Risk Parity Radio

In this episode we discuss the rebalancings of four of the Sample Portfolios at Portfolios | Risk Parity Radio, which occurred on July 21, 2021.  We also adjusted the allocations of the Risk Parity Ultimate Portfolio to make it more diverse.

And we answer emails from Rob and Colin to boot, about considerations in making portfolio  adjustments and what to do if you end up with too much retirement money.

And celebrate crossing 100,000 downloads!

Links:

Comparison of Original Risk Parity Ultimate and New Risk Parity Ultimate:  Backtest Portfolio Asset Allocation (portfoliovisualizer.com)

Correlation Matrix for New Risk Parity Ultimate:  Asset Correlations (portfoliovisualizer.com)

Support the show

In this episode we start by addressing emails from Eric, Gareth, Jeff and Randy about transitioning with a high savings rate, data sources at portfoliovisualizer and portfoliocharts, Chinese A shares ETFs, and capital gains tax issues.  Then we do our weekly portfolio reviews of the seven sample portfolios at Portfolios | Risk Parity Radio. 

After that we have some fun smashing some crystal balls discussed in a CNBC article and talk about more rebalancing.  Yeah, baby, yeah!

Links:

Portfolio Visualizer Data Sources:  Frequently Asked Questions (portfoliovisualizer.com)

Portfolio Charts Data Sources:  Search Results for “data sources” – Portfolio Charts

KBA Correlation Analysis:  Asset Correlations (portfoliovisualizer.com)

CNBC Article re Crystal Ball Failures:  The mystifying bond market behavior could last all summer (cnbc.com)

Optimized Rebalancing Article:  Optimal Rebalancing – Time Horizons Vs Tolerance Bands (kitces.com)

Support the show

In this episode we discuss an investigation and penalties assessed against TIAA for malfeasance in managing client accounts and then we answer emails from Adam, Brian, Andy, and Bennie.  We discuss short-term draw-down strategies, volatility and correlation theory, margin accounts and leverage funds, and automated investing.

RANT subject article:  TIAA to Pay $97M for Pressuring Investors Into Rollovers | ThinkAdvisor

And here is the rest of the text of Brian's email:

"Below is a simple numbers example I created at the time that allowed it to click for me, I share it in case there are others like me that have a hard time allowing the words of others dissuade them from the math that's going on in their head.

It might be helpful because it holds return and volatility constant to isolate the impacts of correlation. Cheers.

The return of Asset A has four observations: -10%, +30%, +15%, +5%

 If we drop this into a spreadsheet it has an average return of +10% and a ~17% standard deviation.

 Asset B and C are exactly the same as Asset A in all ways, with the only difference being the order of their returns.

Asset B = +30%, -10%, +5%, +15%
Asset C = +15%, + 5%, +30%, -10%

If you didn't immediately notice, when you drop these into a spreadsheet you will see that Asset A & B have a -1 correlation, and Asset A & C have a 0 correlation."

Now where it gets interesting is suppose over these four periods you had two portfolios, one that was 50/50 A&B and another that was 50/50 A&C. Calculate the average return and standard deviation for these two portfolios.

 You'll see that both have a +10% average return just like the original assets, however that standard deviation goes to zero for the negatively correlated assets and only drops ~5 points for the zero correlated assets."

Support the show

In this episode, we answer emails from Jon, Toby, Dale and Andrew about intermediate portfolios, adjustments to gold in portfolios, value investing vs. broader diversification, market timing, financial coaching and how to incorporate I-Bonds.

Then we go to our weekly portfolio reviews of the seven sample portfolios you can find at Portfolios | Risk Parity Radio

And we drop a few crystal balls on the pavement of reality and see what happens.

Link to Choose FI Sample Portfolios Page:  M1 Pies: Manage and Optimize Your Portfolio Like a Pro (choosefi.com)

Support the show

In this episode we answer emails from Peter, Darren and Paddi about sequence of return risk of Risk Parity style portfolios versus cash-drag portfolios, correlations among U.K. and European ETFs, gilts, Vanguard ISA selections, U.S. versus global portfolios, glide paths, the Macro-Allocation principle, valuing real estate in a retirement portfolio, an Amex privileged assets account, the Golden Ratio portfolio and gold ETFs.

