell me to lean more towards those funds with better filters on them and to stay away from the Russell small cap value fund in particular.

Mostly Uncle Frank:

But now to the changes in the Fed. The money in your account it didn't do too well, it's gone, and I think the problem here is, in order to predict what's going to happen, you not only have to predict what happens first, but what the market's reaction to that is and then what the Fed's reaction to that is. And I should say not just the Fed but the rest of the government too. So like, for instance, during COVID, there was a big market crash when the economy was shut down. During COVID, there was a big market crash when the economy was shut down, but then there was a huge reaction not only from the Fed but also from the fiscal authorities, just flooding the economy with money.

Voices:

No, you can't just print more money.

Mostly Uncle Frank:

I saved the economy. We're trillions of dollars in debt.

Voices:

Ha ha, money printer go boom.

Mostly Uncle Frank:

And obviously that ultimately had the bigger effect over time because it pretty much took care of the recessionary impulse but then later on created an inflationary impulse. But I don't think anybody was really predicting how all of that would play out before the COVID panic began.

Mostly Mary:

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

Mostly Uncle Frank:

And I think you're likely to see lots of moving parts and actions taken that we can't really predict right now, because one of the stated goals of this administration is to get interest rates lower, and particularly mortgage interest rates. But just lowering the federal funds rate, as everybody's talking about right now, isn't going to automatically lower the long end of the curve, which is the part that affects interest rates. So they may try that. It may not work. The long end of the curve, which is the part that affects interest rates, so they may try that. It may not work. The long end of the curve could go up down or stay the same, depending on other factors Now tariffs being stuck in the courts, we don't know what's going to go on there either. But the next thing that could happen is some form of yield curve control, like Japan used for many decades, simply causing the Fed to buy the longer end of the curve to suppress interest rates, which would make your treasury bonds go up in value, and so you can see how path-dependent this is going to be that there's going to be an action, then something's going to happen, and then there's going to be a reaction, then something else is going to happen, then there's going to be another reaction and in that kind of environment, which is typical of a complex adaptive system, you really can't be predicting in advance how it's all going to play out. The only thing I would say is that this is going to be still a favorable environment for gold in particular.

Mostly Uncle Frank:

I heard a data point last week.

Mostly Uncle Frank:

I don't know whether it's true or how they calculated it or not, but the data point was that central banks now hold more value in gold because they've been buying it, than they do in US treasuries.

Mostly Uncle Frank:

I'm talking about central banks besides the United States, and that's historical as well, that when there's uncertainty in economic markets and people are like, well, I don't know what's going to happen or what I should buy, oftentimes they just go buy gold. And I'm not really talking about individuals per se, I'm talking about institutions. But that also could go into a kind of speculative bubble, with big jumps up and then big jumps down, like it did in the 1970s, particularly at the end. So I certainly would not use that as an excuse, for example, to over allocate to gold or anything else. Anyway, I'm sure my answers were quite dissatisfying with their vagueness and other lacks of definition, but that's what I think and that's the way I think you are talking about the nonsensical ravings of a lunatic mind and so thank you for your donations and thank you for your email you can't handle the dogs and cats living together second off.

Mostly Uncle Frank:

Second off of an email from Phil.

Voices:

Phil, hey, phil, phil Connors, phil Connors, I thought that was you.

Mostly Uncle Frank:

And Phil writes.

Mostly Mary:

Thanks for all the great info. I retired early, engineer and airline pilot. Your experience, depth and reasoning of the topic and measured delivery came at a perfect time for me.

Voices:

That goes without saying.

Mostly Mary:

Oof. Setting up and tracking my own intermediate term portfolios has been an invaluable benefit. Spreadsheet nerds rejoice.

Voices:

Yes.

Mostly Mary:

I implement the concepts into my whole portfolio, bruce Lee style. It has also informed how I assist my parents in managing their portfolio. Be advised would a former assistant chief pilot always address the pilot group within a memo or email? This podcast discusses you and risk parity radio. In the last question it's disappointing, but not surprising, that the host has a superficial take on the topic. I really hope the questioner gets some more complete advice. Some of the earlier discussions are somewhat sus as well, such as recommending VT and then saying AVGE is what they recommend. Perhaps we may be treated to a mini rant. The soundbites have grown on me. I'd never heard of Homestar Runner and I'm gone.

