Sound Investing

Paul shares writings and wisdom from two of his trusted Truth Tellers, George Sisti of On Course Financial Planning and Dr. Jim Dahle of The White Coat Investor.  Both of these experts are focused on helping people be better buy-and-hold investors.  George's blog post is titled “Here We Go Again!” and Jim’s blog post is “Should I try to time the market?” While Paul is not an advocate of timing for most investors, he tries to help investors understand that most comments about timing do not represent the realities of what timing is meant to accomplish, which is to protect investors during major market declines.  For those interested in timing, this link takes investors to graphs by Dr. Edward Yardini that show timing at work for 90 years. Paul's hope is that investors will see that they may have periods of feeling pleased with the work of timing, but many more periods when market timing is very unproductive. Paul also discusses changes in upcoming AAII presentations, as Don McDonald of Vestory has offered to substitute in making Paul's presentations in Boston, Westport and NYC, while Chris Pedersen may make the presentations in Silicon Valley and San Diego. None of these are finalized but we will have more on these in coming week. (Click here for upcoming presentations). Join more than 20,000 savvy investors and receive Paul’s free twice-a-month newsletter! Sign-up here.

Do you want to have a better idea of the range — or returns and risks of loss — that different equity asset classes have generated over a long period of time?  In this podcast, Paul discusses 5 tables covering the S&P 500, Worldwide Equity (50% U.S./50% International), Worldwide Equity (70% U.S./30% International), All Value (50% U.S./50% International) All Value (70% U.S./30% International).  In each case the table will show 50 years of annual returns of the equity portfolio, as well as returns with 9 different combinations of fixed income and equity. It will be helpful to listen to Paul’s podcast on the Ultimate Buy and Hold Strategy 2020 Update before listening to this podcast. Our enormous thanks to Daryl Bahls for building the tables for this podcast and the balance of the more than 60 tables we will cover in the next 2 months. Links to Tables: S&P 500 Worldwide Equity (50% U.S./50% International) Worldwide Equity (70% U.S./30% International) All Value (50% U.S./50% International) All Value (70% U.S./30% International) If you find this information of value, please like, share, and go to PaulMerriman.com to subscribe to our FREE twice-a-month newsletter. Join more than 20,000 savvy investors for Paul Merriman’s free “Sound Investing” newsletter delivered twice a month to your inbox at https://paulmerriman.com/signup/ View Paul’s videos at https://paulmerriman.com/videos/ Get you FREE “How To Invest” series books at https://paulmerriman.com/how-to-invest-series-complimentary-download/

The most important work we have done over the last 38 years has been to help investors identify the equity asset classes they should consider holding in their portfolio.  In this podcast, along with the  accompanying tables, Paul updates investors on the results of his Ultimate Buy and Hold Strategy from 1970 through 2019.  These tables are designed to help investors see the changes in risk and return when 9 equity asset classes are added to the S&P 500 index.  The discussion and tables compare portfolios of 50% U.S./50% international equity asset classes, (See Table) and 70% U.S./30% International equity asset classes (See Table) with the S&P 500.  They also compare the results for each portfolio using annual and monthly rebalancing.  Additionally, there is a complete list of funds and indexes used in the study- Data Disclosure (UBH-AV) Data Disclosure (UBH-WW).  Special thanks to Daryl Bahls for all the work he’s done in building the tables for this podcast and the balance of the more than 60 tables we will cover in the next 2 months. Link also mentioned in this podcast: Best of Class Recommendations for all the equity classes. If you find this information of value, please like, share, and visit PaulMerriman.com to subscribe to our FREE twice-a-month newsletter. Join more than 20,000 savvy investors for Paul Merriman’s free “Sound Investing” newsletter delivered twice a month to your inbox at https://paulmerriman.com/signup/  All subscribers will receive a FREE copy of Paul’s new book coming out later this year. View Paul’s videos at https://paulmerriman.com/videos/ Get you FREE “How To Invest” series books at https://paulmerriman.com/how-to-invest-series-complimentary-download/

