White Coat Investor Interviews Paul Merriman

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DFAMAN
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White Coat Investor Interviews Paul Merriman

Post by DFAMAN » Sat Apr 21, 2018 12:14 pm

The White Coat Investor interviewed Paul Merriman in a WCI podcast that ran this week. I think the interview was excellent. In addition to a discussion of Merriman's variable withdrawal strategy, WCI focused most of the hour and 10 minute interview on the main areas that make Merriman somewhat controversial to Bogleheads, including (1) his heavy focus on tilting to small and value, (2) his preference for DFA funds over Vangard (which largely is tied to his focus on deep tilt) and (3) the fact that half of Merriman's personal funds are invested using a mechanical trend-following market timing strategy. I'm with Merriman on (1) and (2), but I don't use (3). However, Merriman explains the market timing strategy (pros and cons) in an even-handed way, and he's upfront about his view that most people shouldn't use a market-timing strategy, and that it should never be used in a taxable account.

https://www.whitecoatinvestor.com/an-in ... odcast-50/

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Earl Lemongrab
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Re: White Coat Investor Interviews Paul Merriman

Post by Earl Lemongrab » Sat Apr 21, 2018 1:09 pm

I remember when Merriman's site had market-timing indicators. I think there were four arrows for different allocation slices, up or down. I used to look at them, but never did anything about it.

I did use his recommendations on the Megacorp 401(k). Those are still there.

https://paulmerriman.com/find-your-companys-401k-plan/

That got me reading his site and was one of the motivations to really start researching and learning, and developing my current portfolio. I'm grateful for the information he provided.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

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Re: White Coat Investor Interviews Paul Merriman

Post by snarlyjack » Sat Apr 21, 2018 2:26 pm

I listened to the podcast... Thank you for posting it.

I would like to offer a article that will refute most of what he said.

Enjoy...

http://jlcollinsnh.com/2012/04/15/stock ... -save-you/

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triceratop
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Re: White Coat Investor Interviews Paul Merriman

Post by triceratop » Sat Apr 21, 2018 3:54 pm

snarlyjack wrote:
Sat Apr 21, 2018 2:26 pm
I listened to the podcast... Thank you for posting it.

I would like to offer a article that will refute most of what he said.

Enjoy...

http://jlcollinsnh.com/2012/04/15/stock ... -save-you/
I haven’t even listened to the podcast and I know that that article doesn’t refute what he said.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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Re: White Coat Investor Interviews Paul Merriman

Post by snarlyjack » Sat Apr 21, 2018 4:01 pm

Really Triceratop,

I suggest you listen to the pod-cast.
Then we'll talk about it...

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Re: White Coat Investor Interviews Paul Merriman

Post by triceratop » Sat Apr 21, 2018 4:21 pm

It’s not even really a refutation of what Dr Life said because Lo was speaking about behavioral problems with buy-and-hold.

I will listen to the podcast later, out of interest. The two people on the podcast are excellent and interesting people.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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Re: White Coat Investor Interviews Paul Merriman

Post by Prospero » Sun Apr 22, 2018 3:13 am

Thanks for posting the link. I enjoy listening to Paul Merriman.

I am 100% with him on value and small factors (in fact I probably tilt more than he does!) He made a good point about not just holding a market cap geographically diversified portfolio (which tilts more towards large growth companies) but also diversifying between large/small and growth/value.

I am 1% with him on market timing. The only market timing I will attempt is rebalencing. That said I did like that he had a 50/50 split between buy-and-hold and timing. The point being that whatever happens, something is going to make him smile. Isn't that the point of a diversified portfolio anyway?

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Re: White Coat Investor Interviews Paul Merriman

Post by DFAMAN » Sun Apr 22, 2018 5:52 pm

Prospero wrote:
Sun Apr 22, 2018 3:13 am
That said I did like that he had a 50/50 split between buy-and-hold and timing. The point being that whatever happens, something is going to make him smile. Isn't that the point of a diversified portfolio anyway?
Agreed. I couldn't sensibly employ a market timing strategy even if I wanted to, as >90% of our portfolio is taxable, but I can't say he's crazy for doing it for half of his portfolio. He has been upfront that he has more money than he needs (barring some sort of complete meltdown of the global economic system) and in 2008 half his portfolio was completely out of equities, which I'm sure helped him to worry less than others did about big losses. This type of mechanical timing strategy (which is completely based on moving average prices and not based on emotion or guesses about future market moves) likely will avoid the worst fallout from huge bear markets, but as he admits this likely is at the expense of giving up part of the upside he could have received.

