Market Timing vs. Buy & Hold: Why market timing fails the test for most investors
"Buy and hold investors don’t just win on average returns— they win by avoiding the behavioral landmines that sabotage long-term success.” Paul MerrimanIn this podcast Paul addresses one of the most important investment decisions a do it yourself investor will make. Paul opens the discussion with comments from a Forbes article from 2008 that discusses Warren Buffett’s market timing decision he made to get totally out of the market in 1969 and back aboard in 1974.The podcast (with the help of Chatgpt, includes a list of 10 common reasons market timing doesn’t work for amateur investors.1. Missing the best days2. Emotional decision-making3. Perfect timing is impossible4. Higher costs and taxes5. Volatility is high during recovery6. Recency Bias7. Focus on noise, not timing signals8. Overconfidence9. Loss of Compound Growth10. Data shows long-term investing winsPaul challenges AI that there are many emotional disadvantages with timing.The most important performance and non performance hurdles:1. Decision-making: Timing requires lots of work and buy and hold almost none.2. Mistakes: Market timing suffers lots of mistakes and buy & hold rarely wrong in the long term.3. Emotional Toll: Timing has lots of emotional challenges and buy & hold is more peaceful. 4. Behavioral Risks: Timing has lots of behavioral risks and buy & hold is simple.5. Time Commitment: Timing takes time and action and buy & hold is rarely touched.6. Expenses: Costs and taxes are both lower with buy & hold.7. Timers must be more resilient with many decisions being wrong.8. Financial Results: A few timers may perform well but all buy & holders are likely to have “won”.
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38:17
Financial Literacy and Mastering the Million Dollar Decisions
Watch Video hereApril is Financial Literacy Month, and to help us celebrate we brought in a returning guest, Paul Merriman. Paul has been on the show before to discuss investment portfolios, but today he talks with us about some extraordinary strides he's making as a financial literacy advocate through his nonprofit, The Merriman Financial Education Foundation. We also share some of our favorite financial literacy resources.RESOURCES MENTIONED ON THE SHOW🌐 Visit Catching Up to FI websitehttps://catchinguptofi.comPaul's Websitehttps://www.paulmerriman.comMerriman Financial Literacy Program at Western Washington Universityhttps://financialliteracy.wwu.eduIGradhttps://www.igrad.com/Next Gen Personal Financehttps://www.ngpf.orgWhite Coat Investorhttps://www.whitecoatinvestor.comThe John C. Bogle Center for Financial Literacyhttps://boglecenter.netTIMESTAMPS / CHAPTERS00:00 📣 Introduction and Financial Literacy Impact01:09 👋 Welcome and Guest Introduction01:35 🤝 Paul Merriman's Nonprofit and Financial Literacy Story02:33 💡 The Importance of Financial Literacy06:59 🏫 Nonprofit Initiatives and University Programs16:15 🏋️♀️ Bootcamp and Investment Decisions18:07 🌐 Other Financial Literacy Organizations22:09 🏛 State-Level Financial Literacy Education25:55 ✨ Final Thoughts and Encouragement31:27 🙏 Conclusion and Farewell
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30:57
WSCPA- The ultimate buy and hold portfolio
Watch video hereThis updated discussion of the Ultimate Buy and Hold Portfolio highlights the advantages of equity asset allocation and worldwide diversification. The presentation was presented to members of the Washington State Society of CPAs. At the end of the presentation Paul adds his list of 15 million dollar decisions that all investors will make in their lifetime.
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59:38
How to Bake a Cake: An Asset Allocation Mashup | Rick Ferri & Paul Merriman
Watch the video hereJoin me on Catching Up to Fi l with Rick Ferri to discuss key investing topics like asset allocation and the pros and cons of small-cap value vs. total market funds. TIMESTAMPS / CHAPTERS00:00 ⛓️ Understanding Bonds and Young Investors02:31 🌟 Introduction to Financial Literacy Titans03:12 🎓 Paul Merriman's Financial Education Foundation04:18 🧠 Rick Ferri and the Bogle Center for Financial Literacy12:09 ⚖️ The Importance of Asset Allocation23:11 🌍 Debating International vs. US Stocks35:12 🗓️ Target Date Retirement Funds: Pros and Cons45:55 📈 Exploring Small Cap Value Investing49:34 🧩 Understanding Non-Traditional Index Funds50:28 🔍 Small Cap Value Performance Analysis52:56 👨👩👧👦 Generational Wealth and Portfolio Management53:54 🧬 Diverse Value Factors in Investing55:55 🚧 Challenges of Small Cap Value Investing57:33 🧭 The Philosophy of Long-Term Investment Strategies01:01:11 🧪 Debating the Evidence-Based Investing Approach01:12:46 🛡️ The Importance of Staying the Course01:22:05 🎤 Final Thoughts and Recommendations
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1:35:02
Small Cap Value Showdown Between Financial Legends — (This Could Add Millions To Your Retirement!)
In the left corner, we have Paul Merriman, the seasoned finance veteran weighing in at 183 pounds. In the right corner, Dr. Karsten Jeske, the scrappy newcomer at 208 pounds. The bell rings, and the small cap value debate begins.This episode features a financial boxing match between two investment heavyweights with dramatically different perspectives. Paul Merriman champions diversification through the efficient frontier, which means adding small cap value to your portfolio. Dr. Karsten Jeska has “thrown cold water” on this approach, favoring simpler strategies like “VTSAX and chill.”The stakes are high — we’re talking potentially millions of dollars in your retirement account over decades.Merriman argues that history shows clear evidence for small cap value’s premium. From 2000 to 2009, small cap value outperformed the S&P 500 in all but one year, compounding at 10 percent while the S&P 500 returned negative 1 percent. He believes this pattern will continue, creating a powerful diversification effect when combined with broader market indexes.Jeske counters that small cap value’s outperformance is mostly “front-loaded” in history, happening before anyone knew about it. Since 2006, small cap value has underperformed. He argues that once an advantage becomes widely known, it disappears in an efficient market. Adding small cap value might even be “di-worsification” — increasing complexity without improving returns.The debate expands beyond small cap value to touch on:Active vs. passive investing strategiesMarket timing vs. buy-and-hold approachesSimplicity vs. complexity in portfolio constructionThe role of faith vs. evidence in investment decisionsWhile both experts disagree about small cap value’s future, they agree on fundamentals: invest early, stay invested for the long term, and understand that no one can predict markets with certainty.What starts as a technical debate evolves into a philosophical discussion about evidence, probability, and the limits of our knowledge — all with millions of retirement dollars hanging in the balance.Timestamps:Note: Timestamps will vary on individual listening devices based on dynamic advertising run times. The provided timestamps are approximate and may be several minutes off due to changing ad lengths.(0:00) Debate intro: small cap value vs index funds(4:01) Merriman: small cap value offers premium returns(9:40) Jeske: small cap value underperformed since 2006(18:20) Historical performance data significance(25:15) Stakes: difference of millions over time(33:08) Diversification vs added volatility debate(41:45) Risk-adjusted returns comparison(49:08) Questioning true diversification benefits(57:40) Value traps and actively managed funds(1:05:08) Technology stocks vs value investments(1:13:45) Data selection bias in studies(1:19:40) Faith vs science in investment decisions(1:29:20) Personal risk tolerance considerations(1:36:08) Closing arguments on investment strategies(1:42:08) Paula declares the debate a drawWatch video here
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