Sound Investing

Hosted by Paul Merriman

Business Investing

Website RSS feed

Episodes

569

Latest episode

Oct 2026

Language

About the show

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

Listen to episodes

60 recent

October 21, 202642 min

The Two Biggest Paydays of My Life

As Paul turned 83 last week, he recorded this podcast in his studio office surrounded by piles of articles and notes for future recordings and a good deal of gratitude. He says this may be his favorite podcast he's ever made. He starts with the two biggest paydays of his life. The first was December 31, 2012, the day he sold his part of the firm he'd started in 1983 and walked into retirement with a promise to his wife that he'd never work for money again. The second happened in the last 48 hours, and not a dollar changed hands. He also has a word of caution for anyone who credits him for what their portfolio has done. Then an epiphany. After reading a recent Adam Grossman piece in HumbleDollar, Paul began to question whether John Bogle's "stay the course" really belongs as the number one rule for being a successful long-term investor. He took the question to ChatGPT, shares the whole conversation, and comes away with a new rule number one, plus a line he thinks an 18-year-old might still remember at 65. The third topic is bonds. Paul has been reading a lot of negative commentary about them lately, so he goes back to Table B1 and walks through 56 years of history: how many losing years the S&P 500 had since 1970, how many the short-to-intermediate bond portfolio had, what the worst 12 months and worst 60 months looked like, and why he and his wife hold the mix they do at 83. He also explains why long-term bonds are not the answer, and what the numbers since 1928 say about the premium you get for their extra risk. LINKS Market Risks by Adam M. Grossman, HumbleDollar

October 14, 202657 min

Office Hours: Teachers Questions Answered

In this special office-hours session, Albert and I answer the questions teachers have been sending in across our four NGPF classroom sessions — more than 500 educators strong. We move fast and cover a lot of ground: 1. How a young person can open a first investment account (and why $1 is all it takes to start at Fidelity) 02:36 2. My favorite books on saving, investing and index funds 10:58 3. The best free websites and videos for teachers and students 12:51 4. How to make inflation real in the classroom — yes, the bubble-gum story 19:19 5. Why asset classes like small-cap value and large-cap growth behave so differently 25:15 6. A live walk-through of Morningstar’s style boxes and the chart function 34:45 7. Advice for reaching first-generation and lower-income students 47:24 8. What would be the job to suggest to a middle schooler to get them more interested in math and economics? Whether you teach this material or you’re just getting started yourself, I think you’ll find something here you can put to use. Watch video

October 7, 202654 min

The $5 Million Pay off for a Financially Literate High School Graduate

WATCH THE VIDEO This is the fourth of five presentations I recorded for Next Gen Personal Finance (NGPF.org) and am sharing with Sound Investing listeners. I titled this one “The $5 Million Payoff for a Financially Literate High School Graduate” — but I could have called it the $42 million payoff, and by the end you’ll see the math that makes it believable. I walk through the single biggest decision of all (stocks vs. bonds), 100 years of market history, why the first five years of investing matter most, and how low costs, low taxes, and automation turn small savings into a fortune over a lifetime. FREE BOOK THIS WEEK Spending Your Way to Wealth (see Appendix E) https://investorship.com/wp-content/uploads/2023/10/SYWTW.pdf TABLES AND RESEARCH https://www.paulmerriman.com/data-tables QUESTIONS paul@paulmerriman.com (put “NGPF” in the subject line) Join us next week for the final session: Financial Literacy Office Hours with Paul Merriman .