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Re: White Coat Investor Interviews Paul Merriman

Post by IlliniDave » Mon Apr 23, 2018 6:00 am

Pretty sobering the hear how small a fraction of people believes are capable of being competent do-it-yourself investors.
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Re: White Coat Investor Interviews Paul Merriman

Post by paul merriman » Thu Apr 26, 2018 1:38 pm

I do appreciate all the kind comments, and for those who disagree with my beliefs, it would be fun to have a debate sometime. Since I don't recommend investors use timing, I have no problem with those who don't believe in timing. For those who think large cap blend (S&P and Total Market Index) is better than a portfolio of U.S. and international large and small blend, large and small value, emerging markets and REITS, I guess we will find out. My problem is I'm almost 75 and if I live to be 100 it won't be enough real time returns to solve the problem. I do know the S&P 500 compounded at 17.2% from 1975 to 1999. But I also know that for the period 2000 through 2017 it compounded at 5.4%. I also know that small cap value hypothetically beat the S&P 500 for the period 1975 to 1999, as well as 2000 through 2017. You can correctly say that extra return was the premium for the additional risk of small cap value and I would say, "right." I do know there is no risk in the past so I, and everyone else, know what they should have done. The challenge is what will happen in the future. As much as I believe anything about investing, I believe that no one knows what will be best in the future. I do know that my recommended portfolio has many times more public companies than offered in the S&P 500 or Total Market Index. I like massive diversification. I have believed that for a long time but when I read Dr. Bessembinder's paper I became an even greater believer. I talk to a lot of young people and I have done all I can to get them to own them all not just the biggest and the best. I love helping people. I have not met a Boglehead that I worry about their investing beliefs. As different as we all may be I think we are all "in the ballpark." The ones that I worry about are the ones who have not learned the difference between load and no load, passive and active management, or high and low expenses. I am floored how many people don't even know who John Bogle is or what he has done for the majority of investors in America. After I had my 90 minute with Jack in his office last June, I was anxious to share the thrill with others. And the blank stares about who Jack is and what he has done to make our lives better is a bit mystifying. By the way, it would be even worse if I mentioned the names Gene Fama Jr. or Ken French who have done work that may be equal to Jack. I hope to have 90 minutes with each of them as well. And at the end of my life I hope to have educated a million young people about the importance of equity asset class selection, asset allocation between those equity asset classes, as well as bond funds and the ability to find the funds that will maximize the likelihood of success over their lifetime. Plus, I will do my best to show them how to add some small cap value to go along with their target date fund holdings.

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Re: White Coat Investor Interviews Paul Merriman

Post by cinghiale » Thu Apr 26, 2018 1:56 pm

Thank you, Mr. Merriman, for taking the time to write such a gracious and thoughtful apologia.
"We don't see things as they are; we see them as we are." Anais Nin | | "Sometimes the first duty of intelligent men is the restatement of the obvious." George Orwell

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Re: White Coat Investor Interviews Paul Merriman

Post by onthecusp » Thu Apr 26, 2018 2:13 pm

Yes, thank you Mr. Merriman. Your site set me straight on reasonable diversification and asset allocation with bonds. After that I found Bogleheads and enjoy a variety of well reasoned debate around the edges.

My two favorite sites!

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Re: White Coat Investor Interviews Paul Merriman

Post by sergeant » Thu Apr 26, 2018 2:17 pm

I love this place! Thank you Mr. Merriman.
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Re: White Coat Investor Interviews Paul Merriman

