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Risk Parity Radio

Frank Vasquez
Risk Parity Radio
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5 risultati 18
  • Episode 449: A Transition, Personal Finance Is Still Finance, And Fun With Mary And Coaching Stuff
    In this episode we answer emails from Nick, No Name, and Nathan.  We discuss transitioning at 70% to FI, the inherent problems with a lot of psychology-based and convenience-based finance media and personal finance that fails to do the finance part first, Mary's amusement with Frank's ego (don't encourage him), and financial coaching.And we get to hear from Abby at the Father McKenna Center.Links:Father McKenna Center Donation Page:  Donate - Father McKenna CenterShannon's Demon Article:  Unexpected Returns: Shannon's Demon & the Rebalancing Bonus – Portfolio ChartsVideo Interview of Abby:  The Church's View on Homelessness Amid Trump’s Removal Plan in D.C. | EWTN News NightlyIf you have comments or questions, please send them to [email protected] or visit www.riskparityradio.com.Breathless Unedited AI-Bot Summary:When should you transition from a high-equity portfolio to a risk parity approach? This question, posed by a listener at 70% of their FIRE number, launches us into an exploration of timing one of the most critical shifts in an investor's journey.The ideal transition point typically comes at 80% of your target number and about five years from your goal. The logic is straightforward: you want to secure your gains while your portfolio sits near all-time highs, shifting from aggressive growth to stability as you approach financial independence. Your decision should weigh how much you'll continue contributing and your personal risk tolerance.This episode also pulls back the curtain on the troubling state of financial media. Too many "experts" repeat outdated concepts like the "100 minus your age" rule—a relic from the 1990s with no empirical backing. We explore how financial advice has become psychologically driven rather than financially optimized, with advisors choosing strategies that are easy to explain rather than those that deliver optimal results.As Upton Sinclair observed, "It's difficult to get a person to understand something when their salary depends on them not understanding it." This explains why many advisors promote bucket strategies and time segmentation plans despite their inefficiency—they're selling what clients can understand, not what best serves their financial futures.The DIY investor's advantage is clear: we can focus on data first and psychology second. Your financial behaviors should align with your goals—if you want to spend more in retirement, you need a portfolio designed for that purpose, not just psychological tricks to feel comfortable underspending.Want to make better financial decisions? Stop trying to predict the future. Adopt a decade-long perspective instead of obsessing over current conditions. Remember that rebalancing works over time due to Shannon's Demon—the mathematical reality that regularly rebalanced diverse assets outperform in the long run.Support the show
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  • Episode 448: The Problem With Simulated Crystal Balls, Cleveland Rocks, And Portfolio Reviews As Of August 22, 2025
    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 CenterListener Blog Post Describing Risk Parity Concepts And Four Quadrant Model:  15 Uncorrelated Assets | SSiSBridgewater 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 FameBreathless 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
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  • Episode 447: The OG Cowbell, Some Dueling Blog Posts, Spending And Enjoying More With Bill Bengen, And Musings About Gold 'N Bitcoin
    In this episode we answer emails from Evan, James and Brandy.  We discuss the joys of more cowbell from first principles and its origin story, a recent back-and-forth between Karsten and Tyler, the inherent problems with trying to massage data with crystal balls and what it's really revealing about the shortcomings of a basic 75/25 portfolio, some nuggets from Bill Bengen's new book, and some musings about bitcoin and gold.Links:Early Retirement Now Article:  Can we increase the Safe Withdrawal Rate with Small-Cap Value Stocks? – SWR Series Part 62 - Early Retirement NowPortfolio Charts Response:  The Human Complexities of Correcting the Record – Portfolio ChartsBill Bengen's New Book | A Richer Retirement: Supercharging the 4% Rule to Spend More and Enjoy More.Lyn Alden Talk:  Nothing Stops This Train w/ Lyn Alden | Bitcoin 2025RSSX Fund:  ReturnStacked® U.S. Stocks & Gold/Bitcoin ETFBreathless Unedited AI-Bot Summary:What makes a truly optimal retirement portfolio? The conventional wisdom suggesting a simple 75% S&P 500 and 25% bond allocation deserves serious reconsideration according to mounting evidence from multiple sources.Bill Bengen, creator of the original 4% withdrawal rule, has published a groundbreaking new book that challenges long-held assumptions about retirement spending. By incorporating a more diversified approach—including US large, small, mid-size, and micro-cap stocks alongside international equities and treasury bonds—Bengen demonstrates that safe withdrawal rates could potentially reach 4.7% or higher. When accounting for current inflation levels, he suggests rates between 5-5.5% might be sustainable with properly diversified portfolios.The historical data speaks volumes. When examining performance during the worst possible retirement starting years (1929, 1960s, 1972-73, 1999-2000, 2008-09), portfolios with value tilts or alternative assets consistently outperformed simple index-based approaches. This critical finding undermines the narrative that concentration in broad market indexes represents the safest approach for retirees who actually need to spend from their portfolios.We also explore Bitcoin's potential role in modern portfolios, examining its correlation with technology stocks and questioning whether it functions as a true diversifier. Unlike gold, which maintains near-zero correlation with equity markets, Bitcoin increasingly moves in tandem with growth stocks as institutional adoption increases. This distinction matters significantly for investors seeking stability rather than speculation. New financial products like RSSX are emerging to capitalize on this dynamic, combining stocks, gold, and Bitcoin with adjustments based on relative volatility.The fundamental question isn't about maximizing theoretical returns or terminal wealth, but about constructing portfolios that reliably provide income through various market conditions. A well-diversified approach has historically delivered better outcomes for those spending from their portfolios than simple stock/bond splits—aligning with Bengen's philosophy of spending more and enjoying retirement rather than dying with maximum wealth.Looking to refine your retirement strategy? Send your questions to [email protected] or visit riskparityradar.com to join the conversation.Support the show
