090 - The 60/40 Investing Strategy No Longer Works... Do This Instead

Chances are that you’ve heard about the 60/40 portfolio strategy. If not, it’s a classic way to balance your investments and mitigate the higher risk of stocks in market downturns. 

History shows that this method has worked pretty good, but with everything else in life, things change. 

The results of the last 4 years show that the balance has been disrupted. Bonds no longer go up when stocks go down or vice versa. They actually move in the same direction. 

Luckily, Tim has been seeing a pattern with certain assets in our portfolios. One that’ll take the place of bonds in this strategy and actually seems to perform better than bonds ever did. And we're going to share it with you.

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Transcript

Welcome to Roaming Returns, a podcast about generating a passive income with dividend stocks so you can secure your finances and liberate your life. Chances are that you've heard about the 60-40 portfolio strategy. If not, it's a classic way to balance your investments and mitigate the higher risk of stocks in market downturns.History shows that this method has worked pretty good, but with everything else in life, things change. The results of the last four years show that this balance has been disrupted. Bonds no longer go up when stocks go down or vice versa.They actually move in the same direction. Luckily, Tim has been seeing a pattern with certain assets in our portfolios, one that'll take the place of bonds in this strategy and actually seems to perform better than bonds ever did. And we want to share it with you.This week, hey! Hey, guys! So, last week, we mentioned what had been kicking around in the portfolio, what I call a 60-40 2.0. If you're not familiar, there's a 60-40 investing strategy currently, and if you are aware of the 60-40 investing strategy, you're probably like, what are you talking about, Tim? There's already a 60-40 rule or investing strategy. It doesn't work so good. It worked for years and years and years.It was kind of like the 4% thing that they were touting for like 30 years, and then it just wasn't feasible. But the actual 60-40, there was a disturbance in the force, I guess, is the best way to describe it. From the pandemic.Yeah. Prior to COVID, it was doing all right, and then after COVID, it stopped doing all right. So, it's something to just wait and see, but even with the 60-40, though, it wasn't generating enough income for me, so that's when I came up with the 60-40 2.0, and we'll go into it.But the first thing we're going to look at is the 60-40 investing strategy that everyone knows about, or if you don't know about, most people know about. Well, you'll be familiar with it once we start talking about it. Basically, you allocate 60% of your investments into equities or stocks and 40% to bonds.And this is, if you've talked to an expert or financial guru about retirement, this is one of the things they will try to pimp you on is the 60-40. The reason why is because stocks, they can provide high returns. But they're higher risk.Higher risk with higher volatility, whereas bonds, they provide more stable income, and they can help protect your portfolio or your brokerage account whenever stock prices fall, in theory. And the 60-40 rule, it's often recommended because most people, when they're reaching the retirement age, they have a moderate to low risk tolerance, and it's like, basically, when stocks go up, bonds go down. But stocks go up more often than bonds, so that's why it's 60% stocks, 40% bonds.And then when stocks go down, bonds go up, and they alleviate some of the loss whenever stocks are going down, like in a down period. Yeah, so the whole point of it is to basically keep your portfolio value from crashing 100% on stocks. The bonds kind of keep it not as bad as it would be.So if the market drops, say, 30%, your portfolio would probably only drop like 20%, 15%, 15% to 20%, maybe, something like that, by comparison. Yeah, like Harm just said, the reason that they've implemented it through the years is because they found, I think it started in the 70s, maybe the 60s, but it was a long time ago, and they found that through the years that when stocks were volatile, bonds actually were a calming factor that kept the portfolio at least close to your initial principle. And that's the thing.People tend to panic when their principle's going down, which we've talked about ad nauseum with the whole... The reason I looked into it originally wasn't so much from the volatility aspect, it was from the... I wanted there to be a stable floor. Like if you're in bonds, they're not really going to do much. So if you invest 40% of your portfolio in bonds, it's not really going to do much price-wise.It might fluctuate a little bit, but you have a stable floor. And then you have 60% on top of that, where if you're in growth stocks, you're going to have ridiculous returns in the growth stocks. If you're in dividend stocks, you're going to have your dividends coming in, but you have a floor that your portfolio shouldn't fall below the 40% if you get the right bonds.Now what a lot of people will do is they'll actually just invest in bond funds, but they actually don't keep that as their 40% for some whatever reason. You mean they don't consider that part of their 40%? Yeah, we were in PDI and DSU, and they don't include those as part of their 40% in bonds. They include that.Really? Yeah. Doesn't that seem kind of counterintuitive? I thought so. Okay.I tweaked it. Tweaked it like a nipple. He's got boobies on the brain.Boobies. The actual returns of the 60-40, I went back as far as I could. The actual returns, they vary so much from year to year and from market climate to market climate.When we mean market climate to market climate, we were just in a low-rate market climate, and prior to that, we were in a higher-rate market climate, but then we were in a financial bubble market climate and a real estate bubble market climate, and then there was the dot com bubble. There were lots of different eras or portions of the years going back that provided a good look at what the 60-40 was doing. For a long time, it was actually delivering pretty well.What was found is when the interest rates were high, the 60-40 was delivering better returns, but when the interest rates were low, the 60-40 returns were much lower than they were in a high-rate environment. You have to understand where interest rates are going to determine whether or not to set up a 60-40 portfolio, but we don't know this year. This year, who the hell knows? They could go down.They could go up. This year is going to be crazy. I was just going to say, Tim was so much more confident about this until the last week