Sound Investing

Hosted by Paul Merriman

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559

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Aug 2026

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About the show

Weekly podcasts with Paul Merriman. Strategic planning for investing at every stage of life.

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August 19, 20261 hr 33 min

Paul Merriman and Rick Ferri: A Conversation Decades in the Making

Watch the video here. Paul sits down with Rick Ferri — not for a debate, but for the kind of honest conversation two people can only have after spending their careers chasing the same goal from different directions. Rick makes the case against tilting: the small cap premium largely disappeared once the research went public around 1980, and he believes value stopped working around 2006. Paul counters with Table G1b, which shows the results of blending small cap value and the S&P 500 in 10% increments from 1970 through 2025 — returns alongside the worst drawdowns each combination had to survive. Then Rick does something unexpected — he crosses to Paul's side of the table and builds a strong argument for small cap value, framing it as a way to capture the return of private companies that represent half of the economy. Where they land is less about who's right than what it costs to be wrong. If you go down the factor road, Rick says, it's a lifetime commitment — not three years. Also covered: lump sum versus dollar cost averaging, what an hourly advisor can do to help do-it-yourself investors implement their new portfolio, the new Trump accounts for newborns, and why VT may not be your best choice in a taxable account. Both Paul and Rick will be at the Bogleheads Conference, November 13–15 at Green Valley Ranch Resort and Spa in Henderson, NV, near Las Vegas. Registration: boglecenter.net/2026conference Table G1b — Fine Tuning Table: S&P 500 vs. US Small Cap Value: View the table Stay tuned for next week's podcast, a discussion with Chris Pedersen about this interview with Rick.

August 12, 202614 min

Preparing for an upcoming debate with Rick Ferri: Total Market portfolios

This Friday I'm sitting down with my friend Rick Ferri for a debate that I think matters a great deal, even though — or maybe because — Rick and I agree on almost everything. We both believe in diversification, low costs, index funds, ignoring predictions, and staying the course. Where we part ways is what happens after that. Rick's case is that you should simply own the whole market. A total stock market index fund gives you thousands of companies at an extraordinarily low cost, and adding complexity rarely pays. My case is that the academic research — Fama, French, and decades of market history — shows that greater exposure to small and value companies may raise long-term expected returns. Rick calls that factor tilting. I call it better diversification. He'll argue I'm not adding diversification at all, just changing the weights, and he's right that this is exactly what we're doing. The question is whether it's worth doing. We also take on a second question that gets far too little attention: if you do want small and value exposure, where should you get it? Vanguard, Fidelity, DFA or Avantis — traditional indexing or systematic portfolio management? Differences that look trivial today can compound into very large ones over 40 or 50 years. Neither of us is trying to win. Rick may be right. I may be right. Ask us again in 50 years. What I hope you take away is the process — examining evidence, understanding the alternatives, admitting what nobody knows, and committing to a strategy you can stick with. Because every strategy disappoints you eventually, and what you do in that moment matters more than which one you chose. The podcast and video of my conversation with Rick will be available Wednesday, August 19, 2026. If you have any questions for Rick, send them to Paul@paulmerriman.com.

August 5, 202637 min

Finding the Perfect Advisor, a Battle Over Words and VT vs. AVGE

Paul returns from three days at the Garrett Planning Network retreat with a lesson that has almost nothing to do with investments — and everything to do with getting your money's worth from professional advice. Garrett advisors work by the hour, a business model Paul believes eliminates the conflicts of interest built into assets-under-management relationships. For $1,000 to $8,000, he's convinced most families can get extraordinary value from five to ten hours with a thoughtful, trained hourly planner. But there's a catch: the value of those hours depends almost entirely on your willingness to tell the truth. Inspired by a Seth Godin observation — people lie in focus groups, on surveys, and to themselves — Paul explains why the most valuable planning meeting isn't the one where you look financially successful. It's the one where you're completely honest. Paul and his wife are putting this to the test with an hourly planner of their own, and he'll report back in the weeks ahead. Next, Paul shares a private conversation with his longtime friend Rick Ferri, who challenged an idea Paul has taught for decades: that small cap value, large cap value, and international are equity asset classes at all. Rick argues there's only one equity asset class — the total market — and everything else is a segment or style. Paul takes the challenge seriously, does some digging, and explains why the answer matters far more than a debate over definitions. How you think about asset classes shapes the portfolio you'll live with for the next 60 or 70 years. Finally, Paul digs into AVGE, the Avantis globally diversified all-equity ETF, and how it compares to Vanguard's total market approach (VT and VTI). He walks through the meaningful differences: 70/30 U.S./international at Avantis versus 60/40 at Vanguard, and substantially larger positions in mid cap value, small cap value, and small cap blend. He looks at what those tilts have meant historically — including Vanguard's own mid cap value fund turning $10,000 into roughly $160,000 versus $102,000 for the S&P 500 — and why he believes the extra 0.17% in expenses may be money well spent. For investors who don't want to go all-in, Paul offers simple combinations, like a third VT, a third AVGE, and a third AVUV. CHAPTERS 00:00 – Introduction: three topics from the Garrett retreat 01:56 – Why hourly advisors have fewer conflicts of interest 05:52 – The catch: your willingness to tell the truth 06:38 – Seth Godin: "People lie... and they lie to themselves" 08:04 – What planners can't fix if they don't know about it 13:00 – Paul's debate with Rick Ferri: what is an equity asset class? 18:05 – Why the definition shapes your lifetime portfolio 21:34 – AVGE vs. VT: U.S./international balance 23:07 – Comparing value, blend, and growth exposure 25:00 – Mid cap and small cap: what history shows 30:15 – Expense ratios and what you're paying for 31:35 – Simple combinations: VT + AVGE + AVUV 33:15 – Stay the course: closing thoughts Learn more about the Garrett Planning Network

