Risk Parity Radio

In this episode we answer questions from Ben, Todd, and Tom. We discuss how managed futures differ from momentum, differentiating Monte Carlo simulations and why you need to be careful with parameterized simulations, and flexible withdrawal strategies generally and applied to the sample portfolios.
LInks:

QMOM and DBMF comparison and correlations:  testfol.io/analysis?s=5lCK1KCsAsx

Morningstar 2025 State of Retirement Income Report:  Morningstar State_of_Retirement_Income_2025.pdf - Google Drive

Portfolio Charts Annual Returns Calculator:  Annual Returns – Portfolio Charts

Stress Test Comparisons (Golden Butterfly, Golden Ratio, 60/40 and Three Fund Portfolios) Starting in 2000 with 5% withdrawal rate and CPI Inflation:  testfol.io/?s=7jwHMS4FogB

Breathless Unedited AI-Bot Summary:

Ever wondered why a momentum stock fund and a managed futures fund can look similar on the surface yet behave like opposites when markets lurch? We dig into the real differences between equity momentum strategies like QMOM and multi-asset trend programs like DBMF, explaining how managed futures trade across stocks, bonds, commodities, and currencies with the ability to go long and short. That breadth—and the discipline to follow trends over weeks to a year—creates low correlation to traditional portfolios and turns macro chaos into potential opportunity.

From there, we tackle the Monte Carlo confusion that trips up even seasoned planners. We compare historical shuffles that preserve real-world co-movements with parameterized simulations that assume normal distributions and independence—two assumptions markets love to break. You’ll hear why fat tails matter, how “impossible” scenarios sneak into naïve models, and where to find usable inputs without double-counting inflation. We also share a simple framework: use multiple calculators, add historical stress tests starting in rough windows like 1968 or 2000, and look for consistent results across tools before you trust any forecast.

Finally, we turn to retirement withdrawals and the habits that actually hold up. Instead of rigid CPI bumps, we walk through constant-percentage withdrawals, guardrails, and the reality that retiree spending tends to run at CPI minus 1–2 percent outside healthcare. We highlight how flexible rules can raise sustainable withdrawal rates and why resilient portfolio design—think Golden Butterfly or Golden Ratio—can outperform a classic 60/40 under severe sequences. If you’re ready to upgrade your plan with better diversification, better testing, and smarter spending rules, you’ll leave with practical steps you can apply today.

Enjoyed the conversation? Subscribe, leave a review, and share this episode with a friend who’s serious about building a portfolio that survives bad markets. What testing change will you make this week?

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In this episode we answer emails from Sebastian, Mark, and James.  We discuss the purpose of treasury bond allocations, annuity cash flows, and where rentals fit, goofy accounting for taxes, a bridge to social security and answer questions about Testfolio and data sources.  And celebrate Catherine O'hara.

And THEN we our go through our weekly and monthly portfolio reviews of the eight sample portfolios you can find at Portfolios | Risk Parity Radio.

Additional Links:

Father McKenna Center Donation Page:  Donate - Father McKenna Center

Portfolio Charts Article re Accumulation in an RP-style Portfolio:  Minimize Your Miss – Portfolio Charts

Immediate Annuities:  Immediate Annuities - Income Annuity Quote Calculator - ImmediateAnnuities.com

Portfolio Charts Data Sources Page:  Data Sources – Portfolio Charts

Breathless Unedited AI-Bot Summary

Markets threw a curveball this week: gold ripped, then slipped; small cap value popped; long bonds mostly yawned. We use the noise as a lesson in clarity—every asset in a risk parity mix has a job. Treasuries aren’t for yield; they’re for recession insurance and rebalancing power when stocks sag. Gold, managed futures, and value are there to diversify return drivers so you’re not betting your future on a single story.

We dig into a listener’s Golden Ratio allocation with annuitized payouts and single-family rentals. The key is classification. Treat rentals as income if you’re keeping them, or as a future lump sum if you plan to sell—but don’t try to count both the cash flow and the equity for rebalancing. We also tackle the “can I replace treasuries with X?” question, and explain why the only valid substitute must reliably rise when recessions hit. If it won’t go up when growth falls, it isn’t doing the bond job.

