Scott Builds Four Portfolios with Four Different Strategies ($40k Experiment)

Summary

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BiggerPockets Money Podcast

Episode: Scott Builds Four Portfolios with Four Different Strategies ($40k Experiment)

Date: December 30, 2025
Hosts: Mindy Jensen and Scott Trench

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Episode Overview

In this episode, the BiggerPockets Money Podcast embarks on a hands-on experiment: Co-host Scott Trench invests $40,000 across four separate portfolios—each built with distinct strategies, allocations, and underlying investment philosophies. The goal? To transparently demonstrate the real-life mechanics and eventual outcomes of each approach, from the tried-and-true index fund to a custom, valuation-conscious “market timing” portfolio. Over time, the show will update listeners on performance, offering a rare real-world comparison for FIRE (Financial Independence, Retire Early) enthusiasts and serious investors alike.

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Key Topics & Discussion Points

1. Experiment Structure & Objectives

• Four Portfolios: Each receives $10,000, invested through public.com (BiggerPockets Money sponsor and partner).
• Purpose: Side-by-side, real-money comparison of four investment strategies, from basic to advanced, passive to active.
• Ongoing Updates: Results will be tracked and shared quarterly in the newsletter and occasionally on the podcast.

Notable Quote:
“What if you could see exactly how different investment strategies perform side by side in real time with real money? That’s exactly what we're doing in today’s episode.”
— Mindy Jensen (00:00)

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2. Portfolio #1: 100% S&P 500 Index Fund (VOO)

• Strategy: Pure exposure to largest US companies via a low-fee ETF.
• Mechanics:
  • Account setup and instant deposit to public.com.
  • $10,000 purchase of VOO via market order.
• Concept: This is the “default” path for many index investors—simple, broad, and low-cost.

Notable Moment:
“I now am the proud owner of the United States economy. The S&P 500, the 500 largest companies that make up the S&P 500.”
— Scott Trench (05:03)

• Discussion: Weightings favor larger companies (e.g., more Apple, less Best Buy).

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3. Portfolio #2: The Classic 60/40 Stock-Bond Portfolio

• Strategy: Balanced, following the “4% rule” and supported by Bill Bengen’s research.
• Allocation:
  • 60% Vanguard Total Stock Market ETF (VTI): $6,000
  • 40% Vanguard Total Bond Market ETF (BND): $4,000
• Purpose: Lower volatility and serve as a gold standard for retirement planning.

Notable Quote:
“Bonds are insurance. They’re going to dampen the volatility of my portfolio.”
— Scott Trench (07:53)

• Process: Instant transactions, highly liquid funds, immediate (albeit minor) value fluctuations.

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4. Portfolio #3: Risk Parity Portfolio (The Frank Vasquez Approach)

• Background: Mirrors a previously constructed portfolio by Mindy, with performance comparisons starting from different market cycles.
• Allocation:
  • 42% Stocks (split between Vanguard Growth ETF [VUG] and Avantis US Small Cap Value ETF [AVUV])
  • 26% Bonds (half Intermediate: VGIT, half Long-term: VGLT)
  • 16% Gold (GLDM)
  • 10% Managed Futures (DBMF)
  • 6% International Stocks (split between IDMO and AVDV)
• Purpose: Enhance withdrawal safety; reduce sequence-of-returns risk for retirees by diversifying across uncorrelated assets.

Notable Quotes:

• “Gold has a really good volatility dampening effect on a portfolio.”
  — Scott Trench (17:32)

• “My best performing holding in this account? …It's gold. And it still goes up and I don’t like gold.”
  — Mindy Jensen (18:18)

• Routine: Annual rebalancing, periodic withdrawals in Mindy’s version; Scott sets his to “let ride.”

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5. Portfolio #4: Scott’s “Market Timing” Thesis Portfolio

• Objective: Explore alternatives for investors uncomfortable with current high US stock valuations.
• Scott’s Perspective:
  • Feels the S&P 500 is “too expensive” by historical standards (high Shiller PE, high price-to-sales, etc.).
  • Seeks a way to stay invested while waiting for fairer prices, with rules for rotating back into the S&P 500.
• Allocation:
  • 30% Bonds (BND)
  • 20% Real Estate Investment Trusts (VNQ)
  • 30% US Value Stocks (AVUV)
  • 20% International Value Stocks (AVDV)
• Rules for Rotation Back to S&P 500 (VOO):
  1. Move 25% of portfolio to VOO or VTI if Shiller PE falls below 25.
  2. Move all assets to VOO if Shiller PE goes below 20, Buffett Indicator below 125%, or price/sales below 1.7.
  3. (Added on Mindy's suggestion) Reverse out if valuations soar again, to avoid hasty, irrational decisions.

Notable Quotes:

• “This is not a ‘please invest in this portfolio’…this is a thesis for feedback.”
  — Scott Trench (20:47)

• “The stock market is so far out of its historical range by almost every valuation metric that I can hear about…in this portfolio, I’m putting on the hat of somebody who’s uncomfortable with that…”
  — Scott Trench (30:27)

• “This is entertainment purposes only. And with that said, I’m going to go ahead and transact in this portfolio here and we’re going to see how it, how it does so you can all laugh at me as the years go by.”
  — Scott Trench (32:53)

• Philosophical Discussion:

  • Mindy expresses trust in tried-and-true index investing, citing decades of riding out market crashes (e.g., 1990s, 2008, COVID).
  • Scott admits his lack of experience through major crashes (2000, 2008) makes him more cautious and “anxious-lite.” (40:44)
  • Both agree: Your portfolio should reflect your emotional comfort and your life phase (e.g., withdrawal vs. accumulation).

