2018 Update of Paul’s “Ultimate Buy-and-Hold” Portfolio


For many years Paul and Rich have updated the Ultimate Buy-and-Hold Portfolio, and have posted the updates for 2018.  This podcast is a step-by-step discussion of building a portfolio of 10 major equity asset classes. We want to make very clear how much impact each of these asset classes has on the long-term return of the portfolio, as well as the standard deviation (volatility).  For more on the topic, here are links to two new articles and the table referenced in the podcast. 

Topics you can’t afford to miss

Ken Roberts – of Ken’s Bulls & Bears on KCKQ AM 1180 in northern Nevada – recently interviewed Paul. In this 43 minute conversation they discuss target date funds, the pros and cons of stock selection, how young investors can get a head start, the four most important variables in your mutual funds performance, and the best asset classes for the long term.

Pros and Cons of Motif and M1 Finance


The Motif Investing and M1 Finance companies allow investors to create a customized portfolio of individual securities and ETFs.  Paul and Chris Pedersen compare these two low cost ways to create do-it-yourself robo portfolios.  In both cases there are great advantages and important limitations.  Chris recently compared the important differences in a table that may be useful as you listen to their discussion of these innovative trading platforms, which covers fees, minimum investments, rebalancing limits, reinvesting dividends, tax management, portfolio construction, and how investors can build portfolios using the recommended portfolios on the Merriman website.  For those who want to learn more, here are links to M1 and Motif.

Passive VS. Active Q&A


In Paul’s recent Marketwatch article he explores the debate between the results of index funds and actively-managed funds.  If you review the comments following the article, you will see there are a lot of defenders of active management. In this podcast Paul responds to some of the most aggressive defenders of active management, including a comparison of Warren Buffet vs. DFA passively-managed value funds. He also explains why it is hard to know what returns public investors have actually made on their investments. And he challenges the idea that active managers will perform better during bear markets.

The #1 investment table


Paul discusses the annual update of Callan’s colorful “Periodic Table of Investment Returns 1999-2017” and suggests you view the table while listening: https://www.callan.com/wp-content/uploads/2018/01/Callan-PeriodicTbl_KeyInd_2018.pdf.  Paul also addresses the changes to his 401k recommendations from 50/50 U.S/international equities to 70/30 U.S./international, and small cap value from Guggenheim SmallCap 600 Pure Value (RZV) to SPDR Small Cap Value (SLYV); and he compares the return and risk of his buy-and-hold and market-timing accounts.

2017 Portfolio performance plus your questions answered

Paul briefly discusses the recent MarketWatch article, “4 simple and effective ways to help a young person get a jump on retirement”  and continues with consideration of 2017 performance of the Vanguard, Fidelity, T Rowe Price, Schwab, TD Ameritrade mutual fund and ETF portofolios recommended at his site, including his favorite. He then turns to how to build the Ultimate Buy and Hold Portfolio with fewer funds, the reasonableness of using all stable value funds for bonds, and the questionable value of a mutual dividend distribution.

What you should know about 2017 returns


DON’T LISTEN TO THIS PODCAST if you don’t like numbers. Many unexpected things happened in 2017.  To understand them it’s important to look at the numbers.  This discussion includes a comparison of large cap, small cap, growth, value, U.S. and international asset class returns.  There is also a comparison of 1- and 15-year returns for Vanguard, DFA and the average mutual fund in all the major asset classes that Paul hopes you will have in your portfolio.

What I think about Bitcoin and my 12 projects for 2018

This podcast presents plans for 12 major projects for 2018 by The Merriman Financial Education Foundation.  They include fund selection for self-directed 401k plans, new 401k plans, more studies on the long-term impact of saving to retirement, answering more of your questions, teaching more young people about sound investing and interviewing some of the industry’s most-qualified experts.  Paul finishes this last podcast of 2017 with his recommendation for those considering adding Bitcoin to their portfolio.

What to do about bonds?


What to do about bonds is probably the most common question I get from investors.  In some ways it is the simplest of investment decisions but it can be made difficult due to emotional hurdles.  In this podcast Paul reviews several past articles on bonds.  Here are the links to those articles:  “Why bonds are the most important asset class” and  “Bonds:  Buy, sell or hold?”  He also suggests listening to a podcast recorded several years ago.

That podcast covers the following topics:

1.   Why invest in bond funds when equity funds make so much more money?
2.   What bond funds should I own in a rising interest rate market?
3.   What bond fund should I use in my emergency fund?
4.   Why not use high yield bond funds?
5.   What do you look for in selecting the best bond funds?
6.   Which are better: bond funds or individual bonds?
7.   Should I rebalance my bond funds periodically?
8.   What are the risks of owning bonds?
9.   How much of my portfolio should be in bonds?
10. How do bonds compare to annuities?
11. Why don’t you recommend international bond funds?
12. What do you think of “go anywhere” bond funds?
13.  Why not invest in funds that own dividend paying stocks instead of bond funds?
14.  How much can I lose in a bond fund if interest rates rise?
He finishes the podcast with a  discussion about his personal approach he has to using bonds in his own portfolio.

10 things you should know about small cap value

Small cap value continues to be an asset class that Paul recommends for all investors.  Of course, for retired investors it may be a very small part as their position in equities is low. For first-time investors following Paul and Chris’ target date fund recommendations, the super-charged asset class may take up the entire portfolio. Most investors will be surprised to learn that small cap value is low risk compared to the conservative S&P 500. In this discussion Paul references this study by Chris Pedersen, Resilency: How Fast Do Different Asset Classes Recover?
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