BROADCASTS.com

In Episode 101, we welcome the great educator, Paul Merriman.\nWe start with Paul\u2019s background; specifically, the story of an early trading experience with commodities. He doubled his money in days\u2026and then lost everything on the very next trade.\nThen the guys dive in, with Meb bringing up something Paul wrote called \u201cThe Ultimate Buy & Hold Portfolio\u201d and asking for more detail. Paul starts with the S&P which, even with all its up-and-downs, has done great over the years. But then he walks us through some tweaks \u2013 adding large cap, then small cap \u2013 he notes the various percentage returns added by each, as well as the effect on volatility. He eventually arrives at a final portfolio, showing us the power of this diversification.\nMeb points the conversation toward the behavioral benefit of diversification and says how some listeners will wonder how much money to put into each of the asset classes Paul had identified. Paul tells us he originally put 10% into 10 different asset classes \u2013 after all, if each asset class is worthy, then he wants it to be in his portfolio; especially because there\u2019s no way to be certain which one(s) will shine going forward.\nAgreeing, Meb touches on being \u201casset class agnostic\u201d and notes that the problem with being, say, a \u201cgold guy\u201d or any die-hard type of investor, is you get wedded to that asset class. This emotional bond can lead to bad behavior. This leads to a discussion about implementation and the challenges of emotional investing. Paul tells us \u201cI don\u2019t want my emotions to have anything to do with how (my) money is managed.\u201d\nThe conversation drifts toward the benefits of investing early, yet the challenges of educating young people as to its importance, as well as different investing needs over a lifetime. The guys note how the best thing for a young person would be the markets tanking for 10 years. Of course, that would be terrible for an older investor in/near retirement. This bleeds into a conversation about formally educating the younger generation about investing.\nA bit later, Meb asks about the older investor who might have been burned in \u201908, is now near retirement, thinks the U.S. market is expensive, yet needs results. What about him? Paul walks us through the realities of losses and gives us his overall thoughts. This morphs into a common question we get \u2013 invest everything at once, or drip it in over time? Paul has some thoughts on how to do this in a way that balances math and emotions.\nThere\u2019s tons more in this episode (it\u2019s one of our longest to date): the challenge of investing in the \u201cshiny object\u201d\u2026 how to avoid getting screwed by your advisor\u2026 investment newsletters\u2026 buy-and-hold versus market timing\u2026 the critical nature of understanding past performance\u2026 giving money to grandkids\u2026 and of course, Paul\u2019s most memorable trade; his involves the \u201987 crash.\nWhat are the details? Find out in Episode 101.\nLearn more about your ad choices. Visit megaphone.fm/adchoices