In this podcast, “Can I trust your numbers?” Paul answers two common questions: “Can I trust the historical returns in your tables?” and “Can I believe these results will be repeated in the future?” Paul discusses the strengths and weaknesses found in the past results, as well as suggests how to deal with estimated returns for the future.
This podcast covers the historical performance of the small cap value asset class. Paul compares the risk and return covering the last 87 years in 1, 15 and 40 year periods. Learn why he believes that the Vanguard Small Cap Fund is headed for lower future returns. At the end of the podcast he asks listeners to pass this along to friends and family, as well as trustees of their 401k plan if it doesn’t include a small cap value fund.
10 Things You Should Know About Small Cap Funds
This podcast looks at the one year, 15 year and 40 year returns of the Small Cap Index as well as the impact of size, value and diversification on returns. Paul compares the Small Cap Index at Vanguard and DFA, and discusses the problems of active management with this asset class.
Paul discusses 10 of the most important things you should know about value investing. Using stories about three of the most famous value investors, he explains why your long-term performance should be amongst the best in the industry. He compares two value funds so that you can understand why one made 3.5% more for 15 years. As Paul did in his podcast on the S&P 500, he also reviews the 1, 15 and 40-year track records and compares them to the S&P 500. It is recommended you listen first to the S&P podcast and read this article.
Paul answers these common questions on investing from his readers and listeners. You can find more articles, recommendations and resources – including three FREE “How To Invest” eBooks – at PaulMerriman.com.
2. What is the difference in the risk of each of your portfolios? Why did your portfolios do so poorly last year? (7:18-17:53)
3. Is it possible for a do-it-yourselfer to use a mechanical market timing system, or does it have to be done through a advisor? (17:54-24:34)
4. Why don’t you make DFA recommendations as you do for Vanguard? (24:35-32:29)
5. Is an annuity a good way to save to set up an account for long term care at age 85? (32:30-37:49)
6. Is there such a thing as an ultimate timing system or portfolio? (37:50-45:14)
7. Why do you recommend Dimensional Fund advisors over Vanguard and others? (45:15-1:03:40)
2. Should I move my money from the U.S. Government TSP to your Vanguard funds when I retire? (9:11-15:12)
3. Are all the Vanguard ETFs commission free? (15:13-17:39)
4. How often should I rebalance when I am making monthly contributions? (17:40-22:00)
5. Can’t you have plenty of international exposure with a portfolio of large multi-national U.S, companies, like the S&P 500? (22:02-26:25)
6, I have most of my money in Vanguard Primecap fund. What are your recommendations for how much you should have in one fund? (26:25-35:11)
Paul presents the many financial education resources at paulmerriman.com to help investors improve their financial future. Learn about free access to a library of Marketwatch.com articles, podcasts, free books, and free recommendations for mutua
The most common question I receive is about moving cash positions into the market. I have addressed this topic several times, but here’s one more try. There is no “answer” other than to find a comfortable way to get back to the asset allocation that’s appropriate for the long term. I hope these comments will help cautious investors get it right and keep it right.
The Outrage of the Year! For most of the last 30 plus years I have been a pain in the backside for brokers, as I have tried my best to warn investors about the dangers of doing business with an financial advisor who is compensated on a commission basis. In my book, “Get Smart or Get Screwed: How To Select The Best and Get The Most From Your Financial Advisor,” I list 80 reasons why I don’t trust brokers. I actually pared it down from over 100. I thought I had seen all the tricks and traps of commission-motivated sales people. In this podcast I discuss a way that two people got mislead. One was relatively happy with the advice while the other now feels grossly cheated. Find out how an otherwise helpful CPA led his clients astray, while thinking he was doing them a favor.
With the recent rise in the S&P 500 it’s happening again. Investors are wanting to know if we should be reducing our positions in international equity asset classes and investing more in the S&P and other U.S. equity asset classes. In this podcast I discuss the challenges of owning a more diversified portfolio. Have there be changes in international markets that mean we should change our commitment to them? Should we continue to rebalance, which means taking money from some big winners and putting more in the dogs. It’s never easy. Paul poses 3 questions we have to face in order to consider a major change in our portfolio.
Paul discuss the key disadvantages of Vanguard’s largest fund and why Vanguard recommends investors put so much confidence and money into this, and its sister fund, that represent the international markets. Find out why Paul believes using this fund can set your retirement back one to five years and cost your heirs millions of dollars.
Experts conclude that over 90% of long term investment returns come from your choice of asset classes. In this podcast Paul discusses 8 separate decades of asset class returns so that you realize that the next 10 years may look a lot different from the expected long term return. This information will hopefully help investors understand the unpredictability of short term returns and allow them stay the course after a period of disappointing returns.