Sound Investing

By Paul Merriman

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

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The podcast currently has 812 episodes available.

Best of Sound Investing

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Number 1: 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 19, 20261h 34min
Number 2: 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 26, 20261h 7min
Number 3: The Investing Myths That Cost a Fortune
WATCH THE VIDEOIt was a pleasure to be invited back on System Trader with Jack Lempart. Here is a list of the main topics we covered: CHAPTERS0:53 • My own biggest mistake3:15 • Why “the stock market is a casino” is exactly backwards6:48 • “I don’t have enough money to start” — what $100 a month actually becomes9:33 • A $20 bet with my 13-year-old grandson13:04 • How much intelligence does successful investing really require?15:31 • The Mensa Investment Club: buy low, sell lower16:24 • Three books for the psychological hurdles17:38 • “It’s a bad time to invest right now” — the myth that never dies20:00 • Why a falling market is the best thing that can happen to a young investor24:21 • Can a star manager do it for you? SPIVA and Bill Miller30:21 • An ETF is only a wrapper — how do you grade what’s inside it?33:01 • Traditional vs. non-traditional index funds35:49 • Home bias: half U.S., half international, and the lost decade44:04 • Cap-weighted vs. asset-class weighted funds46:26 • Finding your right level of risk before the market tests you55:20 • Is the small-cap value premium dead?62:52 • Financial literacy in high school — and who’s teaching on TikTok64:21 • Where the biggest premium comes from: size, value, quality and momentum69:29 • The one thing to do tomorrow morning: control what you can, then automate
September 02, 20261h 14min
Number 4: 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 09, 202641min
Number 5: 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
August 05, 202638min