Voices:

Best to you both, Phil.

Mostly Uncle Frank:

Well again, first off, thank you for being a donor to the Father McKenna Center, which has moved you also to the front of this email line. Now getting to this email, which kind of makes me chuckle a little bit.

Voices:

I want you to be nice until it's time to not be nice.

Mostly Uncle Frank:

What Phil is referring to is an episode of Talking Real Money and that is with Don McDonald and sometimes Tom Cock.

Voices:

Yeah, they come to snuff the rooster.

Mostly Uncle Frank:

And those guys have been around forever Reminds me of Ted.

Voices:

Baxter in the old Mary Tyler Moore show. What is it now, ted? Oh no, how come every time I come to you to say something, you say what is it now, ted? Like I'm going to say something dumb.

Mostly Uncle Frank:

Because they had a traditional talk radio financial program for many years. It sounds like they're still operating it, but that is a classic way that many local financial services providers would operate for many years. They'd have these little call-in programs and then use that to generate and drive traffic to their sites and get new clients and things like that. Anyway, I found it most interesting how their commentary about me has changed over the past few years. If you go all the way back to episode 147 of this program. Somebody else sent me another one of their episodes where they were commenting on me and at the time they really went after me and disparaged me, said I was selling crypto scams or something like that, and they had spent all of I don't know 30 seconds looking at the website before telling everybody I was not worth listening to and some kind of terrible person.

Voices:

I just got a call from this guy. He's coming up to meet me now. He's setting up a school for broadcasters and he wants to use my name the ted baxter famous broadcasting school.

Mostly Uncle Frank:

It'd be right here in minneapolis to start, but it could spread all over the country unless they find a vaccine for it because I think they thought I was kind of like a competitor and so they needed to take me down or something like that. And it sounds like they've learned a little bit since then. Because don m, because Don McDonald was a lot more careful in answering this question and a lot less dismissive than he was in the programs of years gone by.

Voices:

I mean, if it doesn't work out, you could lose your shirt. But that's the beauty of it, Mayor. This guy Marsh has all the experience and the money. All he wants from me is my reputation. Well, in that case, you've got nothing to lose.

Mostly Uncle Frank:

But anyway, these guys tend to have the same kinds of stock answers that they use over and over again, and so, to any question about any strategy that goes beyond two or three funds in a portfolio or something extremely simple, they basically say things like yeah, I'm aware of it, I've studied it, it doesn't work for me.

Voices:

It doesn't work for me.

Mostly Uncle Frank:

And always come back to well, it's far too complicated for do-it-yourself investors. I'm not a smart man, but that is actually kind of a veiled marketing shtick for a lot of financial advisors, because, when you think about it, it makes a whole lot of sense for them to tell do-it-yourself investors that they have to stick to the simplest thing they can possibly think of whether that be a two or three fund portfolio or a target date fund or something else like that Because what they really want them to do is make the listener do it yourself or believe anything beyond that is too complicated and that then they need to hire a financial advisor to help them.

Voices:

You're not going to amount to jack squats. You're going to end up eating a steady diet of government cheese and living in a van down by the river.

Mostly Uncle Frank:

So it's good marketing when you think about it, but it's not true. That's the problem that managing five or six funds is really no more complicated than all the other things a do-it-yourselfer will have to do, involving managing their different retirement accounts, dealing with tax laws, looking up, optimizing Social Security and perhaps rental real estate. The truth is that most do-it-yourself investors, by the time they've accumulated something, have probably 10 or a dozen different things in their portfolios, just because they have all these different accounts and may have acquired different strategies over time, and so they're really generally simplifying down from that which they are already comfortable with.

Mostly Uncle Frank:

so this kind of worship of the simplicity god is pretty much a false virtue in this context inconceivable what you should really be thinking about in terms of simplicity is following Einstein, which is make things as simple as possible, but no simpler.

Voices:

Everything should be made as simple as possible, but not simpler.

Mostly Uncle Frank:

Because you just do lose something in diversification when you're trying to ram all these things in two or three funds.

Voices:

That's the fact, Jack. That's the fact, Jack.