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Notable Quotes & Memorable Moments

• “That’s investing...now I’m down a dollar. So that’s it. That’s the first account.”
  — Scott Trench, on immediate market fluctuations (05:35)

• “I think that everybody has to go through their first recession at one point. It’s not exciting to see your stock portfolio keep going down and down…”
  — Mindy Jensen (41:12)

• “I do not understand the stock market right now. I just don’t, I don’t get it. I don’t understand why it’s trading at these levels here.”
  — Scott Trench (43:41)

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Timestamps for Key Sections

• [00:00] — Introduction & Purpose
• [03:07] — Portfolio 1: 100% S&P 500 Index Fund (VOO)
• [06:03] — Portfolio 2: 60/40 Stock-Bond Portfolio (VTI/BND)
• [12:39] — Portfolio 3: Risk Parity (multi-asset, diversified)
• [20:47] — Portfolio 4: Scott’s Market Timing Thesis
• [31:38] — Setting Rules for Behavioral Consistency
• [40:44] — Personal Reflections on Experience and Emotional Investing

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Flow & Tone

The episode is hands-on, playful, and candid. Both hosts are transparent about their biases, experience, and comfort zones. The banter is supportive but honest—showing Mindy as the battle-tested index investor and Scott as the cautious, research-driven experimenter.

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Takeaways for Listeners

• No One-Size-Fits-All: Even two experts at the same firm choose different approaches based on risk tolerance, beliefs, and experience.
• Mechanics Matter: Setting up and allocating portfolios is easier than most investors think. Index funds are especially user-friendly.
• Diversification Is Key, But So Is Sleep: Emotional fit and ability to “sleep at night” should drive allocation.
• Experimentation (with a Disclaimer!): It’s possible to try out theses with a sliver of your portfolio, but always do so with a clear plan and self-awareness.
• Track, Learn, Iterate: The show will follow these portfolios and share honest, data-driven updates to help listeners learn from real outcomes.

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Final Thoughts

Neither Scott nor Mindy offer investment advice. Instead, they showcase how to build, test, and reflect on investment strategies—reminding listeners to tailor their approach to their own comfort and goals, while learning from both research and lived experience.

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Transcript

[Mindy Jensen]

What if you could see exactly how different investment strategies perform side by side in real time with real money? That's exactly what we're doing in today's episode. Scott is going to build four separate investment accounts with completely different allocations in real time. Same starting amount, same timeline, but four distinct portfolios that could produce dramatically different results. We'll track these portfolios over time and see which approach comes out ahead. Will the aggressive strategy win? Will the conservative play prove smarter? Or will something in the middle strike the perfect balance? This is a great episode to Follow along on YouTube if you want to see Scott share his screen to walk us through this step by step. Of course, you can also still follow along on audio too. Hello, hello, hello and welcome to the Bigger Pockets Money podcast. My name is Mindy Jensen and with me as always is my experimental co host, Scott Trench.

[Scott Trench]

Thanks, Mindy. I'm excited to go public with my investments decisions today here on the show. So I'm excited about this. I have set up for four different brokerage accounts using public.com, who is a partner with BiggerPockets Money Now. We're so excited to be sponsored by public.com and these four accounts are going to answer four questions. How do I invest in an index fund? Mechanically, how do I invest in a 6040 stock bond fund? How do I build a risk parity portfolio? And specifically I want to compare the results of a risk parity portfolio. We already did this on a previous episode with Frank Vasquez and Mindy. I want to see how mine does investing now, starting with $10,000 compared to Mindy's who got started in July and how the timing differences work there. And then last, I'm going to talk about a thesis for an actively managed ish portfolio that kind of explores the idea of I don't really like the stock market right now. It's too expensive. The price to earnings ratios, price to sales ratios, they're too high. What is an alternative that I can put my money into so I'm not just sitting in cash and waiting for the market to collapse, but I am putting it into higher yielding or different asset classes. And when the time comes, my intention is to flip it back to the S&P 500 or a boring old fashioned index fund when certain ratios are hit. So that's what we're going to explore, those four theses. And I think it'll be fun to watch the long researched, well researched, well publicized best practices in investing just absolutely crush my actively managed portfolio here over the next couple of years. Let's do a quick disclaimer here. I am not a professional investor and not getting paid to promote any of these stocks. BiggerPockets Money is sponsored by the brokerage firm Public.com and we do have a special promotional offer for BiggerPockets Money listeners. But none of the stocks that we're going to talk about today. I'm not paid to promote any of them. I'm not endorsing them. I'm simply using them for illustrative purposes. For four portfolios that we're going to compare performance against over the next couple of years, these could all go to zero. They could all perform very badly. My active thesis could be preposterously wrong and bad. This is an experimental and educational and entertainment purposes only video on this subject.

[Mindy Jensen]

I love it. Scott, let's jump in. Scott, how much are you putting in each one of these accounts?

[Scott Trench]

$10,000. So this is a $40,000 overall investment portfolio across these four. These four portfolios that we're going to be building today. I have preceded each one of these accounts with $10,000. It took a couple days to settle into the account and Public will match any rollovers. For example, when I rolled over my account from Schwab to Public, they matched it and that matches uncapped, which is awesome. So good time to roll over to public if you're thinking about it. Public is of course a sponsor of Bigger Pockets Money and we are very grateful for their support. All right, so let's should we build this first portfolio?

[Mindy Jensen]

Okay, Scott, you've got four portfolios to build. Let's go with the super basic one, the 100% VO. Walk us through the mechanics of making this purchase on public.com.

[Scott Trench]

Sure. So first with any brokerage account, you got to set up the account, answer some questions, and transfer money from your bank account into the brokerage account. Many brokerage accounts today allow you to instantly trade as soon as you initiate the deposit. Others will need you a couple of days to wait for the funds to settle. I set up all these accounts last week, so I shouldn't have any issues with allocating these funds. The first portfolio is as simple as any portfolio we're going to construct. This is a broad based Vanguard low fee index fund. We're going to buy the S&P 500. The ticker for this is going to be Voo and we're going to just buy that fund right now. It'll take a few moments and it'll be astonishingly easy for folks. A lot of Folks build this up to be a big moment, their first investment, and it is a big moment, but the mechanics are quite simple once you get used to it. So we're going to go up to the top here and we're going to type in Voo. There it is. And we are going to purchase $10,000 in a buy order here. This is a pretty large index. Very, very $823 billion in assets under management. It's heav so I don't have to do any type of limit orders or anything like that. I'm just going to do a market order here in the middle of the day and I'm going to transact and it's going to execute almost instantly for this type of trade here. So that's 10,000 bucks. Boom, we are done. Now if I go back to my brokerage account, look at that. It's already gone up a dollar and 84 cents, about.02% since I bought it. And I am up $1 here. So that's. That's it. I now I'm the proud owner of the United States economy. The S&P 500, the 500 largest companies that make up the S&P 500 here.