September 30, 202657 min

The Inside Story About Diversification

Harry Markowitz called diversification "the only free lunch in finance." In this session, part of Paul's series for Next Gen Personal Finance educators, Paul Merriman explains what that means in practice, and why a well-diversified portfolio can help investors stay the course through good markets and bad. Paul covers the history and math behind diversification, from Don Quixote's "don't put all your eggs in one basket" to Warren Buffett, Charlie Munger, and Sir John Templeton. He explains the three kinds of risk investors face (company, market, and asset class), and shows how the "lost decade" of 2000–2009 hit S&P 500 investors hard while more diversified portfolios kept growing. You'll also hear: How adding small "baby steps" of large cap value, small cap, and REITs added about 1% a year to returns since 1970 Why the two-fund strategy (half S&P 500, half small cap value) may be less risky than it looks What a young investor putting away as little as $1,000 a year could build over a lifetime A simple "ultimate buy and hold" for hands-off investors: a target date fund plus a slice of small cap value Plus, Paul shares a free book from market historian Bill Bernstein. Watch on YouTube: youtu.be/MDqaIojI8TE Free book: If You Can: How Millennials Can Get Rich Slowly Tables and research: paulmerriman.com/data-tables Send your questions to Paul at paul@paulmerriman.com (include "NGPF" in the subject line)

September 23, 202652 min

The #1 Reason to Use Index Funds

Watch the video here. This is the second of five presentations Paul recorded for Next Generation Personal Finance (NGPF.org), whose free curriculum reaches some 150,000 teachers. The sessions weren't open to the public, but NGPF has allowed Paul to share each one with Sound Investing listeners. The subject is index funds, and Paul starts where the story starts: John Bogle, 1976, and a fund launch that nearly got cancelled before it opened. From there he looks at what the evidence actually says about active management over 20 years, why most investors never hear about the costs that quietly come out of their returns, and what happens to a fund that doesn't perform. He also introduces the non-traditional index funds from Dimensional and Avantis that he believes give young investors their best opportunity, and closes with stories from the 90 minutes he spent in Jack Bogle's office. CHAPTERS 00:00 Introduction 02:44 What is an index fund? 04:38 John Bogle and the first index fund 08:50 Active vs. passive: beat the market or be the market 10:52 The SPIVA report 14:53 Quartiles and the 20-year picture 19:49 How long do mutual funds survive? 22:05 Asset class and style drift 25:14 The tax cost of active management 28:51 Bogle on costs and the hidden drags on return 35:18 Myths about index funds 38:28 Beating the S&P 500 with index funds 42:35 Traditional vs. non-traditional index funds 49:06 Dimensional and Avantis 50:23 The number one reason to use index funds 55:46 Stories from meeting Jack Bogle 59:25 Wrap-up NGPF: ngpf.org

September 16, 202653 min

The Math and the History of Investing

WATCH THE VIDEO Want to build a multi-million-dollar retirement portfolio without gambling on single stocks? This is the first session of the four-part series I recorded for the teachers of Next Gen Personal Finance — and I’m sharing it here with you. In it, I break down the timeless principles, the math and the market history every long-term investor needs to know. WHAT YOU’LL LEARN IN THIS EPISODE • The Math of Compounding [01:43] — how finding an extra 0.5% to 1% in returns — or starting just five years earlier — can add millions to your lifetime wealth. • The Power of Starting Early [09:48] — why your initial investment years build your foundation, and how both bull and bear markets work in favor of young, disciplined savers. • Budgeting Strategy [19:43] — applying the “Pay Yourself First” rule and the 50/30/20 framework to establish sustainable saving habits. • Stocks vs. Bonds [22:44] — understanding why stocks are low-risk for long-term growth, while bonds carry inflation risk over decades. • Market Diversification [30:08] — why 4% of companies generate nearly all stock-market gains, and how owning total-market index funds ensures you don’t miss out on them. • Equity Asset Classes [37:59] — comparing large-cap blend, large-cap value, small-cap blend and small-cap value to reduce volatility and boost returns. • Target-Date Funds [49:38] — why automated, age-tailored allocation helps investors stay the course and avoid emotional mistakes. Tune in to discover how staying the course, keeping expenses low, and letting history guide your strategy can transform your financial future. Join us next week for The #1 Reason to Invest in Index Funds .

