Episode 444: Weird 401ks, Portfolio Visualizer Experiences And Leveraged Funds

Risk Parity Radio

In this episode we answer emails from Ian, Bruce and Boone. We discuss dealing with a 401k with limited options, the limitations of the ticker symbol analyzers of Portfolio Visualizer and incorporating individual stocks into a retirement portfolio, and limitations and developments in leveraged ETF land.

Note: No podcast this upcoming weekend as Frank and Mary will be on hiatus. Check out Frank's recent interview on the Mile HI FI podcast for more insights and a scintillating discussion about cooked green vegetables.
Links:
Optimized Portfolio Website: Leverage | Optimized Portfolio

Testfolio Website: testfol.io
Value Stock Geek Website: Security Analysis | Value Stock Geek | Substack
Mile Hi Fi Podcast: You Should Spend More (Probably) - Frank Vasquez | MHFI 279 | Mile High FI Podcast
Breathless Unedited AI-Bot Summary:
Frank Vasquez dives into the practical realities of implementing risk parity principles within common investment constraints in this illuminating Q&A session. Drawing on his wealth of experience, Frank tackles three distinct listener questions that reveal the gap between theoretical investment strategies and their real-world application.
When confronted with a listener's limited 401k options, Frank demonstrates how to make pragmatic choices while staying true to risk-conscious investing principles. Rather than abandoning risk parity altogether, he suggests practical compromises using available funds for the short term, with plans to transition to a more ideal allocation after retirement. This advice brilliantly showcases how financial independence seekers can adapt sophisticated strategies to work within institutional limitations.
The conversation takes a fascinating turn as Frank debunks misleading backtest results from Portfolio Visualizer, explaining why recent market conditions might create dangerously optimistic expectations about individual stock performance. With characteristic humor, he guides listeners away from recency bias and toward sound portfolio construction principles that prioritize asset allocation over security selection.
Perhaps most valuably, Frank explores the complex world of leveraged ETFs, demystifying why products like UPRO and TMF rarely achieve their stated multiplication factors over extended periods. His careful analysis of these sophisticated tools, along with newer innovations like return-stacked ETFs, provides crucial perspective for investors considering these instruments for retirement planning.
Throughout the episode, Frank balances technical expertise with accessibility, using cultural references and humor to make complex concepts digestible. His commitment to evidence-based investing shines through as he consistently reminds listeners to focus on risk management, broad diversification, and long-term thinking rather than chasing recent performance or market timing.
Have questions about implementing risk parity in your own portfolio? Email Frank at [email protected] or visit riskparityradio.com to learn more about building resilient investment strategies that can weather any market environment.

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Chapters

1. Introduction and Episode Overview (00:00:00)

2. Ian's 401k Portfolio Question (00:01:52)

3. Responding to Ian's Financial Independence Plan (00:09:55)

4. Bruce's Question on Individual Stocks (00:17:36)

5. Boone's Question About Leveraged ETFs (00:21:54)

6. Closing Remarks and Announcements (00:25:42)