And the Atlanta Highway.

Links:

Portfolio Charts Heat Map:  HEAT MAP – Portfolio Charts

Unicorn Bay Correlation Analyzer That Works With UCITS ETFs:  Asset Correlations for Free | Unicorn Bay

Support the show

In this episode we answer emails form Eric, Chas, Rick, Mike and Grant about Canadian stuff, using margin, transition timing, and inverse stock funds.  And THEN we do our weekly and monthly portfolio reviews of the SEVEN sample portfolios at Portfolios | Risk Parity Radio.

Additional links:

Portfolio Charts Fund Finder:  FUND FINDER – Portfolio Charts

Portfolio Charts Retirement Spending Calculator:  RETIREMENT SPENDING – Portfolio Charts

Interview of Me on a Scottish podcast:  ‎Superb Diamond Range: Frank Vasquez of Risk Parity Radio (The Financial Series) | #49 | Risk Parity Investing | podcast | superb diamond range on Apple Podcasts

Support the show

In this episode we introduce a new sample portfolio on our portfolios page at Portfolios | Risk Parity Radio.  The Levered Golden Ratio is a leveraged portfolio that contains stocks, treasury bonds, gold, a REIT, a volatility fund and a smidgen of crypto-related funds.  It will be the seventh sample risk-parity style portfolio.

Additional Links:

Portfolio Visualizer Backtest:  Backtest Portfolio Asset Allocation (portfoliovisualizer.com)

Correlation Matrix:  Asset Correlations (portfoliovisualizer.com)

Seeking Alpha Article Re Risk Parity Portfolios with NTSX and SWAN:  Risk Parity Portfolio: Double-Digit Annual Returns, Inflation and Recession-Proof | Seeking Alpha

Support the show

In this episode we answer emails from Andrew and Karen, Nick, Chris and Brandon.  We discuss ETF expenses, an article about treasuries that misuses data in favor of a Crystal Ball,  the Holy Grail principle, vectors and volatility, rebalancing and Vanguard mutual funds.

Here are the links:

Referenced Article:  iShares ETF TLT: No Reason To Buy Long-Term Treasuries At Rock-Bottom Yields | Seeking Alpha

2021 Correlation Analysis of TLT, SPY and VIOV:  Asset Correlations (portfoliovisualizer.com)

Bond Convexity Article:  High Profits at Low Rates: The Benefits of Bond Convexity – Portfolio Charts

Ray Dalio Explains the Holy Grail Principle:  Ray Dalio breaks down his "Holy Grail" - YouTube

Michael Kitces Optimized Rebalancing:  Optimal Rebalancing – Time Horizons Vs Tolerance Bands (kitces.com)

Support the show

In this episode we thank Mathew G for his support, answer emails from EJ, Greg, Nathan, Scott and David and do our weekly portfolio reviews of the sample portfolios you can find at Portfolios | Risk Parity Radio.  We discuss EDV, alternatives to gold in the Golden Butterfly, my investing history, accumulation portfolios and the portfolio shift at retirement.

Errata:  I said "1.5%" when I meant "1.5 times" in the discussion of EDV and TLT and the insurance ETF mentioned is KBWP.

Additional links:

The Father McKenna Center:  Home - Father McKenna Center

Sample Portfolios at Portfolio Charts:  Portfolios – Portfolio Charts

Michael Kitces Phases of Investing Article:   The Four Phases Of Saving For Retirement (kitces.com)

Morningstar Diversification Landscape Report:  Diversification_Landscape_033021v2.pdf (morningstar.com)

Support the show

In this episode we answer emails from  Randy, Mike, Ed, Javen, Boone, Jamie and Glenn.  We address the sample portfolio distribution rules, long-term treasury bonds and crystal balls, a proposed portfolio, the ETF BTAL, rebalancing rules, volatility funds and cheaper alternatives to TLT.

Extra-added bonus link:  Optimal Rebalancing – Time Horizons Vs Tolerance Bands (kitces.com)

Support the show