Information Overload

SPEAKER_00 0:05

You're gone to a really great financial future. Tom and Don are talking real money.

News and Market Bias

SPEAKER_02 0:12

One of the biggest things that investors do, people who consider themselves serious investors, I'm serious about investing. I read my Wall Street Journal, I read my investors' business daily, I read the New York Times, I read the Washington Post, I read uh whatever it is, uh Bloomberg, that thing, I watch Fox Business and CNBC, I'm paying attention, I know what's going on in the world of finance, I follow the news, so I am a savvy investor, therefore I am going to make better decisions because I'm ahead of the curve and all of the rest of you aren't. So can the news, knowing what's come, what might be coming, the reports from companies, things that have happened to them recently, can that be a means by which you profit in the stock market? Hi, everybody. Welcome to Talking, Real Money, the podcast, Don McDonald here in a beautiful FLA, where it's uh, I don't know what it is today when this airs, but I'm pretty confident it feels like 108.

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We're in the salad days here. It's a sunny in 75 every day.

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Now it feels like 78.

SPEAKER_03 1:23

Yeah, it's crazy hot. Really out there. So yeah, crazy. I'm telling you, I'm still trying.

SPEAKER_02 1:29

I I think there's an escape to the mountains coming. We were gonna go to Maine, but gas prices. I think we're just gonna go to the mountains and park for a month. I'm not sure.

SPEAKER_03 1:38

Okay. You know.

SPEAKER_02 1:39

They in the trailer, of course.

SPEAKER_03 1:40

Now, when you say park to meet the city, not just in the car, isn't it just we're just gonna pull into a parking spot somewhere.

SPEAKER_02 1:45

It's been a month there. Okay. See what it's like to be homeless. Absolutely. Try it. It doesn't sound like a fun thing. Anyway, what are we talking about? Well, we're talking about reacting to the news. Can you, as an investor, make decisions based on, you know, a company's reports of better earnings, worse earnings, something terrible happening, something great happening, you know, the rocket not blowing up as opposed to it usually blowing up or whatever it might be. Can you make decisions? Larry Swedro, good friend of ours, wrote a paper on that.

SPEAKER_03 2:20

Well, he writes a daily vlog. I mean, I read it every day. It's good. And uh and I think I pay something for it. I don't think it's free, so I think you've got to pay to get this every day. Um we have a bias. So the other thing is when I read this, I thought I uh if you would have to really work hard to convince me that markets in the long haul

Efficient Markets Debate

SPEAKER_03 2:42

are inefficient.

SPEAKER_02 2:43

In other words, Well, okay, you're talking about the efficient market bias. We believe that markets but but but but let's let's let's codify that let's not codify, let's let's focus that a bit. We believe that markets are efficient on a grand scale. Yeah. There are inefficiencies. The problem is trying to recognize, to uh identify, and then to use those inefficiencies and finding the inefficiencies that actually work. And I think that's kind of what this article is about, right?

SPEAKER_03 3:13

I think it is about that. And you're seeing that I think you're seeing that play out the last year and a half with people that have moved into international stocks, which have gone up more than U.S. stocks because they were kind of priced a little lower than U.S. Right, okay. So anyway, so Larry uh wrote recently about a news study that's called the inefficient pricing of news. And the paper suggests that the assumption of efficient markets that you just described on is wrong. Quoting Larry, mispricing is larger and lasts far longer than the academic finance world has documented. Now they went back and looked at 6.7 million Reuters new art news articles over about a 25-year uh time frame ending in 2022. So that's a pretty decent amount of news. Or is it?

SPEAKER_02 4:00

I don't know. I I don't think it is. I don't think 25 years is enough data points to draw conclusions because it's very you're gonna got a look at a lot of recency bias biases in there.

SPEAKER_03 4:14

Yeah, but what they found is fascinating. Researchers made an observation that seems obvious in hindsight, again from Leary, but haven't been formally tested. A lot of what we call news, they say, is predictable. Um, got to think that through a little bit. They found that that there's uh about a 10% that it could predict roughly 10% of the variation in news contact before the article is even published. Uh wait a minute. What can predict that? The researchers. They if you just looked at generally, here's what you would expect this company. The things that companies most of the time report as news are really not that good.

