Is the small cap premium gone?


For the last 15 years, a lot of market experts have said that the small cap and value premiums are a thing of the past. Their position is normally based on the idea that once a premium has become common knowledge it goes away. Of course that would suggest that once the premium of stocks over bonds is understood by most people, it will cease to exist. In this podcast Paul looks at the 15 years before 1990, 1990 to 1999 and 2000 to 2013, which should convince investors that those premiums are still highly likely to exist in the future.

Paul answers your questions

In this podcast Paul answer 5 questions:
1. Why should I pay fees to a fund manager if I can build the fund myself?
2. Do REITs make sense in a taxable account?
3. Should I invest in a REIT ETF or mutual fund?
4. How should I dollar cost average $100,000 into the market?
5. What educational material should someone read who has invested in individual stocks all their life?

How to fix a broken portfolio

In this podcast Paul discusses four major challenges to fixing a broken portfolio. Almost every question he receives is about how to make something that isn’t working, start working. Broken portfolios can be repaired with a handful of simple steps, but they’re not necessarily easy steps. Change, even in the face of obvious advantages is difficult for most people. In sharing how he would fix the problems, Paul hopes that listeners can break the logjam and live in peace with their investments.

How To Get The Most From Your 401(k) Plan

The 401(k) is the backbone of most retirements, yet millions of people are investing in 401(k) plans with mediocre offerings. To help make the most of your retirement investment, Paul Merriman offers recommendations for more than 100 Top U.S. company plans and the U.S. Government TSP at his website  In this podcast he explains why and how to use them. 

Differences between Vanguard and DFA Emerging Market Funds

Focusing on the differences between Vanguard and Dimensional Fund Advisors (DFA) funds, this podcast compares the Vanguard Emerging Markets Fund with four different emerging market funds at DFA. There is no secret to the advantages at DFA but it does take some analysis to understand the way their portfolios are constructed.

Ken Roberts’ Bulls and Bears – A Radio Interview with Paul Merriman

Ken Roberts’ Bulls and Bears – A Radio Interview with Paul Merriman
Paul discusses a wide range of investment topics, why and how investors fail and succeed and offers his sound investing advice. We recommend you skip through the radio show ads and enjoy Paul’s interview.

8 Secrets to help you retire today and enjoy it!

Paul Farrell is one of the most popular writers on Many of his articles are focused on “gloom and doom,” some list the reasons to “buy now,” and an even smaller number address money and lifestyle. The money and lifestyle articles are Paul Merriman’s favorites, although he suspects they are the least read. A recent article,  “8 Secrets to help you retire today and enjoy it!” gives a little of Farrell’s path to his present balance between work and play.

In this podcast Paul Merriman takes on Farrell’s “Lesson No. 1. No, you don’t need a million bucks.”  While Farrell makes a reasonable case that you don’t need a million dollars to retire, Merriman argues that’s a dangerous long-term goal. His advice to young people is that they take steps to retire with at least $2 million. If they don’t make that goal, they can adjust; but we must be careful what we wish for and aim for.



Q&A Regarding Paul Merriman’s Recommended Portfolios

Q&A Regarding Paul Merriman’s Recommended Portfolios

This 30-minute podcast gives investors a better understanding of how and why I put together my recommended portfolios.

Question #1: Why not substitute some bond funds that pay higher rates of return, like peer-to-peer lending securities that pay over 10%?

Question #2: Is it possible to make rebalancing easier by using one small cap Vanguard fund, rather than two?

Question #3: How risky is it to let an investment advisor manage your account? How do we know the manager isn’t another Bernie Madoff?

Question #5: If an investor has millions to invest, are there things he/she should do differently from what you recommend?

Question #6: Why have you recommended Vanguard ETFs that are similar but more expensive than others they offer?

Q&A Regarding Asset Allocation, Financial Advice, Stocks vs. Bonds, and CDs

In this podcast, Paul continues to answer questions from readers and listeners.
Question #1:  I just received $300,000 from the sale of a company and would like to invest in a handful of funds and stocks I like. What do you think of my asset allocation?
Question #2:  Should I put all my bonds in my tax deferred investments?
Question #3:  I have 401(k)s, IRAs, taxable accounts, and my wife has several accounts of her own. Where can we get help to put together your asset allocation using all these accounts?  Is it possible to get good advice on an hourly basis?
Question #4:  My friend and I are in our 20s. I told him you recommend young investors should have all their long-term investments in equity funds. He is keeping 10% in bonds in case there is a big sell off, help protect him from loss and give him money to invest when the market is down. What do you think?
Question #5:  My grandmother has a 10 year CD paying 3.1%.  She wants something that pays more but is safe. What would you recommend?

Q&A Regarding Bonds, Index Funds, ETFs and 401(k) Diversification

In this podcast Paul responds to questions by readers and listeners.