From there, we clean up two planning snags that trip up even seasoned DIY investors. First, the tax myth: don’t “tax-adjust” asset values across accounts. Taxes are expenses, not asset haircuts. Optimize location, model annual tax liabilities, and keep the allocation true on the asset side. Second, Social Security modeling: the most practical move is to add it as an inflation-indexed future cash flow in a robust planner. If you need a present value for net worth, price a comparable inflation-adjusted deferred annuity instead of guessing with discount rates. For bridging years before benefits start, a TIPS ladder can unlock higher, earlier spending without warping your core portfolio.

We wrap with a clear performance snapshot and withdrawals across eight sample portfolios, from the classic Golden Butterfly and Golden Ratio to levered experiments and a return-stacked build. The thread through it all is discipline: know each asset’s purpose, keep cash intentional, rebalance when markets hand you spread, and let validated data—not hunches—drive decisions.

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In this episode we answer emails from Gregory, Rick and Graham.  We discuss some more amateur ideas on gold and cash buffers, and modeling managed futures, and we explain why costs and liquidity often matter more than the story you’re told. We share tools, back-tests, and resources that help DIY investors build smarter, calmer portfolios.

Graham's  "Fall Back" instructions for inputs for Testfolio:  "For example, since you typically use DBMF but would want to back test further, one can write DBMFSIM?FB=KMLMSIM which will use DBMF as far back as it can, then fall back to using KMLM. Did you know these can be chained? One can fallback onto commodities beyond the KMLM simulation, like this: DBMFSIM?FB=KMLMSIM?FB=GSGSIM."

Links:

Father McKenna Center Donation Page:  Donate - Father McKenna Center

Three Ingredients:  Three Secret Ingredients of the Most Efficient Portfolios – Portfolio Charts

Video on Hedge Fund Market Wizards:  Jack Schwager presents: 15 Hedge Fund Market Wizards trading secrets & insights in their own words

Infinite Loops Podcast with Cliff Asness:  Surviving the Meme Stock Bubble | Cliff Asness

Damodaran 2026 Critiques of CAPE Ratios:  Aswath Damodaran 2026 Critiques of CAPE Ratios.pdf - Google Drive

Managed Futures/Trend Following Paper for Download:  A Century of Evidence on Trend-Following Investing

Graham's Full House Portfolio:  testfol.io/?s=5cyAAHgo1OH

Breathless Unedited AI-Bot Summary:

What if the biggest edge in your portfolio isn’t a hot strategy but the boring details—costs, liquidity, and the ability to rebalance in seconds? We dig into listener questions on gold, long-term treasuries, cash buffers, and managed futures, and we separate evidence from stories that sound good but quietly erode returns. We look at why an 80 percent stocks and 20 percent gold mix can be fine during accumulation, yet struggle in retiree withdrawals when stocks and gold sometimes fall together. Then we explain how duration from long treasuries can change the drawdown math, especially in recessions.

We also push back on the temptation to chase yield on vaulted physical gold. Once you add spreads, storage, transaction fees, and redemption friction, that “yield” comes at a cost, and you sacrifice the instant liquidity your rebalancing plan needs. Gold ETFs give you precise position sizing and near-zero friction so you can trim, add, and move on. On cash, we keep it blunt: a small buffer for bills makes sense, but large multi-year cash cushions drag safe withdrawal rates over time. Replenish cash by trimming whichever asset has run hot—simple rules, fewer regrets.

For listeners trying to model managed futures, we cover why commodity funds are poor proxies and how to use Testfolio’s fallback feature to extend DBMF or KMLM backtests across regimes. The larger message is pragmatic: stop searching for the perfect allocation and build a naively diversified mix that can handle growth, inflation, and shocks without prediction. Want to see how this plays out? Hit play, take notes, and test a small, real-money experiment in a side account to learn your own behavior.
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In this episode we answer emails from Isaiah and Mike.  We unpack how metrics hijack meaning and show how a diversified, risk-parity approach lets you thrive without chasing perfect scores, review our business model and help Mike tweak his portfolio selections.

And THEN we our go through our weekly portfolio reviews of the eight sample portfolios you can find at Portfolios | Risk Parity Radio.

Links:

Father McKenna Center Donation Page:  Donate - Father McKenna Center

"The Score" Video Summary:  The Score Summary Video.mp4 - Google Drive

"The Score" Slideshow:  The Score Summary Slideshow.pdf - Google Drive

How To Do An Asset Swap Video from Risk Parity Chronicles:  How to Do an Asset Swap

Breathless AI-Bot Summary:  

Numbers promise clarity. But when scores start steering our choices, we trade meaning for metrics—and investing gets harder, not easier. We take you inside a listener-recommended book on gamification and value capture, then connect its insights to practical retirement planning, rebalancing discipline, and the craft of building portfolios that can handle ambiguity.

