Sound Investing

Of the many mutual fund and ETF portfolios on our website, paulmerriman.com, which of the dozen-plus portfolios is most appropriate for you, given your risk tolerance and need for investment return? The goal of this lively discussion — with Paul Merriman, Chris Pedersen and Daryl Bahls — is to help you decide. Topics covered include: A short history of the Vanguard,Fidelity,T Rowe Price and Schwab portfolios — offered first on the Merriman Wealth Management website and moved to the website for The Merriman Financial Education Foundation. The Vanguard ETF Portfolio as well as the many Best-in-Class ETF portfolios, including the Ultimate Buy and Hold, U.S. 4 Fund Combo, Worldwide 4 Fund Combo, All Value, All Small Cap Value, and a series of 2 Funds for Life Portfolios. Regarding the Ultimate Buy and Hold Strategy, Paul discusses the use of the Fine Tuning Your Asset Allocation Tables to determine the best combination of stocks and bonds. Plus, those tables are used later in discussing the 4 Fund Combos. The many psychological considerations in selecting the right portfolio, explored by Daryl. A reminder of how patient a small-cap investor must be, by Chris, who also presents a new Tell Tale chart from 1928 to 2019. Consideration of the pros and cons of each of the ETF portfolios, by Chris. Watch video here.

Paul Merriman is amazed at the interest in GameStop. People he's known for years and never had an interest in the stock market are getting involved…. only emotionally for most, but for many both emotionally and financially. In this podcast, Paul explains the difference between going “long" and ‘short” in the market, and what drove him to buy GameStop when it was selling for under $10 a share. He addresses the problems with short selling and why the unit-of-return per unit return stinks. If people are happy to see hedge funds fail, they should be happy to learn that only about 5% of hedge funds stay in business for more than 10 years. The good news is GameStop is a major holding for Vanguard and DFA — over 9 million shares between them. Paul discusses the Grizzly Fund (GRZZX), which is one of the better performing short funds. Over last 15 years, a $1000 investment became worth $100, which is better than the average short fund where $1000 became worth $50. Why? The answer includes the long-term returns of short recommendations from "The Hulbert Financial Digest"’s study of newsletters. Questions & Answers How should I invest for the next 10 years?  Do you think 2 Funds for Life would be right for me? Paul answers and also references Chapter 10 of his book, Financial Fitness Forever. In our current low-interest-rate environment, do you think that will affect the ability of bonds to help counteract market downturns? Is it possible to include the inflation rate along with the return in the tables the foundation creates? Paul suggests a number of other data points that would be nice to have. Finally, Paul explores an investor's claim that he has done well since the mid-1980s. Was it luck or was it skill? This podcast is part of the educational offerings from The Merriman Financial Education Foundation, a registered 501(c)3.  If you found value in this podcast, here are five ways to support the podcast and our foundation:

Paul Merriman, founder and president of The Merriman Financial Education Foundation, Chris Pedersen, director of research, and Daryl Bahls, director of analytics, discuss the 2021 Best-in-Class ETFs  Paul starts the discussion with a short history of his commitment to providing mutual fund recommendations  He makes it clear that they are not CFPs, CFAs or registered investment advisors, and he notes that selecting the “best" ETFs has its limitations and is not a science. Chris then discusses the steps he takes to identify the final choice in each equity asset class, and why he chose several new ETFs, including his expectation for additional return. Chris, Daryl and Paul answer related questions including: Should I immediately switch old positions into the new recommendations? Should I hold the old positions and start a new portfolio at M1 Finance? Having started an account for a one-year-old child with a small-cap value fund, should I buy more small-cap value or put the next investment into another asset class? Why are you suggesting ETFs with higher expenses? Why have you eliminated the more risky emerging markets ETFs? To see the Powerpoint slides, click here. To watch the video click here.

Paul announces Chris Pedersen's Best In Class ETF Recommendations for 2021 and Paul’s updated Mutual Fund recommendations for Vanguard, Fidelity, T. Rowe Price and Schwab. In anticipation of next week’s Zoom call to discuss the new portfolios and fund recommendations, Paul Merriman, Chris Pedersen and Daryl Bahls are soliciting questions from you, our listeners. If you have questions related to this work, please submit them to info@paulmerriman.com with subject line: ETF/MUTUAL FUND QUESTION. They will try to address them in next week’s recording. Paul answers these recent questions from our readers and listeners: How should I invest $160,000 for my 66-year-old mother who doesn’t need the money to live on? 12:28 What are the advantages and disadvantages of the Ultimate Buy and Hold Strategy and 2 Funds for Life for a 57 year old? 18:39 What is the most tax-efficient way to rebalance an All-Equity portfolio? 26:39 Should I pay off a mortgage or invest in my retirement accounts? 29:45 Why are your large-cap value index higher than the large-cap value at Vanguard? 33:12 How is having $300,000 at age 65 a million dollar advantage? 42:55 Why do you think index funds are better than owning an investment in real estate property? 48:45 I want to put money into a Roth IRA. Should I use your tax-deferred or taxable portfolio recommendations? 58:54 Don McDonald’s Talking Real Money Minute — “Cryptocurrency: yes or no?" Don McDonald, Co-Founder and co-host of the "Talking Real Money" podcast, produces the “Money Minutes” often featured on “Sound Investing” podcasts. Don also produced the soon-to-be-released audio version for our latest book, We’re Talking Millions!.

