“The shortest route to top-quartile performance is to be in the bottom quartile of expenses.”

— Jack Bogle

In This Edition

›From Paul: John Bogle, Seth Godin, and the Search for Better Investing

›The 2026 Bogleheads Conference

›This Week’s Truth Tellers

›This Week’s Podcast

›Testimonials

From Paul

John Bogle, Seth Godin, and the Search for Better Investing

In a few days, I’ll be attending the Bogleheads Conference, and I can hardly wait! There are three reasons I’m particularly excited.

First, I’ll have the opportunity to meet people who have found our Foundation’s work helpful. One of the greatest rewards of my retirement has been hearing from investors whose financial lives have improved because of something they learned from our articles, podcasts, videos, books, or historical tables. But reading an email is one thing. Shaking someone’s hand, looking them in the eye, and hearing their story is something entirely different.

After all, our Foundation doesn’t manage anyone’s money. We don’t sell investments. Our mission is simply to share the evidence and help people make better financial decisions. When someone tells me our work has helped them retire with greater confidence, avoid an expensive mistake, or teach their children to invest, that’s our compensation. And I never get tired of receiving it!

Second, I’m looking forward to spending time with many of our trustworthy Truth Tellers. These are people who have devoted much of their professional lives to helping investors separate evidence from speculation, sound advice from salesmanship, and long-term wisdom from Wall Street noise. We don’t always agree — in fact, some of our most valuable conversations come from our disagreements — but we share something much more important: a commitment to helping investors succeed.

Which brings me to my third reason for being excited. I’m going to debate Dr. Jim Dahle, founder of The White Coat Investor, about the best way to build a diversified stock portfolio. Jim is one of my favorite Truth Tellers, and I have enormous respect for his work. We agree on almost everything that matters: low costs, diversification, index funds, discipline, and staying the course. But we have an interesting disagreement.

Jim will make the case for owning the total U.S. stock market. I’ll make the case that investors should consider going beyond the traditional market portfolio by adding exposure to small-cap, value, and profitable companies. Jim believes the total-market index is an excellent place to stop. I believe it’s an excellent place to start.

What Seth Godin reminded me about investing

Recently, Seth Godin published a wonderfully short blog post titled “Not Yet.” His message is that successful products and ideas continue to evolve. He reminds us that very few people still drive a Model T. And he concludes with a thought I love: “Perfect isn’t possible. Better always is.”

That immediately made me think about John Bogle. In 1976, Bogle introduced the first index mutual fund available to individual investors, based on the S&P 500. It was revolutionary. Instead of paying expensive investment managers to try to beat the market, ordinary investors could own hundreds of America’s largest companies at a very low cost. That single innovation changed the investment industry forever.

But think about what has happened in the 50 years since. We have learned an enormous amount about the characteristics associated with long-term stock returns. Gene Fama and Ken French helped demonstrate the importance of company size and value. Subsequent research identified profitability and asset growth as additional characteristics associated with differences in expected returns. None of these discoveries guarantees higher returns. But they offer investors new ways to think about diversification and portfolio construction.

When I met with John Bogle in 2017, he told me he had great respect for the work of Fama and French. I have never forgotten that conversation. I don’t believe respecting Bogle’s extraordinary achievement requires us to stop learning. The Model T was a revolutionary automobile. But nobody suggested that automobile engineering should end there. And I don’t think investment research should stop with the S&P 500 or the total-market index.

Some fascinating research from Jeff Cornell

This brings me to a particularly timely piece of research. Jeff Cornell of Avantis Investors authored a study titled Risk and Return of Tilted Portfolios. Jeff examined hypothetical U.S. stock portfolios over the 51 years from 1973 through 2023. The portfolios began with the total U.S. stock market. Then, in varying degrees, they increased exposure to companies with characteristics associated with higher expected returns — particularly value and profitability, including smaller companies.

The historical results were striking. The total-market portfolio produced an annualized return of approximately 10.6%. A moderately tilted hypothetical portfolio returned approximately 11.8%. A more substantially tilted hypothetical portfolio returned approximately 12.9%. And the most aggressively tilted portfolio in the study returned approximately 15.1%. Those differences, compounded over decades, would have been enormous.

