Dave Ramsey, small cap value and a "new" 4 fund portfolio
Jun 14, 2023
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Financial expert Dave Ramsey joins Chris, Daryl, and Paul to discuss the lawsuit he is facing and recommendations to eliminate conflicts of interest. They delve into the performance of small cap value and compare actively managed funds to index funds. The hosts also emphasize the importance of minimizing costs and maximizing efficiency in investing.
New investment strategy combining large-cap blend, small-cap value, and international holdings
Importance of historical trends for evaluating investment performance
Deep dives
Variety of Formats and Viewership
The podcast episode discusses the viewership of various content formats, including articles, podcasts, and videos. While the articles have been seen by a larger number of people, the average time spent reading them is usually not more than two minutes. In contrast, podcasts and videos require more time commitment. However, the challenge lies in getting people to listen to a 45-minute or hour-long podcast or watch a lengthy video.
New Combination of US and International Investments
One interesting topic discussed in the podcast is a new combination of US and international investments, suggested by Chris's daughter. Instead of the commonly used two funds strategy that combines a target date fund and small-cap value or the S&P 500 with small-cap value, this new strategy consists of a 50-50 blend of large-cap blend and small-cap value, with 30% allocated to international holdings. The international allocation includes 15% international large-cap blend and 15% international small-cap value.
Evaluation of Performance and Historical Data
The podcast delves into the evaluation of investment performance and the use of historical data. It discusses the comparison between different time periods, specifically from 1928 to 1969 and from 1970 to 2022, to analyze the performance of different asset classes. The performance of small-cap value is highlighted, with the compound rate of return for this category being significantly higher when the years heavily impacted by the Great Depression are excluded. The discussion emphasizes the complexities of evaluating performance and the importance of understanding historical trends when making investment decisions.
Paul starts the podcast encouraging listeners to check out the latest video where Chris, Daryl and Paul answer questions from readers, listeners and viewers regarding the article, podcast and video about the Sound Investing Portfolios 2023 Update. The following are the links that were used in the video:
Paul also discusses a new table that Daryl is building that will show more long term details on U.S. portfolios from 1928-2022. The discussion includes an interesting comparison of lump sum and dollar cost averaging from 1928-1937. He also digs into the relative returns of large and small cap value in good times and bad.
In the last newsletter there was a section regarding a lawsuit that investment guru Dave Ramsey is facing. In this podcast Paul makes a recommendation that would eliminate the conflicts of interest Dave may have and provide a much needed service to help investors find the kind of advisor they prefer.
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