In this episode we answer emails from Philip, David and Keith. We discuss an aggressive risk-parity style portfolio (without leverage), review QREARX, which we analyzed in Episode 81, and how the value factor is determined by various funds and indexes.

Links:

Father McKenna Center Donation Page: Donate - Father McKenna Center

Portfolio Matrix Tool at Portfolio Charts: Portfolio Matrix – Portfolio Charts

The Weird Portfolio: Weird Portfolio – Portfolio Charts

Morningstar Page for QREARX: QREARX – TIAA Real Estate Account Fund Stock Price | Morningstar

Amusing Unedited AI-Bot Summary:

Ready to rethink your investment strategies? Discover how pushing the boundaries with aggressive risk parity portfolios can transform your financial growth. Inspired by listener Philip's question, we unravel the potential of a 70% equity allocation, showing you why it might be your ticket to a prosperous retirement with a longer horizon or increased growth needs. Learn how to artfully allocate the remaining 30% across assets like large-cap growth, small-cap value, long-term treasuries, gold, and managed futures for optimal diversification. Plus, get the scoop on our informal meetup at the Economy Conference—it's where finance meets fun.

In this episode, we're not just about strategies but interactions. As we sift through listener emails, we spotlight financial strategies and fund analysis, tackling topics from the intriguing weird portfolio to critiques of funds like QREARX. Unearth the complexities of value stock categorization and challenge the purported benefits of illiquidity premiums in outdated financial structures. As travel plans call for a brief hiatus, we invite you to keep the conversation alive through emails and our website. Tune in for insights, engagement, and a touch of humor designed to entertain and inform our valued listeners.

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In this episode we answer emails from Richard, Robert and Jacob. We discuss Richard's generosity and excellent example as a role model, an ill-conceived and biased critique of small cap value allocations, why you probably should not use popular personal finance gurus as retirement role models due to their workaholism and hoarding behaviors, and why having too much cash or very short term bonds in a portfolio is not a good idea.

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 Donation Page: Donate - Father McKenna Center

ERN Small Cap Value Article of 2 December 2024: Small-Cap Value Stocks: Diversification or Di-WORSE-fication? - Early Retirement Now

First Merriman Response to SCV Article: The True Story About Small Cap Value

Supplemental Merriman Responses To SCV Article: Why should small cap value make higher returns?

Testfolio Comparison Of IWN vs. IJS vs. VISVX vs. DFSVX vs VFINX Since July 2000: https://testfol.io/analysis?s=gkqbgk7mzka

Shannon's Demon Article Re Math Of Diversification: Unexpected Returns: Shannon's Demon & the Rebalancing Bonus – Portfolio Charts

ERN Safe Withdrawal Rate Post of 15 April 2016: Pros and cons of different withdrawal rate rules - Early Retirement Now

Michael Batnick Article re Shifting In CAPE Ratio: Stocks Are More Expensive Than They Used to Be

Rick Ferri Interview: Show Us Your Portfolio: Rick Ferri | Why a Simple Approach Beats 90% of the Pros

Core 4 Portfolios: Process – Core-4

Rob Berger Interview (with transcript): Bogleheads on Investing with Rob Berger – Episode 48 - The John C. Bogle Center for Financial Literacy

Interview of Michael Kitces Re Problems With TIPS Ladders: Michael Kitces: How Higher Yields Affect Asset Allocation and Retirement Planning | Morningstar

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In this frolic and detour from our regularly scheduled programming, we create a "Reference Episode" by employing two AI podcasters to summarize the information contained in Episodes 1, 3, 5, 7 and 9, which are some of the foundational episodes for this podcast. BTW, choose PFFV instead of PFF if you are interested in that. But the point was to teach you how to analyze investments.

Here are (most of) the original links and notes from those episodes.

