Sound Investing

In preparation for his presentation at the Bogleheads Conference Paul reread John Bogle’s “The Little Book of Common Sense Investing” He has been recommending the book since 2007 but in 2017 Wiley published the updated and revised edition.  There is some terrific new material in the revised edition.Paul focuses on several topics from the book including Bogel’s statement that index funds are the only “honest” funds.  Paul discusses the reasons actively managed funds can’t afford to tell the truth.Paul also discusses Chapter 2 on Rational Exuberance.  In this chapter Bogle discusses the very important topic of investment returns vs. speculative returns.  This topic is essential for do it yourself investors to understand as it prepares them for a reality of investing that could help them stay the course during difficult times.Paul ends by reading Bogle's list of 8 common sense realities that every investor should know.  It would probably be smart to reread this short list at least once a year.At the Bogleheads conference Paul will speak twice: once in an interview with Jim Dahle (The White Coat Investor).  The topic is factor investing.  We have developed a page of links to all of the tables that are focused on the use of factor funds to build a portfolio.  Here is a link to that list of tables, charts and graphs.In his second opportunity to share he is part of a panel on investing.  That will be a free for all and should be fun.All of the conference presentations are being taped so they will be available in the coming months. 

I had an amazing conversation with David Baughier on the Forget About Money podcast! We discussed my 12 One-Million Dollar Ideas for building wealth, the power of starting early, and why index funds are a game-changer for long-term investing. We also covered the importance of diversification, the benefits of small-cap value stocks, and why sticking with a buy-and-hold strategy beats trying to time the market. Whether you're new to investing or looking to refine your retirement plan, this episode has actionable tips to help you secure your financial future. Give it a listen—you won’t want to miss it! Watch the video here. Download the transcript here

Paul starts the podcast with a discussion of his ⁠special presentation⁠ to the graduating nurses from the College of Nursing at Texas A&M. This presentation was part of a Life Transitions Series. He discusses how he might be able to do a similar presentation for other groups of graduating college students, as well as  groups of investors who are trying to get the most from their company 401k. The second topic is regarding a new set of tables that should help investors figure out potential future returns for the S&P 500, ⁠Small Cap Value, U.S. 2 Fund Index Portfolio and U.S. 4 Fund Index Portfolio⁠. The third topic was motivated by Ben Carlson’s articles on “⁠Why Housing is Everyone’s Favorite Investment⁠” and “⁠What is the Historical Rate of Return on Housing?⁠” Paul recently sold his home and discusses the challenges of figuring out how the profits compared to the S&P 500., As promised Paul had his meeting with David Sterman, an hourly CFP, who has followed our recommendations. Paul discusses his services and costs. Here is his contact information: ⁠https://huguenotfinancialplanning.com⁠  1358 Old Ford Rd. New Paltz, NY 12561 Phone: (917) 553-0675⁠ david@huguenotfinancialplanning.com⁠  For those interested in the Boglehead Conference: ⁠https://boglecenter.net/2024conference/⁠

The discussion kicks off with highlights from the upcoming Boglehead Conference, focusing on investment strategies. A deep dive into whether to invest a lump sum or dollar cost average reveals historical data supporting both methods. Listeners are guided through the intricacies of small-cap value stocks, exploring their low P/E ratios. Simplifying investment portfolios is suggested for better diversification. Tips on maximizing Roth IRAs and strategies for using T-Bills as equity risk reducers add valuable perspectives for savvy investors.

Dave Ramsey, a renowned financial expert known for his advice on personal finance and debt reduction, tackles some hot topics in this discussion. He emphasizes the importance of trusting historical performance rather than recent returns when investing. The conversation includes practical tips for retirement planning and how to teach young investors about the benefits of starting early. Ramsey also shares his skepticism about cryptocurrencies, echoing Warren Buffett's concerns about their viability as an investment.

1.  My husband and I are moving to Fidelity to set up your Ultimate Buy and Hold Portfolio.  How do we make the change from our holdings to your portfolio?  Do I have to sell all of my holdings?  Plus we want to find an hourly advisor  to help.  Can you make a recommendation? 1:45   2. I have $1million in a money market fund.  Do you think it is time to start reducing the cash position and moving to short term bonds or equity ETFS? 8:45   3.  Are target date funds the same as all in one funds? 17:15   4.  I would like your guidance on the decision to put together a S&P 500 and Small Cap portfolio using 3 to 1 leveraged fu?nds.  Does the extra return justify the higher risk? 20:00   5.  How should I protect my portfolio against inflation from the loss of the petrodollar? 35:00   6.  From what I can see you have not addressed investment needs of older people in their 80s and 90s.  How should I invest?  I just can’t afford to lose money at my age. 39:17   7.  Would I be dumb to have 10% of my retirement funds in gold? 46:20   8.  With the fed getting ready to lower interest rates should I move my money market funds into 10 year Treasuries? 52:40   9.  In the small cap blend and small cap value indexes it seems investors don’t get the advantage of owning small companies that grow to be the giants of corporate America.  How do you get the premium when you have to sell the companies when they move beyond their index? 59:15   10.  What is the difference between your 2 Funds for Life strategy and the two fund strategy that holds the S&P 500 and small cap value? 1:01