because some crazy stuff has been going down with Trump doing all sorts of stuff.I was actually going to ask you, maybe this is a good time to just drop this little market update. The market was so crazy today from just announcement and then retraction. The market was really, really volatile.Last Monday, it was super volatile. We're recording this on, what's the date, 2-3. Last Monday was like 1-27 or whatever when the deep seek came out, deep seek through all sorts of shit in the market.Last Monday sucked. This Monday sucked because on Saturday, there was tariffs implemented and then everyone was freaking out, which I don't understand why because we all knew the tariffs were coming. I don't know why the market freaked out like it did, but anyway, he retracted the Mexican tariffs first and the market recovered a little bit and then he retracted the Canadian tariffs later in the afternoon.The market almost recovered. I was looking at the futures. The futures for tomorrow are up a lot.The experts fucked the pooch on this one because there's no way the market should be that volatile for something that we've known was coming. Yeah, that volatility is crazy. If you think about the reason the market's volatile is because we're trying to project in the future unknown things.We've known about this for months now. There's no reason to have a knee-jerk reaction like what transpired today over this. Well, I think this is at least the second big time that this has happened, so I imagine your pattern sense is going off that it kind of seems like there's either going to be – how I say this? If Trump isn't directly in cahoots with people for like cash grabs, other people are aware of what's happening in their cash grabbing and benefiting from the economic volatility.There was a lot of billionaires short of the market because they knew that the tariffs were coming. Yeah, so I could totally see that being a thing. The other thing you have to keep in mind is – and this is another really good time to bring up the whole stop-loss situation.I would put money that a shit ton of stop-losses got triggered from the massive drop that happened today. Wouldn't you think? Yes. Speaking of stop-losses, Marc Lichtenfeld, he's part of the Oxford Club who I subscribe to for a year.He's really like – what he does with them differs from what other people do. Other people like – say you buy a stock for $100, you just put a $75 stop-loss in. They just do a 25% stop-loss.So if it falls to 75, they sell it. What Lichtenfeld does is he actually – he waits until the close. So if you had a $75 limit and the stock closed at like 74.50 or something like that, he'll tell – like you're supposed to the next morning just put a order in to sell your stuff.So his is actually – you wait until the close of business for the stop-loss and that's actually way smarter than like most people. They just put a stop-loss in because if something – say like UPS the other day had a crappy earnings and you had a stop-loss at like 115, but it shot down to like 109 right away, you would have actually stopped out at like 109, not 115, so you would have lost $6 more. But what Marc Lichtenfeld is doing is he's saying, okay, just ignore the day and then look at the end of the day and at the end of the day, if it's below your 25% stop-loss, sell it the next morning and that's actually – that's the right way to do that.If you're doing stop-losses. Especially when there's usually a rebound because there's like that whiplash effect that happens. But he says even like – so even with the rebound, like she said, say like UPS for example, it went down to like 106, 107, something like that, like right away, it would have triggered the stop-loss.Then the next day, it shot up. So you actually could have – you're still getting out of it because it triggered the stop-loss. But you're going to get out of it on the up for the following day.So you would have sold it like 112 or something like that. So you actually see – do you see the like 112 or the like 112, 113, whatever it would have been. So you wouldn't have lost as much as the 106.Yeah, the automatic triggers. So if you're going to do stop-losses, make sure you use the end of the day price and do it manually and then go. But like I don't like them because there's – We buy when stuff drops.Most of the trading is computer-based algorithm and they just do stop-losses when they do stop-losses and then that's just what it is. Like you're not actually getting the best price. The other big key is the round dollar mark.People tend to trade at rounded dollars. So if you're going like five cents up or down, if you're selling, you should actually be five cents below the dollar and if you're buying, you should be five cents above it because when it hits down, like there's too much people selling and you likely won't get filled type deal. But that's stop-losses but that was just the market update like all hell broke loose and it's going to be like that for like the rest of the year.So if you don't like volatility, just sit it out. Yeah. So Tim had a lot more enthusiasm going into the 60-40 thing until basically the shit hit the fan I guess this week, last week.Oh, I'm fine with my 60-40 2.0 but the actual 60-40 like – Yes, exactly. So it's like we're looking at what the experts were saying and – Because the actual 60-40 requires you to monitor interest rates. Which who the hell knows.And we have no idea. None. Like we said last – in December last year, the tariffs if implemented could actually exasperate inflation and causing interest rates to actually go up and so like this year, who knows.But he's talking about wanting interest rates to go down. I will say that they are like most of the experts are now only factoring in one interest rate cut in 2025 and there's a lot of them that think there will be zero because of the tariffs. Because the tariffs, if you're not familiar how they work, like whenever – he slapped 10% tariff on the China.So anytime – any business in America imports anything from China, the importing business has to pay a 10% tariff. And then when – so to get it here, then once they get it here, that 10% is going to go on to the customers because they're not going to take a loss on it. You're going to pass that on? So there's going to be less money for the customers to buy stuff and because he's trying to establish an American first economy, what they did find out is like every time there was tariffs, the American companies basically pushed their price up right below what you could get and stuff with the tariffs.Like say you're importing something from Temu, well what the American company will do, Amazon in this case, would push their price up right below the Timu price. So the prices are going to go up. So the companies are going