Episode 1:

In this episode we answer five basic questions:

1. What is Risk Parity Radio?

2. Who is this podcast for?

3. Gee willikers, what does "Risk Parity" mean anyway, Uncle Frank?

4. How will will make this real and actionable for you?

5. How can you get involved?

Episode 3:

In this episode we explore the ancient origins of asset allocation and diversification.

Bava Metzia 42a: https://steinsaltz.org/daf/bavametzia42/

70-year History of Investment Consulting: https://seekingalpha.com/article/4357226-70-year-history-of-investment-consulting-1950minus-2020

Episode 5:

In this follow-up to Episode 3, we explore the development of risk-parity style investing from the 1980s to the present day.

The All Weather Strategy Paper: Bridgewater Paper 2009.12 AW Info Pack.doc (granicus.com)

Risk Parity Portfolios: Efficient Portfolios Through True Diversification: https://www.panagora.com/assets/PanAgora-Risk-Parity-Portfolios-Efficient-Portfolios-Through-True-Diversification.pdf

Risk Parity: Silver Bullet Or A Bridge Too Far: chapter-4-from-managing-multiasset-strategies-2018.pdf (callan.com)

Episode 7:

In this episode we discuss the three basic principles are (1) the Holy Grail Principle; (2) the Macro-Allocation Principle; and (3) the Simplicity Principle.

March draw-downs for professional risk-parity style portfolios: https://www.markovprocesses.com/blog/risk-parity-funds-in-the-coronavirus-market-rout/

Ray Dalio explains the Holy Grail principle of risk-parity style investing: https://www.youtube.com/watch?v=Nu4lHaSh7D4

Episode 9:

In this episode we discuss how NOT to choose investments and how to employ a good process to analyze an investment. We adopt the process of David Stein's 10 Questions and apply it to an exchange-traded fund of preferred stocks.

Ishares description of PFF: https://www.ishares.com/us/products/239826/ishares-us-preferred-stock-etf

The 10 Questions To Ask When Considering An Investment:
1. What is it?
2. Is it an investment, a speculation, or a gamble?
3. What is the upside?
4. What is the downside?
5. Who is on the other side of the trade?
6. What is the investment vehicle?
7. What does it take to be successful?
8. Who is getting a cut?
9. How does it impact your portfolio?
10. Should you invest?

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In this episode, we celebrate Ground Hog Day and answer emails from Ron, Jay and Pete. We discuss the value of giving and the new McKenna Man portfolio that Ron is constructing, preferred shares vs. REITs, holding gold, what financial advisors really think about their hoarding clients but can't say in front of them but I will, and Pete's risk parity style portfolio and his 6-year old's potato chip gambling problem.

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 Donation Page: Donate - Father McKenna Center

Dennis And The McKenna Center Team: Our Team - Father McKenna Center

Andy Panko Interview of Eric Niergarth:
Retirement planner chat, with Eric Niergarth from Retirement Roadmap Financial Planning

Pete's Fund and Correlation Analysis:
https://testfol.io/analysis?s=4Qh1xI3JKMl

Amusing Unedited AI-Bot Summary:

Unlock the secrets of alternative investments and discover a fresh perspective on asset allocation with Risk Parity Radio. Ever wondered how creative financial strategies can transform charitable giving? Listen in as we highlight Ron, a dedicated listener, who proposes an innovative approach to support the Father McKenna Center in Washington, D.C. We'll dissect his all-equity portfolio idea, and explore an alternative inspired by the Rick Ferri Core 4 portfolio, tailored for an 8% withdrawal rate. This episode promises to inspire with its blend of community-focused financial creativity and solid investment insights.

Curiosity piqued? Learn why PFFV trumps PFF in cost-effectiveness and tax benefits, especially for those in higher tax brackets. The episode tackles listener questions head-on, like the VNQ versus PFF debate, and shines a light on the essential role of gold in diversification. A personal tale unfolds as I recount my unexpected removal from Andy Pankow's Facebook group, sparking a discussion on the dynamics of online financial communities. This engaging narrative provides a nuanced view of maintaining a steady allocation amidst the ebb and flow of digital interactions.