July 29, 202633 min

AVGV, Truth Tellers, AI and Finding Your Why

Paul discusses his upcoming trip to Minneapolis to address almost 100 hourly financial planners at the Garrett Planning Network annual retreat — then shows, in real time, how he uses AI alongside the Truth Tellers. This example is prompted by a Ben Felix video arguing that most people save without knowing their real “why.” Paul asked ChatGPT to explore the question and shares the full AI response, which includes the six steps to creating your “why” — from “dream before you calculate” to purpose → plan → portfolio. In the second part of this podcast he responds to the many listeners who have asked: build the worldwide all-value portfolio with five Avantis ETFs, or simply buy AVGV, a single ETF that owns the same ETFs but in different percentages? Over three years, AVGV compounded at 21.1% (up 77.4%), while the five-fund do-it-yourself version compounded at 22.2% (up 82.6%) with no rebalancing. Doing the work likely earns a better return — but a Morningstar study suggests most investors do better buying the single ETF, because it takes care of all the rebalancing and overcomes the tendency to chase returns as money is added. Paul would appreciate your feedback on this podcast: paul@paulmerriman.com . LINKS • Ben Felix video on investor myths • Morningstar “Mind the Gap 2025” study • Garrett Planning Network — find an hourly advisor • Meet the Truth Tellers

July 22, 20261 hr 0 min

Stuff Happens: Perspective From Ben Carlson's Risk and Reward

The hardest part of investing isn't choosing funds — it's building a set of beliefs strong enough to keep you disciplined when the market, the news, and your own emotions all conspire to pull you off course. In this episode, Paul sets aside the usual fine-tuning tables and turns to one of his favorite books, Ben Carlson's Risk and Reward. Table by table, Ben makes the same point in a dozen different ways: the bad stuff is normal, it's happened before, and it will happen again. The goal isn't to avoid it — it's to expect it, so you can stay the course. Along the way, Paul walks through: • The 10 worst days, months, and years in market history — and how the market behaved 1, 5, and 10 years later • Why bonds turn a 43% stock loss into something far gentler, and why a simple 60/40 has never had a losing 20-year period • How stocks actually perform before, during, and after a recession (the average is a gain) • The "dead cat bounces" of 2000–2002 and why three years of false hope wear investors down • What a century of international returns says about putting all your eggs in one basket • The most quietly important number in investing: the market's average daily return of 0.03% — a lifetime of baby steps The theme underneath it all: future returns will likely look a lot like the past. We simply have no way to know the sequence — and that's exactly why realistic expectations, low costs, and broad diversification matter more than any forecast. The biggest enemy of the investor, as the data keeps showing, isn't the market. It's the investor. BRINGING FINANCIAL FREEDOM TO NEW AUDIENCES Last week I spent more than three hours with 89 graduating nurses at Texas A&M University, exploring one life-changing idea: how a handful of smart financial decisions can add millions of dollars to your lifetime financial security. Many of you asked to see what these presentations look like, so we're making this one available to watch (link below). LINKS • Ben Carlson, Risk and Reward (Foundation earns when you use this link) • Texas A&M nursing school presentation (3+ hour video) • Texas A&M student feedback • Mike Piper, Social Security Made Simple / other titles • Personal Finance in Your 20s & 30s For Dummies • Free books from Paul Merriman • Boot Camp series & tables

July 15, 202626 min

Is it possible that factor investing won't work?