Paul was interviewed by Rick Ferri, the host of Bogleheads on Investing, on Feb. 3, 2020. During and after the recording, scores of questions and comments were written at the Bogleheads chatroom. This podcast is Paul's reply to a number of the topics discussed with Rick and the questions and comments, broken into two sections. The first section focuses on the basic difference between the investment beliefs of John Bogle and Paul Merriman or, more appropriately, of Gene Fama and Kenneth French, the academics responsible for most of the early work on “factor” investing. The second section is Paul’s responses to many of the comments and questions posted on the Boglehead Forum after the interview aired with Rick Ferri.  These questions centered on small cap and value premiums, buy and hold vs. market timing, pros and cons of simple vs. complex strategies, how aggressive young investors should be, and Paul’s claim to making over 30% a year for 30 years. He also discusses the things he and Bogle totally agreed worked in the best interest of investors. The Bogleheads® motto is Investing Advice Inspired by Jack Bogle. We, at The Merriman Financial Education Foundation, are part of his campaign "to give ordinary investors a fair shake.” The site consists of this wiki and the Bogleheads® forum, both built by volunteers dedicated to helping people begin or improve their investing by applying our investing principles. They even built a page for Paul’s book, Live It Up Without Outliving Your Money. Also related to this podcast: Rick Ferri’s “Core-4” website Article and Tables: 90 Years of Performance Join more than 20,000 savvy investors for Paul Merriman’s free “Sound Investing” newsletter delivered twice a month to your inbox at https://paulmerriman.com/signup/ View Paul’s videos at https://paulmerriman.com/videos/ Get your FREE “How To Invest” series books at https://paulmerriman.com/how-to-invest-series-complimentary-download/

The new Callan Periodic Tables have been released and in this podcast Paul discusses 10 important lessons from the main table (2000-2019) and several other Callan tables he has not addressed before. Paul encourages listeners to review the tables (links below) and see how many important lessons you find, before you listen to the podcast. For those who find tables of numbers a good to learn, this is a “can’t miss” podcast. For a “numbers guy” like Paul, he says, “This was so much fun to record!" The Callan Periodic Table of Investment Returns, now in its 20th year, graphically depicts annual returns for various asset classes, ranked from best to worst. Created by Jay Kloepfer in 1999, the table features well-known, industry-standard market indices as proxies for each asset class. As Kloepfer notes at Callan.com, “The enduring appeal of the table is its ability to be understood at a glance. And once you’ve seen and absorbed it, you can refer to it again and again. New insights still come to me even 20 years later!” Classic Periodic Table 2020 December 2019 Monthly Periodic Table Periodic Table Collection 2019 Join more than 20,000 savvy investors for Paul Merriman’s free “Sound Investing” newsletter delivered twice a month to your inbox at https://paulmerriman.com/signup/ View Paul’s videos at https://paulmerriman.com/videos/ Get you FREE “How To Invest” series books at https://paulmerriman.com/how-to-invest-series-complimentary-download/

Can an employee convince his company’s 401k trustees to make changes?  It took 4 years for this one dedicated investor to do so and he won big. Hopefully, this story will inspire others to work this hard to change the financial futures for all 401k investors. 2:00 What is the lifetime cost of an expense ratio of .15% a year? The answer is surprising. 6:50 In what kind of investment did you earn 30% a year over 30 years? Paul has mentioned the good fortune of this investment but never before given details. 10:00 Is it true your portfolio fell from $16 million to about $12.8 million during the 10 years ending 2009?  Paul refers to Table 1 and Table 2 of the fixed distribution page. 30:45 How do you build an Ultimate Buy & Hold Portfolio if you want to eliminate international equity funds? 35:18 What do you recommend when a company’s 401k retirement plans do not offer target-date funds?  Can you still use a 2 Funds for Life approach? 37:30 Should we use a short-term bond fund for money we need for a downpayment on a house in 2-to-3 years?  This couple is considering Fidelity’s Short Term Treasury Bond Index Fund (FUMBX). 40:05 Why Japan Is So Successful at Returning Lost Property?  This is from one of Paul’s favorite weekly lists, "The Essential List" of BBC’s best articles from the week. CLICK HERE to read the article. 42:25 What market impact will It have if the U.S. produces at least a 3% growth in GDP? This will break a 13-year run of under 3% growth.  The longest previous streak was 4 years, 1930-1933. 46:10 How are young workers facing the need to adjust their future income expectations as under-funded pensions are forced to reduce the pension commitments? Paul comments on the documentary “American Factory,” where workers are coping with the reality they are going to have to accept half the income for the same job. 47:55 What are the benchmarks and realities of returns we think we make? (Paul ends this podcast on a lighter note, discussing the recent sale of the 1968 Ford Mustang Bullitt GT driven by Steve McQueen in the 1968 movie “Bullitt.”  The car was originally purchased for $3,500 in 1974 and just sold for $3.4 million.) 52:20