SPEAKER_02 4:56

They try not to report that. You can't miss it.

SPEAKER_03 4:58

You can't miss it. And that has no had no material impact apparently on the price, which is skyrocketing. It doesn't seem to matter. Um so this is at the end of the day, what you said is absolutely 110% right. I'm gonna say that 80% of the people that I talk to still think that's investing. That investing is reading all those things, is knowing what's going on in the world and what's going to happen, and is basing what I'm gonna do in the next one, six, three months on that. That we're gonna tell you is just a fool's errand uh and and or from everything I've ever read or everything I know. But in this case, they're really talking about the news shock strategy. It I'm not gonna give you the number because Don doesn't want me to, but sharp ratio.

SPEAKER_02 5:44

I I I again I don't think this this is a robust enough study to to to tell people that if you can find the right kind of news, it improves your returns by X. I just think that's misleading.

SPEAKER_03 5:58

Aaron Ross Powell Or how to respond to that, right? Yeah. This is this is always the the struggle once you see the reason.

SPEAKER_02 6:05

And we really need to explain what the different kinds of news are, because there's there's the news shock news, and then there's just the news news. And determining which is the right kind of news?

Bad News Travels Slowly

SPEAKER_03 6:18

Yeah. And they mentioned negative news, and they say that bad news, this is quoting, travels slowly. Investors don't fully process the negative implications right away. And it also, again, kind of gets back to our bias of investors' reluctance to sell losers. Quantitative news? Number news. Yeah, number news, investors appear to underweight them because people like stories, as they point out. When I read this, I was like, yeah, people would rather have a story than they would a number.

SPEAKER_02 6:44

Right. So what are they what are they saying here? Let's just read between the lines. What they're saying here is that with just normal negative news or somebody reporting bad numbers that nobody pays any attention to, the market really doesn't react to that. So you can't play that news, basically. That's what they're saying. You can't play that news for a potential higher return.

SPEAKER_03 7:06

And and the overreaction, ambiguous news. They say investors overreact to uncertainty, high attention news. You don't think the things Don just mentioned, rockets blowing up, et cetera. The initial price move overshoots and then a reversal they say follows. This is looking back again, 25 years of data, at individual companies and news stories, if you will, news information.

SPEAKER_02 7:29

That sounds so complicated already to me.

SPEAKER_03 7:32

Oh, I think it is. And I think there's open to a lot of interpretation, too, right? About what is news negative, is it positive? It's just news in many cases. It's I think it's hard to but what they found again was yeah, there's an edge to doing all this, but replicating the strategy is not realistic for most individual investors because you need access to this again from Larry, large news databases, sophisticated AI infrastructure, and the ability to trade hundreds of stocks with short horizon signals and manage the turnover. That that sounds real easy, doesn't it? I love that.

SPEAKER_02 8:06

I love that. They do all here's what we do in this business. We talk about all of this esoteric research, and we say, yeah, look at this. There are there is a a correlation between X and Y, and and yet you can't play it. It's like, yes, Warren Buffett was better at investing than you were for a while, but you can't do it. Yes, uh hedge funds uh sometimes hedge funds beat the market. But you can't do it. You can't do this stuff. We spend a lot of time spouting a lot of hot air, and I'm sorry, I love Larry, but again, this is one of those stories that it's like, okay, here's all the things that could happen, but bottom line, you can't do anything about it.

SPEAKER_03 8:54

He mentions AQR, the fun family, in here as somebody who could do it. It doesn't say they're going to do it, but it's somebody

Skeptical of Headlines

SPEAKER_03 9:01

that could do it. But he does mention he mentions a couple lessons. Uh the first one's uh the market is less efficient than you think, especially around news events. I don't think that's a big lesson, Larry, because I think there's always reactions, overreaction, underreaction to news. But in the long haul, what does it really mean? He said, but here's the part I really like. He says, be especially skeptical of your reactions, your reactions to splashy, ambiguous news. I think that's a great thing to know. Um because we all have a tendency to, oh, wait, I gotta do something there. Um the story versus statistics gap, he says, is real and exploitable. In other words, the fact that people tend to respond better to stories than to numbers. Um, and then finally, don't confuse big news with new information. Uh, much of what appears to be break news is consistent with what we already know about a company. Confirmation, if you will. So he by the way, he I love this. He calls the um the factor. Is this a factor? Hmm, I think not, but he he calls the the whole aspect of the number of factors now the factor zoo. In other words, there's so many animals that are ranging there that uh that who knows what's a reliable factor.

