“When I first started in the investment business I valued intelligence and charisma far more than I should have. After being in this world for more than two decades I’ve now come to value self-awareness and survival more than IQ and flashy stories.”

— Ben Carlson

In This Edition

›What Do You Do When the Experts Disagree?

›Truth Teller Special: Getting Ahead Has Never Been Easy

›This Week’s Podcast: Paul Merriman and Rick Ferri

›Testimonials

From Paul

What Do You Do When the Experts Disagree?

This week I sat down with my friend Rick Ferri for a serious conversation about a question that could affect your financial future for decades: What should you do when two experts you trust disagree?

Rick and I agree on low costs, diversification, indexing and staying the course. But we disagree about some important portfolio decisions.

Rick believes the evidence for the small-cap and value premiums has weakened and makes a powerful case for keeping portfolios simple. I continue to believe nearly 100 years of historical evidence supports meaningful exposure to small-cap value and other equity asset classes—and that combining those asset classes may offer attractive long-term risk and return characteristics.

Who’s right?

We won’t know for decades.

So why must you choose?

Consider treating them as two separate portfolios.

Perhaps one spouse’s IRA follows Rick’s approach while the other spouse’s 401(k) follows one of ours. Or divide your investments into two portfolios and track them separately.

Don’t continually move money from the loser to the winner. Don’t use one to time the other. Give each strategy the opportunity to do what it was designed to do—for decades.

There may be an important psychological benefit as well. When Rick’s portfolio is winning, you’ll be glad you own it. When ours is winning, you’ll be glad you own that one too.

I consider this diversifying your trust.

Investing requires making decisions without knowing the future. Sometimes the wisest response to two thoughtful, evidence-based people reaching different conclusions isn’t deciding which expert must be wrong.

It may be accepting that either could be right—and building a financial life that can succeed either way.

I hope you will join Chris Pedersen and me next week when we will discuss our thoughts after reviewing the conversation that Rick Ferri and I had.

Truth Teller Special

Getting Ahead Has Never Been Easy

This is one of my favorite Ben Carlson articles. I immediately sent it to my kids and will be building some of the information into my upcoming five-part series for NGPF teachers.

By the way, one of the most important ideas I want teachers, and their students, to know is that investing for retirement has never been easier or more profitable.

Read the Article

This Week’s Podcast

Paul Merriman and Rick Ferri: A Conversation Decades in the Making

I sat 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. I counter 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 my 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 we 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.

We also cover 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.

Rick and I will both be at the Bogleheads Conference, November 13–15 at Green Valley Ranch Resort and Spa in Henderson, NV, near Las Vegas. We hope you’ll come ask your questions. Registration is open here.

View Table G1b — Fine Tuning Table: S&P 500 vs. US Small Cap Value

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Testimonials

“Thank you for your many years of investor education. Your work has had a meaningful influence on how I approach long-term investing.”

— JH

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All the best to you and your family,
Paul Merriman

From Paul Merriman

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Diversifying your trust