Risk Parity Radio

This is our weekly portfolio review of the portfolios you can find at https://www.riskparityradio.com/portfoliosWe also compare the Golden Butterfly Portfolio with a Boglehead's Three-Fund Portfolio using the tools at Portfolio Visualizer.  Here is a link to that analysis:https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&mode=1&timePeriod=4&startYear=1972&firstMonth=1&endYear=2020&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&asset1=Gold&allocation1_1=16&asset2=LargeCapGrowth&allocation2_1=14&asset3=SmallCapValue&allocation3_1=14&asset4=LargeCapBlend&asset5=LongTreasury&allocation5_1=26&asset6=TotalBond&asset7=TreasuryBills&allocation7_1=6&asset8=TotalStockMarket&allocation8_2=40&asset9=Commodities&asset10=TotalBond&allocation10_2=40&asset11=ShortTreasury&asset12=IntlStockMarket&allocation12_1=14&allocation12_2=20&asset13=IntermediateTreasury&asset14=REIT&allocation14_1=10The Golden Ratio is a conservative portfolio that is designed for medium to long-term needs.  It is based on the mathematical golden ratio known to the ancients, which is approximately 1.618 and is represented by the Greek letter phi.  It is comprised of five asset classes in seven funds that are weighted by successive applications of the golden ratio:  42% stocks (split into 14% large cap growth (VUG), 14% small cap value (VIOV) and 14% low volatility (USMV)), 26% long-term treasury bonds (TLT), 16% gold (GLDM), 10% REITs (REET) and 6% money market (SPAXX),  Since 1970, it has a compounded annual growth rate (after inflation) of 7.0%, and an expected permanent safe withdrawal rate of 5.0%.Support the show

In this episode, which is Part Two of Two, we continue our discussion from Episode 14 (Part 1), and conclude our analysis bonds as an investment using David Stein's 10 Questions to Master Investing, which are: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?We cover the last five questions in this episode.Here are the links referenced in the episodeThe correlation matrix of bond funds:  https://tinyurl.com/y4x3jynuDan Huffman's Ultimate KI$$ portfolio with treasury bonds:  https://keepinvestingsimplestupid.com/the-ultimate-ki-portfolio-with-bonds/?fbclid=IwAR3UAmCo9zLVFc5LuIjQd3pjX9MtsMbVGlu9OiNQbK7jFS8le7GzXOlLyTMThe Swanson portfolio:  https://keepinvestingsimplestupid.com/the-swanson-portfolio/?fbclid=IwAR17CTGmCrrxsMfyI3mt0wuFBmMJunpiivyBlom62bO2_9C0m5O61aL8C8IThe prospectus for TLT:  https://www.ishares.com/us/library/stream-document?stream=reg&product=ISHT20&shareClass=NA&documentId=925887%7E925803%7E926213%7E925554%7E925655&iframeUrlOverride=%2Fus%2Fliterature%2Fprospectus%2Fp-ishares-20-plus-year-treasury-bond-etf-2-28.pdfThe fact sheet for TLT:  https://www.ishares.com/us/literature/fact-sheet/tlt-ishares-20-year-treasury-bond-etf-fund-fact-sheet-en-us.pdfA chocolate vinegar cake recipe:  https://www.bonappetit.com/test-kitchen/inside-our-kitchen/article/chocolate-vinegar-cake-recipeRisk parity sample portfolios page:  https://www.riskparityradio.com/portfoliosSupport the show

This is our weekly portfolio review of the portfolios you can find at https://www.riskparityradio.com/portfoliosWe also compare the Golden Butterfly Portfolio with a Boglehead's Three-Fund Portfolio using the tools at Portfolio Visualizer.  Here is a link to that analysis:  https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&mode=1&timePeriod=4&startYear=1972&firstMonth=1&endYear=2020&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&asset1=Gold&allocation1_1=20&asset2=LargeCapGrowth&asset3=SmallCapValue&allocation3_1=20&asset4=LargeCapBlend&asset5=LongTreasury&allocation5_1=20&asset6=TotalBond&asset7=TreasuryBills&asset8=TotalStockMarket&allocation8_1=20&allocation8_2=40&asset9=Commodities&asset10=TotalBond&allocation10_2=40&asset11=ShortTreasury&allocation11_1=20&asset12=IntlStockMarket&allocation12_2=20&asset13=IntermediateTreasuryFor reference, the Golden Butterfly Portfolio is the brainchild of Tyler, the founder and operator of the website www.portfoliocharts.com.  It is a conservative portfolio and is comprised of four asset classes in five funds that are equally weighted:  20% total U.S. stock market (VTI), 20% small cap value stocks (VIOV), 20% long-term treasury bonds (TLT), 20% short term treasury bonds (SHY) and 20% gold (GLDM).  Since 1970, it has a compounded annual growth rate (after inflation) of 6.4%, and an expected permanent safe withdrawal rate of 5.3%.Support the show

In this episode, which is Part One of Two, we begin our analysis of bonds as an investment using David Stein's 10 Questions to Master Investing, which are: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?We cover the first five questions in this episode.Here is the link to the correlation matrix referenced in the episode:https://tinyurl.com/y4x3jynuRisk parity sample portfolios page:  https://www.riskparityradio.com/portfoliosSupport the show

