David

@Greenbackd Just curious: what was eps growth and roe for these years?

Plenty of value outside large growth.

@HML_Compounder podcasts.apple.com/us/podcast/the…

Interesting looking fund. Current target weights are significantly different than baseline, this thing will have some meaningful tracking error given the reasonable 24bp fee.

@christine_benz Just finished your new book. Fantastic! Especially enjoyed the “takeaways.”

When you're not sure what to say but you want to sound smart 🤓: 2025: "Private credit is a more interesting asset class than private equity." 2022: "I don't feel strongly about bitcoin but blockchain technology is here to stay."

@jerkface5150 @Rick_Ferri @tobecb No need to think: spglobal.com/spdji/en/resea…

@Rick_Ferri @tobecb I do think active management works in bond land, theres many funds that do better than the agg. Even munis too.

So-called investment experts once told us to use index funds for large-cap stocks and select active funds for small-cap stocks because small-cap markets were inefficient, and active managers could easily outperform. They also told us...

@syouth1 @Rick_Ferri Fantastic podcast. Thank you. Great questions and astute explanation of the data!

It was very kind of Rick to allow me to come on the Bogleheads podcast and share some perspectives, drawing on my colleagues' excellent research. Thanks again for having me, @Rick_Ferri . It was a lot of fun!

@Rick_Ferri @derektinnin Is it not true that tangent portfolio mkt cap weighted passive portfolios do not trade? This appears to be the case given extremely low turnover?

@derektinnin Trading in index-tracking ETFs is not the same as trading the stocks that make up the index they track. You and I can trade S&P 500 ETF shares a billion times per day with no trading in the individual securities that make up the S&P 500.

Everytime I see this chart, it reminds me how silly arguments are that passively managed index fund investors are somehow ruining the stock market by distorting prices.

@Andrew_Stotz I think you downloaded the wrong podcast?

Enrich Your Future 27: Pascal’s Wager: Betting on Consequences Over Probabilities “You have to think about the cost of being wrong versus giving up on that hope or the ability to brag about how you pick the best-performing stock. Pascal’s wager gives you the right way to think about the answer. And then, you get to enjoy your life much more.” myworstinvestmentever.com/enrich-your-fu…

@Rick_Ferri @C_Reilly5 Interesting comments. Thank you. Historical performance is not indicative but the idea that statistically seems to work probabilistically is VT or VTI plus treasury direct, especially over 20-30 year time horizon? Are there better ideas ex-post or ex-ante after all costs? Thx

@C_Reilly5 And the second is the execution business

Advice-only is a great model for delivering unbiased financial advice, but some people need other people to manage their money. It may not be the interested DIY investor, but it may be their disinterest spouse or heirs. The key is understanding these are two separate services.

@ErnRetireNow Also, defining value as a function of accounting equity only when value is a function of growth, risk and cash flow, seems suboptimal?

Check out my debate on Small-Cap Value with Paul Merriman on David Baughier's Show: youtube.com/watch?v=-EYowE…

@ErnRetireNow Interesting debate. Thank you. Perhaps one could think of small cap value etf/fund as a stock. By overweighting this “stock” you are taking on more idiosyncratic risk that may or may not be compensated?

@JeffWeniger Probably necessary to offset massive decline in purchasing power from weaker yen?

The massive Japanese wage arbitrage is one of the macro themes of this decade. Look at what the 24-hour news cycle totally missed this week: a huge jump in Japan's wage growth, which now exceeds US wage growth. This hasn't been witnessed since I was a child. See my pinned tweet.

@JeffWeniger @HML_Compounder Question if you look at fundamentals such as ROE and assume long term growth = gdp growth, cannot one at least fathom that large cap growth stocks (VUG) are inexpensive compared to small cap (VIOO)? Probably overly simplistic but need to adjust for fundamental differences? Thx

Small caps are 22% cheaper than large caps on price-earnings ratio. The years that witnessed this discount are 1973, 1976, 1998, 2001 and 2020. Even investors who were early in 1973 and 1998 would have then witnessed two legendary small cap cycles: 1974-1981 and 1999-2018.