Explore the lighter side of finance as we analyze the performance of various portfolios in a quirky review of January's market highlights. With imaginative requests, like a breakfast order for the "bacon man," and the intriguing concept of combining Bitcoin and gold in an ETF, this episode offers both entertainment and education. From the conservative All Seasons to the experimental Golden Ratio, each portfolio reveals unique allocations and outcomes. Join us on this enlightening journey through investment strategies, and uncover the unexpected joys of charitable giving through creative financial planning.

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In this episode we answer emails from George, Kyle and Andy. We discuss whether to prioritize DBMF or VGLT (for tax location purposes) in a traditional retirement account, weighing limited choices for small cap funds in a 457, Vanguard's new short-term bond funds and dealing with brokerages' cya requirements for investing in particular funds.

Links:

Father McKenna Center Donation Page: Donate - Father McKenna Center

Vanguard Fund Announcement: Vanguard Expands Fixed Income Lineup with New Actively Managed Bond ETF | Vanguard

Amusing Unedited AI-Bot Summary:

Unlock the secrets to optimizing your investment portfolio and navigate the complex world of power dynamics in our latest podcast episode. Have you ever wondered whether choosing a higher dividend yield or balancing fund fees could impact your financial future? Join us as we guide George through the decision-making process between VGLT and DBMF, ultimately landing on DBMF for its tax-efficient benefits. Meanwhile, Kyle finds himself at a crossroads between a high-fee small-cap value fund and a more budget-friendly Vanguard option. Our advice? Balance is key to managing costs and maintaining a diverse portfolio. And don’t miss our take on Vanguard's new actively managed short-term bond fund—could it be the missing piece in your investment strategy?

Transitioning from the tangible to the philosophical, we embark on a thought-provoking exploration of submission and power through our metaphorical dialogue with "the daughters." Here, we challenge the conventional wisdom of power structures and the humility required to navigate them. Using vivid metaphors and evocative imagery, we invite listeners to question their own roles within these paradigms and consider how such dynamics manifest in financial and legal realms. This episode promises a blend of practical investment insights with deeper musings on the human condition, leaving you with plenty to ponder as we draw parallels between finance and life’s broader themes.

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In this episode we answer emails from Bones, Paul and Justin. We discuss small cap value funds and their underlying indexes, an odd book from an unreliable source and an alternative ETF called CAOS.

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

Additional Links:

Bankruptcy Case Involving David R. Webb: In re Verus Investment Management, LLC, 344 B.R. 536 | Casetext Search + Citator

CAOS Main Page: CAOS ETF - Alpha Architect ETFs

CAOS Fact Sheet: Factsheet_CAOS.pdf

Amusing Unedited AI-Bot Summary:

What if your investments could outpace market trends with a simple shift in strategy? On Risk Parity Radio, we promise to unravel the complexities of asset allocation, specifically tailored for the DIY investor. We kick off with a deep dive into the world of small-cap value funds, dissecting the evolution of Vanguard’s funds alongside iShares' stalwart, IJS. The competition heats up with new entrants like Avantis and Dimensional, particularly the rising star AVUV. With insights from Paul Merriman's research, we explore why diversifying into small-cap value can be a game-changer for your portfolio, no matter which fund you choose.

Ever wondered if an investment product could thrive in both stable and volatile markets? Enter Wes Gray’s Alpha Architect product, Chaos, which challenges traditional investing with tools like protective puts and box spreads. We bring you a thorough examination of this intriguing product and a candid discussion about its potential and risks. Our analysis extends to sample portfolios, showcasing the power of diversification with assets ranging from the S&P 500 to commodities. We wrap up by contrasting popular portfolios like the All Seasons and Golden Butterfly with the experimental Accelerated Permanent Portfolio, making sure you are equipped with cutting-edge strategies to optimize your investments.

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In this episode we answer emails from Lucas, Martijn, and Alexi (a/k/a "the Dude"). We discuss futures contracts and the efforts required to use them, being careful about backtests and interpreting them, and more musings on Big Mo momentum.

