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Original publish date February 27, 2016 (hour 2). Note that content may be outdated as rules and regulations have changed. In episode 6 of YMYW, Larry Swedroe joins the show to discuss what recency bias is and why you should avoid it. Joe and Al ask Larry what the key to successful investing is, and Larry talks about his books\xa0The Incredible Shrinking Alpha and Think, Act and Invest\xa0like Warren Buffett.

2:12 \u201cThe conventional wisdom goes like this: take distributions first from taxable accounts such as your brokerage accounts, then from tax-deferred accounts like your IRAs and 401(k)s\u2026that is the rule of thumb for most advisory firms\u201d

8:05 Interview with Larry Swedroe

9:14 \u201cWhat investors tend to do, as we know, is they tend to buy after periods of strong performance which means they\u2019re buying when prices are high and then they tend to sell after periods of poor performance, which means valuations are relatively low and expected returns are not high\u201d

10:01 \u201cResearch shows, shockingly, that individual investors on average are such poor investors that they actually underperform the very mutual funds they actually invest\u201d

13:21 \u201cThe key to successful investing is to understand what Napoleon advised about military strategies: He said battles are never won on the field, they\u2019re won in the preparation stage\u201d

15:26 \u201cYou have to just accept that markets are unpredictable and you must have discipline, you want to be a buyer when everyone is panic selling and you want to be a seller when everyone else is getting greedy. There is a simple although not easy way of doing that and it\u2019s called rebalancing your portfolio\u201d

16:14 \u201cWhat people don\u2019t understand is really how stocks are priced\u201d

20:01 \u201cPeople have this notion that if they can get in and out of certain asset classes or get in and out of certain markets, that\u2019s going to enhance their overall investment experience, but actually the opposite is true\u201d

21:04 \u201cThe key is to understand how markets have changed over the last 70 years\u201d

23:59 \u201cIt\u2019s not necessarily the mutual fund, it\u2019s the allocation and how you\u2019re actually positioning the overall accounts towards different areas of the markets\u201d

24:55 \u201cHere\u2019s the key: what investors need to focus on is not trying to choose a money manager or stock that they think will outperform\u2026what you do want to focus on is putting your money in the asset classes that you believe are appropriate for you to hold\u201d

28:43 \u201cInvesting is really simple; you need to have a well-thought-out plan to make sure you don\u2019t take more risk than you have the ability, willingness and need to take\u201d

35:25 \u201cWhen you have a fund that\u2019s outside of a retirement account and the manager is buying and selling, that\u2019s causing short-term gains which are the most expensive of gains. Now all of sudden you\u2019re paying more in taxes\u201d