@IndexWealthy @egr_investor Great posts. Learning how to learn is truly a powerful technology. AI, Khan Academy, Cousera ect truly level the playing field. Great time to be a live time learner. Interesting to ponder impact on traditional learning and long term productivity. Enjoy your commentary. Thx

Absolutely agree. Few really get this insight. The key to advanced education is learning how to think, learn, and reason. These skills then apply to the acquisition of knowledge in many different subject areas. I would also say someone who has attained advanced education, is also more likely to have a deeper knowledge base on a broad array of subjects in addition to their deep knowledge in their area of focus. When ever I am asked what people should study to get to Wall Street, I tell them to study what they like. The reality is some of the most successful people I have worked with have degrees in arts, sciences, or the humanities, all three of which teach you how to think, rather than what to think, which is incredibly valuable.

It’s never been easier to learn advanced topics for free online—ML, finance, anything. I’ve gained deep knowledge just from university courses, research papers, and open resources. But I’ve realized my engineering PhD trained me to learn how to learn. Maybe that’s why so few dive in? Thoughts? #MachineLearning #Finance #LifelongLearning #STEM #Education #SelfLearning #Curiosity

@benjaminfelix Thank you for your insights. Given your conclusions, how would you characterize factor based funds?

With a few exceptions, most investors should be using low-cost index funds as their primary investment vehicle. Anyone who disagrees with that statement is probably misinformed, conflicted, or just plain wrong.

@honest_math Great post! Thx. Perhaps the correlation between property tax levels and “quality of life” is higher than expected and causation between home prices and property taxes not as obvious as it appears?

Think about it. Countless experiments continue to produce a replicable consensus: property taxes are useful. One curious reason for this is that things communities value— roads, police, schools—do not tend to materialize spontaneously; they require planning and resources. 2/2

Folks: There isn't a single major jurisdiction in the U.S. where residents pay zero property taxes at the state, county, and local levels. All of them, regardless of local politics, independently decided to levy property taxes at some level to fund their communities. 1/2

@JJCarbonneau Great comment. Makes one question the meaning of “low cost.” Worthy subject for podcast?

$1.9T invested in the #SP500 - $SPY, $VOO, $IVV, $SPLG - brings in close to $1 billion in total fees. We hear about the low fees in passive indexes, which are great for investors, but at scale these things are still raking in the $$$.

@Rick_Ferri @ridingtheliger @TheBondFreak @profplum99 Perhaps one can consider “active” as a variable that fluctuates as a function of perceived mispricing? Thus, may be active investors re-emerge as assets become over or undervalued? What is the elasticity of “active” management? Active does not include closet indexing.

@ridingtheliger @TheBondFreak @profplum99 Most of it is tucked away. That's the essence of passive investing.

Who is "Passive" going to sell to if there is an exodus event? @profplum99

@Rick_Ferri @MikeZaccardi Only 2 ways to raise capital = right side of balance sheet = debt or equity (can be public or private). It’s like elements of water = hydrogen and oxygen. Cannot change elements of water or elements of balance sheet. But you can put water in expensive bottle?

@MikeZaccardi Complexity is adviser job security.

Torsten: The Evolution of Asset Allocation Asset allocation has evolved from the 60/40 portfolio to the barbell portfolio to now focusing on fixed income replacement and equity replacement go2.apollo.com/e/1047283/m-ca…

@Rick_Ferri @Bonhoeffer_KDS @FinanceCoach24 Bogel right, ex post. Ex ante is guessing? Diversification argument makes sense. Perhaps valuation argument given fundamentals (growth, risk, cash flows) requires skepticism? Same for growth vs value? Diversification yes; value/international = cheap = you are right and mkt not?

@Bonhoeffer_KDS @FinanceCoach24 That’s not an argument, it’s a fact they are global. Then again, look around at all the things we import and use daily. Shouldn’t we have exposure to the companies and countries we buy from? It is a global marketplace.

It's not as if international stocks have done poorly; it's that US stocks have done so well! Why continue to invest in international stocks, such as #VXUS? More diversification. You more than double the number of companies in your portfolio, achieve broader industry exposure, and gain a currency hedge. Source: Goldman Sachs Wealth Management

@Rick_Ferri @btq96r Thx for interesting comments! Direct indexing not really an index fund? More like direct active management? Terminology can be misleading? As for fees, perhaps better to disclose compounded impact over at least 20 yr period in absolute $ terms as % of initial portfolio balance?

@btq96r A problem occurs when the product is sold to people who don’t need large tax losses. I’m see much more of that in recent months.

I’m seeing more direct indexing portfolios being sold by Fidelity advisers to people who don’t have a need for large tax losses and never will. One victim is a 76 year old widow who has 750 stocks in two portfolios, sold to her by a Fidelity rep who knew nothing about her taxes.