The pros and cons of investing your retirement assets 100% in equity, including half in international stocks. Why the 4% spending rule is too aggressive.

• Why historical asset class return studies that use only U.S. data are biased
• How researchers build a broader database to study retirement outcomes and spending rates
• How a 100% stock portfolio performed compared to balanced portfolios and target date funds
• Why investors should have half their assets in international stocks
• Why a 4% spending rule is too high, and what is the alternative

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Show Notes

Beyond the Status Quo: A Critical Assessment of Lifecycle Investment Advice by Aizhan Anarkulova, Scott Cederburg, and Michael S. O'Doherty—SSRN

The Safe Withdrawal Rate: Evidence from a Broad Sample of Developed Markets by Aizhan Anarkulova, Scott Cederburg, Michael S. O'Doherty, and Richard W. Sias—SSRN

Related Episodes

421: Beware of Survivorship Bias When Investing

326: The New Math of Retirement Spending and Investing

254: Should You Be 100% Invested In Stocks?

250: Investing Rule One: Avoid Ruin

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We close out 2023 by answering your questions on active vs passive management, market timing, investing for status, what we learned from Charlie Munger, thoughts on a coming recession, worst investment mistakes, recent books that changed us, and more.  

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Show Notes

How the World Really Works by Vaclav Smil—Viking

The Day the World Stops Shopping by J.B. Mackinnon—Harper Collins

Earth for All: A Survival Guide for Humanity by Sandrine Dixson-Declève, et al—Earth for All

Barbarian Days: A Surfing Life by William Finnegan—Penguin Random House

Tao te Ching: Power for the Peaceful by Lao Tzu (Author) and Marc Mullinax (Translator)—Fortress Press

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Do the impressive returns in public and private markets stem from strategic financial engineering or reflect actual economic growth?

• How corporate profit growth is linked to economic growth, even though corporate profits are more volatile
• How interest rates, tax rates, and stock buybacks influence corporate profits and stock returns
• Why there are fewer publicly traded stocks
• How the increase in leveraged buyouts has impacted the economy
• How private equity funds use financial engineering to boost returns

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Show Notes

US CEOs start to contemplate Trump, round 2 by Rana Foroohar—The Financial Times

End of an Era: The Coming Long-Run Slowdown in Corporate Profit Growth and Stock Returns by Michael Smolyansky—The Federal Reserve

10-Year Stock Market Returns—Crestmont Research

Stock Average—Crestmont Research

Stock EPS Reality—Crestmont Research

What Matters More for Emerging Markets Investors: Economic Growth or EPS Growth? by Jason Hsu Jay Ritter Phillip Wool Yanxiang Zhao—Portfolio Management Research

Nominal Gross Domestic Product for United States—FRED Economic Data

The Secretive Industry Devouring the U.S. Economy by Rogé Karma—The Atlantic

Key Drivers Behind Widespread Adoption Of NAV Financing by Matthew K Kerfoot—Proskauer

The Inevitable Rise of NAV Financing by Patricia Teixeira and Anastasia Kaup—Ropes & Gray

HAVE EXCHANGE-LISTED FIRMS BECOME LESS IMPORTANT FOR THE ECONOMY? by Frederik P. Schlingemann and René M. Stulz—NBER

LBOs Make (More) Companies Go Bankrupt, Research Shows by Alicia McElhaney—Institutional Investor

Leveraged buyouts and financial distress by Brian Ayash and Mahdi Rastad—ScienceDirect

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One year after the release of ChatGPT, we explore the positive and negative paths AI could take and what individuals can do to assist with a positive outcome.

Topics covered include:

• How David uses AI to increase his personal productivity
• The societal and economic impacts of AI, including its potential to enhance corporate profitability and individual productivity
• Changes at OpenAI's executive level are examined, highlighting a shift in the organization's direction and philosophy
• What is Effective Altruism and why is it so focused on the catastrophic risks of AI
• What are the phases that would lead to a singularity in which AI poses a threat to humanity
• Why AI is still in the early stages, and how should individuals, businesses and regulators treat it at this point

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Show Notes

Everyday Chaos: Technology, Complexity, and How We're Thriving in a New World of Possibility by David Weinberger—Harvard Business Publishing Education

The economic and market impact of artificial intelligence—Capital Economics

The Fight for the Soul of A.I. by David Brooks—The New York Times

How a Fervent Belief Split Silicon Valley—and Fueled the Blowup at OpenAI by Robert McMillan and Deepa Seetharaman—The Wall Street Journal

A.I. Belongs to the Capitalists Now by Kevin Roose—The New York Times

The ‘AI doomers’ have lost this battle by Benedict Evans—The Financial Times

Effective Altruism

80,000 Hours

What is the AI alignment problem and how can it be solved? by Edd Gent—NewScientist

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In this bonus episode, David visits with Bill Yount and Becky Heptig of the Catching Up to Fi podcast in a wide-ranging discussion on investing using a systematic checklist approach.

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Masterworks – invest in contemporary art

Masterworks Disclosure:

“net IRR” refers to the annualized internal rate of return net of all fees and costs, calculated from the offering closing date to the sale date. IRR may not be indicative of Masterworks paintings not yet sold, and past performance is not indicative of future results. See important Reg A disclosures: Masterworks.com/cd 

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Show Notes

Catching Up to FI

Money for the Rest of Us book

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What are the economic and cultural benefits of tourism. What are the downsides to too much tourism. How to find the right balance.