Post by LateStarter1975 » Thu Apr 26, 2018 2:20 pm

paul merriman wrote:
Thu Apr 26, 2018 1:38 pm
I do appreciate all the kind comments, and for those who disagree with my beliefs, it would be fun to have a debate sometime. Since I don't recommend investors use timing, I have no problem with those who don't believe in timing. For those who think large cap blend (S&P and Total Market Index) is better than a portfolio of U.S. and international large and small blend, large and small value, emerging markets and REITS, I guess we will find out. My problem is I'm almost 75 and if I live to be 100 it won't be enough real time returns to solve the problem. I do know the S&P 500 compounded at 17.2% from 1975 to 1999. But I also know that for the period 2000 through 2017 it compounded at 5.4%. I also know that small cap value hypothetically beat the S&P 500 for the period 1975 to 1999, as well as 2000 through 2017. You can correctly say that extra return was the premium for the additional risk of small cap value and I would say, "right." I do know there is no risk in the past so I, and everyone else, know what they should have done. The challenge is what will happen in the future. As much as I believe anything about investing, I believe that no one knows what will be best in the future. I do know that my recommended portfolio has many times more public companies than offered in the S&P 500 or Total Market Index. I like massive diversification. I have believed that for a long time but when I read Dr. Bessembinder's paper I became an even greater believer. I talk to a lot of young people and I have done all I can to get them to own them all not just the biggest and the best. I love helping people. I have not met a Boglehead that I worry about their investing beliefs. As different as we all may be I think we are all "in the ballpark." The ones that I worry about are the ones who have not learned the difference between load and no load, passive and active management, or high and low expenses. I am floored how many people don't even know who John Bogle is or what he has done for the majority of investors in America. After I had my 90 minute with Jack in his office last June, I was anxious to share the thrill with others. And the blank stares about who Jack is and what he has done to make our lives better is a bit mystifying. By the way, it would be even worse if I mentioned the names Gene Fama Jr. or Ken French who have done work that may be equal to Jack. I hope to have 90 minutes with each of them as well. And at the end of my life I hope to have educated a million young people about the importance of equity asset class selection, asset allocation between those equity asset classes, as well as bond funds and the ability to find the funds that will maximize the likelihood of success over their lifetime. Plus, I will do my best to show them how to add some small cap value to go along with their target date fund holdings.
Thank you Paul for this gracious response. I personally sincerely appreciate your selfless teaching on the area of investing. And although I prefer to keep things simple the Boglehead style, I do listen to your podcast frequently and you were able to convince me to add a 4th fund of small cap value to my portfolio and stick to my IPS. Thanks for all you do!
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Re: White Coat Investor Interviews Paul Merriman

Post by aristotelian » Thu Apr 26, 2018 2:31 pm

Excellent interview with Meb Faber covering similar territory. I was also struck by the thoughts on market timing. Would love to know the contents of the hedge fund!

http://mebfaber.com/2018/04/11/episode- ... long-term/


I do think that market timing works. I mean, start there. A lot of people don’t think that market timing works. I actually have the most successful of all my investments in my portfolio, is a hedge fund that I set up in 1995. And after all fees, it has compounded at over 14% with a downside standard deviation equal to the S&P 500. And during that time, the S&P 500 compound, they had about nine. Now, that by the way, could be luck so we won’t know about the next 15 or 20 years until it happens. But I know that market timing works.

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Re: White Coat Investor Interviews Paul Merriman

Post by Taylor Larimore » Thu Apr 26, 2018 2:44 pm

But I know that market timing works.
aristotelian:

Please read this:

What Experts Say About Market Timing vs. Stay-The-Course

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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Re: White Coat Investor Interviews Paul Merriman

Post by Hukedonfonix4me » Thu Apr 26, 2018 2:51 pm

Listened to the podcast yesterday. Wonderful post Mr. Merriman, another grateful young person elated to absorb the information you continue to provide.

After submitting a 401k plan through the channels on your website, I was floored when I received a personal phone call from you verifying pertinent information.

It is very clear your mission is to provide knowledge to as many inquiring minds as possible for the sake of education. Very admirable

:sharebeer
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Re: White Coat Investor Interviews Paul Merriman

Post by moghopper » Thu Apr 26, 2018 2:53 pm

Taylor Larimore wrote:
Thu Apr 26, 2018 2:44 pm
But I know that market timing works.
aristotelian:

Please read this:

What Experts Say About Market Timing vs. Stay-The-Course

Best wishes.
Taylor
and this:

https://www.logicallyfallacious.com/too ... -Authority

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Re: White Coat Investor Interviews Paul Merriman

