The Case for the Total Stock Market Index and more
Paul begins this podcast with a response to this article by Alex Bryan, director of Passive Strategies Research, North America at Morningstar. The position of both Alex and Morningstaris that a total U.S. stock market index is a core holding. They go on to claim anything else is a form of active management, which appears to include any answer other than a cap-weighted portfolio.
In a second topic Paul responds to another Morningstar article by John Rekenthaler, one of Paul’s favorite Morningstar experts. John is vice-president of research for Morningstar. “What is the right Amount of International Diversification?” explores opinions on how much investors should allocate to international equities? The answers leave a lot to be questioned, so it isn’t hard to believe that Morningstar concludes, “The final choice ultimately, is arbitrary. It rests on intuition, not science.”
The final segment focuses on an article entitled, “Answer Three Questions and Be Among America’s Money Smartest.” Many have written about the result of a survey that found that 70% of adult Americans couldn’t answer 3 very simple money questions. Paul makes the case that successful investing is about much more than being financially literate.