to do that.So the consumer is going to get just pillaged with – Ass pounded. Pillaged with the tariffs. Yeah, pretty much.But when the customer gets pillaged, they're not going to spend as much and when they don't spend as much, it's going to hurt the margins and then – so like earnings are going to be pretty bad. The GDP growth is going to be pretty bad. Yeah, this is going to be a very interesting – So it's going to be a very volatile year for that regard.So if you don't like volatility, I don't know what to tell you other than – THTA. If you don't like volatility, you shouldn't be in the stock market in years like this because it's going to be whipsaw all the time. That's just what it is.OK. Back to my thesis on the 60-40. The second aspect of the 60-40 that I found through all the research is inflation makes the returns differ.Higher inflation is bad and lower inflation was really good for the 60-40 portfolio. So ideally, you're looking for a high interest rate, low inflation period to have the best possible return for the 60-40, but the high interest rate and the low inflation is kind of an oxymoron because if it's high interest, it's going to be high inflation. If it's low interest, it's going to be low inflation.So you're going to have to pick which side – we were trying to do a teeter-totter or see-saw. Yeah. This is supposed to be.That didn't work out. Teeter-totter. Because if you have high inflation, you're going to have high rates and if you have low inflation, you're going to have low rates.So you have to pick which side of the teeter-totter you think is going to benefit your 60-40. So there's a lot of stuff that goes into it that most people don't want to deal with. If you don't take my word for it, I was looking at the data.Annual returns of the 60-40 portfolio from 1928 through 2022 was 8.1% annually. So every year if you had a 60-40 portfolio, you're generating 8.1% on average. Now obviously there was years when it was below zero and there's other years it was like 15% but your average rate was 8.1. More recently from 1981 to 2021 when rates and inflation were under control, the 60-40 returned on average 10.5% per year.So because we had lower rates but lower inflation, we saw an increase of 2.4% per year for that 40-year block. So that all looks good. From January 22nd through December 23rd, the 60-40 returned negative 4.5%. So the difference being that we had higher inflation with higher interest rates and that just wrecked the 60-40.Once inflation and interest rates improved, the 60-40 did as well. In 2024, the 60-40 returned on average 19.7% because we had middle of the pack interest rates but we had like lowering inflation. So that was really good.We actually, with our portfolio, we didn't keep up with that. What I thought here, you just could have indexed funded up and had better returns for like the 80 years it went over. 10.5% since 1957.If you just did an index fund from 1957 to the current, you'd be making 10.5% per year. So it actually takes out all of the watching the volatility and all of the guesswork and everything. You literally just put it in an index fund and make 10.5 but you know how I feel about that.The rebalancing. Index funds don't generate any income and our whole point is we want income so that we can quit our job and use the income to do what the hell we want to do and that's the huge drawback with the index fund. But that's why the 60-40 is actually slightly better just because the dividend component of the bonds or excuse me, the coupon payment or whatever you call it.Interest payments? I forget what they're called. Interest. They're interest payments.Cat is misbehaving. He like beats the crap out of my cabinets in the bathroom. So that's just like a historical context.Historically, you're better to actually do an index fund than the 60-40 if it's from a retirement perspective. Literally, if you're in your 30s and you just want to do the simplest thing, just do an index fund as opposed to the 60-40 because you're going to actually generate more with less headache. Like I said, 2024 was a 19.7 for the 60-40 and I think the index fund was a 22% or whatever.Had you gotten an S&P index fund, it would have been 22 so you still would have done better in 2024 with an index fund. So if you want the least possible effort involved, just do an index fund as opposed to the 60-40. If your financial advisors tell you you should do a 60-40 for your retirement, tell them to pounce on because the index fund is better.Anyway, we're in an environment currently where we have no idea what's going to happen to interest rates or inflation. There's any report you read, the interest rates can go down and inflation can go down but you can find two or three articles by pretty well known authors that do this for like economists who do this for a living that say the interest rates are going to have to go up because inflation is going to go up. Whatever the case may be, however you feel about it, it's irrelevant so you just basically have to think about like, okay, if I'm going to do a 60-40 portfolio, how am I going to address the issue of interest rates and inflation? That's all you have to like basically focus on when it comes to a 60-40 is interest rates and inflation.Okay, the reason that I brought this up though because the more and more research I did, the more and more I started to see that the 40 part of the equation, the bond portion was becoming much less reliable than it used to be. Remember, at the very beginning, we said since the pandemic, prior to COVID, the 40 part of this equation was pretty reliable, pretty consistent. You can figure out where it's going.Since COVID though, bonds are actually not doing what they've historically done when stocks are down. It used to be stocks were down, bonds were up. Remember, we said the seesaw, stocks are down, bonds are up.Okay, stocks are up, bonds are down. What I found and what a lot of the authors I was looking at found, the larger the down day for stocks, it used to be the higher the up day for bonds. So let's say the stocks were down 3% or 4% in a really bad day and then bonds went up like 1% to 2%. That's why the people had the 60-40 because that's what it did, it mitigated this 4% loss with a 2% gain. However, since 2020, when stocks are down, bonds are also down. Yeah, talk about breaking system right there.And it's since 2020 to even now, like the days the stocks go down, most bonds go down. That's not how it's supposed to work. The whole premise of this stupid investing thing is stocks are down, bonds are up.So basically, if anybody's still preaching this old 60-40, they're clearly not looking at the data. I don't agree with the strategy anymore because of inflation, because of that, it's like I said, it's been four years