Mostly Uncle Frank:

And that's especially true when you're drawing down from a portfolio which is completely different than accumulation, where you can just use one to four equity funds and be fine for equity funds and be fine. So they basically told the person that they should not use alternative assets like gold and managed futures, because it's too complicated.

Voices:

You know, ted's told me so much about all you guys. I feel like I know you, what you were doing when he discovered you, how he found you, cleaned you up, gave you your first breath. They don't want to hear all that.

Mostly Uncle Frank:

Which again is just not true, particularly given the kinds of funds we have available today. They also went after the name of the Golden Ratio portfolio itself, which I thought was kind of funny, because at the beginning of this program Don McDonald also says oh you know, I'm not a math guy, I don't even know how to use an Excel spreadsheet. I'm a a math guy, I don't even know how to use an Excel spreadsheet. I'm a radio media guy. Listen to me be radio media guy. That's when I think of Ted Baxter from the Mary Tyler Moore show.

Voices:

Mars told me that Ted Baxter's famous broadcaster's crew will open next week. Gives you goosebumps, doesn't it Mary? Well, ted, I have a high goosebump threshold. Gives you goosebumps, doesn't it mary? Well, ted, I have a high goosebump threshold. Uh, I guess you wouldn't know what it's like to claw your way up from the gutter.

Mostly Uncle Frank:

Come on, ted, you didn't claw your way up from the gutter anyway, since he's confessed to not being a math guy, maybe he didn't realize that the golden ratio is just math and it's just a mathematical description of the ratios of the portfolio. The funny thing is to me is that he was recommending a 60-40 portfolio in particular, and that is in fact a golden ratio portfolio with only two assets in it. It would be 62-38 technically, but it's the same kind of portfolio. But I guess, since he's quote, not a math guy, unquote that he can't really figure that out. But if you can't really figure that out, then what business do you have telling other people what to do?

Voices:

Isn't it wonderful, Mary. Only in America could a man who never graduated from school own one. Isn't it wonderful? Who never graduated from school own one. Wonderful.

Mostly Uncle Frank:

It may sound good on radio programs but really it's not helpful or useful. He also made a complete misstatement when he said that the 60-40 portfolio outperforms the golden ratio portfolio and they had quote done some research and looked into it. Blah, blah, blah. They must not have looked into it very hard because I can run this through many calculators and show you the exact opposite. I'll give you a link to Testfolio and you can look at that and compare the two portfolios. And it's even worse for the 60-40 when you're talking about taking out drawdowns out of the portfolio. So that was just a complete misstatement that they've never backed up.

Mostly Uncle Frank:

Do you think anybody wants a roundhouse kick to the face while I'm wearing these bad boys? Forget about it. But I'll tell you what I usually do with respect to particularly financial advisors, when they start talking out of both sides of their mouth or other orifices is I go look at their disclosures, particularly at the SEC. Is I go look at their disclosures, particularly at the SEC, and usually you find some glaring conflicts or hypocrisies or both, and it's no different in this case. So I looked at their ADV file with the SEC and I'll link to that in the show notes just to check out what was really going on there, because one of the things that Don McDonald says is they would never advise investing in commodities in particular. So the question to me is well, does the firm they work for, appella Wealth Management, now use commodities?

Voices:

Guess what.

Mostly Uncle Frank:

And the answer to that is yes, they do. Surprise, surprise, surprise, surprise, surprise, surprise. Got a big hypocrisy going on here. It's on page 29 and 30 of their disclosure. They talk about using commodity funds. They talk about using long short funds. They have a whole section there on alternative mutual funds, which is essentially alternative assets. Tell you one thing in his radio program, when the ADV disclosure file under penalty of perjury, says another thing. He's got a big problem. He's got a really big problem.

Voices:

Real wrath of God type stuff.

Mostly Uncle Frank:

And I know they merge their firm into this big conglomerate, which is kind of what's going on in a lot of financial services industries these days Smaller firms being sucked up into national ones. But he's really not in a position to be telling people they can't or should not invest in commodities when the firm he's affiliated with does that with their clients.

Mostly Mary:

That's not an improvement.

Mostly Uncle Frank:

Another thing I like to search is the word conflict. See if there's conflicts of interest disclosed there. They're actually pretty good on that. The one big conflict they disclose there is that they do encourage their clients to roll over their 401k plans into IRA plans, which they are then going to charge AUM fees on.