Links:

Father McKenna Center Donation Page: Donate - Father McKenna Center

Martijn's Link: testfol.io/?s=aoTgPMqhGQA

Portfolio Matrix (Start Date Sensitivity): Portfolio Matrix – Portfolio Charts

The Dude's First Link: Asset Correlations

The Dude's Second Link: testfol.io/?s=aKrdp1uCnEu

The Dude's Third Link: testfol.io/?s=kUK5djVum0A

Amusing Unedited AI-Bot Summary:

Unlock the secrets of futures trading and leveraged ETFs as we tackle complex investment strategies, inspired by a thought-provoking listener email from Lucas. Discover how you can master the intricacies of futures contracts, from rolling them over to navigating market conditions like backwardation and contango, without getting overwhelmed. Learn why leveraged ETFs were created to simplify leverage acquisition, and get insider recommendations on the best platforms to embark on futures trading. Martain, another keen listener, challenges us with a debate on straightforward 1.5 times equities strategy versus modern portfolio theory, leading to a rich discussion on investment approaches.

Venture further into the world of leveraged risk parity portfolios and how hedge funds are using them to optimize risk-reward profiles during the accumulation phase. Comparing these advanced strategies to more straightforward leveraged S&P portfolios, we emphasize the essential role of historical data in shaping robust investment decisions. Be wary of the allure of short-term gains as we dissect the role of momentum funds in risk parity portfolios and the significance of diversification in securing stable outcomes. Through listener insights and expert analysis, this episode is a treasure trove for anyone seeking to broaden their understanding of strategic investing.

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In this episode we answer emails from Paul (from Canada), Gary, Ben and Alexi (a/k/a "the Dude"). We discuss finding funds for Canadians, podcast outlet alternatives, the similarities between S&P 500, total market and large cap growth funds and how they can perform the same role in a diversified portfolio, and a gnarly Alpha Exchange podcast about leveraged funds (which the Dude and I both misidentified as "Alpha Architect".) And the Creedence vs. Tina Turner versions of "Proud Mary."

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

Additional Links:

Portfolio Charts Golden Butterfly page: Golden Butterfly Portfolio – Portfolio Charts

Asset Correlations (VTI and VOO and large cap growth): https://testfol.io/analysis?s=63nAL9efMMg

Golden Butterfly With Total Market vs. Large Cap Growth: https://testfol.io/?s=h0ZxYu0txcP

Alpha Exchange Podcast on Leveraged Funds: Michael Green, CFA, Portfolio Manager, Chief Strategist, Simplify Asset Management | Alpha Exchange

Amusing Undedited AI-Bot Summary:

Unlock the secrets of successful portfolio diversification on this episode of Risk Parity Radio. Whether you're navigating the Canadian stock market maze or strategizing with U.S. index funds, our conversation will equip you with the tools to conquer currency conversion challenges and leverage international market access through platforms like Interactive Brokers. We share strategies to optimize your asset mix by combining large cap growth with small cap value funds for a truly diversified and resilient portfolio.

Ever wondered how to differentiate between total market funds and large cap growth funds? Our discussion sheds light on their high correlation and recent performance trends, urging investors to focus on macro allocation principles and informed bond choices rather than getting lost in the minutiae of fund selection. Discover how pairing assets with varying volatilities and correlations can lead to a more robust investment strategy that withstands market turbulence.

Dive into the world of leveraged ETFs and learn about the risks lurking behind these financial instruments. We dissect insights from the Alpha Exchange podcast, stressing the importance of liquidity in minimizing systemic risk. As we share our weekly portfolio reviews, you’ll gain valuable insights into market performance and the art of strategic rebalancing. From conservative to dynamic portfolios, we offer a comprehensive look at maintaining diverse asset allocations to optimize growth and stability. Reach out with your questions and explore our website for more resources on mastering the investment landscape.

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