[Mindy Jensen]

It looks like you just lost a DOL, Scott.

[Scott Trench]

Nope, now I'm down a dollar. So that's investing. So that's it. That's. That's it. That's the first account. Right. This is when people say they invest in. In. In the stock market or index funds. That's all they're doing, right. Is is is buying this or a similar type of ETF that owns all of the stocks in an index. It's a weighted average index. So it'll own more of a company like Apple and less of a company like Best Buy, for example, which is a smaller company than Apple. And so it owns that the. The entire way down the chain.

[Mindy Jensen]

Okay, Scott, now Let's do the 4% rule 6040 stock bond portfolio that Bill Behnken set up his whole portfolio theory against. Now we have another $10,000. What are we buying in this one, Scott?

[Scott Trench]

We're going to start off by making the core of this a stock market allocation, right? So in this particular case, just to confuse everybody, I'm going to use a slightly different index fund. This is the equivalent to VTS X, the one that is talked about, for example, at length by J.L. collins in his book the Simple Path to Wealth. The difference between vtsax or its ETF equivalent VTI is going to be that you're going to own not just the 500 largest companies in the economy, you're going to own all of them. In practice, what that means, because this is a weighted average market capitalized index fund, what this means is that I'm just, I'm still going to own all the companies s and P500 and they're going to make up most of my portfolio. I'm just going to get a little more exposure to smaller companies in addition to that portfolio. So we're going to type in the ETF for this, which is the ticker, which is vti. That is equivalent to the mutual fund vtsax. It's the ETF version of that that you can buy through an account like Public, for example. I don't have to be on Vanguard's portal to buy this. And I'm going to go ahead and transact VTI here for $6,000, right. We're going to take 60% of our portfolio and put it into stocks here. And we're going to purchase, we're going to review that order. And again, this is an enorm heavily liquid. I'm not going to bother with placing a limit order or anything like that. I'm just going to go ahead and transact.

[Mindy Jensen]

Hold on. Before you submit, contribute $10 to support this PFOF free trade.

[Scott Trench]

I am not going to do that. So I'm going to uncheck that box and I'm going to submit my order here. All right, so that is done. And I should be the proud owner of the entire US Stock market right now in my portfolio. And that's right. I have, I just lost another dollar. It looks like maybe a dollar and a half. And I own $5,999.39 of equities. And I still have $4,000 in cash here. So the second component of this is going to be bonds. Right? What is the purpose of bonds here? They're insurance and they're going to dampen the volatility of my portfolio. So for this, one of the largest and most liquid bond funds in the world is going to be the Vanguard Total Bond Market. Fund B and D is going to be the ticker and I'm going to spend $4,000 purchasing this fund. Again, this is an enormous fund. It's highly liquid and it's a, it's, it' first tool that one could use in exploring a very simple 60, 40 stock bond portfolio. So the second portfolio here is going to be 60 stocks, 40% bonds and we are done. That's, that's how fast it can be to set up a portfolio here. So I've got my VTI and BND positions here and my portfolio balance is just a little less than $10,000 here. So you I think won right away when you bought your portfolio on the show Mindy a while back.

[Mindy Jensen]

I don't remember if I won right away but I have been winning ever since. I think it it has dipped down below the initial $10,000 that I put in there, but it has stayed above almost the entire time. Ooh, 32 cents. Woohoo.

[Scott Trench]

Scott's rich well now I'm up 32 cents. There you go.

[Mindy Jensen]

And now a quick word from our show sponsors. Support for the show comes from Public, the investing platform for those who take it seriously. On Public you can build a multi asset portfolio of stocks, bonds, options, crypto and now generated assets which allow you to turn any idea into an investable index. With AI it all starts with your prompt. From renewable energy companies with high free cash flow to semiconductor suppliers growing revenue over 20% year over year, you can literally type any prompt and put the AI to work. It screens thousands of stocks, builds you a one of a kind index and lets you back test it against the S&P 500. Then you can invest in a few clicks. Generated assets are like ETFs with infinite possibilities, completely customizable and based on your thesis, not someone else's. Go to public.combpm and earn an uncapped 1% bonus when you transfer your portfolio. That's public.combpm paid for by Public Investing Brokerage Services by Open to the Public Investing Incorporated member FINRA and SIPC Advisory Services by Public Advisors, llc. SEC Registered Advisor Generated Assets is an interactive analysis tool. Output is for informational purposes only and is not an investment recommendation or advice. Complete Disclosures available at public.comDisclosures My husband and I have multiple investment accounts across several different companies. Throw in vehicles, investment properties and private equity holdings and it can be difficult to get a good idea of our actual net worth. And frankly, between the kids, work and just life in general, I don't have time to be logging into 47 different places. So I just didn't. Scott walked me through setting up my Monarch account and suddenly everything was easy. It's all in one spot so I can check in quickly. Just like everything else on Monarch, the dashboard is customizable so I can see at a glance what's most important to me and dive deeper when I need to. Feel organized and confident in your finances. With Monarch an all in one personal finance tool that brings your entire financial life together in one clean interface on your laptop or your phone. And right now, just for our listeners, Monarch is offering 50% off your first year code pockets monarch.com don't let financial opportunities slip through the cracks. Use code pockets monarch.com in your browser for half off your first year. That's 50 off your first [e-mail] with the code pockets Autotrader is powered by Auto Intelligence, the hyper personalized way to buy a car. AutoTrader's tools sync with your exact budget and preferences to tailor the online car shopping experience totally to you. Budgeting lets you input your info to see listings in your price range. Search and inventory helps zero in on your dream car. You can choose from new or pre owned, the style of the car and features like engine size, color, all the way down to whether you want a trailer hitch. Go ahead and get picky. Don't worry about scrolling endlessly. AutoTrader powered by auto Intelligence only shows you vehicles based on what you can afford and what you want. And Pricing shows you which listings are the best deals so you can feel like you're winning the negotiation without negotiating. You can even choose how to close the deal online at the dealership or a little bit of both. Auto Trader Powered by Auto Intelligence makes the process of buying a car less of a process. Try it today. Visit autotrader.com to buy your perfect ride. Welcome back to the show. All right, Scott, you said we have four portfolios that we want to do. We've done two. What's the next one?