SPEAKER_02 10:16

And that's why I love the statement from many, many years ago by Eugene Fama that there are all of these new ideas that come out all the time, and that only a very few survive long-term scrutiny. Everybody's looking for the new thing. And I think AQR is a fund group that is guilty of that. And guilty of exploiting that. Do you know what the average expense ratio is uh for AQR funds?

SPEAKER_03 10:43

I think it's spendy, right? Half a percent.

SPEAKER_02 10:46

Oh, you are so far away.

SPEAKER_03 10:49

I'm not making enough money, apparently.

SPEAKER_02 10:51

No. Uh the average expense ratio was uh quoted by Portfolios Lab across the entire family at 1.44 percent. Wow. That's Yeah. That's a number that's in I believe that's a number that's almost impossible to overcome.

unknown 11:08

Right.

SPEAKER_02 11:08

You're not gonna be able to do that. I don't know how you're gonna consistently squeeze an extra one and a half percent out of the market with these very esoteric factors, and I think they're just that. Uh we're we're tr it's a it's it goes back to this very human problem. We're trying too hard to think this stuff up.

SPEAKER_03 11:28

Well, and he mentions that. He says, learn to be suspicious of your own reactions to news. The market's reaction to a surprise announcement is probably incomplete, right? They have they haven't really thought it through. What's this all gonna mean in the long haul? We've seen that many, many times. Well, so at the end of the day, um, is this something you really need? I'm gonna say no. Is this something we all want? Sure. I want to know what XYZ corporation, what that change downtown is gonna mean to my portfolio, but it's not gonna change how I invest. Uh number two, I do we need a new factor of some kind? I you'd have to have a lot more data and research to add one.

SPEAKER_02 12:06

I I I want more time. I mean, I want them to go back a hundred years. I I exactly.

SPEAKER_03 12:10

Yeah.

SPEAKER_02 12:11

And there's news, there are news resources from a hundred years. You could take this study back. It would be very involved to do so. And it wouldn't be as robust because of the the quantity of news. It was far lower in nineteen twenty-seven than in two thousand twenty-seven. I've quickly willing to bet that there was a lot, lot less news out there. I think I I kind of remember sitting around with the family and nineteen twenty-seven? No, in in nineteen sixty seven. Oh, okay. We just watched Walter Cronkite. That was And that's the way it is, the two hundred fifty-seconds. We never watched Huntley and Brinkley, and we never watched Frank Reynolds over there on ABC that also ran network.

SPEAKER_03 12:54

You like the Tiffany Network, you're gonna stick with them.

SPEAKER_02 12:56

Well, it was Walter. Come on.

SPEAKER_03 12:59

Captivity for those fifty-two American hostages in a row. There would be no cable news.

SPEAKER_02 13:04

At the end of the day, my big takeaway doing it. What?

SPEAKER_03 13:06

My big takeaway? What? Be suspicious of your own reaction because we have biases, we all have emotions around things, and people tend to respond, and that leads them to bad decisions. That I've seen many, many times.

SPEAKER_02 13:21

Ignore the news. It means really for a diversified portfolio, the news doesn't mean a darn thing. No need. Why waste your time? Do something more fun. Go to a soccer game.

SPEAKER_03 13:34

Yeah. Of course.

SPEAKER_02 13:36

Are those over yet?

SPEAKER_03 13:37

We're getting pretty close. No, it's July now. Yeah. Yes. Isn't it over? Until July 19th, so it's not over yet.

SPEAKER_02 13:44

It's not over. It's still going.

SPEAKER_03 13:46

You can still watch very early American football. There's something somebody's playing something.

SPEAKER_02 13:51

No, oh, there no, the UFL's even done.

SPEAKER_03 13:54

Is that done? Okay. I didn't watch any of it. I'm I'm sorry.

SPEAKER_02 13:58

I saw some in a in a uh brewery I was in. I went, wait, Orlando has a football team? I did not know that. Have they been playing for months and I didn't know that?