Topics covered include:

• How short-term rentals have changed tourism
• How cities grapple with too many short-term rentals
• What is the outlook for short-term rentals
• How much does tourism contribute to economic output
• How can tourism be harmful and helpful
• The example of Cuba

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Show Notes

International tourism revenue, percent of GDP - Country rankings—The Global Economy

U.S. Travel and Tourism Satellite Account for 2017–2021 by Sarah Osborne—Journal of US Bureau of Economic Analysis

2023 Short-Term Rental Mid-Year Outlook—AirDNA

Welcome to Hochatown, the Town Created by Airbnb by Julie Satow—The New York Times

Short-Term Rentals Attract Private Equity Seeking New Asset Class by Sean O'Neill—Skift

As Cuba’s economic crisis deepens, citizens scramble to migrate by any means by Dave Sherwood—The Irish Times

Cuba's worst economic crisis in decades forces people to get creative to survive by Eyder Peralta—NPR

Related Episodes

93: Capitalism, Complexity and Cuba

389: Is Airbnb Intensifying the Housing Crisis?

449: The House of Cards: Evaluating Economic and Financial Warning Signs

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What are the pros and cons of partially funding retirement expenses with an inflation-indexed bond ladder versus an immediate annuity? There is a big downside to TIPS ladders that many investors don't realize.

Topics covered include:

• Why the stock market is more risky than many people realize
• Is it too late to invest in TIPS as one advisor suggests
• How TIPS and TIPS ladders work
• How immediate annuities work
• The pros and cons of a TIPS ladder versus an immediate annuity

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Show Notes

Effortless: Make It Easier to Do What Matters Most by Greg McKeown

Essentialism: The Disciplined Pursuit of Less by Greg McKeown

Skin in the Game by Nassim Nicholas Taleb

Worry-Free Investing: A Safe Approach to Achieving Your Lifetime Financial Goals by Zvi Bodie and Michael J. Clowes

Safe Haven: Investing for Financial Storms by Mark Spitznagel

A Complete Guide to Investing in I Bonds and TIPS

TipsLadder

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We discuss ten rules of thumb for individual investors to consider when saving and investing for and in retirement.

1. Don't use institutional hand-me-downs
2. Stay close to home base
3. Beware of dragon risk
4. Mind your investment seasons
5. Catch the popping corn
6. Watch for market swarms
7. Track the economic winds
8. Follow the traffic lights
9. Diversify your baskets
10. Don't burn your ships

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Show Notes

How to Invest Money E-book

Related Content

Complete Guide to Mortgage REIT Investing - Money for the Rest of Us

Complete Guide to Equity REIT Investing - Money for the Rest of Us

Episode 451: How Much Should You Invest in Stocks

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Interest rates have been sliding for seven centuries. Dive into the historical forces driving this trend and examine whether the recent interest rate spike is just a blip on the radar.

Topics covered include:

• How the supply of savings and the demand to borrow impact interest rates
• Why have interest rates been falling for over 700 years, and what might have changed recently to propel rates higher
• How lower rates have helped households increase their net worth and reduce their financial vulnerability
• What are some lower-risk ways to take advantage of higher interest rates

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Show Notes

The Price of Money Is Going Up, and It’s Not Because of the Fed by Jamie Rush, Martin Ademmer, Maeva Cousin, Tom Orlik, and Rich Miller—Bloomberg

Secular stagnation is not over by Olivier Blanchard—Peterson Institute for International Economics

A big problem looming for bond markets by TOMASZ WIELADEK—The Financial Times

Eight centuries of global real interest rates - Paul Schmelzing - Bank of England

Changes in U.S. Family Finances from 2019 to 2022—The Federal Reserve

A Complete Guide to Investing in I Bonds and TIPS

Related Episodes

448: Where Are Interest Rates Headed Next? Insights from the Jackson Hole Symposium

450: How Higher Interest Rates Alter Our Financial Blueprint

452: Beyond Stocks: The Allure and Strategy of Credit Investments

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Why investing in non-investment grade bonds, leveraged loans, and preferred stocks is potentially more compelling than investing in common stocks at present.

Topics covered include:

• Why Howard Marks told institutional clients to sell stocks and buy high-yield bonds instead
• The contractual agreements comprising bonds, leveraged loans, and preferred stock give them an advantage relative to common stocks
• How preferred equity exhibits attributes of both bonds and common stocks
• What is the expected return and risks for high-yield bonds, leveraged loans, and preferred stock
• How do we invest in these three asset types

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Show Notes

Sea Change - Memo by Howard Marks

Further Thoughts on Sea Change - Memo by Howard Marks

Investments Mentioned

SPDR Bloomberg High Yield Bond ETF (JNK)

iShares iBoxx High Yield Corporate Bond ETF (HYG)

Invesco Senior Loan ETF (BKLN)

iShares Preferred Stock ETF (PFF)

Virtus Seix Senior Loan ETF (SEIX)

DoubleLine Flexible Income Fund (DFLEX)

BlackRock Debt Strategies Fund (DSU)

Barings Corporate Investors Fund (MCI)

Related Content

397: How to Invest Based on Cycles

451: How Much Should You Invest in Stocks? The Art of Position Sizing in a Volatile Market

423: A “Safe” 6% Yield: The Case for Investment Grade CLOs

How to Invest in Closed-End Funds

Money for the Rest of Us Closed-End Fund Course

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