[Scott Trench]

The third one is going to be our risk parity portfolio. While I'm pulling this up, why don't you pull up your risk parity portfolio you constructed in June. This will be the exact same portfolio that you constructed. I'm just going to build it at a different time and I think that that will show interesting changes. The returns of my portfolio will be very interesting based on when I build it versus yours. You bought yours at a relative low point in the stock market back in June I believe, and I'll be buying it at a much higher valuation here in December.

[Mindy Jensen]

Yes, I believe I actually bought it in July. But either way I have withdrawn $42 a month ever since I created the portfolio. So I started with 10,000 dol thousand dollars. I withdrew $42 because that is 5% divided by 12. So every month I will be withdrawing and my portfolio is currently $10,997.79. I started with 10,000 I am up almost $1,000, and that is withdrawing July, August, September, and October. I forgot to do November, So it's only December 2nd. When we're recording this, I will go out and withdraw that and still have, well, more than I started with, and I'm still withdrawing. I think this is a really fun experiment.

[Scott Trench]

Absolutely.

[Mindy Jensen]

My account originally started off with 42% stocks, 26% bonds, 16% gold, 10% managed futures, and 6% international stocks. And I have a variety of amounts in my accounts. It's not quite that same amount each time because I have to sell dollar amounts, not percentages of my account. So it's just when I go into sell, I look in and see what's a little bit higher than what I wanted it to be, and then I'll sell that.

[Scott Trench]

Well, I'm going to recreate that same account here today. Do you want to read that off so I can have them up here on the. On the screen?

[Mindy Jensen]

Yes. So I had VUG Vanguard Index Funds, the Vanguard Growth etf, formerly known as Vandex Index, TR vipers.

[Scott Trench]

Yep. So. So the first component here is going to be the stocks. And we're going to put 42% of the portfolio into stocks. We're going to split those between growth and value stocks. And the reason we're going to do that is because, from a higher withdrawal standpoint, this allows us to manage withdrawals and rebalancing on our own a little better than buying a single ETF that contains the entire stock market. For example, for the purposes of this portfolio, which is a withdrawal portfolio, we are not going to withdraw from any of these portfolios. We may rebalance the portfolios as we talk about here once a year, but we're going to let these ride. In my case, Mindy is, of course, withdrawing from her portfolio. So this first one's going to be the Vanguard Growth ETF. We're going to buy 21% of our position, which is $2,100. It's going to go into this, and we're going to purchase that. And again, this is a highly large, highly liquid fund. All the funds we're going to be doing today are going to be of that. That sort. And so that transacted immediately. And we are the proud owner of Vug right now. Look at that. I've already lost 30 cents.

[Mindy Jensen]

Next up is AVUV, which is advantageous US small cap value ETF, and that's another 21%.

[Scott Trench]

This is a great fund for folks that are looking to get exposure to small Cap value stocks. So this fund has various screeners that kind of factor out micro caps or biotechs that have, you know, that don't have very much revenue or kind of more speculative plays for profitable boring businesses. If you're a fan of like Cody Sanchez or Alex Hormozi, you know, and you want to buy like these boring businesses that, that are doing, you know, that have been around for a while or, or are in these, these categories that are not that exciting but are relatively lower priced, for example, relative to earnings or revenue than, you know, large S P 500s. That's what this is generally screening for here. It's a very popular fund to get exposure to that asset class. I'm actually going to use this in my thesis a little bit here and we'll talk about that in a minute. So that's avuv. Let's talk about bonds next.

[Mindy Jensen]

Oh, now I'm up to $11,000. This is really exciting. All right, my bonds, I have vgit Vanguard Scottsdale fds intermediate term treasury bonds.

[Scott Trench]

So this is just, we're buying two sets of bonds here, intermediate and long term bond bonds. And all this was discussed on the episode we did with Frank Vasquez here. So we're just simply repeating that portfolio. But we're getting, we're, we're separating our bond exposure of 26 of this portfolio into two funds, intermediate and long term. And so this is the intermediate tranche. This will be 1300 bucks here or 13 of the portfolio and we'll transact that. And again, very highly liquid, highly traded fund here. So we don't have to do market limit orders or anything like that. So next we'll do vglt, which is the long term version of that for another 1300 bucks. View order Submit order okay, what's next?

[Mindy Jensen]

Next up is 16% gold. I only did one option here. I did GLDM, which is the world Gold Minis.

[Scott Trench]

This is just a way to get exposure to gold without having to own physical gold. We're going to do that in this portfolio here. Gold has a really good volatility dampening effect on a portfolio. If you're looking to have a, you know, for diversification or uncorrelated assets, it's a great way to get that. And that's one of the primary goals of a risk parity portfolio is to have a large amount of exposure to uncorrelated assets so that you can maintain a safer withdrawal rate. This portfolio should, over a long period of time, underperform a stock market or Other, other portfolio over very long periods of time. However, it will have much less volatility, allowing for a higher withdrawal rate on the portfolio that you dampen the effective sequence of return risk.