Retirement Bridge Planning

SPEAKER_02 14:10

Apparently they had. Anyway, uh we love questions. Questions, we love questions. Uh and you send them in to us a lot. Thank you, at talkingrealmoney.com. The ones that Tom likes are, of course, the kind that he gets to print. But the party likes even more is that every once in a while you'll send in a question that we we'll we'll look at it and we'll go, that really needs a conversation. So Tom just picks up the phone and does this.

SPEAKER_03 14:38

Thanks, Don. We are going to go to Durham, North Carolina, where Pam joins us on the telephone. Hey Pam, how are you?

SPEAKER_04 14:46

Hi, Tom. I'm great. How are you?

SPEAKER_03 14:48

I'm having a great day. My pleasure. How can we help?

SPEAKER_04 14:51

Wonderful. Thanks for everything that you and Don do. I have learned a lot.

SPEAKER_03 14:56

Wait, there's another guy on there's another guy on the show. I'm gonna have to I'll look into that when we're done here, but okay. I'll I'll see what I can find out. So, all kidding aside, what what what what's your question? How can we help you?

SPEAKER_04 15:10

Okay, I have a question about a brokerage. My husband and I are 57 and 59, planning to retire in about three to five years. Um, he is likely to take Social Security starting at 67, and I probably will wait until 70. We have about 1.3 million dollars between uh traditional IRAs, Roth, HSA. Most of that is in the traditional IRA. And we're looking at opening a brokerage to save some cash um to use as a bridge um prior to Social Security. And so we are also likely to come into some money from the sale of a parent's house in a few years, maybe $150,000, $200,000, and we would consider putting that into the brokerage as well. And so we realize we do not have a long runway um you know, before we would be using this brokerage, so you know, we would want to be conservative. So we wanted to ask what asset allocation should we use for the brokerage, or should we just stick with the high yield savings account for now?

SPEAKER_03 16:15

Wow, okay, so you threw a lot at me. So um, in terms of that money, the the inheritance and the other money you're saving, when would you be likely to use that? How soon would you actually start to spend some of that?

SPEAKER_04 16:28

So I am thinking of possibly retiring in about three years.

SPEAKER_05 16:34

Okay.

SPEAKER_04 16:34

And so, you know, I would want to be using that, you know, between when I start taking Social Security at 70. So probably it would be like a time span of seven years or so.

SPEAKER_03 16:47

Okay, but you'd be starting that in th potentially in three years.

SPEAKER_04 16:52

Correct.

SPEAKER_03 16:53

Yeah. So yeah, I mean, so you want to have those first three years probably in fixed income in case stocks were to go down. So I would figure out, I would look at it the other way. I would say, okay, here's what we need from income from that particular holding. Um, and I would I'd probably have all that in fixed income. Um, or maybe even maybe even 80% in fixed income and 20% in some sort of high yield savings, so that even have a little more conservative because you really want to make sure that money's gonna be there. You can't count on stocks, certainly in a three-year period. You could be looking at a three-year period where they're down. So I'd probably do it that way. I'd probably say, okay, we're gonna need this much, and I don't want to take Social Security until I'm 70, which is wonderful, um, because you're gonna get the obviously the larger benefit there by waiting. So yeah, I'd probably do it something like that. Um, and then you might want to look at the whole portfolio since it's traditional Roth, HSA, and then brokerage to make sure that the whole portfolio still meets your need for return, your amount of risk you're willing to take, and your comfortability with ups and downs in the market, so the volatility. But that's probably how I'd look at the inheritance part of it.

SPEAKER_04 18:04

Okay.

SPEAKER_03 18:05

And so uh in terms of fixed income, like money market, bonds, uh Yeah, no, I would be looking at probably, you know, a total bond, maybe BND at Vanguard. That's a very fine total bond fund. So that's a that's an exchange traded fund that holds, you know, thousands of uh of securities that are fixed. They are an IOU, right? They're they're issued by governments, corporations, et cetera. And uh Vanguard runs this in a somewhat conservative manner so that you get some yield. I'd just be curious, I hadn't looked at the BND yield in a while, but it's still showing a you know almost 4.5% yield, according to uh that's what Vanguard's telling people. So you're still making some money there, but it's the idea for you is it's the cushion. It's the money that uh again, if stocks went down, you could take the money out of that. That's my preferred situation. As I say, yeah, probably with that shorter runway, put 80% of the fixed income portion in something like a BND and then 20% in a high yield savings of some kind that's still probably paying, you know, four, four plus percent, but uh it's not gonna have any motion up or down, right? It's basically set. So that's what you're looking for, stability there. But yeah, BND, a total bond, something like that would be a good place for you.

