Sound Investing

Latest Episodes:

Bootcamp #1 - The Biggest Decision of All: Stocks vs. Bonds Feb 26, 2025

Show notes

The 2024 numbers are finally in and we have produced the #1 investment decision in the Bootcamp series. There is no question that the biggest lifetime decision an investor makes is the choice between the safety of bonds and the potential long term growth of stocks. Here is a⁠ link⁠ to the pdf of the set of slides Paul uses in the presentation. The presentation includes the ⁠updated 1, 15 and 40 year returns tables ⁠ along with the ⁠quilt charts for the 1928 to 2024 period⁠.

Our thanks to Daryl Bahls who has put together most of the tables in the Bootcamp series.

If you have questions please send them to ⁠paul@paulmerriman.com⁠. Please put Bootcamp #1 in the subject line.

Watch video here.

The Good, Bad, Ugly and Average Risk and Returns of Small Cap Value, S&P 500 and 2 and 4 Fund Portfolios Feb 19, 2025

Show notes

The purpose of this podcast/video is to help investors understand the likely risk and return parameters of small cap value, S&P 500, 2 Fund Portfolio (50% each SCV/S&P) and 4 Fund Portfolio (25% each SCV/S&P/SCB/LCV). In each case the best, worst, and average 1, 2, 3, 5, 10. 15, 20, 25, 30, 35, 40 year returns are listed.
The following tables are discussed:

S&P 500 Historical Risk and Return

US SCV Index Portfolio Historical Risk and Return

US 2 Fund Index Portfolio Historical Risk and Return

US 4 Fund Index Portfolio Historical Risk and Return

Also the risk and return page from the Sound Portfolios is referenced.

Bootcamp #2 The Ultimate Buy and Hold Portfolio: Update 2025 Feb 12, 2025

Show notes

This is the second presentation in the Boot Camp Series.Click for video.

The first presentation (Stocks Vs. Bonds) will be available in the next two weeks.

This presentation makes the case for diversifying a portfolio using multiple equity asset classes.

Paul uses 4 set of tables to make his case:

A1a:Ultimate Buy & Hold Equity Portfolio (50% US/50% Int'l)

A2a:Alternative Equity Portfolio Tables (50% US/50% Int'l)

A1b:Ultimate Buy & Hold Equity Portfolio (70% US/30% Int'l)

A-2b: Alternative Equity Portfolio Tables (70% US/30% Int'l)

Paul also mentions the recent video/podcast that addresses the Sound Investing Portfolios.https://www.youtube.com/watch?v=XGv0ZdZ8adk

https://www.paulmerriman.com/2025-bootcamp-3-sound-investing-portfolios

Bootcamp #3 Sound Investing Portfolios Feb 05, 2025

Show notes

In this Podcast, Paul, Chris, and Daryl describe the Sound Investing Portfolios and their background, rationale, construction, and performance.

00:00 - Intro
02:00 - DFA Background
05:47 - Portfolio Rationale
11:45 - Allocations
14:11 - Backtesting & Comparisons
19:32 - Rewards of Diversification
28:42 - Differing Good Times
32:40 - 70/30 US/Int'l Portfolios
35:05 - Which Funds?
39:08 - Close

During the Podcast the following tables were referenced:
✅ Table H1a - Sound Investing Portfolios: Asset Allocations (50% U.S. / 50% Int’l)
✅ Table H2a - Sound Investing Portfolios: Comparative Data (50% U.S. / 50% Int’l)
✅ Table H3a - Sound Investing Portfolios: Annual Returns (50% U.S. / 50% Int’l)
✅ Table H1b - Sound Investing Portfolios: Asset Allocations (70% U.S. / 30% Int’l)
✅ Table H2b - Sound Investing Portfolios: Comparative Data (70% U.S. / 30% Int’l)
✅ Table H3b - Sound Investing Portfolios: Annual Returns (70% U.S. / 30% Int’l)

The Index Edge: Paul Merriman’s Investment Insights Jan 29, 2025

Show notes

In this insightful conversation, renowned financial expert Paul Merriman shares his wealth of knowledge and experience in investing. He discusses his journey from stockbroker to founding his own investment advisory firm, and eventually establishing the Merriman Financial Education Foundation. Paul delves into various topics, including:

✅ The importance of data-driven investing and understanding the math behind it
✅ His meeting with John Bogle and their differing philosophies on investing
✅ The case for small cap value investing and its historical performance
✅ The challenges of market timing and the benefits of portfolio diversification
✅ The emergence of ETFs and trend following strategies

PaulMerriman.com

Tables, Graphs and Charts
Boot Camp
S&P 500 vs Small Cap Value
Quilt Charts
Equity Index Returns
Free Copy- We’re Talking Millions
Free Copy- 2 Funds for Life
Best in Class ETF Update 2024

ETFAtlas.com – A new portal offering a comprehensive catalog of ETFs from the United States, Canada, and Europe.

