Sound Investing Paul Merriman

On May 18, 2024 Chris Pedersen made a presentation to the Houston Chapter of AAII.   At the end of the presentation Chris answered over 20 questions.  Those questions are on this podcast.  Here are the question topics:

1. Portfolio expectations compared to S&P 500?2.  How would adding small cap value (SCV) help a retiree?3.  How important is asset class location using 2 Funds for Life?4.  Would a do it yourself target date portfolio be better than buying a target date fund?5.  How do you expect interest rates to impact equity?6.  How different are the Total Market Fund expected returns from the S&P 500?7.  What are drawbacks by investing in SCV?8.  What steps should we take to manage emotional risk?9.  What is your opinion about combining TIPs with equities?10.  Should you increase your equity holdings as the get older?11.  Please comment of Christine Benz’s Bucket Portfolio?12.. What SCV funds do you recommend?13.  Are there other target date funds you recommend besides Vanguard?14.  At age 60 what kind of return should I expect over the rest of my life?15.  Do you recommend nudge  withdrawals over withdrawals from the whole portfolio?16.  Why would more profitable small cap value funds do better than portfolios of less profitable companies?17.  Do you recommend VT, the Vanguard Worldwide equity fund?



Inside the Investment Mind of Chris Pedersen with host Charles Rotblut.  Charles is  the editor of the AAII Journal, and a vice president and Chartered Financial Analyst at AAII



Q1:  What is the best way to get big positions in cash invested?  All at once or dollar cost average over time?

Q2:  How should target date fund investors choose the best date for their situation?

Q3:What are the pros and cons of backtesting historical performance?

Q4:  Why did you choose the drawings in your book “2 Funds for Life?”

Chris explains investing diversification with some analogous side trips to the worlds of food and nature.

He starts by illustrating the importance of perspective, emphasizing the need for many decades of data in backtesting.
Next, he covers the ingredients, or asset classes and styles, most investors will use to diversify.

With the ingredients in hand, he explains what happens when we mix them, and how mixing ingredients that are substantially different can improve the return we get for any given level of risk.

He then covers the real-world implications for accumulators and retirees and finishes off with some fine tuning tables and thoughts on the discipline needed to be a meaningfully-diversified investor.

Here is Chris' pdf from his presentation

Get a free copy of We're Talking Millions

Eleven months a year Dr. Robert  Pass produces a podcast dedicated to a review of the latest literature and thought leaders in pediatric cardiovascular care.  For the last 3 years Rob has finished his podcast series with a focus on personal finance. 

It has been an honor to work with Rob on these special podcasts for the last 3 years. This is his podcast from December 2023. 



To conclude 2023 we end with noted national authority on personal finance and investing, Mr. Paul Merriman.

Mr. Merriman reviews some basic ideas about asset allocation within a retirement plan such as a 403b, 401k or IRA with the goal of achieving the highest degree of return for level of risk.

He reviews the importance of diversification and also shares with us both a '2 fund' and '4 fund' approach to creating a low cost, efficient and diversified portfolio that has, historically, been associated with good long term returns.Mr. Merriman's work can be seen at: paulmerriman.comFor those interested learn more about his '2 Fund' solution: https://www.paulmerriman.com/2-funds-for-life-update-2023For those interested to learn more about his '4 Fund' solution: https://www.paulmerriman.com/4-fund-comboFor those interested in target date funds: https://www.paulmerriman.com/target-date-fundsFinally, for those who did not previously take advantage of Paul's free book, the following is a link to a free PDF of the book: https://irp.cdn-website.com/6b78c197/files/uploaded/Were-Talking-Millions.pdfPlease note: This episode is not intended to provide specific personal finance advice and is for entertainment purposes only. Please consider speaking with a trusted advisor before making any significant changes to your retirement assets.

Paul and Chris cover several questions about the Best-in-Class ETF recommendations and selection process.


What's the overarching objective of the Best-in-Class ETF recommendations?*  What's the 6-step process described in your AAII Best-in-Class ETF Article?
Why is it sometimes worth paying another tenth of a percent or more for funds with more exposure to small or value?
Is AVUV's recent 6%/year return advantage over VBR expected and/or likely to continue?*  What did Avantis say are the market conditions that favor or disadvantage their approach?*  How should investors think of the risks of tilting away from the cap-weighted market indexes towards small and value?
Retail investors have a potential superpower versus institutional fund managers -- patience!
How many hours does it take Chris to update the Best-in-Class ETF recommendations?
JL Collins is a big proponent of the total market index.  How much is our Best-in-Class ETF recommendation for large-cap blend (AVUS) likely to outperform a total-market index fund such as VTI?
What happens when small-cap value becomes super popular?

Links: Best-in-Class ETF Bootcamp video and podcast

AAII article on Choosing Best-in-Class ETFsPortfolio configurator

Portfolio visualizer factor statistics, factor regression tool, and fund factor regressions.

Watch video here

Join Paul and Chris to follow up on Chris’ video on "2 Funds for Life Update 2024" .

In this discussion Chris covers the history of the development of this popular portfolio, as well as his new table that covers the expected returns for all of the periods from ages 20 to over 90.

The discussion included comments on:


The advantages of Blackrock over Vanguard target date funds and why it should make over .5% a year more over their lifetimes.
The reasons paying more for a small cap value fund may pay big rewards over the long term.
The advantages and disadvantages of the more aggressive 2 Funds for Life Portfolios.
How to build the Portfolio by using several different accounts
The impact of rebalancing vs. letting the 2 funds grow independently

Watch video here

I interviewed Stan Haithcock, the expert I depend on when I have questions about annuities. We will dig into single premium life annuities (SPIA), multiple-year guaranteed annuities (MYGA) and other insurance products that are often over sold and over priced. What is the truth and how can you get what you need at the right price? Join me and Stan as he answers my questions and yours.

Stan Haithcock, also known as "Stan the Annuity Man" is recognized as one of the top independent annuity agents in the United States. Stan has authored seven books on annuities — all free on his website— and has produced over 1,000 educational videos on YouTube. His goal is to help do-it-yourself investors understand how annuities work and to protect them from costly mistakes.

⁠Click to watch video