Post by cinghiale » Thu Apr 26, 2018 3:01 pm

And this within the link just provided:
Explanation: Richard Dawkins certainly knows about evolution, and he can confidently tell us that it is true, but that doesn't make it true. What makes it true is the preponderance of evidence for the theory.
I do believe that Taylor quotes the experts not as a simple appeal to authority, but because said experts have done their homework, crunched the numbers, examined the alternatives, and their opinions coalesce around some basic principles. Those principles must be subject to interrogation and, if possible falsification. But calling what undergirds a diversified portfolio of low-cost instruments as simple appeal to expertise is doing an injustice to the preponderance of the evidence.
"We don't see things as they are; we see them as we are." Anais Nin | | "Sometimes the first duty of intelligent men is the restatement of the obvious." George Orwell

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Re: White Coat Investor Interviews Paul Merriman

Post by moghopper » Thu Apr 26, 2018 3:06 pm

cinghiale wrote:
Thu Apr 26, 2018 3:01 pm
And this within the link just provided:
Explanation: Richard Dawkins certainly knows about evolution, and he can confidently tell us that it is true, but that doesn't make it true. What makes it true is the preponderance of evidence for the theory.
I do believe that Taylor quotes the experts not as a simple appeal to authority, but because said experts have done their homework, crunched the numbers, examined the alternatives, and their opinions coalesce around some basic principles. Those principles must be subject to interrogation and, if possible falsification. But calling what undergirds a diversified portfolio of low-cost instruments as simple appeal to expertise is doing an injustice to the preponderance of the evidence.
And I disagree. There is often a certain undercurrent here that is off-putting.

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Re: White Coat Investor Interviews Paul Merriman

Post by cinghiale » Thu Apr 26, 2018 4:05 pm

Please specify. “A certain undercurrent.” If you mean that “the best we can come up with” is sometimes treated as chiseled-in-stone revealed truth, I’ll agree with you. But the main current I get here is the joy and relief of escaping high fees, crappy funds, chaotic portfolios, and semi-competent financial experts. And the disturbing underside is... what, exactly?
"We don't see things as they are; we see them as we are." Anais Nin | | "Sometimes the first duty of intelligent men is the restatement of the obvious." George Orwell

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Re: White Coat Investor Interviews Paul Merriman

Post by snarlyjack » Thu Apr 26, 2018 4:27 pm

Paul Merriman,

Nice meeting you & welcome back to Bogleheads.

I listened to the interview with White Coat Investor, thank you.
80% of what you said I agree with. (Which isn't to bad).
I do not believe in market timing but I do believe in "Yield On Cost".

I believe if a person can hold "dear" & buy additional shares in
a down market they can do much better over the long term.
Crashes are to be expected. I feel a person should take full
advantage of them.

Right now...it is hard to get a good "Yield On Cost" but I
dca each payday. Long term I feel that is the way to
the promise land...

Once again thank you for the interview!

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Re: White Coat Investor Interviews Paul Merriman

Post by Ryerle » Thu Apr 26, 2018 4:55 pm

Hukedonfonix4me wrote:
Thu Apr 26, 2018 2:51 pm
Listened to the podcast yesterday. Wonderful post Mr. Merriman, another grateful young person elated to absorb the information you continue to provide.

After submitting a 401k plan through the channels on your website, I was floored when I received a personal phone call from you verifying pertinent information.

It is very clear your mission is to provide knowledge to as many inquiring minds as possible for the sake of education. Very admirable

:sharebeer
I had a similar experience to the one quoted above. For me, Paul's content is a great resource to point people to. We can quibble over some things, but I think people need to realize Paul is out there trying to educate large amounts of people with valuable information for free! He is doing a great service and is willing to discuss his philosophies sans the dogmatic delivery. Many roads to Dublin :D

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Re: White Coat Investor Interviews Paul Merriman

Post by hicabob » Thu Apr 26, 2018 5:03 pm

I'm too a big fan of Mr Merriman's podcast. His really excellent voice is always so calm and reassuring, perhaps the antithesis of Jim Cramer.
I was surprised that he said he uses a financial adviser on a recent podcast. Of all folk I would have expected Paul to do it himself.

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Re: White Coat Investor Interviews Paul Merriman

Post by White Coat Investor » Thu Apr 26, 2018 10:41 pm

It was a fun interview to do. It may be the longest podcast we've published yet.

