Don and Tom take a reality sledgehammer to investors’ wildly inflated expectations for stock market returns. A new survey shows average Americans expect 12.6% after inflation, even as historical real returns rarely crack 9%. They explore how this overconfidence—fueled by recency bias and company loyalty—leads to dangerous behavior like under-saving, over-spending, and poorly diversified portfolios. With real-world client stories, historical decade-by-decade returns, and a deep dive into how long it takes portfolios to recover after major drops, they reinforce the need for long-term discipline and diversified planning. The episode wraps with audience questions on umbrella policies, retirement bond ladders, and smart ETF tax-loss harvesting strategies.

0:04 Don delays the podcast waiting for Tom’s arrival (with British accent)

1:30 Survey shock: Investors expect 12.6% real annual returns

2:28 Reality check: Actual global stock returns are closer to 9%

3:45 Dangerous real-world portfolios: 100% S&P 500 near retirement

5:30 One-stock portfolios tied to employers—what could go wrong?

6:50 Under-saving due to false optimism about future returns

7:14 Decade-by-decade historical real returns from 1930–2020s

10:13 The Dave Ramsey fantasy: 8% withdrawals on 12% returns

10:40 Recency bias: Why we forget recent downturns so fast

11:05 50% of years see 10% drops; 1 in 3 see 20% drops

12:47 Emotional investing vs. disciplined long-term planning

13:39 Listener Q: How long to recover from a major market drop?

14:22 Diversification shortens recovery time historically

15:36 Build for the worst case: 50% stock market drop

16:32 Listener Q: Does Ivan need an umbrella policy with $350K net worth?

17:57 Umbrellas are rarely needed—but the industry sure sells them

18:54 Listener Q: Is LifeX 10-year bond ladder a good retirement tool?

20:20 It’s mostly return of principal—DIY Treasury ladders are cheaper

22:40 Don’t be fooled by nice websites and big yield promises

23:24 Listener Q: Can AVGE replace four-fund ETF portfolio for tax loss harvesting?

24:32 Swap Avantis for DFA funds—nearly identical, wash-sale safe

25:56 Parting shots: Buy a decent mic, don’t let emotion control your portfolio

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