Paul introduces Don McDonald, Co-Founder of  Vestory Investment Advisory and co-host of "Talking Real Money" podcast, who will be producing “money minutes” for most of our podcasts. Don also produced the soon-to-be-released audio version for our latest book, We’re Talking Millions!. Paul discusses the upcoming Retiremeet America 2021 free online conference on Feb. 20, 8:00 a.m.-1:00 p.m. PT. See the list of speakers, topics, speaking times and registration form at https://retiremeet.com  Paul and David Booth, Co-Founder of Dimensional Fund Advisors, are keynoting the conference. Before addressing the Q&A's Paul discusses an article, “Deep Risk in the United States of America,” by Ben Carlson. Ben is on Paul’s list of Truth Tellers and highly recommends Ben's articles and podcasts at https://awealthofcommonsense.com/. Larry motivates Paul to discuss the question: What changes should a pre-retiree make to their portfolio when they have saved enough to retire, even though they are planning to work longer? 19:00 What asset allocation should I have when I reach retirement but don’t need the money to live on? 23:40 How would you suggest someone who is currently in cash get back into the market? 31:22 Don McDonald’s “Talking Real Money” — The risks in owning bonds With bond yields so low do you expect retirement returns to be significantly lower than in your tables?  38:57 In a recent newsletter we mentioned a presentation by Barry Schwartz, author of The Paradox of Choice. The focus of the presentation was what happens when people are offered too many choices. We linked to a college presentation that got into other topics not of interest to us.  Here is a shorter presentation and very popular TED Talk with over 15 million views: https://www.ted.com/talks/barry_schwartz_the_paradox_of_choice?language=en   45:10 In your 2012 book, First Time Investor, you were not in favor of target date funds. What has changed that you now recommend them? 60:40 Do you really think the S&P is going to beat Berkshire Hathaway over the next 10 years? 57:45 I know an investment advisor who made 29% a year over the last 2 years and he has all of his own money in the portfolio he wants me to use —individual stocks, not index funds. Is this investment philosophy a fool's errand and am I falling for a siren’s song? 1:06:35

This podcast addresses the most important investment lessons of 2020 from The Merriman Financial Education Foundation’s research team, Chris Pedersen and Daryl Bahls. In each case there is a table/chart/graph that helps illustrate the lesson. (See more below. Also, WATCH as a VIDEO). In this a year-end Zoom call, Chris discusses his recent studies on using “2 Funds for Life after 60” as well as the case for international diversification and how he has created additional past returns for international asset classes that are difficult to find. Paul discusses why he thinks the new book, We’re Talking Millions, has been well received. Each finished the discussion with what’s coming in 2021. For Daryl it is new studies on distributions and inflation. For Chris it is a new book on 2 Funds for Life, along with Best In Class ETF Portfolio updates. For Paul it is more presentations to high school and college students, a series of 5-minute videos, promoting the upcoming We’re Talking Millions audio book, and a major overhaul of his website. About The Charts Click here to access a pdf of the charts The first two Quilt Charts show the one year returns (1928-2019) for S&P 500, Large Cap Value, Small Cap Blend, Small Cap Value and 4 Fund Portfolio. Only 1 in 5 years produced expected premiums. The next two quilt charts show that the 10 and 20 year results become more dependable in achieving results. In 75% of the 20 year periods the ranking of results was as expected. The next 5 graphs show the relative strength of the S&P 500 vs. the 4 Fund, All Value and Small Cap Value Portfolios. All of the graphs show investors how very patient they must be to capture the better returns of the different portfolios. The worst case in each graph ran from 15 to 20 years of under-performance. The next five tables track the risk and returns of 11 super simple portfolios of 1 to 4 funds.  The good news is all but one of the portfolios had very fine returns. It was also noted that the best performers also had the biggest number of best and worst years. The Ultimate Buy and Hold Equity Portfolio didn’t produce many new lessons but the one it produced was interesting. After 50 years of performance the All Value Portfolio produced its first total return that was lower than the portfolio of all 10 asset classes. What Paul failed to note (but Daryl and Chris left in the table) was the 50-year result of the 4 Fund All U.S. Portfolio of 12.3%, just .3% less than the much more complex 10-fund Ultimate Buy and Hold Portfolio.