A longtime listener wrote in after watching a Ben Felix video making the point that factor investing may not beat the S&P 500 by the end of an investor’s lifetime — and could even do worse. His question was simple: is factor investing really worth the effort? Paul’s answer turned out to be two answers, so he’s splitting it into two episodes. This week is about the thinking. Next week is about the evidence — including new data Daryl Bahls just sent over. Paul also tries something new: using AI to canvas the writings of the Truth Tellers and surface what they would say about this exact question. What emerges is a point they all agree on — good decisions do not guarantee good outcomes, and bad decisions sometimes produce wonderful ones. Bill Bernstein, Larry Swedroe, Ben Felix, Mike Piper, Christine Benz, Rob Berger, Jim Dahle and Jack Bogle each frame the same distinction: expected returns are not realized returns, and probability is not certainty. Investing is one long series of forks in the road — save or spend, stocks or bonds, index or active, buy-and-hold or market timing — and none of them come with a guarantee. What they come with is a probability. The job is to choose thoughtfully, accept the uncertainty, and have the courage to stay the course while the evidence still supports the plan. LINKS • Meet the Truth Tellers: paulmerriman.com/truth-tellers

July 8, 202655 min

Back from the Baltic and 12 of your questions

Paul returns from a two-week Baltic cruise refreshed and ready to dig into the numbers. He opens with a 12-month performance review of the recommended portfolios at Avantis, DFA and Vanguard — Avantis averaged 31.1% across the 10 equity asset classes in the Ultimate Buy and Hold, versus 27.7% at DFA and 26% at Vanguard — and explains why the non-traditional index funds keep outperforming traditional cap-weighted indexes. Paul also revisits Ben Carlson’s look at the ARK Innovation ETF (ARKK), which grew to $30 billion under management before falling 65% while the S&P 500 gained more than 60% — a costly lesson in performance chasing, with an estimated $7.5 billion in shareholder losses. Then Paul answers 12 listener questions, with a special deep dive into table G1B — 56 years of S&P 500 vs. small cap value returns, one year at a time, plus every combination in 10% increments. QUESTIONS COVERED 1. Funds that match the international and U.S. small cap value asset classes 17:18 2. Keep investments at Fidelity or move to Vanguard? 18:51 3. Is the Vanguard money market fund a good long-term emergency fund? 20:19 4. Pairing the S&P 500 with small cap value — the G1B fine-tuning table 21:46 5. Why the Four Fund worldwide portfolio uses U.S. small cap value only 31:17 6. Should geopolitical tension make you cash out? 33:57 7. Why has small cap value historically produced higher returns? 36:47 8. Can you get rich from investing? The Rule of 72 and $100 a month 41:51 9. Is the all-value worldwide portfolio better than the other strategies? (Table H2) 44:03 10. Where to find the 10 Fund portfolio allocations 48:39 11. Paul’s take on DFA’s micro cap fund (DFMC) 49:16 12. Lump sum or dollar cost average when switching funds in a Roth? 51:57 LINKS • Table H2 — Sound Investing Portfolios Comparison (Worldwide All Value) • Table H1a — Sound Investing Portfolios Asset Allocations • Fine-Tuning Table G1B — S&P 500 vs. Small Cap Value • Fine-Tuning Table G1C — S&P 500 vs. SCV, 2025 Returns • Best-in-Class ETF Recommendations

July 1, 202626 min

They're Back... Talking Real Money - Investing Talk

I joined my longtime friend Tom Cock for a special edition of Talking Real Money — a wide-ranging conversation about the evolution of indexing, the proposed changes to the S&P 500, and why investors should understand both the strengths and limitations of traditional index funds. I explain why firms like Dimensional Fund Advisors and Avantis Investors use a more flexible, evidence-based approach than traditional indexing, and how academic research has reshaped portfolio construction over the past several decades. We also explore lessons from market history, including the importance of understanding major bear markets, determining appropriate risk levels, and building portfolios that align with your personal goals rather than chasing maximum returns. I share insights from the latest Dimensional Matrix Book and explain why I believe studying 100 years of market data helps investors stay disciplined during inevitable downturns. Finally, I introduce a simple but powerful strategy for helping newborns and young children build substantial retirement wealth through small annual investments that can compound over many decades. CHAPTERS 0:11 Special guest Paul Merriman joins Talking Real Money 0:55 Long friendship and investing partnership between Tom and Paul 1:20 S&P 500 rule changes and earlier inclusion of major IPOs like SpaceX 2:07 Historical examples of S&P 500 additions and omissions 2:35 Microsoft’s delayed entry into the S&P 500 2:56 NVIDIA replacing Enron in 2001 3:29 How index rule changes can affect future returns and volatility 4:08 Why indexing remains the preferred strategy for most investors 5:16 Traditional versus non-traditional index funds 6:37 How Avantis and Dimensional incorporate factors beyond company size 8:05 Why factor-based investing differs from traditional indexing 9:02 Problems with rigid index reconstitution schedules 10:16 Momentum, flexibility, and portfolio management advantages 11:22 Introduction to Dimensional’s annual Matrix Book 11:53 Using market history rather than forecasts to guide investing decisions 13:09 Lessons from past bubbles, crashes, and lost decades 14:20 Why Paul trusts academic research more than Wall Street forecasts 15:14 The case for small-cap value investing 15:49 Clarifying Paul’s allocation to small companies 16:53 Investing for heirs, charities, and future generations 18:10 Remembering investor panic during the 2008 financial crisis 19:18 Determining an appropriate risk level for retirement portfolios 20:43 Different investor goals: beating the market, maximizing returns, or minimizing risk 21:28 Peace of mind versus maximum growth 21:55 Helping young people build retirement wealth early 22:54 The $365-per-year retirement funding concept 24:09 Final thoughts and appreciation between Tom and Paul Questions? Comments? Click!

