Recency Bias and Downturn Lengths

In this episode we answer emails from Andy, John, and Todd.  We discuss what "holding dollars" means, the lure of speculation on recent events, the ongoing inadequacies of 401k and 403b plans and their incentives, and small cap value vs. small cap blend.  More Cowbell!  Before that we trade stories from the EconoMe Conference and spotlight Fairfax CASA’s work with foster kids and our fundraising efforts.

Links:

Fairfax CASA Donation Page:  Donate - Fairfax CASA

EconoMe Presentation on Financial Forecasting and Base Rates:  F. Vasquez EconoMe 2026 Final Slides.pdf - Google Drive

Testfolio Comparison of LCV vs. LCG vs. SCV vs. SCG:  testfol.io/?s=cSv9C5VxOW9

Testfolio Comparison of Golden Ratio Portfolios with Small Cap Variants:  testfol.io/?s=hTcOUvd0g4J

Breathless Unedited AI-Bot Summary:

Markets get weird fast: oil shocks, war headlines, and that sickening moment when it feels like every asset in your portfolio is moving together. We dig into a question that pops up in exactly those moments: what does it actually mean when traders say they’re “holding dollars,” and is there a DIY investor version that makes sense? We walk through the mechanics behind dollar demand, why institutional cash moves don’t map neatly onto a home risk parity portfolio, and why cash timing is a low-odds game for long-term investors.

From there, we tackle the real culprit behind most bad decisions: the urge to tinker. We talk leverage, opportunistic investing, and the seductive idea that you’ll spot the perfect entry point if you just watch enough financial news. Our view stays consistent: a disciplined asset allocation, a clear rebalancing rule, and the patience to wait out uncertainty usually beat prediction. If you absolutely must scratch the itch, we discuss how some investors think about volatility tools when the VIX is elevated, and why even “smart” speculation should be capped and rules-based.

We also answer a practical retirement-plan headache: building diversified risk parity style exposure inside a 401k or 403b with limited fund menus. We explain why plan options change slowly, what kinds of “alternative investments” may show up instead, and why pushing for a self-directed brokerage window can be the most effective workaround. Finally, we close with a nerdy but important allocation question: small cap value vs small cap blend, how small cap growth can sneak in, and why index selection (CRSP vs deeper value tilts like S&P 600 value style exposure) can change what your backtest is really telling you.

Subscribe for more DIY investing clarity, share the show with a friend who keeps tinkering, and leave a quick review with your biggest portfolio question.

Support the show