now. If it was just a one-off, I'd think, okay, it's a one-off, but it's been four years now and we're starting the fifth and today, the market was down 2%, 1%, 4% and bonds were down like 1%. So like today, even during this, it happened again. It's just not just a one-off. If it was to say 2020, it was like that and then 2021, it was like that and it started to recover, then that's fine.I wouldn't even approach the subject matter. But 2020 was like that, 2021 was like that, 2022, which was a bad year for stocks, should have been a really good year for bonds and it was a really, really, really, really bad year for bonds. That was the one that said, okay, wait a minute, then we might be on to something here.What's happening and the resource after resource is actually, a lot of research showed this, was because the interest rates were where they were and inflation, it was like the perfect storm. It just was not beneficial to be in that and we're still in that environment where inflation needs to be, I think, around the 2%, the 2% target for this investing strategy to work. Anytime it's above 2%, it seems bonds perform really, really poorly and whoever you look at, inflation is either between 2.4, 2.8, 3.6, it depends where you look at.What's the Fed's target? Isn't it usually like three? Two. Two, that's their target. Yeah, 2%. Why the hell did they freaking lower interest rates again? That's what I've been saying all along. There was a time when inflation was at like nine or 10%, I understand that, but they should have just had the rates stay where they were so that that 9% could have came all the way down to like 2.2, 2.1 before they started. I thought they were targeting three.No. If they're targeting two, that's even worse. Wow, they're jackasses.I found that anytime the interest rates were above 3%, the 60-40 didn't perform as well. Right now, we're in an environment where we have a 3% inflation and we have a 4.5% interest rate. The 60-40 is not going to work until those two numbers get more in line.It has to be interest three or below, inflation around 2%. That's going to be, I think, it's going to be at least four or five years before we get to that perfect balance on the teeter-totter where everything will be good for the 60-40 to work like it's supposed to. That was a brief, elongated introduction into what the 60-40 ... An elongated brief.What I found, it's not reliable for me and I don't like not getting very much income. Yeah, the income's the big one. I had to figure out a better way to get a better return with less volatility on the 40 part of the 60-40.Duh. If you read anything, they all preach the same thing, diversify. Diversification is the best way to combat uncertainty.That's true to a point. We've gone overboard with our portfolios because we have 30-some stocks in the one and almost 40 in the other. That's because Tim likes to tinker and I can't take that away from him because I like to tinker.Diversification is the best way to do that. If you had 15 to 20, that should be good. Like I said, I had to find out how to diversify best so the 60 did what it was supposed to with the growth potential and the 40 did what it was supposed to that when the stocks were down a lot, this 40 shouldn't be down at all.It should actually be up. It should maintain your value of portfolio. It was a very difficult balance.What I came up with, we're calling the 60-40 2.0, it's returning more than the traditional 60-40 and it offers more income and defense. We're income investors as you know and I really want to make income so to combat the inflation and interest rate problems but still make income. That was a huge thing that I had to figure out.What I came up with was this. I have 60% of our portfolio in stocks and 40% in treasuries, bonds, ETFs, closed-ended funds, preferred shares, etc. They don't bring that up when they're talking about the 60-40.They literally just focus on the bond portion. If you do the treasuries with the bonds, with ETFs, closed-ended funds and preferred shares, it kind of all balances out where there's not a lot of volatility and it doesn't really move too much. That's fascinating.I can't wait to see what you got here. We're going to pull up the portfolio in a minute so you can see what we have going on but the ETFs, closed-ended funds, preferreds offer very nice dividends. So I actually like to have at least 15% of the 40% in ETFs and 15% of the 40% in closed-ended funds and then I like to have 5% in preferred and 5% in treasuries and bonds.What I'm seeing with this new 60-40 2.0 breakdown is much lower down days when the stock market is down and then when I had investments in treasuries and bonds just by themselves. For whatever reason, I don't know why, the closed-ended funds and the ETFs that we're in are doing really good. When the market's down, they're kind of not.They kind of go up as opposed to when we were in bond funds, the bond fund would go down. When the treasuries, I guess the 5-year treasury and the 10-year treasuries all over the place is based on the day, I don't know. Logically, it makes no sense but I don't know.I think what happened is I actually have a pretty good inclination of what the macro trends are so even when the market's down, there's going to be sectors that are going to perform well for whatever reason the market's down. We have an ETF that deals just specifically in AI. Last Monday when AI happened, it went down but it didn't go down.If you look at the AI stocks, they were down 10%, 12%, 15% and our AI ETF was only down like 0.7%. What else does it hold? That's it. It just holds AI companies. They must have some gems in there that apparently didn't get tanked.It holds 25 AI. See, and that's a diversified thing within one asset which is really nice. We really like closed-ended funds and the ETFs for that reason.I think because I understand the macro trends, I understand that energy is going to be good and AI is going to be good this year and cryptocurrency is going to be good this year even though crypto took a huge dookie this weekend. Yeah, but it just literally had a giant fluctuation just like the market did. Because logically, ETFs and closed-ended funds should tank as well as the days when the market tanked.Yeah, they should follow stocks. It's not. It may very well be that I have the best closed-ended funds and ETFs ever known to man.I highly doubt that. That would be absolutely hilarious. We don't have good luck in that regard.I have tech closed-ended funds and ETFs as well as energy closed-ended funds and ETFs. Most of my ETFs are Yieldmax and now I know how people feel about Yieldmax. But dude, if you follow what we said when it comes to investing in Yieldmax where basically your first rule of thumb when you invest in the Yieldmax is