Thanks again, Paul.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

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Re: White Coat Investor Interviews Paul Merriman

Post by iamlucky13 » Fri Apr 27, 2018 4:20 pm

paul merriman wrote:
Thu Apr 26, 2018 1:38 pm
And at the end of my life I hope to have educated a million young people about the importance of equity asset class selection, asset allocation between those equity asset classes, as well as bond funds and the ability to find the funds that will maximize the likelihood of success over their lifetime. Plus, I will do my best to show them how to add some small cap value to go along with their target date fund holdings.
You may count me as one young person closer to your million.

Your "First Time Investor" e-book was very helpful to me in finally educating myself decently about investing, starting at a very basic level and then progressively adding to that foundation each chapter. I wish I'd found it 5 years earlier.

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Re: White Coat Investor Interviews Paul Merriman

Post by palaheel » Fri Apr 27, 2018 5:53 pm

I'm also a fan. My 401k offers several DFA funds, and I use them to tilt to small and value. I wish I'd known about doing that years earlier.
Markets crash. Markets recover. Inflation takes your money FOREVER.

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Re: White Coat Investor Interviews Paul Merriman

Post by cookymonster » Fri Apr 27, 2018 8:21 pm

It was a good podcast. I've tilted to small and value for a while. I think Paul does himself a disservice by calling his non buy and hold strategy "market timing." To me that means attempting to get out of the market when it has gone up out of fear of a coming crash, and trying to get back in when stocks have been going down. The trend following he does is really just the opposite and seems to be a momentum strategy more than a market timing strategy in the most commonly understood sense.

If you invest to capitalize on factors, it doesn't make much logical sense to tilt toward the small and value factors but ignore the momentum factor. However I have yet to do so, because it would be pretty much impossible to replicate my asset allocation in both my taxable and retirement accounts. The other option is to add a momentum factor etf, but those are extremely tilted to growth, and I am not sure of the best way to tilt toward momentum without cancelling out the value premium.

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Re: White Coat Investor Interviews Paul Merriman

Post by 2pedals » Fri Apr 27, 2018 8:28 pm

It was interesting to listen to the podcast, thanks to White Coat Investor. Paul I know you have a passion in helping out others with their financial dreams. I am glad that you are enjoying your family and your retirement.

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Re: White Coat Investor Interviews Paul Merriman

Post by willthrill81 » Sat Apr 28, 2018 9:59 pm

cinghiale wrote:
Thu Apr 26, 2018 4:05 pm
Please specify. “A certain undercurrent.” If you mean that “the best we can come up with” is sometimes treated as chiseled-in-stone revealed truth, I’ll agree with you. But the main current I get here is the joy and relief of escaping high fees, crappy funds, chaotic portfolios, and semi-competent financial experts. And the disturbing underside is... what, exactly?
There are many experts, including Paul Merriman and Larry Swedroe, who believe that there is value to market timing (i.e. it's not a fruitless exercise). But this idea flies in the face of one of the Boglehead principles, and many of the forum's longtime and most prolific posters share this view. Consequently, market timing (aka trend following) is much more often derided than not. It's as simple as that.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: White Coat Investor Interviews Paul Merriman

Post by willthrill81 » Sat Apr 28, 2018 10:02 pm

Taylor Larimore wrote:
Thu Apr 26, 2018 2:44 pm
But I know that market timing works.
aristotelian:

Please read this:

What Experts Say About Market Timing vs. Stay-The-Course

Best wishes.
Taylor
It's hard to convince a man who's been successfully market timing for more than 35 years that it doesn't 'work'. If you mean 'work' to be earning significantly higher returns than buy-and-hold, then Paul would say that's not what he means. By 'work', he means that he's had returns very similar to buy-and-hold but with lower drawdowns.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: White Coat Investor Interviews Paul Merriman

Post by One Ping » Sat Apr 28, 2018 11:38 pm

willthrill81 wrote:
Sat Apr 28, 2018 10:02 pm
It's hard to convince a man who's been successfully market timing for more than 35 years that it doesn't 'work'. If you mean 'work' to be earning significantly higher returns than buy-and-hold, then Paul would say that's not what he means. By 'work', he means that he's had returns very similar to buy-and-hold but with lower drawdowns.
I've talked with Paul about his timing philosophy and results and this is exactly what he means. :beer
"Re-verify our range to target ... one ping only."