September 9, 202640 min

Get Out While You Can or Stay the Course

Paul opens with news of a new opportunity to reach young investors: a five-part series for Next Generation Personal Finance (NGPF.org), available to some 150,000 teachers who use NGPF's free curriculum. Topics include the math and history of investing, the case for index funds, the inside story on diversification, the $5 million payoff for a financially literate high school graduate, and a teacher Q&A session. Each presentation will be shared with Sound Investing listeners the following week. Then Paul turns to two listener questions that go to the heart of how people actually experience the market. The first asks whether broad diversification really produces the best returns, or whether a more focused portfolio would do better. He walks through the Bessembinder research showing that roughly 4% of companies drove most of the market's long-term return, Fama and French data on small cap value going back almost 100 years, and Vanguard's own real time returns since 1998 comparing $10,000 invested in the S&P 500, mid cap, small cap blend and small cap value asset classes. The second is a letter from an investor who put his first real savings, earned at $7 an hour, into Fidelity Magellan in 1985, lost 30% on Black Monday in October 1987, and pulled everything out. Forty years later he still fears the next crash and asks whether Paul's Ultimate Buy and Hold portfolio could leave him waking up with half his money gone. Paul closes with a story about five 24-year-old engineers he met on Bainbridge Island, and an offer to anyone who can gather a group that would benefit from a conversation about investing. LINKS Fine-Tuning Your Asset Allocation tables NGPF: ngpf.org

September 2, 20261 hr 13 min

The Investing Myths That Cost a Fortune

WATCH THE VIDEO It was a pleasure to be invited back on System Trader with Jack Lempart. Here is a list of the main topics we covered: CHAPTERS 0:53 • My own biggest mistake 3:15 • Why “the stock market is a casino” is exactly backwards 6:48 • “I don’t have enough money to start” — what $100 a month actually becomes 9:33 • A $20 bet with my 13-year-old grandson 13:04 • How much intelligence does successful investing really require? 15:31 • The Mensa Investment Club: buy low, sell lower 16:24 • Three books for the psychological hurdles 17:38 • “It’s a bad time to invest right now” — the myth that never dies 20:00 • Why a falling market is the best thing that can happen to a young investor 24:21 • Can a star manager do it for you? SPIVA and Bill Miller 30:21 • An ETF is only a wrapper — how do you grade what’s inside it? 33:01 • Traditional vs. non-traditional index funds 35:49 • Home bias: half U.S., half international, and the lost decade 44:04 • Cap-weighted vs. asset-class weighted funds 46:26 • Finding your right level of risk before the market tests you 55:20 • Is the small-cap value premium dead? 62:52 • Financial literacy in high school — and who’s teaching on TikTok 64:21 • Where the biggest premium comes from: size, value, quality and momentum 69:29 • The one thing to do tomorrow morning: control what you can, then automate

August 26, 20261 hr 6 min

Paul and Chris Follow-Up: The Rick Ferri Small-Cap Value Debate

Paul and Chris reflect on Paul’s recent discussion with Rick Ferri. Paul adds information he wished he’d included, and Chris reacts to Paul and Rick’s positions. Together, they discuss the behavioral, trust, and performance benefits and trade-offs of seeking meaningful diversification by adding Small-Cap Value to a portfolio. CHAPTERS 00:00:00 – Intro 00:02:50 – Chris’ 30k Foot View 00:06:16 – Mid-caps? 00:10:40 – Tot. Mkt. vs. S&P 500 00:20:15 – Trust and Change 00:25:45 – Table G1b 00:28:50 – VT vs. AVGE 00:42:20 – Dollar-Cost-Averaging 00:52:00 – Paul’s Grandson’s Question 00:53:08 – Gold funds 00:59:40 – Travel plans 01:02:20 – Outro Watch the video on YouTube Table G1b — Fine Tuning Table: S&P 500 vs. US Small Cap Value

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.

Is this your show?

Claim this listing to keep it up to date, reach guests who want to pitch you, and manage bookings with Guestify.

Claim this listing

More Business podcasts

The Bottom Line

Alexander Spencer

BusinessInterviews guests