March 16, 2025

Episode 407: Multi-Asset Funds Like GDE, "Life Cycle" Econ-Models, Historical Interest Rate Musings And Portfolio Reviews As Of March 14, 2025

40 minutes

In this episode we answer emails from Dustin, MyContactInfo, and Mark. We discuss the ETF GDE and combo return stacked funds generally, why you probably don't want to use economists' "life cycle model" for personal finance planning due to its unrealistic underlying assumptions, and whether we could use historical high interest rates to create market timing and allocation signals between stocks and bonds.

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:

Article About BTGD: New ETF Offers Dual Exposure to Bitcoin, Gold | etf.com

Optimized Portfolios Site: Optimized Portfolio - Investing and Personal Finance

Rational Reminder Podcast Re Lifecycle Model: Ben Mathew: The Lifecycle Model vs. Safe Withdrawal Rates (SWR) | Rational Reminder 340

Debunking Economics: Debunking Economics - Revised and Expanded Edition: The Naked Emperor Dethroned?: Keen, Steve: 8601406370678: Amazon.com: Books

Amusing Unedited AI-Bot Summary:

When market turbulence strikes, diversification proves its worth. This week, as the S&P 500 tumbles nearly 4% year-to-date and the NASDAQ falls over 6%, gold emerges as the standout performer—surging past $3,000 an ounce with returns exceeding 13%. These dramatic market movements create a perfect real-world demonstration of why uncorrelated assets matter in portfolio construction.

We dive deep into the limitations of economic models for personal financial planning, examining why the Life Cycle Model—while logically sound in theory—falls apart when confronted with life's inherent unpredictability. The assumption that we can accurately forecast our lifespans, relationships, and changing preferences decades in advance reveals a fundamental disconnect between theoretical economics and practical personal finance.

A thought-provoking listener question explores whether allocation strategies should shift dramatically if interest rates ever reach levels where risk-free returns match or exceed historical stock returns. Drawing on lessons from the early 1980s when Treasury yields exceeded 15%, we consider why developing investment rules based on rare historical anomalies rarely serves investors well.

The weekly portfolio review shows mixed performance across our eight sample portfolios, with those holding significant gold allocations weathering the current volatility far better than stock-heavy alternatives. We also examine rebalancing decisions for the Levered Golden Ratio portfolio, making thoughtful adjustments to improve its value tilt and diversification characteristics.

Whether you're curious about combining assets in hybrid funds, wondering how managed futures perform during market corrections, or simply wanting to see how different portfolio strategies are navigating current conditions, this episode delivers practical insights for the thoughtful, independent investor. Join us for this exploration of asset allocation in uncertain times.