[Mindy Jensen]

Now, Scott asked me, what is my best performing holding in this account?

[Scott Trench]

Gold.

[Mindy Jensen]

It's gold. It's actually at 17 and a half percent. And that's the thing that I keep selling to fund my withdrawals. And it still goes up and I don't like gold. I don't want to own gold. It is a testament to my affinity for Frank Vasquez that I even put it in here in the first place. But it just keeps going up. All right, managed futures is next. Scott, we are going to do 10% of our account and I chose DBMF, which is Littman Gregory Managed futures.

[Scott Trench]

Managed futures are an interesting one because the primary point of managed futures is again lack of correlation with other asset classes. It bets on trends continuing in various directions. So in years where other parts of the portfolio may perform very poorly, the managed futures can provide different or better performance in those years. And again, that just allows for a higher safe withdrawal rate when you apply it in the context of a larger portfolio. So that's we're going to do here. Here we are going to put in 10%. So let's do that. I love how easy they make this.

[Mindy Jensen]

It really is amazingly easy.

[Scott Trench]

All right, so we've got most of our portfolio allocated. I'm down $0.08 to exactly even now, $1.50 as the market changes in real time here. Let's do international exposure as our last bit here. So we're going to do the same thing we did for Stockport exposure. We're just going to have both US stock based exposure and international stock based exposure. So for that, for the growth portion of this, we're going to use a fund called idmo, which is going to give us to that growth portion of the international portfolio. We're going to put 300 bucks into that. And then for the value component of this, we're going to use AVDV and that's going to be at 300 bucks.

[Mindy Jensen]

And that's the Avantis International Small Cap Value ETF.

[Scott Trench]

Yep, it's the international version of AVUV which we talked about earlier, buying these boring low value value stocks from the international markets here. Okay. And that is our portfolio here. We've got our stocks, our bonds, our gold, our managed futures and our international stocks. And we're just going to let this thing ride and see how it does over the course, you know, over the course of next year, we'll check in periodically once a quarter to see how the portfolio is performing. We might even provide a few more updates in the next couple of months if there's some interesting stuff going on. But otherwise those are the three portfolios that we've discussed.

[Mindy Jensen]

Okay, Scott, we've done three portfolios. Now it's time for you to do your fourth. Fourth, Scott tries to time the market portfolio. Tell me what you're thinking.

[Scott Trench]

Perfect. So I have prepared a thesis. I am an amateur investor so this is going to be a good time to get feedback from the the audience here. This is not a please invest in this portfolio. This is a thesis for feedback. And basically what I'm trying to explore with this fourth portfolio is I along with I think a lot of other bigger pockets, money listeners and maybe people in the fire community in general want to invest primarily in the S&P 500 in the US stock market. And the largest companies are a total market index fund. However, the current reality of stock market valuations is giving me pause. I feel very uncomfortable with the ratios from the stock market right now and can't justify having a larger or very meaningful exposure to those companies given how crazy in some cases the valuations are to in the context of history. So like let's, let's look up a couple of these multiples here for context. One of my favorite places to go and look at this stuff is, is this website called multiple and you can go and look at some stuff here and you can see hey the Shiller price to earnings ratio which is a inflation adjusted look back at earnings over the last 10 years. So it normalizes for spikes like Covid or those kinds of things is at close to its all time high here today at at 12-02-2025. So it has been higher but that was in 1999 before the famous.com bubble burst. And it took about 15 years, 13 years for the stock market to recover from that point. Another thing to look at is the price to sales ratio. So revenue you can always there's things about hey, companies should be more profitable than ever at this point. Margins are higher, it's aggregated in tech. But sales is a lot harder to g gamify for companies. So the stock market has never The S&P 500 has never traded above a 3.4 price to sales ratio. There are other ways to kind of look at this. Price to book value is at close to all time highs or at all time highs. There's a thing called the Buffett Indicator, which is the total capitalization of the stock market to US GDP. And that's at well over 200% here today in December 2025. And so all of these ratios are giving me a lot of pause in terms of hey, do I really want to have a big portion of my portfolio in S&P 500 at this point? I would prefer to. That's my goal. If it weren't at these crazy ratios, I could probably have gone my entire life potentially staying in the S&P 500 and just following the best practice of passive index fund investing and low fee diversified broad based index funds. So because of those dynamics, I'm wondering, is there another way to invest so I don't have to get exposure to the high valuations in those areas, but that I can rotate back into stocks if they ever get into a level that I am comfortable with, which it would be merely two standard deviations above historical averages, for example. First, one caveat this by saying there are a lot of reasons why long term historical averages are not fair or useful today. For example, interest rates are much higher throughout most of the 20th century than they are today. With lower interest rates you should expect a higher price to earnings multiple for the market. A lot of the companies that are huge in the United States today, like Alphabet and Meta and Tesla, these companies are, are, have global reach and have global expansion plans. And so their market capitalization should be higher in many cases than in the past. And there is reason to believe that the Buffett indicator total market capitalization relative to GDP may not be as useful anymore. But I'm still worried even with that that these, these valuations are completely extreme. So I want to caveat that. So the question I'm asking is, is there a higher earning yield, lower volatility place to Park Capital this 10,000 bucks while I wait, wait for the S&P's earnings to catch up or for the price of the S&P 500 to fall, can I invest in a portfolio that I can hold forever? So it's not necessarily a timing play, there's a timing component to this, or a set of rules that would trigger me back into my favorite investment, the S&P 500. But I could also, could I just sit here forever and still make sure that I have a very good shot at growing my capital and generating income that I can live off of if The S&P 500 never is priced again at a level that I think is fair? Right this in the 25 times price to earnings ratio, Shiller Pe Ratio, for example. So my hypothesis for this is going to be 30% in bonds, 20% in REITs, in real estate, 30% in value stocks, the AVUV that we talked about, and 20% international value. So all this is is owning bonds, stocks and a little bit of real estate while we wait for the large mega cap companies in the S&P 500 to become more fairly priced.

