Paul Merriman

This podcast was motivated by an email exchange in which Paul tries to motivate an investor to consider a simple change that might add almost 1/2 percent a year. The response to his suggestion is one of the biggest challenges educators and advisors have: "You are probably right but I'm happy where I am."  Paul's concern is that most investors don't really understand the impact of the 1/2 percent difference.

How much risk should you be taking? How do you decide how much of your portfolio you want for growth, and how much for safety?  The great news is the past has taught investors how to improve returns while reducing risk.  This Sound Investing podcast is can help you make one of the biggest decisions of your investment career. We suggest that you download and print the Fine Tuning Table (at http://paulmerriman.com/fine-tuning-asset-allocations/) and follow along while Paul explains how to best fine tune your asset allocations.

This is the second in a series of podcasts I consider the most important questions for investors. The first was "The Ultimate Buy and Hold Strategy," in which I identified the asset classes every equity investor should have in their portfolio. The question now is: how do you invest in those asset classes most efficiently? This podcast addresses those types of mutual funds you should know about - specifically Index Funds, – and considers the pros and cons

We should all have an "ultimate strategy," based on the best way we know how to do something. This podcast presents the best way I've found to position yourself for the future. The ultimate strategy must have a long history of success, be able to be managed simply, offer better rates of return on investment and no more exposure to risk you're willing to take. It should also allow you to rest assured that your strategy works in good times and bad. No matter what times are like, this is the "Ultimate Buy and Hold Strategy" for the long haul. Recommendation: Before listening to this podcast, Paul recommends that you print the pie graphs (or have them available to reference). You can find them at: http://paulmerriman.com/buy-and-hold-graphs/ For more information, read Paul's "Ultimate Buy and Hold" article found on the Home Page of his website, and read Paul's MarketWatch article by the same name.  

Commission-free ETFs at Vanguard, Fidelity and Charles Schwab, offer investors a great way to take advantage of diversification and asset allocation, even with just a small amount of money to begin. Paul introduces listeners to these ETF portfolios, along with the pros and cons of ETFs and the advantages and disadvantages at each company. See Paul's updated ETF recommendations at www.PaulMerriman.com. For those using Paul's older recommended portfolios at Schwab, for example, you may wish to modifying using these updates.    Stay tuned in the coming months for another podcast that will answering the questions on this subject posed by listeners.      

Fund family rating lists can lead us to erroneous conclusions. Paul offers practical ways to think about and assess fund performance that will help you make the best decisions. 

This podcast is aimed at the first-time investor. Paul suggests you share with your children, grandchildren and other young adults in your life. He believes that if these 10 decisions are made correctly, an investor is almost assured a successful investing career.    

Paul explores the implications of making investment recommendations that are wrong. Contrary to what he recommends, it may be that large will beat small, growth will beat value, and U.S. will beat international. How will investors make out if everything goes wrong? This is an important question to ask about any portfolio. Paul faces the possibility and concludes that being wrong is not necessarily bad.  

  Paul admits to being excited about the release of the annual DALBAR report that compares what funds report returns vs. the actual real-time return investors receive. This report shows the impact of pairing emotional investors with high-cost funds. Paul promises that some of the results are hard to believe, but there is no question that investors can do better with a little education.

  Paul sees red when he hears people attacking the use of hypothetical results, because they let you see how bad a fund or asset class can be. He considers the short-term results of actual performance to be more misleading than hypothetical long-term returns. A bigger problem than the use of hypothetical profits, says Paul, are funds not reporting the built-in hypothetical future losses.  

    Paul believes inflation is one of the most overlooked risks for investors. He compares the after-inflation returns of the S&P500, small-cap value and several fixed-income securities. While bonds are considered very safe by most investors, it may be that stocks are by far the safer asset class.  

    Paul discusses the pros and cons of bond funds in his list of 15 different considerations in determining which is better: bonds or bond funds?  

    Paul discusses his latest financial education program at Western Washington University and the results of a national financial literacy survey that indicates a huge need, even for people who are confident of their knowledge of financial topics. Paul gives his listeners the five easy questions that the survey listed. While he believes his listeners will get all 5 right, less than 10% of adults in the survey did.   

  The update on active vs. passive mutual fund management shows another surge toward index funds. The big news is that the second-largest pension fund in the country is considering putting all of its investments (now 50% indexing) into index funds.

A recent study concludes that future returns of the "Top Dog" in each industry are not as special as they likely looks to most investors. This study reflects some of the same outcomes of comparing future returns of popular growth stocks vs. out-of-favor value companies. While it is common to find investors who consider investments in Top Dogs a path to superior returns, history proves otherwise.