get your principal back so you're not losing any money.Get your initial money out. From there, just let it do what it's going to do. For example, YMAX, I'm up 22% in YMAX.I'm up 9% in ULTY even though it's down like 30%. Microsoft, the Yieldmax were up 45%. The Tesla one were up 62%. The NVIDIA one were up over 200%. The Coinbase one were up 125%. The Amazon one were almost up 100%.My tech ETFs, JEPQ and NBXG are up 65% and 114%. So 65% in JEPQ, 114% in NBXG. My energy closed-ended funds, USLY and SRV are up 7% and 5%. And my S&P covered call, FEPI is up 15%. My AI covered call, AIPI is up 5% but we just got into AIPI, that's going to be up more than that. I'm not saying that all to boast, I'm just saying if you keep up with the macro trends and invest accordingly into what the macro trends are going to be for that year or the following two years, your closed-ended funds and ETFs mirror what the macro trends are going to be, you should smash it because it doesn't matter when the market goes down because most of the time when the market goes down, AI stocks are still up or energy stocks are still up.That's how you mitigate the risk in this new 60-40 thing, you kind of have to know what's going on. I do want to ask you, TSLY, the Tesla Yield Max, isn't that the one that like crushed everybody? Yeah. And we're up 62%.But we got out. I know we got out. And then we got back in when it actually was like down and the trend, the macro flipped over.Right. But I just wanted to point that out because the Tesla one really killed a lot of people. In fairness, that one's lucky because it was an experiment.I got the same day I got in the TSLY, I got in the CRSH, which is the long in Tesla and the short in Tesla. Oh, so that was the only reason you got in? Yeah. Oh, so you just, again, tinkering.I don't know what it is about Tim and tinkering, but it works, very nice. I don't like to have more than 40% of my portfolio in the closed-ended funds, the ETFs, preferred treasuries and bonds, et cetera, blah, blah, blah. I literally just took the 60-40 rule and tweaked it to meet my standards.Now, you might have different standards. You might want to say a 60-20-20 rule, which would be 60% equities, 20% in these closed-ended funds and ETFs and everything, and then 20% just in bonds. Like whatever, you have to tweak it to fit your personal investing thing.But I really like what we got going on. Last year, for example, it's working out. Last year was the best year for the traditional 60-40 portfolio since 1999, so 25 years.It had its best year last year, and the return was 19.7. Our 60-40 returned about 15, but it wasn't set up like I wanted it yet. So this year will be a better barometer, better measuring stick, how it's going to compare to the 60-40. We only lost out by like ... We were above 15.It was like 15.3, so we missed out by like 4%. But we generate a shit ton of income. Which I think more than makes up for that 4%. So even with the portfolio not being set up the way I wanted it to, the way I was trying to get it to morph it to how I want it to be, we only underperformed the traditional 60-40 by less than 4.5%, and that was the best it had been in 25 years. So like if it's just an average year, we're gonna smash it like an average 8.7 percent year Our portfolio will smash the 6040 looks like double. It'll be double if not more It'll be at least it'll be at least like 50% better Well in the other aspect to about bonds and we've said this a bunch of times is like they're a pain in the ass so what I'm gonna do is I'm I will We'll probably revisit the 6040 in Probably January next year. We'll do like a silly the traditional 6040 performed this and here How are 6040 2.0 performed and we'll like it'll it won't be a whole Podcast probably probably not I'll just be like a blurb at the beginning of a podcast or something like that But I'm going to keep tracking this and I'll probably like it if you're part of the email list I probably will be updating you on How it's going compared to probably every couple months of our every quarter.I'll be like with a 6040 Why don't we just do it when we do the dividends we can I don't know if that's too much extra work Now we're gonna go into our Schwabie account and we're gonna look at what we have the beauty of Schwab. I don't know I know Beauty of Schwab Vanguard doesn't have it. I know Wells Fargo doesn't have it.I know Robin Hood doesn't have it. I know Stuff I doesn't have it The beauty of Schwab is that it'll tell you did you write down there where it says the total at total equity 60 point two Two percent. Oh right here.So we have sixty point two two of our portfolio is in. Oh, that's so nice Anything for you we have thirty nine point six two percent of our portfolio in ETFs and closing the funds and Other other fun stuff. Now.I know it doesn't look like we have a lot in Treasuries But we do if you look at that THTA we have whatever that is one and a half percent in Treasuries right now I'm working to build that up and then we have one point eight in the I bit and we have One point eight and why BTC that's a new experiment that I'm running I want to see which one does better Because why BTC actually holds I bit in its account when it pays you a dividend whereas I beat I bit just holds Bitcoin But it doesn't pay you anything So I'm gonna see which one's performing better and then I'm gonna nix whichever ones so wait We actually have one that doesn't pay anything. Yep experiment time Wow, I'm a little mind boggled right now that you're doing something that doesn't actually have a payout Okay, but like if you look okay, this is our this is our 40 This is our 40. You'll see we have FEPI, which is the it's a Rex ETF Tim's got a hard-on for these Rex on next week's the actually the email that comes out on Friday I go into detail about FEPI, AIPI and CPI, which are the three Rex funds But this Rex fund here just holds like innovative tech companies We have four point three in that that one's been banging like these numbers.These numbers are all fucked up Don't like these numbers the right they don't matter Like I have the better numbers in my thing AIPI, which is one I was just mentioning them, which is a yeah, which is a macro trend It holds 25 companies that are like awesome in the AI field. So that's why we're in that one USLY is a I want to say it's right. I know it's oil, but I want to say it's like a exchange Traded note, but I'm not sure But that's oil one It basically goes off the USO thing and you make a lot of money on it You'd look over there.You see this. It's paying eighty three point seventeen Percent yield. Are you serious? That's what that number is right here.Yeah Whoa, can you see the first two there FEPI only pays 26 and then a IPI only pays 36 Then why max we're rocking