Voices:

And I have a straw there it is, that's a straw, you see. Watch it. And I have a straw there it is, that's a straw, you see.

Voices:

Watch it. My straw reaches across the room and starts to drink your milkshake. I drink your milkshake. I drink it up.

Mostly Uncle Frank:

And this is the typical conflict that firms that charge AUM typically have, because their goal is really to get all of the assets of a client under their management, and frequently they do not want to manage only part of the assets Because they want to get paid more for doing essentially the same work. And the way you do that is you get all of the assets in there, even if it's just sitting in cash or not doing anything somewhere. But then the main question with respect to firms that charge AUM is well, how much are they charging? And according to the disclosure, appellate charges up to 1.5% AUM. It's on pages 12 and 13 of the disclosure.

Voices:

Surely you can't be serious.

Mostly Uncle Frank:

I am serious and don't call me Shirley. And that's a ridiculous amount of money. I'm sorry.

Voices:

You fell victim to one of the classic blunders.

Mostly Uncle Frank:

If you're only taking for even 5% out of your assets and 1.5% of that is going to the advisor, you're basically giving away between a quarter and a third of your retirement money to the advisor and nobody should be paying that these days. In fact, I think the AUM model should be made obsolete and it's gone Poof. But I realize that's not going to happen anytime soon because it still is very lucrative, particularly when you amass these conglomerations of small firms across the US which I think they've disclosed. Now they have up to $4 billion in assets under management across all of the firms they've absorbed.

Voices:

It's a trap.

Mostly Uncle Frank:

Now, maybe these guys don't charge that much. My recollection is they weren't charging that much when they were on their own, but it's still a travesty, even if they're charging 1%. It's just too much.

Mostly Uncle Frank:

Because only one thing counts in this life get them to sign on the line which is dotted but you can see, then, the incentive they have by the way they run their program and the way they fixate on simplicity to the point of distraction. And I'm reminded again of that, upton sinclair, it is difficult to get a person to understand something when their salary depends on them not understanding it.

Voices:

Always be closing.

Mostly Uncle Frank:

And here they seem to do a lot of shading of the truth when it comes to simplicity, this 60-40 portfolio and other things, and they don't really understand the problem. 60-40 portfolio and other things and they don't really understand the problem. They don't really understand the problem because they've been operating this way for so long that it feels normal. It feels natural, but the truth is we don't have to put up with it anymore and we are the potential customers. We are the clients. That's why I laughed so much about that earlier episode, episode 147. It's like what are you guys actually trying to do? Don't you know that my listeners are very good do-it-yourself investors and have lots of money and you'd love to get them as clients. And here you are disparaging what they're doing and what they're thinking. At some level it's like they just don't get it. We're not gonna take it. No, we ain't gonna get it. And they're perfectly nice guys. They come across that way, but they don't seem to realize they've become part of the problem because they're still fighting a war that ended 20 years ago, and the war I'm talking about is whether you should be recommending managed funds, loaded funds, complicated insurance products, other things like that, or you should be recommending index funds, and at one point they were on the managed fund side but they jumped to the other side to recommend index funds. But that was a long time ago, and now the issue is whether they should be charging AUM and whether we can construct better portfolios with just a little more effort, given the wide variety of ETFs we have today that we didn't have back in their day. So if they really want to compete today, they need to up their game and not be fighting the same war that was won 20 years ago. And just one final note on this there are developments that are going in our direction in popular finance and financial media, and I'll direct you to an article in Morningstar that was published this year, where they were looking at the effects of alternative assets on portfolios, and the crash in April in particular, and two of the assets they looked at are common ones we use here GLDM for gold and DBMF for managed futures and they found that by adding those to a portfolio, it improved the portfolio performance and lowered the volatility, and so at the end of the article they have a 60-40 portfolio lined up against some more diversified portfolios that include the alternative assets, and one of those portfolios has, I think, 30% total stock market fund or something similar. I can't remember whether it included international or not. It had 30% in USMV, which is a low volatility fund that is value tilted. Then it had 20% in treasury bonds, 10% in gold and then 10% in managed futures and DBMF and that was the best performer of the ones they were listing there, certainly better than the 60-40 portfolio. I'll link to that in the show notes.