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Re: White Coat Investor Interviews Paul Merriman

Post by paul merriman » Tue May 01, 2018 8:30 pm

I know few Bogleheads are fans of timing. I believe investors who can stay the course with a buy and hold strategy have no reason to consider market timing. I think those who believe in buy and hold will find lots of evidence that timing is a waste of time, as timing will produce long periods of results that will confirm buy and hold is better. I am so excited that Taylor Larimore produced a link to a list of almost 100 quotes about the challenges of market timing. I will record a podcast responding to at least half of the quotes. These quotes come from some very smart people so it will be fun responding to their comments. I promise to include the toughest of the arguments. I am actually very excited about doing that podcast.

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Re: White Coat Investor Interviews Paul Merriman

Post by snarlyjack » Tue May 01, 2018 8:39 pm

Paul,

I' am looking forward to your pod-cast on market timing.

We also have this endless argument on dividends.
Income investing vs. growth investing. Personally I
like income investing which flies against growth investing.
VHDYX & VDAIX are 2 excellent funds that I like.
Maybe in your pod-cast you could give us your take on
the 2 different strategies? I know you like value stocks.

Enjoy this article...

http://theconservativeincomeinvestor.co ... e-account/

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Re: White Coat Investor Interviews Paul Merriman

Post by arcticpineapplecorp. » Tue May 01, 2018 8:52 pm

I just listened to it today. Good interview Dr. Dahle. And Paul is always a great guest (and host). One of the parts that got me thinking is that when we DIYers drink the cool aid (my words, not the guest/host) we tend to believe everybody can (or should) be a DIYer. This was true for me as well. I have come to believe quite the opposite. I don't think many can or will just buy and hold. There have been too many studies (Dalbar, though imperfect as it is, and was disussed slightly in the interview) and others (like Vanguard's own white paper showing how using an advisor can add value) that makes me believe there is value that advisors can bring to investors for many who will ultimately be their own worst enemy (Pogo quote "I have met the enemy and he is us") due to fear (and other emotions), panic selling, behavioral mistakes (impatience, etc.).

Dr. Bernstein also talked at length on The New Retirement Podcast that there's an awful lot of factors that go into whether someone can be successful at DIYing (like understanding the history of the market, declines and recoveries, etc., investing theory, behavioral finance, etc) which most people don't even begin to think they need to care about, but they do and should if they're going to do it on their own.
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

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Re: White Coat Investor Interviews Paul Merriman

Post by willthrill81 » Tue May 01, 2018 9:15 pm

paul merriman wrote:
Tue May 01, 2018 8:30 pm
I know few Bogleheads are fans of timing. I believe investors who can stay the course with a buy and hold strategy have no reason to consider market timing. I think those who believe in buy and hold will find lots of evidence that timing is a waste of time, as timing will produce long periods of results that will confirm buy and hold is better. I am so excited that Taylor Larimore produced a link to a list of almost 100 quotes about the challenges of market timing. I will record a podcast responding to at least half of the quotes. These quotes come from some very smart people so it will be fun responding to their comments. I promise to include the toughest of the arguments. I am actually very excited about doing that podcast.
Thank you for all of your work Paul. You have done a great service to many people, myself included. I look forward to your podcast regarding market timing.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