[Mindy Jensen]

So.

[Scott Trench]

So how am I doing so far, Mindy? What do you think so far?

[Mindy Jensen]

I think your thesis makes sense based on where you're coming from. However, this is not a portfolio that I am doing personally. So I hope that answers your question.

[Scott Trench]

There you go. Yeah. Well, anyways, I'll, I'll briefly talk about these and if you're interested, if anyone is interested, you can read the thesis on bigger pockets money. We'll see how this goes. But bonds are going to be my insurance. I'm holding those bonds in this portfolio, that 30% and I'm going to take that. I'm going to take 25% of that or most of that and rotate it back into stocks and into VOO specifically if it hits certain ratios in the future. If it never does, I'll just keep them in bonds and continue to earn this yield for the duration of this portfolio.

[Mindy Jensen]

How frequently are you going to be checking in on the Shiller ratio?

[Scott Trench]

I'll set up an alert and if it triggers, based on my rule, I'll move. So I probably will rarely check, but in the event that there's a crash or years go by and earnings increase enough to create the ratio of price to earnings back into the band that I've set, then it would trigger this move.

[Mindy Jensen]

Okay.

[Scott Trench]

VNQ is a Vanguard fund that owns REITs. There's actually argument about what the best REIT fund is. Vanguard's VNQ actually has higher fees than a Schwab, for example, but I'm comfortable with Vanguard is still very low fees. And this would have exposure across a variety of different current real estate asset classes and geographies. We've already talked about AV UV and AV dv. These are value stock funds, both US and international, and they're trading at relatively low price to earnings ratios. When we talk about the stock market being very expensive, most of that expensive component, most of that, the high ratios of price to sales and price to earnings are coming from the Magnificent Seven or the 10 stocks that have the highest market cap. Those 10 stocks in the S&P 500 make up 38% of the the market capitalization of the S&P 500. So it's very, very highly concentrated. So this portfolio is moving away from that to other stocks that are. The stock market is not necessarily very expensive for these value plays here. In fact it's actually below trading below historical averages on a trailing twelve month or even forward price to earnings ratio in both of these funds. So what I'm doing here is this is not a permanent portfolio and it's also not short term market timing. Right? So it is. There's a long term component to market timing here. But this is a cash flow forward, a portfolio that is investing in higher yield relatively speaking than what you can get in the S P500. And this portfolio is going to trigger again to buy the S P500 the board. The our favorite old fashioned index funds here at BiggerPockets money once certain rules are hit. So the first rule, there's two rules, very simple. If the Shiller price to earnings ratio is at or below 25, remember that, that chart I just showed you, that's at 40 right now. Then I will move 25% of the portfolio into Voo or Vti and that 25% will move from bonds to that. I'll sell my BND portion and I will move that into Voo. So that's phase one. Phase two is if the Shiller PE ratio falls below 20 or the Buffett indicator falls below 125%. That's the market capitalization of the S&P 500 to US total GDP or the S&P 500's price to sales ratio falls below 1.7. Then I will move everything in the portfolio, recognizing capital gains or whatever and triggering tax events and put it all back into my favorite long term investment which is voo. I don't have a trigger for selling voo. If it goes up again in the future. Future I may revisit that in this portfolio because there is a bit of active management to this. I may put in the inverse rules here to a certain degree, but that is the only trigger that I have in the portfolio right now. So this portfolio could sit in these four funds, bnd, vnq, AVUV and AVDV forever or in the immediate future if there was a crash, I could sell a portion of the bond fund or all of the portfolio and move it into VOO based on these rules. What's your thoughts, Mindy?

[Mindy Jensen]

My thought is you. You at the end you said you don't have a plan to move it back into this market timing portfolio that I am calling this if the tape goes above again, the Buffett indicator goes back up, the S P sales price to sales goes back up. I would encourage you to do that now because in the heat of the moment, you could act irrationally. I, even you, Scott, could act irrationally. So during the calm, during the I'm not trying to make a decision right now phase, I would encourage you to think about what would happen when does it hit that you make changes again.

[Scott Trench]

I think that's a great call. So I will, I will bump that before I publish this. And what I'll probably do is I'll probably just invert these, these items here. So if the Shiller cape gets above 25, I would then move, you know, that's significantly above the long term historical average, although way down from where we're at currently. Then I might move back into this portfolio where only 25% is in Voo and 75% is spread across the other items here. But again, the point of the portfolio that I did here is what the heck is going on? This is like the stock market is so far out of its historical range by almost every valuation metric that I can hear about that, hey, in this portfolio, I'm putting on the hat of somebody who's uncomfortable with that and really wants to be in the s and P500. Just, just wants to be a passive investor, but just can't because of current all time high valuations. That's what this portfolio is attempting to simulate here. And so I'd love a greater reaction from folks listening about how you think this does in accomplishing that goal or whether there's a better approach to doing that. But this is my approach to doing that by shifting out into, into four highly liquid big funds that should allow me this option to move when these rules hit.

[Mindy Jensen]

Okay, so Scott, you are saying all of this. I mean, look at this document that you wrote. I've got a copy of this document too. This is well thought out. Just because I don't agree with your statement or your philosophy, I have to agree with your statement. The CAPE is whatever you said it was and the Buffett indicator is whatever you said it was. You're not making that up. Those are facts. But those facts don't bother me the way that they bother you. So I just, I think this is very well thought out and you have given a lot of consideration to this. Anybody who's listening who's like, oh, well, Scott says I should do this, so I should do this. This is not investment advice. This is what Scott is doing. Based on his personal experiences with stock market crashes, which are pretty few, and based on his, I don't want to say anxiety, but a little bit anxiety, like anxiety light of where the market is currently trading at. So please do your own research, come up with your own own theories. But Scott is doing this based on a lot of thought, not just because some guy from somewhere said to do this. So he's doing this. So I just, I want to caution people from taking extreme action just because they heard it on this podcast that one time.