First, we break down a simple framework to resist metric addiction: practice metric mindfulness, guard “opaque” spaces where you don’t track every moment, and treat numbers as disposable tools. That shift matters for health, career, and especially money. Chasing precision in complex markets leads to false confidence and needless anxiety; aiming for ballparks and using satisficing rules keeps you steady.

From there, we dive into performance and positioning. While large growth stalls, small cap value, gold, commodities, and managed futures are pulling their weight. We share how diversified, risk-parity style allocations harness those uncorrelated trends without prediction—and why selling strength into rebalancing is the quiet edge that compounds over time. You’ll also hear clear, practical guidance on tax location and cash: put growth in Roth accounts, anchor bonds in tax-deferred space, keep cash lean if you have flexible liquidity, and rebalance across accounts at the household level.

Underneath the tickers is a broader life stance. Money, power, and fame are easy to count and easy to chase. Relationships, time autonomy, and meaningful work resist scoring yet deliver the lasting returns. Let numbers serve your purpose, not replace it. If you’re ready to think beyond dashboards and build a portfolio—and a life—built for uncertainty, you’ll feel right at home.

Enjoy the conversation? Follow the show, leave a review, and share it with a friend who needs a saner way to invest.
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In this episode we read a lengthy email missive from our good friend Dr. Bill on reaching financial independence a few years early, designing a risk parity portfolio with an advisor, and facing the emotional fog that follows. We share how to replace optimization with intention and use time, not money, as the measure of value, and touch on these points:

• hitting FI earlier than planned after high savings, growth and a modest windfall
• shifting from global cap weight to risk parity for steadier withdrawals
• choosing fee‑for‑service advice and aligning incentives
• handling FI emotions, identity shifts and one‑more‑year urges
• using four idols as red flags for decisions
• buying happiness through relationships, experiences, time‑buying and generosity
• satisficing small choices to protect energy and attention
• building post‑career structure with short chapters and yearly subtractions
• treating time as the scarce currency, not money

Links:

Father McKenna Center Donation Page:  Donate - Father McKenna Center

Dr. Bill's Interview on Bigger Pockets Money:  The Decumulation Strategy After Hitting Financial Independence | Bill Yount

Kardinal Financial:  Kardinal Financial — Flat Fee & Fee-Only Financial Advisor Bryan Minogue | Madison, WI

Afford Anything Episode #618:  They Ran Out of Money. I Didn’t. Here’s Why.

Breathless Unedited AI-Bot Summary:

The number hits, the accounts say you’re free, and yet the feeling isn’t triumph—it’s fog. We dive into that messy, honest space after financial independence with a candid letter from Dr. Bill, a late starter who reached FI years ahead of schedule. His story opens the door to two challenges at once: how to build a portfolio that steadies withdrawals in uncertain markets, and how to build a life that isn’t ruled by “one more year.”

We start with the money. Risk parity isn’t a magic trick, but it’s a powerful framework for retirees and late starters: diversify by risk, not headlines, so stocks, bonds, and real assets share the load. That balance can dampen drawdowns and reduce sequence risk when you’re finally taking income. We highlight why fee‑for‑service advice beats legacy models, what to expect from a thoughtful plan, and how to avoid turning markets into a source of constant anxiety. Sleep matters as much as return.

Then we face the human side: identity, purpose, and the gravitational pull of more. Using a simple lens—avoid the four idols of money, power, fame, and unhealthy pleasure—we redirect focus to the only currency that compounds after FI: time. We break down practical ways wealth buys happiness through relationships, experiences that spark flow, time‑buying that deletes chores and commutes, and generosity that deepens community. You’ll hear tactical rules to cut over‑optimization, pilot a lighter work schedule, structure short chapters instead of a rigid life plan, and run annual “stop doing” audits to keep your days aligned with what matters.

If you’re nearing FI, newly independent, or stuck in the fog, this conversation offers a clear path forward: design a portfolio for resilience, and design a life for meaning. Subscribe, share with a friend who’s wrestling with “enough,” and leave a review to help more DIY investors find a saner way to retire on purpose.
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