June 24, 20261 hr 0 min

Ben Carlson and Paul Merriman on Full Disclosure

Paul Merriman joins host Roben Farzad on Full Disclosure for a rare conversation alongside Ben Carlson, director of institutional asset management at Ritholtz Wealth and author of the new book Risk and Reward: How to Handle Market Volatility and Build Long-Term Wealth . Roben called it a “truth teller tandem” — the first time these two have sat down together — and the result is an hour of warm, candid, data-grounded talk about how individual investors can actually succeed. The conversation opens with a great question: does a century of S&P 500 history mean anything when index funds didn’t even exist for most of it? Paul explains why those long-run numbers still matter — not as a promise of the next ten years, but as a guide to the full range of what markets can do. From there, Paul and Ben trace just how far investing has come since Paul entered the business in 1966: the death of the 8.5% sales load, the arrival of IRAs and 401(k)s, fractional shares, and commission-free trading. As Ben puts it, the barriers to entry have been bulldozed, and today’s investor has a better shot at strong net returns than ever before. But more choices bring more temptation. Paul and Ben dig into diversification as a risk-management tool — why a tilt toward small-cap value and a meaningful allocation to international stocks can pay off over a lifetime, even when the S&P 500 is dominating the headlines. They revisit the lost decade of 2000–2009, the lessons of Japan’s 1989 peak, and the hard discipline of rebalancing into the pain when an asset class is out of favor. They also get practical about the things keeping investors up at night: inflation as one of the biggest risks most people underestimate, the real trade-offs in today’s bond market and long-duration Treasuries, and an honest look at the FIRE movement — including why meaning, longevity, and a 30- or 40-year retirement complicate the dream of retiring early. Throughout, Paul shares his own story, including why, at 82 and with more than he needs, he still holds half his portfolio in equities because of a caution he’s carried since his twenties. Ben closes with the thought that may stay with you longest: the most important thing an investor can understand is not the market — it’s themselves. Knowing which mistake you’d regret more, and what you can truly live with, is the foundation everything else is built on. Watch video here.

June 17, 20261 hr 7 min

Evidence-Based Investing, Index Funds & Staying the Course

I recently sat down with Steve Chen on his Boldin Your Money podcast for a wide-ranging conversation about evidence-based investing — and why it matters more than ever in a world of speculation, hype, and constant financial noise. We covered my early days as a stockbroker in the 1960s, the psychology that trips investors up in downturns, how low-cost index funds transformed personal finance, factor investing and small-cap value, and why younger investors are being pulled toward gambling-like behavior through apps, crypto, and prediction markets. Whether you're just starting out or planning for retirement, I think you'll find it time well spent. KEY TOPICS DISCUSSED • The difference between investing and speculation • Why staying the course is emotionally difficult • Wall Street incentives and investor behavior • The origins of index fund investing • Factor investing and small-cap value explained • Why diversification matters long term • Rebalancing strategies and portfolio management • Financial literacy and generational investing habits • Why gambling behavior is becoming normalized • How AI tools like ChatGPT and Claude are changing education • The psychology behind successful long-term investors TIMESTAMPS 00:00 Introduction 02:55 Paul Merriman's start in investing 05:20 Wall Street incentives and conflicts of interest 08:35 Why investing is harder than it looks 12:25 Investing vs speculation 15:40 Why people panic during market crashes 17:30 The psychology of staying the course 19:10 Generational wealth and financial literacy 23:40 The case for index funds 28:45 Factor investing explained 32:30 The four-fund portfolio strategy 36:00 Rebalancing and long-term returns 38:00 ChatGPT, Claude, and financial education 42:15 Market valuations and investor behavior 45:30 Building wealth intentionally 49:00 Gambling culture and modern investing 51:45 Teaching financial literacy to younger generations 54:00 Final thoughts on long-term investing RESOURCES MENTIONED Paul Merriman Foundation: https://www.paulmerriman.com/ Try the Boldin Planner for free: https://go.boldin.com/podcasttep110 Watch Video here- https://youtu.be/y_i5wrr_tfM