Mostly Uncle Frank:

But it is really obvious today that the data supports what we do here and does not support these overly simplistic things that people keep pushing on the public in an effort to get themselves hired or otherwise. So basically, morningstar says that Don McDonaldald's wrong too. At least with respect to this wrong, I don't know what else to tell you. They'd be much better off simply saying that they haven't studied something and they don't know, rather than either trying to disparage me, like they did a few years ago, or misstating or relying on this appeal to simplicity because they're not helping themselves. In fact, they're digging themselves a bigger hole every time they talk about what I do. I award you no points, and may God have mercy on your soul. So hopefully you at least found that mildly entertaining, since it sounded like you wanted me to entertain you in some way with that.

Voices:

I'm funny how I mean funny, like I'm a clown. I amuse you, I make you laugh.

Mostly Uncle Frank:

And I'm glad you're getting value out of this podcast. It's free no more flying solo. There's no AUM to be charged.

Voices:

You need somebody watching your back at all times.

Mostly Uncle Frank:

And thank you for your email.

Voices:

My school's gonna be out there, mary. Out there for kids who won't have to make the long, hard-growing trip to the top that I made. Out there for kids who want to learn the blood and guts of the broadcasting game. Out there for any kid with dreams and ambitions. And 300 bucks, I'm gonna be rich, mary. I'm going to have all the things that only money can buy Happiness, good health, spiritual fulfillment. And then then one day I'm going to use my money to do something good for my country. I'm going to make a huge contribution to a presidential candidate and buy myself a political appointment Ted Baxter, united States ambassador to Hawaii.

Mostly Uncle Frank:

Last off. Last off of an email from Brady.

Voices:

It's the story of a man named Brady who was busy with three boys of his own.

Mostly Mary:

And Brady writes Hi Frank, I've been listening to your podcast lately and really enjoying it. I learned about it from some Facebook posts in the Choose Fi group.

Voices:

The best Jerry the best.

Mostly Mary:

Our son has Down syndrome, so we are hoping to save enough and apply a risk parity style of maintenance in retirement that we hope will last through his lifetime also. So this is just another thank you message, one of many, I hope. Cheers Brady PS, maybe I should say last off. The sound bites were a little annoying at first, but I have started enjoying them.

Mostly Uncle Frank:

Well, I'm glad you're finding the podcast useful, Brady, and I'm glad it's helping you plan for your son's future. And yes, I do realize that I annoy some people.

Voices:

Talk Amada. Do not implore him for compassion.

Mostly Uncle Frank:

But you know that self-expression to the point of annoying other people is one way to avoid one of the five regrets of the dying talk, amada, do not beg him for forgiveness which is I didn't express myself talk, amada, do not ask him for mercy so I hope you'll take it in that light

Mostly Uncle Frank:

let's face it you can't talk, am out of anything and I don't know what other plans you've come up with besides using a risk parity style portfolio for the long term. One other thing that might be useful in your case that is not useful in most people's cases is a whole life insurance policy, because if you are going to have a dependent for the rest of your whole life, that can make sense, whereas it does not make sense if your children are going to outgrow it and be able to support themselves at some point. Maybe you don't even need that because you've got enough assets stored up or will have enough assets stored up, but if you haven't looked into that or thought about that, that might be something else you'd like to consider. Anyway, I'm glad you're enjoying the podcast and thank you for your email.

Voices:

That's the way they all became the Brady Bunch. The Brady Bunch, the Brady Bunch. That's the way they became the Brady Bunch.

Mostly Uncle Frank:

But now I see our signal is beginning to fade. If you have comments or questions for me, please send them to frankatriskparodyradarcom. That email is frankatriskparodyradarcom. Or you can go to the website, wwwriskparodyradarcom. 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, 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. Oh yeah, yeah, here come the rooster yeah, you know he ain't gonna die.

Voices:

No, you know he ain't gonna die. Die, die, die, oh, oh, oh, oh, oh, oh, oh, oh oh.

Mostly Mary:

Oh, oh, oh, oh, oh, oh, oh, oh, oh oh, I'm sorry. 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.

People on this episode

Head Shot

Frank Vasquez

Host