Boxtrap
Posts: 86
Joined: Tue Oct 10, 2017 1:13 pm

Re: White Coat Investor Interviews Paul Merriman

Post by Boxtrap » Thu May 03, 2018 2:58 pm

paul merriman wrote:
Thu Apr 26, 2018 1:38 pm
I do appreciate all the kind comments, and for those who disagree with my beliefs, it would be fun to have a debate sometime. Since I don't recommend investors use timing, I have no problem with those who don't believe in timing. For those who think large cap blend (S&P and Total Market Index) is better than a portfolio of U.S. and international large and small blend, large and small value, emerging markets and REITS, I guess we will find out. My problem is I'm almost 75 and if I live to be 100 it won't be enough real time returns to solve the problem. I do know the S&P 500 compounded at 17.2% from 1975 to 1999. But I also know that for the period 2000 through 2017 it compounded at 5.4%. I also know that small cap value hypothetically beat the S&P 500 for the period 1975 to 1999, as well as 2000 through 2017. You can correctly say that extra return was the premium for the additional risk of small cap value and I would say, "right." I do know there is no risk in the past so I, and everyone else, know what they should have done. The challenge is what will happen in the future. As much as I believe anything about investing, I believe that no one knows what will be best in the future. I do know that my recommended portfolio has many times more public companies than offered in the S&P 500 or Total Market Index. I like massive diversification. I have believed that for a long time but when I read Dr. Bessembinder's paper I became an even greater believer. I talk to a lot of young people and I have done all I can to get them to own them all not just the biggest and the best. I love helping people. I have not met a Boglehead that I worry about their investing beliefs. As different as we all may be I think we are all "in the ballpark." The ones that I worry about are the ones who have not learned the difference between load and no load, passive and active management, or high and low expenses. I am floored how many people don't even know who John Bogle is or what he has done for the majority of investors in America. After I had my 90 minute with Jack in his office last June, I was anxious to share the thrill with others. And the blank stares about who Jack is and what he has done to make our lives better is a bit mystifying. By the way, it would be even worse if I mentioned the names Gene Fama Jr. or Ken French who have done work that may be equal to Jack. I hope to have 90 minutes with each of them as well. And at the end of my life I hope to have educated a million young people about the importance of equity asset class selection, asset allocation between those equity asset classes, as well as bond funds and the ability to find the funds that will maximize the likelihood of success over their lifetime. Plus, I will do my best to show them how to add some small cap value to go along with their target date fund holdings.
Thank you, Paul, for taking the time to write such a thorough, measured and genuine response to all the Bogleheads. I have learned so much about the value and wisdom behind smart passive investing in the last 2 years - mostly from absorbing knowledge from a small handful of longtime, well seasoned investors/bloggers. And you're right at the top of that list. Thanks for all you do.

likashing
Posts: 149
Joined: Tue Mar 06, 2007 7:58 pm

Re: White Coat Investor Interviews Paul Merriman

Post by likashing » Thu May 03, 2018 3:12 pm

paul merriman wrote:
Thu Apr 26, 2018 1:38 pm
I do appreciate all the kind comments, and for those who disagree with my beliefs, it would be fun to have a debate sometime. Since I don't recommend investors use timing, I have no problem with those who don't believe in timing. For those who think large cap blend (S&P and Total Market Index) is better than a portfolio of U.S. and international large and small blend, large and small value, emerging markets and REITS, I guess we will find out. My problem is I'm almost 75 and if I live to be 100 it won't be enough real time returns to solve the problem. I do know the S&P 500 compounded at 17.2% from 1975 to 1999. But I also know that for the period 2000 through 2017 it compounded at 5.4%. I also know that small cap value hypothetically beat the S&P 500 for the period 1975 to 1999, as well as 2000 through 2017. You can correctly say that extra return was the premium for the additional risk of small cap value and I would say, "right." I do know there is no risk in the past so I, and everyone else, know what they should have done. The challenge is what will happen in the future. As much as I believe anything about investing, I believe that no one knows what will be best in the future. I do know that my recommended portfolio has many times more public companies than offered in the S&P 500 or Total Market Index. I like massive diversification. I have believed that for a long time but when I read Dr. Bessembinder's paper I became an even greater believer. I talk to a lot of young people and I have done all I can to get them to own them all not just the biggest and the best. I love helping people. I have not met a Boglehead that I worry about their investing beliefs. As different as we all may be I think we are all "in the ballpark." The ones that I worry about are the ones who have not learned the difference between load and no load, passive and active management, or high and low expenses. I am floored how many people don't even know who John Bogle is or what he has done for the majority of investors in America. After I had my 90 minute with Jack in his office last June, I was anxious to share the thrill with others. And the blank stares about who Jack is and what he has done to make our lives better is a bit mystifying. By the way, it would be even worse if I mentioned the names Gene Fama Jr. or Ken French who have done work that may be equal to Jack. I hope to have 90 minutes with each of them as well. And at the end of my life I hope to have educated a million young people about the importance of equity asset class selection, asset allocation between those equity asset classes, as well as bond funds and the ability to find the funds that will maximize the likelihood of success over their lifetime. Plus, I will do my best to show them how to add some small cap value to go along with their target date fund holdings.
Dear Paul, just want to say thanks. I started working in 2001 and so did my 401k/IRA investing. I forgot how I stumbled to your site at that time, but I heard/learned about diversification and stock/bond split from you first. Over the years I have learned even more from other knowledgeable people e.g. this forum and Bogle/Boglehead books, but I need to thank you for first opening my eyes about portfolio diversification when I first started.

Totally agree that we are all in the same "ballpark".

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