it? Why max to and where that's making 40% and that's like I'm telling like of all the yield maxes people always talk about like The one stock specific ones whether it's Amazon or whether it's Tesla or whether it's a new video or whatever Like so I'm finding that why max is just killing it with with these weekly dividends You know, you get a dividend every freaking Friday Yeah and if you heard us being questionable about that like we thought it was gonna do something similar to a different and what I found like What I found is that it actually is Paying more in dividends per month than it did when it was doing a monthly payment. So it's pretty nice There's JEPQ. That one's just it's basically my way of Having an index fund that covers the Nasdaq.It does a cover call on the Nasdaq So you're not gonna have as much appreciation when the Nasdaq index fund goes up, but you're getting a nine with a 10% dividend So I'm cool with that BME That's when we brought up last year because the first Trump term this this particular sector the health the health science sector under Trump Exploded it did really well So we got in the BME because it's paying 8% dividend and it's something that I know is gonna go up when you're trying Anything black rock and the 2025 they're calling for small caps to just be kicking kicking ass so RYLD is the small cap cover it like it's basically if you had an index fund that covered the Small caps. That's what RYLD is again You're gonna have the upside on the small caps, but you're getting a 13 or 12 percent dividend So I'm okay with that MBXG is a closed-ended fund that just kicks ass when it comes to tech 9% return We're up so much in that one Like I wear up so much in that one that I've sold off. I think all of it and that's all profit I know JEPQ. Oh, so we have no money invested. Yeah, JEPQ. We have no money invested.I'm pretty sure MBXG We have no money invested in so that that strategy we talked about when it comes to the yield maxes I've actually applied to the rest of the 40% So anytime I I can I pull out as much as I can so I get my initial investment out of all these So it's literally all just whatever and you see over here. We have the did the reinvest tab here all these ones to say Yes, they're reinvesting because we're where we're at. Whereas the ones up top scroll top again real quick Sorry cats are running up top.You see I have no on the US of Y We're getting that in cash and we have we're getting the Y max and cash I'm using that cash to actually pay for other ones up here in the 60% one So I'm taking the the cash from my 40 and I'm putting into my 60 To strengthen my 60 positions other than the icon. Just ignore I was just gonna say I know you're not putting it in icon. No, no Just ignore that one medical property.The thing is gonna turn around. But anyway, let's go down SRV is one that I'm super super super high on It's the midstream one and it like they basically hold all the best and midstream companies It's a close-knit fund and it's paying a 12% 12% per year So you get a 1% dividend every month to hold midstream if you're familiar with midstream That is you have the upstream where they do like all the digging to get the oil out And then the midstream is where they like Refine it and then they transport it to the downstream the downstream is where they like distribute to the gas stations the midstream I believe is gonna be huge under this this year this year's energy is gonna explode But I think the midstream is gonna be where it explodes more. So again, you see a specific Macro trend that we have in our 40 why BTC again? We've been over crypto so many times that's going to be Another macro trend.I didn't realize that was paying 46% Holy. Yeah, that's another one that pays out weekly That's a roundhill ETF that pays out weekly What it does is it actually invest in the I bit the one below it and it writes cover calls in the I bit Which is smart. That's why I'm kind of liking these two together.We were in For the longest time we were in bit out, but bit O does future contracts, which is fine there. It's good We made a shit ton of money. We made like 250% on bit.Oh, but I'm more interested in this one here actually holds Bitcoin It's a black rock one that holds Bitcoin This one above it is writing cover calls on the black rock one that's holding Bitcoin So you're getting money from the cover calls So when Bitcoin goes up in theory this I bit should go up and when Bitcoin goes or Bitcoin goes up I bet you go up and then you should be making more money with your cover calls on the I bet So that's my theory on that one. The next one ULTY is probably the the next one that I'm gonna sell It's really difficult. It's paying out 80% But yeah, why would you want to sell that I just do explain? I don't like where it's at.It gets dividends like decreased for like the last four months Uh, I mean that is what they do is they write options on all sorts like like they have it's a it's an actively Managed ETF. Oh, is this the one where they do randoms? Yeah, they pick out random companies to write options on so there's no predictability to it We're the other ones. Yeah, okay, then we see the Amazon one which rocks ass that one's been super awesome rocks 24% yeah, that one's like probably like if you were gonna set up basically you could I think you could set up a yield max a portfolio only with Amazon Coinbase Microsoft Nvidia and just make a shit ton of money and it wouldn't deviate that much from where it's at But that's me.All the next one is the one I found that we talked to you about. It's the sofa Replaced all of our bullet shares Bull chairs if you remember they were It's called so fine hands. They were paying like six to seven percent and they were holding treasuries and It really blows my mind that this is a treasury stock that pays out twelve percent yield like that's insane Treasuries and I forget what else they're holding.They're holding something else. Where's THTA basically holds Treasuries and that had then it writes options on the S&P so like bull like 75 or 80 percent of their ETF is just treasuries And then they write options using the treasuries as leverage on the S&P 500 So I believe the S&P is gonna be up this year So it makes sense to actually invest in a place. This is where I'm storing all my cash, right? I was just gonna say if you missed it in the last couple episodes or you're not on the emails we have got rid of bullet shares because that used to be our Cash fund and we moved over to THTA because it pays more and the fact that it's got the treasuries kind of sweet Then we have Coney we're doing an experiment now that we have so much money in Coney We've talked about a few times but like the theory and the CONY one is Coinbase is gonna be up this year So this