[Scott Trench]

Yeah, absolutely. This is, this is not a portfolio that someone should emulate. I am not a professional investor. I am a podcaster that is really interested in this concept. I'm interested in beginning my very early journeys into investment theses. And I'm putting a very tiny percentage of my wealth into a portfolio, one of four portfolios. I'm building today into this thesis as a test to see how it performs against more tried and true portfolios from a real professional like Frank Vasquez or the great research that supports passive index fund investing. So this is entertainment purposes only. And with that said, I'm going to go ahead and transact in this portfolio here and we're going to see how it, how it does so you can all laugh at me as the years go by. So first we're going to do bnd. This is the same fund we did for our stock bond portfolio earlier. We're going to put 30% of this portfolio into BND and we are now the proud owners again of BND in this portfolio. Okay. The second one is vnq. This is Vanguard's real estate etf. And again, this is. There's two reasons for the Vanguard the real estate component for this. First, it's a way for me to get this portfolio to get more diversification, another less correlated asset into the portfolio. That is not just value stocks. Right? So value stocks is really the core thesis of the portfolio here is shifting. Avoiding these mega cap growth stocks that are trading at very high multiples and moving into value real estate is a way for me to get diversification away from that. In this. I've also been noodling on a certain asset class classes in real estate, particularly better valued. But I figured that was beyond my skill to begin analyzing those. We had UC Escola on here a while back. The high yield landlord who puts in a ton of time and energy and attempting to analyze REITs or sectors in any way means I have to compete with him. So I don't want to be thinking about that so, okay, so we're going to do 2,000 bucks, 20% of the portfolio into VNQ, then we're going to be done. Okay, next up is avuv, our old friend here for us, Small Cap Value, that's going to be 30% of the portfolio or $3,000. And then the last one is going to be AVDV, which is Avantis International Small Cap Value. It's going to be our international exposure to value stocks, the same thing as we did in the risk parity portfolio. So that's the portfolio here we are now in those four positions. We have no cash left over. We will reinvest the cash that comes into these periodically as we get distributions. And this portfolio should yield about 4% from day one and be our highest yielding portfolio from a cash flow perspective on this. So if I was taking distributions and assuming they didn't stop, I would be able to distribute at 4% from this portfolio, theoretically without having to sell any positions. We'll see how that actually plays out.

[Mindy Jensen]

All right, Scott, I think we should give updates based on where our portfolios are at the end of every quarter in our newsletter. So to our listeners, if you have not yet signed up for our newsletter, please do [e-mail] Newsletter and I do.

[Scott Trench]

Want to just thank our sponsor Public one more time for supporting BiggerPockets money. And remind everybody that if you choose to use Public as your brokerage and you roll over accounts either from your after tax brokerage account or any retirement accounts that they will do a 1% uncapped match on that. And we like the interface. This is what I'm using personally. This is not just for the test portfolios but for my personal brokerage is also also through Public these days. So if you are interested in Learning more about Public.com, you can go to BiggerPocketsMoney.com Public and or you can go to Public.com BPM either one of those works and you can go check out and that will help you get all the instructions you need to set up an account and get the 1% uncapped match for assets that you roll over to Public.

[Mindy Jensen]

This is our final ad break. We'll be right back with more after this. Support for the show comes from Public, the investing platform for those who take it seriously. On Public you can build a multi asset portfolio of stocks, bonds, options, crypto and now generated assets which allow you to turn any idea into an investable index with AI. It all starts with your prompt from renewable energy companies with high free cash flow to semiconductor suppliers, growing revenue over 20% year over year. You can literally type any prompt prompt and put the AI to work. It screens thousands of stocks, builds you a one of a kind index and lets you back test it against the S P500. Then you can invest in a few clicks. Generated assets are like ETFs with infinite possibilities, completely customizable and based on your thesis, not someone else's. Go to public.com bpm and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com pay for by public Investing Brokerage Services by Open to the Public Investing Incorporated member FINRA and SIPC Advisory Services by Public Advisors llc SEC Registered Advisor Generated Assets is an interactive analysis tool. Output is for informational purposes only and is not an investment recommendation or advice. Complete Disclosures available at public.comDisclosures My husband and I have multiple investment accounts across several different companies. Throw in vehicles, investment properties and private equity holdings and it can be difficult to get a good idea of our actual net worth. And frankly to going we're between the kids, work and just life in general. I don't have time to be logging into 47 different places, so I just didn't Scott walked me through setting up my Monarch account and suddenly everything was easy. It's all in one spot so I can check in quickly. Just like everything else on Monarch, the dashboard is customizable so I can see at a glance what's most important to me and dive deeper when I need to. Feel organized and confident in your finances with Monarch, an all in one personal finance tool that brings your entire financial life together in one one clean interface on your laptop or your phone. And right now, just for our listeners, Monarch is offering 50 off your first year with code pockets monarch.com don't let financial opportunities slip through the cracks. Use code pockets monarch.com in your browser for half off your first year. That's 50 off your first [e-mail] with the code pockets Autotrader is powered by Auto Intelligence, the hyper personalized way to buy a car. Autotraders tools sync with your exact budget and preferences to tailor the online car shopping experience totally to you. Budgeting lets you input your info to see listings in your price range. Search and inventory helps zero in on your dream car. You can choose from new or pre owned, the style of the car and features like engine size, color, all the way down to whether you want a trailer hitch. Go ahead and get picky. Don't worry about Scrolling endlessly. Autotrader Powered by Auto Intelligence only shows you vehicles based on what you can afford and what you want. And pricing shows you which listings are the best deals. So you can feel like you're winning the negotiations without negotiating. You can even choose how to close the deal online at the dealership, or a little bit of both. Autotrader Powered by Auto Intelligence makes the process of buying a car less of a process. Try it today. Visit autotrader.com to buy your perfect ride. Thanks for sticking with us. Okay, Scott, I really appreciate you thinking about this and taking time to write down all of your thoughts, thoughts and where you want to go. You know, you have an investment philosophy for this particular portfolio and I appreciate you sharing that with our audience. I know that some people will agree with you, some people will agree with me. It's not like you're taking sides and you know, one of us is more popular than the other, it's me. But I appreciate you taking this time. Scott, do you think that your lack of long term stock market experience with regards to the ups and downs of the stock market plays into your thoughts on this at all?

