"Plans are useless, but planning is indispensable." General Dwight D. Eisenhower

In This Edition
A Magic Allocation Recipe: A Magic Allocation Recipe: Mixing Factor Investing Into a 60/40 Portfolio
Updating Your Will
Latest Podcast
Testimonial

In this week’s podcast I address one of the most important topics on the minds of virtually all investors—future returns. In the latest AAII Journal the cover article is about the 60/40 portfolios we have recently been discussing. Here is a link to the article- A Magic Allocation Recipe: Mixing Factor Investing Into a 60/40 Portfolio

In the comment section Jeffrey D from New York noted, "I believe that future economic and financial conditions will be more like the last couple of decades and, therefore, the four fund portfolio will continue to underperform. Are there any studies that might support tweaking the make-up of the four funds? I'm thinking replacing the Large Cap Blend fund with a Precious Metal fund or an International fund."

My response to Jeffrey included, "I never try to predict anything less than about 40 years and even then I think in terms of ranges.”

His comment motivated me to put together a podcast that addresses the challenges of predicting future returns. I hope you will take the time to listen to the podcast but here are a couple of highlights.

Over the last 25 years the S&P 500 made about one-eighth as much as it did the previous 25 years. Really! And during the last 25 years one S&P 500 fund made 45% more than the Vanguard S&P 500 Fund. Really! Plus, during the same period one of the most famous small cap value funds under performed a relatively unknown small cap value fund by almost 100%. Really!

I don’t want to discourage investors nor do I want to mislead investors. If I have any point to make it might be to encourage investors to do what they can to increase the amount they are putting aside for the future.

I hope I get lots of feedback from the podcast. I look forward to your comments. What kind of return expectations do you have for the future?

Updating Your Will?

My wife, Zan, and I have been working on updating our wills and I couldn’t pass up this link to "The Seven Worst Assets to Leave Your Kinds or Grandkids“. It made me rethink a couple of our decisions.

Latest Podcast- Can You Trust the Market? Equal-Weighted S&P 500 vs. Four-Fund Strategy

After a week with family, friends, and his longtime writing partner Rich Buck, Paul sat down to record this reflective new episode of Sound Investing.

He opens with a story from his talk at Olympic College, where a student asked the question every new investor faces:

“How can I trust the market when I might lose everything?”

Paul’s answer is grounded in decades of data. He guarantees investors will lose money—sometimes—but never everything, if they’re diversified and disciplined.

Using 75 years of historical returns, Paul examines three 25-year periods:

1950–1974: S&P 500 compounded at 10.1%
1975–1999: S&P 500 compounded at 17.2%
2000–2025: S&P 500 compounded at 8.3%

He compares these with the Four-Fund Strategy, where equal allocations to large-cap value, small-cap blend, and small-cap value produced a 9.4% average annual return over the last 25 years—versus 8.3% for the S&P 500 alone.

Paul also highlights a striking finding:
The equal-weighted S&P 500 (VADDX / RSP) outperformed the traditional cap-weighted index, compounding at 9.9% versus 8.3% since 2000.

“Equal weighting rewards the underdogs—smaller companies that are temporarily out of favor,” Paul says. “It’s a built-in way to lean toward value and size premiums.”

Finally, he revisits the Small Cap Value Index, where DFA’s real-time fund (DFSVX) returned 11.1% versus 8.3% for the S&P 500—proving once again that diversification across size and value continues to pay off for long-term investors.

Paul concludes with this reminder:

“We can’t buy the past, but we can learn from it. Every extra percent of return—earned through disciplined diversification—can change a lifetime of outcomes.”

Testimonial from- A Magic Allocation Recipe: Mixing Factor Investing Into a 60/40 Portfolio

Paul and Chris, #1 Thank you for your diligent research to reduce the time and effort and for laying out a systematic process for selecting and allocating asset classes to the famous “4 Fund Combination” portfolio. #2 Merriman Educational Foundation is a “truth teller” that AAIIers can trust.

Can You Trust the Market? Equal-Weighted S&P 500 vs. Four-Fund Strategy

Lifecycle Investing : The Ages of the Investor

How to retire with more money and greater peace of mind

In This EditionA Magic Allocation Recipe: A Magic Allocation Recipe: Mixing Factor Investing Into a 60/40 PortfolioUpdating Your WillLatest PodcastTestimonial

In This Edition
A Magic Allocation Recipe: A Magic Allocation Recipe: Mixing Factor Investing Into a 60/40 Portfolio
Updating Your Will
Latest Podcast
Testimonial

S&P 500 fund beats Vanguard S&P by 45%