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Paul Merriman

A Business and Investing podcast
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Sound Investing was named the “Best Money Podcast” by Money Magazine in 2008. It has provided clear, concise advice on money and retirement since 2001 when it began as a radio program. The program is now delivered exclusively as a podcast offering market analysis, interviews with some of the best minds in investing, the Outrage of the Week, Top Ten Lists, and general information about how to properly prepare yourself for retirement.

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Recent Episodes

Why not own a growth index fund instead of the S&P 500?
The podcast addresses five different topics from our readers and listeners. It starts with a discussion of the likely future returns of growth vs. value. I read a short blog from Seth Godin, titled “Getting to the truth”: Your anecdote isn’t true. I know it happened. I know that your experience, your feelings, your outcomes are real. And they’re yours. Statistics suffer when compared to anecdotes. Because your mileage may vary. Your interaction with the randomness of the world will never match up to what the statisticians tell us to expect. Because averages and correlations are never what we actually experience. We experience a tiny slice of it. But, at the same time that the larger truth can’t be experienced, your anecdote can never represent the larger truth, because it’s yours. What happened to you will never happen to anyone else, not in quite the same way. By relying on well-told stories, we ignore the real truth, the universal truth of how the world actually is. Yes, our mileage varies. But please let me know what the reality of the world is. This blog inspired me to address the question of the reality I want investors to consider, but with the ‘reality’ that ‘my reality’ may turn out wrong. On the other hand, there is absolutely no evidence that anything has changed in the long term relationship between these two great asset classes. My comments include a full discussion of the returns of the Russell 1000 Large-Cap Growth, Large-Cap Value and Large-Cap Blend for the last 10 and 20 years. Topic 2:  Chitra asks me to explain the process of withdrawing income from the Vanguard Monthly Income Fund Portfolio    Topic 3:  Jaaron asks whether it makes sense to use the Vanguard Large Growth Index instead of the S&P 500.  In my answer, I compare the small, large, value and growth Russell indexes as well as the same asset classes as designed by DFA.  Listeners may be surprised by the fact that how these indexes are built can produce life-changing differences. Topic 4:  Chris and Kayli ask where they can find our recommendations to build the Ultimate Buy and Hold Portfolio. Topic 5:  Fred asks me to discuss the difference between investing in a target date fund and working with a professional advisor to give personal advice.  
Facts and fictions of small-cap-value returns – Part II
In last week’s podcast, I responded to some recent controversies about small-cap-value returns. I examined and shared my findings of a study that looked at the history of returns for many of the popular asset classes: S&P 500, Total Market Index, Large-Cap Value, Small-Cap Blend, Small-Cap Value, U.S. Long-Term Bonds, U.S. Treasury Bills and Inflation. (Slide 1: History of returns for popular asset classes). This week, I continue my discussion from Part 1 regarding the potential benefits of adding more small cap and value to a portfolio. This is of particular concern as I learned about the young investors who are part of the FIRE movement. One of the biggest mistakes these young people are likely making is in thinking a Total Market Index really gives them all the small cap and value they need to maximize their future performance. (Slide 2: Comparison of Returns: S&P 500 vs. equity asset classes). I read a portion of a remarkable article from Mark Hulbert in which he discusses the research of academics who have concluded stocks don’t make much more than bonds. Investors always have to make the decision who they should trust. If these academics are right, maybe the smartest thing you can do is beef up your exposure to equity asset classes that have outperformed the S&P 500 and Total Market Index over almost every 20 year period.
Facts and fictions of small-cap-value returns Part 1
Some controversy and concern seems to have risen about small-cap-value returns. While on vacation in Europe recently, I used the early morning hours to complete a study examining the history of returns for many of the popular asset classes: S&P 500, Total Market Index, Large Cap Value, Small Cap Blend, Small Cap Value, U.S. Long Term Bonds, U.S. Treasury Bills and Inflation. My goal was to see what we might learn from the past performance of these asset classes.  What can we learn from history about predicting future returns? Should we expect the Total Market Index to give us access to the premium returns of small-cap and value?  Should we expect bonds to give an excess return over taxes and inflation? In this podcast, I am happy to share what I learned and deduced. As always, I invite you to freely share my podcasts and visit our website for much more information on small-cap-value and many other investor topics.
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Podcast Details
Mar 1st, 2017
Latest Episode
Oct 2nd, 2019
Release Period
No. of Episodes
Avg. Episode Length
About 1 hour

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