But there’s a very important catch. The more aggressively investors tilted their portfolios, the more differently their results could look from the overall market. In one particularly difficult 12-month period, the total market gained nearly 18%, while the most aggressively tilted hypothetical portfolio lost almost 9%. Imagine how that would feel. Your friends are celebrating a terrific year in the stock market, and you’re looking at a loss! Would you stay the course?

That’s the question that makes this research so important. These were hypothetical, backtested results — not actual fund returns. They excluded trading costs and fees, and there is no guarantee that the historical advantages will continue. Jeff’s study doesn’t prove that everyone should tilt their portfolio. It demonstrates both the potential rewards of factor investing and the very real behavioral challenges that come with it. And that’s exactly the discussion I hope Jim and I will have.

The real debate

I don’t expect Jim to convince me that small-cap value investing is a terrible idea. And I doubt I’ll convince Jim that everyone should abandon the total-market index. Nor should that be our goal. The real value of a debate is helping investors understand the trade-offs.

A total-market index fund offers simplicity, broad diversification, low costs, and the comfort of knowing your portfolio will closely follow the market. A thoughtfully constructed factor portfolio offers the possibility of higher expected long-term returns, but it also brings additional complexity, potential costs, and the risk of underperforming the familiar market benchmarks for many years.

Neither strategy eliminates uncertainty. And neither strategy can succeed for an investor who abandons it at the wrong time. My hope is that everyone who hears our discussion comes away better prepared to make a decision that fits their circumstances, temperament, and goals.

The best part of the conference

As much as I’m looking forward to debating Jim, I’m even more excited about the conversations before and after the session. If you’re attending, I hope you’ll introduce yourself. Tell me what you’ve learned, what has worked for you, what hasn’t, and what you wish our Foundation would explain more clearly. And if you disagree with something I’ve taught, I’d love to hear that too.

After more than 60 years of investing and more than a decade of working with our Foundation, I’m still learning. That’s one of the great joys of this work. Seth Godin’s message reminds us that we don’t have to be perfect to make progress. We just have to remain willing to learn, question our assumptions, and consider whether there’s a better way.

John Bogle helped millions of investors put the odds in their favor. Our job is to keep learning how to improve those odds — without forgetting the lessons that made his work so valuable. I hope to see many of you at the conference. And Jim, if you’re reading this, I’m looking forward to a spirited debate!

Source note: Jeff Cornell, “Risk and Return of Tilted Portfolios,” Avantis Investors, June 2024. Historical portfolio results are hypothetical, gross of certain costs, and not guarantees of future performance.

Mark Your Calendar

The 2026 Bogleheads Conference

If you’ll be at this year’s Bogleheads Conference, I’d love for you to introduce yourself — and I hope you’ll come to my debate with Jim Dahle on the best way to build a diversified stock portfolio. You’ll find the full schedule, speakers and registration details at the John C. Bogle Center for Financial Literacy.

Conference Details →

This Week’s Truth Tellers

The Stock Market Earnings Bonanza

Ben Carlson

An AI-Conceived Cyberattack: A Cybersecurity Expert Explains

Christine Benz · Morningstar

Can You Control Required Minimum Distributions?

Christine Benz · Morningstar

This Week’s Podcast

Research on Adding Value and Profitability to Your Portfolio

This week I look at what the first ten months of 2026 can teach us about how we invest. While individual tech and AI stocks were getting hammered — Google, Intel, Netflix and a long list of others — the S&P 500 stayed up almost 12% on the year. That gap is the whole case for broad diversification.

I walk through the year-to-date numbers for Vanguard, Avantis and DFA ETFs across the asset classes, the tax advantage of all-in-one funds, and what the new Avantis study on tilted portfolios suggests about value, profitability and small-cap value — plus a preview of my Boglehead debate with Jim Dahle.

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Testimonials

“This year I opened a Roth for my fourth and last grandchild with her first earned lemonade-stand money. It’s invested in AVUV. My other three grandchildren and their mothers all have Roths too.”

— A Sound Investing listener

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All the best to you and your family,
Paul Merriman

From Paul Merriman

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Perfect Isn’t Possible. Better Always Is. — A Bogleheads Preview