SPEAKER_04 19:27

Okay. And it's okay to have bond in a brokerage account.

SPEAKER_03 19:32

It depends on your income. Um, you know, really the only time bond interest per se becomes a tax issue generally is if you're in a very high bracket, you know, 30% or higher. Otherwise, it really is not that meaningful. It's okay to collect interest from there and have to pay a little bit of tax out of the brokerage. So you could, so the difference there is you could use, you know, municipal bonds of some kind, uh, the municipal bond fund, you're paying, you're getting less in interest, but you're not paying any tax on it. It just turns out that the difference between the interest between the two generally, unless you're in a pretty high tax bracket, it just makes more sense to collect that higher interest from a total bond and pay a little bit of tax you may have to pay on it.

SPEAKER_04 20:19

Okay. All right.

SPEAKER_03 20:21

Does that help?

SPEAKER_04 20:22

Well, yes, it does.

SPEAKER_03 20:24

Well, thank you for your kind comment, uh, which we really do appreciate, all kidding aside. It's uh it's nice and congratulations on your upcoming retirement. It sounds like you got a pretty good plan in place.

SPEAKER_04 20:35

We hope so. Thank you so much.

SPEAKER_03 20:37

Thanks, Pam. You take care.

SPEAKER_02 20:38

All right, we're done with our behind-the-scenes thing while we edited in that uh call.

AVTM Versus AVGE

SPEAKER_02 20:43

And now it's time for Tom to read one of his paper questions.

SPEAKER_03 20:48

I know. Fun, right? Columbus, Ohio, Thomas writes us. You know you're moving to the top of the pile if your name's Thomas. That goes without saying. And this is lengthy, so please listen carefully. Don and Tom, I've been wanting to write to you both for a long time. I actually found your show right after your first Clark Howard commercial, and you're both on my Mount Rushmore of financial advice now. I'm gonna go by again and check, see if I'm there, because that takes a lot of work. Don, I'm putting Tom right next to Dave Ramsey, even though I know he's- Wait a minute, wait a minute. What did he say? He's putting Tom right next to Dave Ramsey on Mount Rushmore. Um, even though you know I have you have some strong feelings about that. But I completely agree with you guys. Dave should stick to budgets and leave investing to Don and Tom. So we're right there with you. Maybe another time we can talk about whether Rick Edelman should be removed from the mountain based on what he did at the end, becoming a total crypto bro. Rick's always on the next hot thing. Yes, bye, Rick. Yeah, Rick's gone. Uh, but Clark he says is untouchable. And you know, I I I like Clark's work. Don, you're not only the HOA president, but Celebration can thank you for promoting their tourism. You're the reason I visited back in February. It's a beautiful town. By the way, how much candy do you actually have to buy for Halloween down? There.

SPEAKER_02 22:01

I uh we buy we generally buy between 600 and a thousand pieces of candy every year.

SPEAKER_03 22:10

We had three people this year at my house.

SPEAKER_02 22:12

We had uh about five hundred. That's crazy.

SPEAKER_03 22:15

All right, here's the actual question. And thank you, by the way, Thomas, for all of those very kind comments. We do really appreciate it. The question is about AVTM. That's the Avantas Total Markets ETF. It's not A V G E. Why did they launch it? What's the actual difference between the two? AVTM is a more of a market like uh index-like product. It's going to reflect the fact that the market is made up more of large stocks than smaller ones. Um it has a similar U.S. international split to A V GE, but it's going to own larger and more growth-oriented stocks versus I'm answering this for you.

SPEAKER_02 22:56

Oh, are you answering that? That's not the question.

SPEAKER_03 22:58

That's not the question.

SPEAKER_02 22:58

This is just my Yeah, but you're absolutely right. It it it falls uh just slightly smaller cap than the typical large stock fund. But when you compare it to A V G E it doesn't have the small and value tilt. It's way off to where he says, why did they launch it?

