"When the student is ready the teacher will come." Generally attributed to both Lao Tzu and Buddha.

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By the time you get this newsletter I will have had a wonderful dinner and evening with my dear friend Tom Cock. For those of you who listened to this weeks podcast you may have already listened to Tom and Don’s most recent podcast. In the podcast they interview Weston Wellington, one the best teachers in the financial community. It’s less then 30 minutes and covers topics I know are of interest to most of you. There’s a short list of the topics and a link to the podcast below in our latest podcast show information.

I also hope those of you who are in or close to retirement and struggle with the decision which of our equity/bond portfolios to use, will listen to this weeks podcast. It adds a slightly different approach to making the decision. Let me know if it generates questions.

Latest Podcast- Which 60/40 Portfolio is Best?

Prior to discussing his topic of the day, Paul shares his thoughts on a ⁠recent podcast ⁠ featuring Truth Tellers Tom Cock and Don McDonald, joined by Weston Wellington from Dimensional Fund Advisors. Weston weighs in on some of the most critical issues facing investors right now.

Here are the topics on the podcast with Tom Cock and Don McDonald-

0:53 Weston Wellington on volatility and market uncertainty
2:47 Why volatility is the “price we pay to play”
3:32 The media’s role in investor anxiety
4:57 Should investors act on daily financial advice?
6:15 Portfolio changes should reflect personal changes, not headlines
7:24 Spam vs. Motorola: A lesson in stock picking
9:44 Dimensional’s stance on individual stock ownership
10:02 Diversification as “the closest thing to a free lunch”
11:07 Are alternative investments the new magic bullet?
12:43 Mutual funds vs. ETFs—what works best and when
15:27 Industry evolution: from 8% loads to indexing dominance
18:29 Where Dimensional fits in the modern fund landscape
21:01 AI vs. “aggregated intelligence” in managing portfolios
24:04 How regular people can find real financial advice
25:34 The key to success: Temperament, not timing
26:44 Weston’s side gig as a roving birthday singer
27:58 Why Weston hasn’t been invited lately (and he's lonely)

Next, Paul highlights a recent article by another Truth Teller, Ben Carlson. In ⁠“60/40 Portfolio Corrections, Bear Markets and Recoveries,” ⁠ Ben breaks down the differences in returns during bear markets and the bounce-back that follows. Inspired by this, Paul explores a question that doesn’t get much attention: What’s the impact on a portfolio when you apply a 4% fixed withdrawal rate to the nine Sound Investing equity portfolios, each with a 60/40 equity-to-fixed income split? The results may surprise you!

Paul notes there’s more to come on this topic, as these findings could have a real impact on how investors choose their retirement portfolios.

Podcast Q&A's

Q: What were the hot topics in the episode?

Volatility & market uncertainty
Media’s influence on investor anxiety
When (and if) to change your portfolio
The classic Hormel Foods vs. Motorola investment debate
Diversification as a “free lunch”
The role of alternative investments
Mutual funds vs. ETFs
How AI is influencing portfolio management
Is success about temperament or timing?

Q: How do the all equity and 60/40 portfolios perform in bear markets?

A: Over 40 years, starting with $1M and withdrawing 4% annually (adjusted for inflation), a 60/40 portfolio could grow $4.9M to more than $30M depending on the portfolio you use. But the difference in risk can be very small.

Q: What did the data say about long-term investing?

A: Over 40 years, starting with $1M and withdrawing 4% annually (adjusted for inflation), a 60/40 portfolio could grow to $4.9M. More diversified portfolios often performed even better.

Q: Why does sequence of returns matter?

A: The order in which good and bad years happen—especially when withdrawing funds—can dramatically change your end result.

Testimonial from Facebook

"My husband, Russell and I started listening back around 2010-11. Among the podcast, the website, and his books, Paul has quite literally changed our whole outlook and our lives! Can’t ever thank you enough, Paul."

-KH

Which 60/40 Portfolio is Best?

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In This Edition A Dimensional MindLatest PodcastQ&A from Latest PodcastTestimonial

In This Edition
A Dimensional Mind
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