one should be fine My one Microsoft is the next one.It's another single stock yieldmax ETF and that one's just been awesome Do you say? 25% yield on that one. The next one is a bond fund PHT, so I'm actually trying to get more money into that but it's very difficult because I don't want to go over 40% in the ETFs and Everything else I got closing the funds down here. So it's very difficult to put more money into that But it only yields 8% so it's like I might sell it.I don't know I haven't decided yet. That was a heck of a 180 weirdo and then the video awesome NVDY and the last two are part of a Experiment I'm running to see what's going on NVDY pays about 53 percent yield and then the last two that Tim just said we've mentioned a little bit ago TSLY long CRSH the long of Tesla the options trading and the short So I'm running I'm running a experiment that because if my experiment performs like I'm think it's going to this is freaking ingenious I swear, I'm going to actually pick up the Nvidia short and the Coney short So basically what happens is the price value changes all over the place But it should in theory balance out and all the while you're making the dividends on both sides So you're actually doubling the cash flow while minimizing the like I said Like most people look at that sale the game losses off But that's not accurate because that's whenever it reinvests it like reinvested a higher price. Yeah, you can't look at those numbers You have to go None of that really matters.I can't tell you I put 500 into that one So it's at 295 or 296. We lost 204, but I put 500 into the Tesla and when it's at 712 So we made 212 So we're up six dollars plus we connect we've collected dividends every month in both of those for like four or five months now So that's it so far. It's been pretty good.We'll see how that continues But that is I imagine that'll balance out long run. I'm hoping yeah, that's my plan because it does we're gonna have I Have a sneaky suspicion that that is Hell yeah to the evolution of this. This is amazing Gil max or the shit, but that's how well That's how I'm addressing the 40% part to actually so I've mitigated risks there So I have the short and the long of that one.Yeah, I have I know that I know that techs gonna be good So I have one in the video one in Microsoft up here. I have MB MBXG And I have JEPQ which are all tech stocks and we have the fang and the FEPI up there I know AI is gonna be pretty banging. So I have the AI covered I know energy is gonna be pretty banging So I have the SRV and the USOI so like if you know the macro trends you can mitigate the risk because I quite I'm saying the days that the markets down a lot.This is actually doing better than the market Like if you go up top there's days where like these this top part gets killed again These prices aren't even accurate because like they're covering the aftermarket stuff and there's a bunch of stuff going on when I looked earlier so you could turn that off when I looked earlier our equities were down like $712 and our ETF close ended funds the 40 part the 40 part was down 400 some dollars so even on a really bad crappy day for the equities are 40% actually was less than that. That's what I want. I want I actually want it to be up so we're working on that, but this actually performs better than the 60-40.I mean it didn't last year. But again, that was the best the best year It's had in four and when did you come up with the 60-40 like last week? No, I came up with it last year You hadn't mentioned it to me. Well, I don't mention everything to you. Mmm I'm surprised by that because he comes over and just babbles his face off every relationship has secret That's hilarious I've really liked it I think but you have to cater like this 40% to your liking like if you don't want like all these yield maxes you could Actually, you just put money in the THTA which is treasuries Yeah, you probably could not do all the yield maxes and just buy Y max and then just add more to so like like It's literally like if you remember when you were young or I know when I was young I go to the library and I check out all those choose your own adventure books I love those That's what the 40% is the 40% of your portfolio is choose your own adventure 60% you should have some bearing like your idea what you want to do with your portfolio when it comes to like what what? equities you want to hold whether it be BDC's whether it be energy stocks whether it be mortgage REITs or Just REITs in general like however, you want to do it. That's up to you 60% we've covered in ad nauseum. You'd like it.You basically you want to get make sure you get into About you want to check your valuation metrics get in a good price has dividends growing with etc So that all should be you should have your 60 set up right or 75 or 80 Whatever you have going on the 40% to choose your adventure You figure you plug in how you want you want your portfolio to look based on what you think the markets going to do You do have to do a little bit of research. I know that kind of sucks it might be easier just to have that you could could just go get a Bond index if you wanted to and just have 40% of your portfolio in a bond index again up to you You can do a Treasury index But that is the 60 40 2.0 I like it and like I said, I'll keep you guys updated It literally is just a theory that I had in my head and then I started looking to it I was like, well the 60 40 is not working So like how am I going to improve this because we used to have a bunch of bonds down here and CDs and shit Well, they're out of favor right now. It's you aren't they? They are but we used to have them and they weren't doing like Hey squat I wasn't making anything.Yeah, and and they're cumbersome Same if we pull the Vanguard we'd see that like the bonds were down like the one that your mom has three bonds and they Were all down like two or three percent today So I mean not that we really care so much about the value component, but still they shouldn't be doing that the one thing I have to mention I didn't top it touch at the top is days like today when all hell broke loose in the morning and then It was crazy volatile in the afternoon it is best to do what I did today I literally said I know it's gonna be a shit day so I literally I saw not in my blanket and I went to play basketball and I Listed some weights and then I just ran on the treadmill and rode the exercise bike. Yes He was looking at futures last night Just get the hell away from it all because you don't want to be making emotionally rash decisions Because that's how you lose it's going to happen Probably a lot this year a lot this year Like just don't even look at your brokerage that day or that What do you call him over Lord Orange Daddy over