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  • Episode 446: Managed Futures, International Bond Funds, Risk Parity Chronicles(!) And Portfolio Reviews As Of August 15, 2025
    In this episode we answer emails from Postmaster, John, and Patrick.  We discuss the ins and outs of managed futures, the outs of international bonds and currency funds, and Risk Parity Chronicles.  Reborn!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 Demystifying Managed Futures Article:  Demystifying Managed FuturesDBMF Video (and link to YouTube channel):  DBMF in Four MinutesMorningstar Article re Alternatives:  How ETF Diversifiers Performed During Market Turmoil | MorningstarSummary: “The Misbehavior of Markets”. A Fractal View of Risk, Ruin, and Reward by Benoit MandeRisk Parity Chronicles Shannon's Demon Article:  Shannon's Demon Explainer - by JustinRPC Article re Rebalancings:  Does threshold rebalancing work with leveraged funds?RPC Portfolios:  Overview of the RPC Portfolios - by JustinRPC Subscription Link:  Risk Parity Chronicles | Justin | SubstackBreathless Unedited AI-Bot Summary:Ever wondered how managed futures work and why they're becoming increasingly popular in diversified portfolios? This episode delivers a comprehensive explanation of these powerful but often misunderstood investment vehicles.Managed futures use trend-following strategies (academically called "time series momentum") to profit from price movements across commodities, currencies, interest rates, and equity indexes. Dating back to the 1960s, these strategies challenge efficient market theory by capitalizing on the observation that when prices start moving in a direction, they often continue that trajectory for extended periods.What makes managed futures particularly valuable is their complete lack of correlation with traditional assets like stocks and bonds, combined with their positive skew. Unlike stocks that "go up the stairs and down the elevator," managed futures typically deliver modest returns during normal markets but can produce extraordinary gains during extreme market environments - precisely when conventional investments struggle most. This unique return profile was on full display in 2022 when many managed futures funds gained 20-30% while both stocks and bonds suffered.The democratization of managed futures through ETFs like DBMF, KMLM, and newer offerings from Fidelity and BlackRock has made these institutional-quality strategies accessible to everyday investors at reasonable costs. DBMF, in particular, uses an innovative replication approach to match the performance of the Société Générale CTA Index, functioning somewhat like a Vanguard for the managed futures space.We also discuss why international bond funds make less effective diversifiers than managed futures, share exciting news about the return of Risk Parity Chronicles blog, and review the performance of our eight sample portfolios.Support the show
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  • Episode 445: "Funny How" With Listener Humor, Rebalancing Leveraged Funds, And CTA
    In this episode we answer two emails from John and one from Pete.  We revel in John's summary of the podcast from its humble beginnings to its current form, his sailboat analogy to portfolio construction and his highly humorous questions.  We also discuss two common but conflicting investor biases: rejecting assets because they've performed poorly recently or because they've performed too well recently and discuss rebalancing rules for leveraged funds and the newer managed futures fund CTA.Links:Listener Blog Post Describing Risk Parity Concepts:  15 Uncorrelated Assets | SSiSPete's Testfolio Rebalancing Analyses:  testfol.io/?s=k6HKskV4lsyTestfolio CTA Analysis:  testfol.io/analysis?s=9WzkwrOUa0hBreathless Unedited AI-Bot Summary:The evolution of Risk Parity Radio takes center stage as we dive into a fascinating listener journey through 445 episodes of financial wisdom and soundbite mayhem. From our humble COVID-project beginnings to developing signature elements like standardized soundbites, cowbell references, and charitable partnerships, this episode offers a rare look at how the podcast has grown alongside its community.A brilliant sailing analogy perfectly captures the essence of risk parity investing: just as skilled sailors can make forward progress in various wind conditions by using the right sails, diversified portfolios can navigate different economic environments by including assets that perform well under specific conditions. This metaphor elegantly explains why we emphasize creating all-weather portfolios rather than attempting to predict market movements.Gold's dramatic turnaround provides a perfect case study in investment humility. In late 2022, some listeners questioned including gold, calling it a "waste of space" that wasn't fulfilling its purpose. Fast forward to 2025, and gold delivered an impressive 28% compound annual growth rate. This example highlights a common cognitive trap: rejecting unfamiliar assets either because they've performed poorly recently ("must be done forever") or because they've performed too well ("must be too high to invest in now").We also explore technical questions about rebalancing strategies for portfolios containing leveraged ETFs and observations about managed futures funds, demonstrating how complex portfolio management requires thoughtful consideration beyond simple formulas.Whether you're a longtime listener appreciating the walk down memory lane or a newcomer curious about our approach to investing, this episode delivers valuable insights about portfolio construction while maintaining our characteristic blend of education and entertainment. Ready to dive deeper? Subscribe now and join our community of thoughtful DIY investors!Support the show
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Risk Parity Radio is a podcast about investing located at www.riskparityradio.com. RPR explores risk-parity style portfolios comprised of uncorrelated or negatively correlated asset classes -- stocks, selected bonds, gold, managed futures, and other easily accessible fund options for the DIY investor. The goal is to construct portfolios that are robust and can be drawn down on in perpetuity, and to maximize projected Safe Withdrawal Rates regardless of projected overall returns.
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