Question #1: In your “Ultimate Buy and Hold Strategy,” you use 40% bonds. What is the impact if you invested less in bonds? How much does a change in bonds change the expected return?

Questions #2: My 401(k) only has three index funds – Fidelity Spartan Total Market Index, Vanguard Small Cap Index and Fidelity Spartan International Index. How would you distribute the investments among the three funds?

Question #3: My 401(k) is run by Schwab, but the investment choices aren’t very good. They offer self direction wherein I can make my own investment choices. Would your Schwab ETF recommendations be a good way to diversify my 401(k)?

First Half of 2014: What Have We Learned?

The first half of 2014 was pretty good. This podcast reviews the results and lessons it has taught us about long-term investing. It also compares some funds at Vanguard, DFA, and at Warren Buffet’s Berkshire Hathaway for the 6 months and 15 years ending June 30, 2014.

How to Use Morningstar

This podcast is in response to a question from a listener. He says, “Most of my non-retirement equity is in the U.S. Vanguard Total Market Index. What percentage of this fund is in the asset classes you recommend?” I used this question to show investors how to use the Morningstar free data base to figure this out on your own.

Are ETFs not living up to expectations?

Are ETFs not living up to expectations? This podcast was suggested by a listener who read an article by Mark Hulbert, who noted that newsletters that used ETFs were getting lower returns with ETFs than open-end mutual funds. In this podcast I compare my returns, (as tracked by Mark Hulbert), with the rest of the newsletters. My results were substantially the same – with no trades – so the problem is not with the ETFs but rather those trading the ETFs.

What’s Wrong with Vanguard

I am as big a fan of Vanguard.  I have recommended their funds for over 15 years and said, without hesitancy, that Vanguard is the best place for do-it-yourself investors to invest.  They are a terrific source of index funds and ETFs and they do a terrific job of educating investors. That said, I also think they do a very mediocre job of asset allocation. In this podcast, I discuss the online survey and corresponding ETF recommendations. I cannot see into the future but I believe their advice will potentially cost investors millions of dollars over a lifetime.

Finding a Mentor

I recently addressed a group of graduating seniors at Western Washington University on the topic, “10 steps you should take in the first 12 months after you graduate,” and, of course, the importance of finding a mentor cannot be understated. This podcast will give you some ideas both where to find a mentor and how to be one. It is intended to be shared with the students and young investors in your  life.

Eight Secrets to Help You Retire Today!

I greatly enjoy teaching and talking with young people, and when I recently asked university students about the dollar amount they believe they need to retire, they said $1 million. Interestingly, that is the same amount I was told by students in 1966. On an inflation-adjusted basis, that 1966 $1 million would be more than $5.5 million today; daunting. In this podcast, I comment on my friend Paul Ferrell’s MarketWatch article “Eight secrets to help you retire today and enjoy it,” and share ideas for enjoying life, while offering good reasons to save and invest for the future and unexpected life events.

Superior Diversification on a Shoestring Budget

More than10 years ago, Rich Buck and Paul Merriman wrote a popular article titled, “Superior Diversification on a Shoestring Budget.”  It is amazing how far the industry has come since the article was released. It focused on how to build a broadly diversified Vanguard portfolio following Paul’s Vanguard Aggressive Portfolio using 9 different funds. To complete the process took 9 years of patient investing. With commission-free ETFs at Vanguard and Schwab, and low minimums with Schwab index funds, most young investors can now build the entire portfolio in one year.  In this podcast Paul discusses how to work with Vanguard and Schwab as well as some of the important differences between funds and ETFs. See Paul’s mutual fund recommendations and ETF recommendations.

Overcoming Hurdles To Saving and Investing For The Beginning Investor

by Stacy Gary (Podcast #8 in the series, Hurdle #2: “I lack the funds.”)

 “I Lack Funds”

While “buy low, sell high” is common sense, we do not always exercise common sense, and often make decisions based on emotion; especially with money, which is a deeply emotional topic. Stacy references the book, “The Behavior Gap” by Carl Richards, that speaks to the behavior gap between how we perceive ourselves and what we actually do, and encourages investors to question their choices in terms of life goals. Stacy Gary may be contacted at:

Warren Buffet recommends S&P for wife

In a recent TV interview, Warren Buffet spent 3 hours answering a barrage of questions from a group of popular hosts on CNBC. Many of the questions were expected and a few were new and interesting to hear his perspective. I think you will enjoy his perspective to the question, “Is the market rigged?” You can read the entire 3-hour interview in an unofficial transcript.

In the interview, Buffet recommended to the trustees of his estate for the benefit of his wife: “I’ve told the trustee to put 90% of it in an S&P 500 index fund and 10% in short-term governments.” I’m sure lots of investors will think, “what’s good enough for Warren Buffet is good enough for me.” In this podcast I explain why Warren Buffet’s decision regarding his wife is probably not appropriate for your spouse. How can I argue with the Oracle of Omaha? Because history and the evidence is on my side. I hope you agree.