1. What is the best glide path (asset allocation) for a 58 year old pre-retiree and then in retirement? This is the link for Chris Pedersen’s 2 Funds for Life glide path. 2:50 2. I don’t need all of my RMD (required minimum distribution). How should I invest the excess? Here is the link to the video on "My 12 Favorite Vanguard Funds for Retirees” and the link to all of the Fine Tuning Tables. 11:19 3. My wife has easily onset demential. It’s costs $200,000 a year. How should a family invest in a situation like ours? Here is the link to the Vanguard Brokerage CDs (⁠https://investor.vanguard.com/investment-products/cds⁠) and ⁠stantheannuityman.com⁠ for MYGA rates.  17:18 4. What are your thoughts regarding precious metal investing? And if there is a place, what is the best way to do it? 22:52 5. Will the massive increase in passive investing, which has benefited the large cap growth indices, reduce the long term returns of small cap value? Here is the link to the long term returns Paul mentions. 28:50 6. How would the long term returns change if we overweight the U.S. 4 Fund Portfolio with slightly more small and large cap value? Here is the link to the Equity Asset Classes (1928-2023) 32:01 7. I’m 72 and my wife is 63. How different should our glide paths be? Here is the link to the Vanguard and Blackrock TDFs. 44:10 8. Are REITTs more like stocks or bonds? 46:41

On July 25, 2024 Paul and Chris made a presentation to the Puget Sound AAII.  Paul spoke to the latest research on small cap value and Chris spoke to the latest research on his 2 Funds for Life Portfolio.  Following the presentation  they answered questions from the guests. Q:  What advice do you give on conversion of regular IRAs to Roth IRAs?Q:  What investments do you recommend to offset large losses in the equity markets?Q:  Why do you recommend AVUS over VOO, or other S&P 500 funds?  In Chris’ answer he recommends listeners read his AAII article on ETF Selection.  Q:  Why don’t you recommend Long Term Treasury Bond fund?  Vanguard Long Term Treasury VGLTQ: Do you recommend a pension and/or Social Security  be considered the equivalent of a bond fund?Q:  Can you compare RSP (an equal weighted S&P 500 Fund) vs. SPY? Watch the full video here.

In this podcast Paul discusses an article by Truth Teller Ben Carlson (The Biggest Winners in the Stock Market), regarding a study by Dr. Hendrik Bessenbinder (Which U.S. Stocks Generated the Highest Long-Term Returns ) This study is an update from an earlier study from Bessenbinder that Paul has recommended many times.Paul also discusses an article by Truth Teller John Rekanthaler,  "When Rebalancing Creates Higher Returns—and When It Doesn’t” This article adds to THE discussion of the impact of rebalancing on the latest video/podcast.

Paul, Daryl, and Chris are together again to discuss what they each think are the best single charts or graphs to help people understand investing and make good decisions. Paul starts by asking Chris and Daryl how much we can rely on the past to predict the future. Paul follows that with a deep dive into his choice for the most important chart -- the quilt chart. Daryl follows up with his choice -- a discussion of the tell-tale chart.Chris finishes with his choice: a discussion of the 2 Funds for Life Fine Tuning Table. Tables referrenced- Table J1b- Equity Index Returns: 1-yr Periods (1928-2023)  ⁠Table K1a⁠- 4 US Asset Class Indexes & 4 Fund Combo Relative Return Ranking (1928-2023)  ⁠Table K2a⁠ Asset Classes & 4 Fund Combo (1928-2023) - Return Rank Frequency  ⁠Table K1b⁠ S&P 500 & US SCV Relative Return Rank Comparison (1928-2023)  ⁠Table K8a⁠ Sound Investing Port. Returns: 10 Yr Periods (1928-2023)  ⁠Table K6a⁠ Sound Investing Portfolios, S&P 500 & US SCV Relative Return Ranking (1928-2023)  ⁠Table K7a ⁠ Sound Investing Portfolios, S&P 500 & US SCV (1928-2023) - Return Rank Frequency    Watch video here.