[Scott Trench]

You mean like, like not having been an investor in the 2008 recession and 2000 recession? I think so. I think, I think that that's absolutely true. I think that I may fear those drawdowns or period, like, you know, a lengthy period of low or no returns, no, no capital appreciation, at least on a portfolio, maybe more than people who have lived through it because of my lack of experience being in one of those. So I'm probably much more cautious than the average listener of BiggerPockets money and many other investors that I, I know.

[Mindy Jensen]

And that's fine. I think that everybody has to go through their first recession at one point. It's not exciting to see your stock portfolio keep going down and down, and then the next day it's down even more. How frequently do you think you're going to check in on these portfolios like you personally logging into public.com and look, oh, look at that, look at that, look at that.

[Scott Trench]

That I think I'm gonna check in on a lot the next two months and then it's gonna fade and we're gonna revisit them infrequently over time here. I'll probably shut them down after 5, 5, 10 years at some point just to reduce complexity in my personal position because these are my personal accounts. But I do, I do think it'll be a fun, a fun little, little thought experiment to see how these do over time. And one of, one of the, one of the reasons why I wanted to do this today is last year I talked about how I sold a bunch of stocks to reallocate to real estate and I bought two properties. You helped me buy both of those properties, actually mind for that. And it's kind of impossible to. It'll be absolutely impossible, at least for the time being, to talk about how that does. Right. Like, are those properties worth more or less now than I bought them for? What's the appreciation rate? I can do that with stocks. I can say here's what the stock portfolio would have done, but I have no idea what the real estate portfolio is from an appreciation standpoint. Almost certainly I'm down from a transaction. If I factor in transaction costs on buying and selling them, if I were to sell them again. But how is that going to perform? It's very hard to actually perform that counterfactual analysis on a move like what I made last year. This is one that I can actually now scientifically say, okay, at these points in time, this is how this portfolio is doing. This is how this portfolio is doing. And I can better understand the quality of the assumptions or at least the outcomes that go into these plays from an investment perspective. So that's one of the reasons why I'm excited about doing this. How can I hold myself accountable to my own investment decisions last year, year around selling out of stocks and moving into real estate? I won't be able to for years or decades really, to understand the directional impact. And even then, if it's close, maybe hard to ever tell how good the move was or not. This one, I'll be able to tell exactly how the moves play out. So that's one of the reasons why I'm excited about this little portfolio challenge.

[Mindy Jensen]

Okay, but that's financially, you won't be able to tell for a while. What about emotionally? Because I remember this was really weighing on you at the beginning of the year. You did not like, like the PE ratio of the stock market. You didn't like how, in your words, it was overvalued. You felt like it was overvalued. How do you feel moving that money out of your stock portfolio and into real estate?

[Scott Trench]

I feel great about it. I, I don't understand it. I don't, I don't. I understand real estate. Right here's rents. They may go up, they may go down on it. But here's my property. It's there. It's going to charge this much rent. It's going to cost me about this much to upkeep. I can get that. I can wrap my head around it. I do not understand the stock market right now. I just don't, I don't get it. I don't understand why it's trading at these levels here. It's as, as expensive as ever been. And I, I, I could not. I would lose sleep every single night if I was 100 in VO like I was for, for a long time with my stock portfolio. So how do you sleep? You sleep, you sleep pretty good, though, with that same allocation to a large degree, right?

[Mindy Jensen]

I don't sleep well no matter what, but no, I don't. This, this does not keep me up at night. I just have insomnia. But no, I think that it is fine because I've been through the 1990 stock market crash, the 2008 stock market crash, the COVID V. I've been through and I'm sure there's a lot of other ones that like, daily the market is down for a long period of time and over the course of the year it's back up or whatever. So I've been through this and I get over it by just not checking in on my portfolio all that frequently. I don't want to look in and see, oh, I've got $10,000 today, and then look in a week later, oh, it's only 9,000. That's not going to make my heart stop. Sing. So I'm investing for the long term. I just don't look.

[Scott Trench]

That's another big difference, I think is, is the other component for this is I'm not investing for the long term anymore. I am now harvesting my portfolio to some degree and living off of it to a certain degree. And so that changes how I feel about this allocation to 100% stocks. I need the portfolio in order to sustain my, my quality of life at this point. That's the difference. That's what, that's what fire is and always was about. And I can't do that if it's 100% in stocks. I just won't, I cannot sleep if that is how it's allocated.

[Mindy Jensen]

And I think that's valid. I think that anybody listening who is like, yeah, you know, Scott, that makes a lot of sense. Maybe your portfolio needs to change. Like Scott's portfolio has changed, in which case do your own giant thesis statement.

[Scott Trench]

Yeah, or, or, or there's plenty, there's plenty of like, very well polished portfolios out there. Like, we should get Paul Merriman mindy here on on biggerpockets money we've talked to Frank Vasquez. There's 60, 40 stock bond allocations. Bill Bengan's got recently research on allocations. I think it's like 55% stocks, 40% bonds and 5% cash or something like that. Some portfolio like that. Please don't quote me directly on that but there are researched portfolios out there. You don't have to build your own thesis. I am just a true nerd and putting mine out there so that I can get attacked by people in the comments section of YouTube videos for all the flaws in it which is great. It helps me learn. So please do provide feedback publicly or privately. It's got a biggerpocketsmoney.com on this and I look forward to hearing hearing it.

[Mindy Jensen]

All right, Scott, should we get out of here?

[Scott Trench]

Let's do it.

[Mindy Jensen]

That wraps up this episode of the Bigger Pockets money podcast. He is Scott Trench. I am Indy Jensen saying see you later alligator.