Paul's recent podcast, The Real Secret to Long-Term Investment Success, elicited many comments and questions at the Bogleheads forum (you can read the threads of conversation here) and from regular Sound Investing listeners. The following are questions addressed on this podcast. What does Paul think of the factor funds at Vanguard? 4:10 What impact do momentum, quality, and volatility have on your recommendations? I suggest listeners check out Chris Pedersen's article and recommendations. 22:16 Where can I see long-term real-time results of the small-cap value asset class? 24:28 John Bogle said that there was no way for a small investor to invest in small-cap value in the 30s.  Where can a small investor capture the results of the past? 31:08 If I add small-cap value to my portfolio how much will my risk go up? 34:40 Is there a similar portfolio to the 4-fund combo that includes international developed markets and emerging markets? 40:54 What are the historical trading costs and inefficiencies when trading small-cap value stocks?  Are they taken into consideration in your studies? 42:52 Are there some "real life returns" that came close to what Paul claims the historical return has been? 46:35 “What has been your biggest mistake?” Rick Ferri asked Paul in an interview for an upcoming Bogleheads podcast (which will be replayed on Sound Investing). Paul speaks about one of the most common investor mistakes and mentions this video in his answer. 49:00 Will Paul likely go to his grave with small-cap value not living up to his expectations? Paul tells investor to be patient and they will receive the premium for investing in small-cap value. 56:53 90 Years of Evidence Shows Investor Patience Leads to Better Returns

What’s the toughest challenge for many investors? Staying the course for the long term. In this podcast, Paul discusses what he considers "the most useful information for investors.” While adding new insights to his Ultimate Buy and Hold Strategy, Fine Tuning Your Asset Allocation and Distributions in Retirement articles and podcasts, Paul explores nine decades of returns for six asset classes that academics have studied for over 50 years. It turns out that the end result of the returns has been exactly what the academics predicted, but the trip was not an easy one for investors. See and download the Tables referenced here. Paul hopes that in understanding this, all investors  — especially young investors — will see that the strategy with the most predictable returns is also the one with the best predictable returns, and maintain the focus and confidence to make it through the normal ups and downs of the market without giving up.

Paul discusses the comparative returns from the Vanguard, DFA and Best-In-Class Portfolios for 2019. He also responds to 12 questions from listeners and readers of paulmerriman.com’s podcasts, articles, videos, books and recommendations for mutual funds, ETFs, 401k’s, the Ultimate Buy-and-Hold Portfolio and more.  To learn more about comparative returns, take a look at the 2-4 Fund Combo Returns 1928-2018. 12 Q&A 1.  How does the new Fidelity Small-Cap Value (FISVX) compare to our IJS and SLYV?  10:24 2.  What’s a good Vanguard Small-Cap Value Fund for a 66-year-old investor? 15:00 3.  Do you really recommend large and small-cap growth funds? 18:30 4.  Why are you so high on DFA funds? 21:00 5.  What’s your plan for helping kids with their IRAs? 26:44 6.  When will you be updating the S&P 500 Fine-Tuning Table? 31:49 7.  What does a long-time client of Paul’s old firm have to say? 33:50 8.  Where can an investor find historical data on stock and bond returns? 38:23 9.  What about supplying transcripts of your podcasts? 41:36 10.  Which is better: VTWW or FISVX small-cap value funds? 47:54 11.  How do Vanguard Value Index and Vanguard Equity Index funds compare? 50:54 12.  How much would $20,000 become in 45 years if I invest it in small-cap value? 53:04

In this podcast, Paul shares his thoughts for the coming year and answers investor questions. The S&P 500 has made 5% more than the portfolio you recommend.  Should I put it all in the S&P? 14:50 What do you think of the new Avantis ETFs?27:05 What do you think about structured notes?  In the answer I make reference to an article by Larry Swedroe:  31:34 https://alphaarchitect.com/2019/08/22/structured-notes-the-exploitation-of-retail-investors/ Can whole life insurance cash value be considered the same as bonds? 37:59 I am 27 with a wife and 2 year old daughter.  What should I do with $150,000? 41:45 I want to live on $2 million in retirement.  What dividend funds do you recommend? 48:16 What do I do if my 401k does not offer target date funds? 53:31 For a young investor do you prefer your portfolio 7 (well diversified) or portfolio 8 (all value).  58:33 This is the link to the recommended portfolios:  https://paulmerriman.com/best-in-class-recommended-portfolios-2019/