over Laura George daddy? Yeah Well, he's doing all sorts of doing all sorts of great great. He's done, but that's that's that I got some cash I got to put it in something soon.Awesome. Oh Look at that Tim got dividends to reinvest into something probably gonna be into the video No, I don't cash, but that's crazy. You said the market was down so significantly and that's what it's up already after market and stuff Craig Ray tomorrow's gonna be a really good day.So if When you hear this the market will have a really good day on Tuesday But it's gonna be short-lived because it's only a 30-day Reprieve for the tariffs and then we'll I guess he's gonna readdress it at that point orange over Lord Orange Daddy is So it could be just a Wednesday could be your crap day or Thursday could be a crap day But we do have other stuff coming out like the last week the inflation data came out inflations at 2.4 Still I don't believe that on the labor labor numbers came out and labor is still strong of this week We have manufacturing data came out. I think today or it comes out tomorrow So like if you could you should take the time to familiarize yourself with all the different reports Because it helps identifying macro trends easier like I know that the Inflation data comes out once a month. I know when it comes out I know when the manufacturing data comes out like I know it's boring but it's super important because it actually identifies where the economy was a month ago and Probability wise where the economy was a month ago Economy is gonna be in the same spot when you read the report.That's just my take on that's that that's the 6040 Next week. I'm vetoing what she had going on because I have going on. I just did a an in-depth Report on the FEPI, AIPI and CEPI. So that's what we're gonna be discussing next week The three Rex Funds I just did a in-depth report on so that's what we're gonna talk about next week in there. They're really good I'm really excited about these actually. This is a new find fairly new find We've been in Rex for oh, we've been in FEPI for a year.We're just in now in AIPI and You didn't know the other ones existed until recently, right? I knew the AIPI came out but I had to make sure the dividend was consistent ish and it is and see I CEPI just came out or I just paid his first dividend So I have to like wait a couple months if that's the case and that's the crypto one if it does what it's supposed to But it doesn't hold crypto. It just holds all the companies that deal with the blockchain Mm-hmm That one has a that's like CCI So like that that one has a dividend that's consistent. I'll probably will start moving Funds into that as opposed to the the I bit and why BTC? I'm gonna have to make a decision on one of those the near future.You're gonna cut it. You're really there's no dividend Why did I buy this? You're not gonna laugh with that one's gonna have he's like I need money. It has to come from somewhere Until we get the condo so where I can put more more money into the 60 part I'm kind of like I Want to pull more money into the bottom and the end of the closing the funds and ETFs But I can't because I don't want to I don't want to deviate from the 60 40 split we got going on I like it.It works. Well, her mom's for example is a 7030 and it didn't perform near as well as ours did last year No, so 60 I was gonna ask you if 60 40 because you said the 80 20 60 40 is the sweet spot I think from what I'm seeing like as long as you can pick Macro trends up and identify them and pick out the best Most of closing the funds were in are like some of the best like that SRV is probably the best midstream closing the fun That PHT is not the best Close-Ended bond fund, but it's the most undervalued with like it has the most potential with really good ratings and The track history that has the best potential to make us money while we're collecting the dividend The yield maxes they are what they are They're just used for cash and we will do an episode on our yield max experiment If you haven't been tuning into the YouTube channel, that's coming out. Um, I think next week.Yeah, cuz I think It's actually this week. Yeah late this week. We're getting dividends.We'll do an updated video We actually have a series on on YouTube if you haven't checked it out and you're curious. We took a loan out to invest in CONY because crypto is gonna pop off this year and One value has plummeted YOLO man The dividend has gone down But it still looks like we'll be able to pay the loan off and have a crap ton of free shares again That was another theory that I had. Yeah that you could it's a way to print money from thin air You could take a you could borrow money whether it be like a loan or a he lock or whatever You could borrow money and then you could just pay off Pay off your loan Using the dividends and then whenever like however long it takes you to pay that off whether it be 12 months 15 months or whatever Mm-hmm at the end of that you're gonna have free shares free money free cash X amount of shares of a ETF that's gonna pay you a monthly dividend That's the theory and so far.It's been pretty good. We're actually been able to pay more than the loan Required to be paid by a lot Looking at like 13 months to pay it off Well that fluctuates because the I'm really curious to see what the dividend gets announced as because it was the lowest it had ever been Last month, which was a huge shocker. It was the lowest ever baby.It was still pretty good. It was still 83 Yeah, 83 83 33. It was still 83 cents.Yeah, 83 cents a share and $15,000 worth of Coney shares adds up to a pretty good dividend. So what was it the dividend payout? Yeah 730 that was the first one. No, that was 1173.Oh, yeah What we laughing at me almost $1,900 and two dividends on a $15,000 loan and I only paid like Four hundred dollars in interest to get that money We are Crickery a little bit I would like to actually get a PFF a because PFF a is like the best close ended fund when it comes to preferred shares they literally will just they have a Easter basket full of all the best preferred shares. I know The van lifers that I help with I got her into that one and it's been awesome That's like I think it's better than PDI actually. Hmm.Interesting. I'm sure you'll start dumping money into that at some point I have money. I know it's all on me and I will get there I only have a couple days left of this freaking detox that's killing me literally killing me and That's a wrap guys Hope you realize how revolutionary this theory could be for your portfolio income and risk mitigation If you haven't expanded into ETFs and close-ended funds yet start off with THTA You'll be moving one step closer to securing your finances and liberating your life See you and next week's episode