In this presentation Paul discusses the advantages of Vanguard, best cash management fund, best equity fund, best balanced funds, best bond funds and more at Vanguard. He also explains how retirees can buy a pension for the rest of their life and make more than 7% a year, most of it tax free. Paul mentions how investors can receive a free library of books on annuities from stantheannuityman.com/. This video is part of a series of educational events sponsored by The Merriman Financial Education Foundation and the Bainbridge Community Foundation. “Financial health is important to both individual and community well being,” says Jim Hopper, BCF executive director. “Charitable giving begins with confidence in your own financial position, and we’re pleased to offer these seminars to help islanders make sound decisions with their money at every stage of life. Investing in yourself and your community, they’re two sides of the same coin.” To learn more about the Bainbridge Community Center, visit their website or Facebook page. For the video of this presentation, click here. This podcast is part of the educational offerings from The Merriman Financial Education Foundation, a registered 501(c)3.  If you found value in this podcast, here are five ways to support the podcast and our foundation: 1)     Leave a podcast review on your player of choice. 2)    Sign up for our biweekly newsletter at PaulMerriman.com 3)    Use our M1 Finance affiliate link if you are interested in setting up a brokerage account, using our portfolio suggestions. The Foundation will receive a one-time small fee at no cost to you. 4)    Buy our latest book, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement available at Amazon and other online outlets. 5)  Consider making a tax-deductible donation to the Foundation to support our mission to provide financial education to investors.  Thank you!

In this year-end holiday message for 2020, Paul speaks to the importance of financial education and sharing knowledge as a form of caring for yourself, your loved ones and future generations. In keeping with the of mission of The Merriman Financial Education Foundation, a free PDF of our latest book, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement, will soon be available to teachers and students and to those who sign up for Paul’s free twice-a-month “Sound Investing” newsletter at https://paulmerriman.com/signup/. Sign up now for more details in our next newsletter! You can also watch this message on Paul's YouTube. This podcast is part of the educational offerings from The Merriman Financial Education Foundation, a registered 501(c)3.  If you found value in this podcast, here are five ways to support the podcast and our foundation: 1)     Leave a podcast review on your player of choice. 2)    Sign up for our biweekly newsletter at PaulMerriman.com 3)     Use our M1 Finance affiliate link if you are interested in setting up a brokerage account, using our portfolio suggestions. The Foundation will receive a one-time small fee at no cost to you. 4)     Buy our latest book, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement available at Amazon and other online outlets. 5)  Consider making a tax-deductible donation to the Foundation to support our mission to provide financial education to investors.  Thank you!

Joe Saul-Sehy, of the award-winning podcast "Stacking Benjamins,” interviews Paul on the a wide variety of topics, such as: What was the key to your investing success? How do you bridge the gap between the spender and a saver in a relationship? Why did you started the latest book, We’re Talking Millions! 12 Simple Steps To Supercharge Your Retirement, with a discussion of inflation? What’s the impact of fixed vs. variable distributions? What’s the choice between stocks vs. real estate How is diversification a million dollar decision? What is the 10-million-dollar decision? What are the most important of the 12 investment decisions? A free PDF of the book is available to teachers and students. To learn more about this, sign up for Paul’s free twice-a-month newsletter at https://paulmerriman.com/signup/ Stacking Benjamins was named "Best Finance Podcast” by Kiplinger and won Best Business Podcast 2017 Academy of Podcasters Award and Plutus Award 2014, 2017, 2018.  You can hear the whole show at: StackingBenjamins.com/Paul-Merriman-978 This podcast is part of the educational offerings from The Merriman Financial Education Foundation, a registered 501(c)3.  If you found value in this podcast, here are five ways to support the podcast and our foundation: 1)    Leave a podcast review on your player of choice. 2)    Sign up for our biweekly newsletter at PaulMerriman.com 3)    Use our M1 Finance affiliate link if you are interested in setting up a brokerage account, using our portfolio suggestions. The Foundation will receive a one-time small fee at no cost to you. 4)    Buy our latest book, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement available at Amazon and other online outlets. 5)  Consider making a tax-deductible donation to the Foundation to support our mission to provide financial education to investors.  Thank you!

I’m very near retirement. What advice would you recommend? :46 What four Vanguard and Fidelity funds do you recommend for your 4-Fund Strategy?  (Recommendations are discussed in the article, “Don’t just default to the S&P 500: Consider the simple 4 funds”.) 6:04 How can a European use your 4-Fund Strategy? 7:42 How about using the 4-Fund Strategy in the U.K.? 11:49 Should I use an advisor or manage the portfolio myself?  Does DFA still have an advantage over Vanguard? 15:56 Can you recommend Vanguard ESG funds? 22:47 When are you going to update your Fidelity and Vanguard mutual fund recommendations? 23:40 Where can we park some profits?  25:00 Most of my nest egg is out of the market waiting for a large drop in the market. Do you expect the market to drop after the holidays? 29:57 We have been in a bull market in bonds for 40 years. But with rates so low that party is over. What investments do you suggest to replace longer duration bonds in most asset allocation plans? 35:00 This podcast is part of the educational offerings from The Merriman Financial Education Foundation, a registered 501(c)3.  If you found value in this podcast, here are five ways to support the podcast and our foundation: 1)    Leave a podcast review on your player of choice. 2)    Sign up for our biweekly newsletter at PaulMerriman.com 3)    Use our M1 Finance affiliate link if you are interested in setting up a brokerage account, using our portfolio suggestions. The Foundation will receive a one-time small fee at no cost to you. 4)    Buy our latest book, We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement available at Amazon and other online outlets. 5)  Consider making a tax-deductible donation to the Foundation to support our mission to provide financial education to investors.  Thank you!