Episode 405: Treasury Strips Funds As A Form Of Leverage, A Return Stacked Portfolio, The Golden Ratio And Portfolio Reviews As Of March 7, 2025
Mar 9, 2025
Discover the intriguing world of treasury STRIPS funds and how they compare to traditional long-term bonds. Unpack the concept of a 'returned-stacked' portfolio that could revolutionize retirement for young investors. Dive into the performance of the Golden Ratio portfolio and its surprising resilience in volatile markets. Plus, engage in a lively discussion about leveraging investment strategies and the potential risks that come with them. This episode is packed with insights for both novice and seasoned investors!
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volunteer_activism ADVICE
Treasury Strips Funds as Leverage
Consider using ZROZ or GOVZ for long-term treasury bond exposure.
Reduce allocation due to their 1.5 volatility relationship with VGLT/TLT.
insights INSIGHT
Return-Stacked Portfolios for Early Retirement
Return-stacked portfolios, combining leverage with diverse assets, offer higher growth potential with less volatility.
This approach suits younger investors accumulating wealth for early retirement.
volunteer_activism ADVICE
Leverage and Age
Younger investors with more time can handle the risk of leveraged portfolios.
Older investors nearing retirement may prefer less risky approaches.
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In this episode we answer emails from Eli, Garrison and Van. We discuss usig treasury strips ETFs like GOVZ and ZROZ and how they relate to long-term treasury bond funds like TLT and VGLT, a "returned-stacked" portfolio similar to O.P.T.R.A. for accumulation and early retirement and why the Golden Ratio portfolio performs very well on many metrics.
And THEN we our go through our weekly portfolio reviews of the eight sample portfolios you can find at Portfolios | Risk Parity Radio.
(Note to compare the discussed Golden Ratio portfolio to other portfolios, input 21% LCG, 21% SCV, 26% LT bonds, 16% gold, 10% REITs and 6% t-bills as "My Portfolio")
Amusing Unedited AI-Bot Summary:
Dive into the nuanced world of portfolio construction with insights that challenge conventional wisdom about retirement planning and asset allocation. We kick off with an exploration of treasury bond strategies, examining whether STRIPS funds like ZROZ or GOVZ offer "free" 1.5x leverage compared to standard long-term treasury funds. This seemingly technical distinction opens fascinating possibilities for freeing up portfolio space while maintaining effective recession hedging.
The heart of the episode tackles a young investor's audacious plan for early retirement using a leveraged portfolio containing 11% UPRO (3x leveraged S&P 500) alongside small-cap value, treasuries, gold, and managed futures. We dissect the Monte Carlo simulations suggesting sustainable withdrawal rates above 6% and consider whether such "return stacked" portfolios represent the future for younger investors seeking growth with manageable volatility.
Most surprising is our deep dive into the Golden Ratio portfolio, which a listener discovered ranks #1 overall on Portfolio Charts despite containing just 42% stocks. We unpack the five fundamental rules that drive this portfolio's exceptional performance: strategic stock allocation between 40-70%, balanced growth and value exposure, precise treasury bond positioning, thoughtful alternative asset integration, and minimal cash holdings. The revelation that this construction is essentially an expanded 60/40 portfolio demonstrates how traditional wisdom can be enhanced rather than abandoned.
Our weekly portfolio review reveals gold's dominant performance in 2023 (up 10.89%) while small-cap value struggles (down 6.47%), reinforcing the value of thoughtful diversification in navigating today's market landscape. Whether you're planning for early retirement, optimizing your current portfolio, or simply seeking investment wisdom beyond mainstream advice, this episode delivers practical insights for the serious do-it-yourself investor.
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