This is our weekly portfolio review of the portfolios you can find at https://www.riskparityradio.com/portfoliosWe also discuss the All Seasons Portfolio in a little more depth, including why it may not be the best representative of a risk-parity style portfolio and what it is missing.The All Seasons portfolio is a reference portfolio that is modeled after Ray Dalio's All Weather portfolio and is described in "Money:  Master the Game" by Tony Robbins.  It is a very conservative portfolio that is comprised of four asset classes in five funds, allocated as follows:  30% total U.S. stock market (VTI), 40% long-term treasury bonds (TLT), 15% intermediate-term treasury bonds (VGIT) 7.5% gold (GLDM) and 7.5% commodities (PDBC).  Since 1970, it has a compounded annual growth rate (after inflation) of 5.6%, and an expected permanent safe withdrawal rate of 3.8%.  Here are the links I mentioned to theoretical risk-parity portfolios from the literature:Risk Parity Portfolios:  Efficient Portfolios Through True Diversification:  https://www.panagora.com/assets/PanAgora-Risk-Parity-Portfolios-Efficient-Portfolios-Through-True-Diversification.pdfRisk Parity:  Silver Bullet Or A Bridge Too Far:  https://www.callan.com/wp-content/uploads/2018/04/Chapter-4-from-Managing-MultiAsset-Strategies-2018.pdfSupport the show

In this episode we analyze gold as an investment using David Stein's 10 Questions to Master Investing, which are: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?We also discuss several bits of financial misinformation I heard on podcasts last month about small-cap value stocks and options for improving traditional 60/40 portfolios.Links referenced in the episode:Correlation analysis of small cap value funds versus the total stock market and large cap growth:  https://www.portfoliovisualizer.com/asset-correlations?s=y&symbols=VTSMX%2C+VIGRX%2C+SLYV&timePeriod=2&tradingDays=60&months=36Analysis of gold versus the total stock market since 2005:  https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=1985&firstMonth=1&endYear=2020&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=6.0&relativeDeviation=0.0&showYield=false&reinvestDividends=true&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&symbol1=UPRO&symbol2=TMF&symbol3=PFF&symbol4=VGIT&symbol5=VTI&allocation5_2=100&symbol6=BND&symbol7=REET&symbol8=TLT&symbol9=GLD&allocation9_1=100Portfoliocharts porfolio analyzer (input 100% gold yourself):  https://portfoliocharts.com/portfolio/my-portfolio/Recent Portfolio Charts article about gold, gold miners, drivers and taxes:  https://portfoliocharts.com/2020/08/21/metal-money-and-the-measurable-value-of-gold/Risk parity sample portfolios page:  https://www.riskparityradio.com/portfoliosSupport the show

This is our weekly portfolio review of the portfolios you can find at: https://www.riskparityradio.com/portfoliosWe also discuss the Risk Parity Ultimate Portfolio in depth, including how it was constructed and how it compares with a classic 60/40 retirement portfolio comprised of VTI (60%) and BND (40%).The Risk Parity Ultimate is a conservative portfolio that is designed for medium and long-term needs.  It is comprised of 12 different funds in six different asset classes:  40% stock funds (split into 12.5% VUG, 12.5% VIOV, 6.25% USMV, 6.25% SPLV and 2.5% UPRO), 25% long-term treasury bond funds (split into 15% TLT, 5% EDV and 5% TMF), 12.5% preferred stock funds (PFF), 10% gold (GLDM), 10% REITs (REET) and 2.5% in a stock market volatility tracking fund (VXX).    Here is a link to the analyzer we used to compare the Risk Parity Ultimate Portfolio with a classic 60/40 retirement portfolio:  https://www.portfoliovisualizer.com/backtest-portfolioSupport the show

This is our weekly portfolio review of the portfolios you can find at: https://www.riskparityradio.com/portfoliosWe also discuss the Aggressive Fifty-Fifty Portfolio in depth, including how it was constructed and how it compares with a Total Stock Market portfolio.  Are you interested in an 80% better performance with only slightly more risk than the market?  Then lend your ear.The Aggressive Fifty-Fifty Portfolio is comprised of 33% UPRO, 33% TMF, 17% PFF and 17% VGIT.  Here is a link to the analyzer we used to compare the Aggressive Fifty Portfolio with a Total Stock Market portfolio:  https://www.portfoliovisualizer.com/backtest-portfolioSupport the show

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 To Master Successful Investing and apply it to PFF, an exchange-traded fund of preferred stock.Links:Investopedia Article -- "How Does Preferred Stock Work?":   https://www.investopedia.com/articles/stocks/06/preferredstock.asp#:~:text=Preferreds%20are%20issued%20with%20a,of%20the%20preferred%20shares%20falls.Ishares description of PFF:  https://www.ishares.com/us/products/239826/ishares-us-preferred-stock-etfPortfolio Visualizer's Asset Correlation Analyzer:  https://www.portfoliovisualizer.com/asset-correlations"Money for the Rest of Us:  10 Questions To Master Successful Investing":  https://moneyfortherestofus.com/how-to-invest-book/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?Support the show

This is our weekly portfolio review of the portfolios you can find at: https://www.riskparityradio.com/portfoliosWe also discuss the Accelerated Permanent Portfolio in depth, including how it was constructed and how it compares with A Total Stock Market portfolio.  Are you interested in a 50% better performance with slightly less risk than the market?  Then lend your ear.Here is a link to the analyzer we used to compare the Accelerated Permanent Portfolio with a Total Stock Market portfolio:  https://www.portfoliovisualizer.com/backtest-portfolioSupport the show