Introduction to Boot Camp Jan 22, 2025

Show notes

The podcast starts with a brief history of the growth of the Merriman Financial Literacy Foundation. From it’s small beginning in December 2012, it has produced over 1000 videos, articles and podcasts, published 6 books, spoken at many national conferences, underwritten a university class on investing for non finance majors at Western Washington University, produced portfolios for do it yourself investors, produced recommended mutual funds and ETFs to build the portfolios. Most recently there is a new effort to give every Western student a meaningful exposure to personal finance. This is being done under the Merriman Financial Literacy Program at Western.

Two years ago we introduced the Merriman Boot Camp. The purpose of the project is to help investors make the best financial decisions. In the podcast Paul discusses 14 of those decisions and how we are enlarging our educational efforts. He also notes that the Boot Camp pages will also contain a new Q&A section on each topic as well as additional information from our list of Truth Tellers.

Why should small cap value make higher returns? Jan 15, 2025

Show notes

In this first Q&A podcast of 2025, Paul, Daryl, and Chris discuss several listener questions and expand on Paul's rebuttal of Big ERN's recent criticisms of diversifying with small-cap value.

0:00 – Introduction

0:29 – Responding to Big ERN's critique

2:11 – Small-cap value lumpsum vs. dollar-cost averaging

6:38 – Daryl's take on SCV's premium persistence

8:46 – Chris' take on SCV's premium persistence

15:50 – Paul highlights the random timing of SCV vs. S&P500 returns

19:50 -- Are there good alternatives to Vanguard's Wellesley fund?

26:18 -- Does 2 Funds for Life mean no SCV in retirement?

29:35 -- Why not let Buffet manage our money in BRK.B?

33:52 -- What portfolio to get a 3.6% safe withdrawal rate in retirement?

38:53 -- Which accounts do we tap for our annual spending needs?

49:39 -- Why doesn't the Portfolio Configurator include REITs and emerging markets?

54:52 -- When will the Best-in-Class ETF recommendations be updated?

These tables were referenced-

Table G-1b - Fine Tuning Table: S&P 500 vs US SCV Equity Portfolio - Out-Performance

Tell-Tale_Charts

2 Funds for Life PDF

2 Funds for Life on Amazon

The True Story About Small Cap Value Jan 08, 2025

Show notes

There has been a lot of anti small cap value articles and podcasts over the last several years. I have been asked many times whether I think the small cap value premium is a thing of the past.In this podcast I have addressed the most commonly discussed criticisms of small cap value. During the presentation I reference a blog entitled, "Small-Cap Value Stocks: Diversification or Di-WORSE-fication?"

The Early Retirement Now newsletter is written by Karsten Jeske, PhD, CFA. Here is a video of a friendly debate that Karsten and I had on the “Forget About Money” podcast. Listeners will learn that Karsten and I have very different beliefs about what returns best represent the small cap value premium. I reference the real time Morningstar performance results of DFFVX (2000 to present), DFSVX (1993 to present) and AVUV (2019 to present).

During my discussion I reference Table G-1b, Fine Tuning Table: S&P 500 vs. US SCV Equity Porfolio - Out-Performance and Table H2a - Sound Investing Portfolios: Comparison Data

I also referenced a Q&A response on Truth Teller Rob Berger regarding his personal take on small cap value in his own portfolio.

I also mention the interview with Jim Dahle at the 2024 Bogleheads Conference. https://www.youtube.com/watch?v=8C3KhRJCwCQ

Could this be the #1 Reason to Invest in Index Funds? Part 2 Dec 25, 2024

Show notes

On December 26, 2019 Paul recorded a podcast entitled, “Could This Be the #1 Reason to Invest in Index Funds?” We were shocked to learn that over 1,000,000 investors opened the podcast. In this podcast he addresses the topic again in “Could This Be the #1 Reason to Invest in Index Funds? Part 2”

The podcast reviews the well established index advantages and adds one that may be the biggest reason an investor is able to find comfort staying the course in an index fund for the rest of their life. This might be a good podcast to share with your young adult children.

Risk with Paul, Daryl and Chris Dec 18, 2024

Show notes

Paul, Daryl, and Chris discuss the risks of investing and life.

Paul starts with an introduction and admission of his challenges managing risks related to diet and health. He then gets Chris and Daryl to chime in with their definitions and perspectives on risk.

Daryl then shares a framework for evaluating risk from his days as a systems engineer. The framework looks at risks in two dimensions: likelihood and impact (or severity). He describes how the framework can help prioritize which risks to mitigate and gives examples of how some financial risks might be reduced in both dimensions. Chris is reminded of the book "Die with Zero," and mentions how risks extend beyond finances to experiences.

Paul, Chris, and Daryl then discuss some of their challenges in managing the risks of their own portfolio allocations and how their behaviors differ from what might be considered ideal. This leads to discussing the dangers of learning the wrong lessons with examples from inside and outside the personal finance world.

Paul reads from the Jonathan Clements article that inspired this podcast: "The Risks We Miss."

Paul then closes out the podcast.

Outtakes include Paul and Chris discussing how the Best-in-Class ETFs can help mitigate risk, and what Daryl wants for Christmas.

Watch video here- https://youtu.be/veXXh-YVYKU