SPEAKER_03 23:17

I think that's the reasonable question. Money? I'm just guessing.

SPEAKER_02 23:21

I I think it's it's trying to be all things to all people. I think that I mean look at Vanguard.

SPEAKER_03 23:27

We asked them at the time. They said, well, because advisors have asked for it.

SPEAKER_02 23:30

Yeah. That's what I mean. It's trying to be all things to all people. Uh if you if you look at AVGE, you see that it's a dramatic tilt towards small companies in value. Uh and um AVTM have you ever heard us suggest it?

SPEAKER_03 23:45

No, we you have not. And by the way, it's 22 basis points. So I think you can basically go on the same thing with V Tom, V as in Tom Tom, or V as in Victor, V is in Tom. VT.

unknown 23:57

Right?

SPEAKER_02 23:58

Yeah, VT VT is going to match it almost exactly. Let me just get that one for Let me look at the portfolio real quick. Single digits. Uh V VT is down to six basis points. Six one hundreds.

SPEAKER_03 24:10

No offense to our friends who are not.

SPEAKER_02 24:12

VT is slightly larger.

SPEAKER_03 24:14

Okay.

SPEAKER_02 24:15

But that's all. That's the only difference is that VT skews a little larger cap, a little, not much, just a little. So they are almost well, they're very similar. Yeah. They're very, very similar for a tiny fraction. And by the way, AVGE is just one basis point or one one hundredth of a percent more expensive than uh AVTM.

SPEAKER_03 24:39

So if I was picking a single stock fund, it would be AVGE because it's global, because it has the small value tilts. So I'd rather have I'd rather have my money invested that way.

SPEAKER_02 24:52

And and I think the the market is also uh doing the same thing. I mean AVTM is is should be bigger, you would think, than AVGE because it's more mainstream and they're both the same size. They have the same amount of money in them.

SPEAKER_03 25:06

So Wow, AVTM has the same amount as AVGE?

SPEAKER_02 25:09

Yeah, they're both one billion dollar funds.

SPEAKER_03 25:12

That's it, huh? Okay. Little babies.

SPEAKER_02 25:15

Uh well they are actually in the grand scheme of funds. Yeah, they're tiny. I mean what's what's VT sitting with right now? Um ninety-five billion.

SPEAKER_03 25:25

And what's DRAM have?

SPEAKER_02 25:29

Uh that's only been around for a while. A little bit of scotch, just a dram.

SPEAKER_03 25:32

Just a dram get through this program. What's DRAM? Roundhill memory? Somebody wrote me about that. It's only been around for a short term. It's already like the tenth largest ETF in the world, or some ridiculous number. Oh, $20 billion. Yeah, it just has come out of nowhere because everybody's invested in these semiconductors this year.

SPEAKER_02 25:51

It's wait a minute. Wait, the darn thing only started in what? When did in like March?

SPEAKER_03 25:59

Yeah, it's just popped up on the screen and gone straight up. The the fundraising has been because it's been the hot place to be the last couple months, right? So guess what? Money's slowed in.

SPEAKER_02 26:09

What is that portfolio? I've got to look at that. It has 18 stocks in the portfolio. Yeah. It's a semi-board. No, I take that back. 12 stocks, the other stuff's bonds.

SPEAKER_03 26:20

This is nuts. Yeah. And it I think it's like the 10th largest ETF already. Some ridiculous lower.

SPEAKER_02 26:27

Well, you guys deserve the insanity you're gonna get. I mean, it is mega cap growth. Yep. Mega cap growth. Nuts. This is crazy. This is nuts.

SPEAKER_03 26:40

You want to squeeze one more in, or do you want to call it? Yeah, yeah, yeah. Do another question. Come on. We're having fun now. California is a little bit more.

SPEAKER_02 26:46

It's keeping me inside where it's cool. Let's go.

Tilting Toward Value

SPEAKER_02 26:48

There you go.

SPEAKER_03 26:48

Don and Tom, thank you for all the good work. What do you think about a portfolio of 80% VT? Yeah. That's a Vanguard Total World. Plus 20% AVGV to achieve a value tilt similar to AVGE.

SPEAKER_02 27:04

Not really.

SPEAKER_03 27:05

It helps cost the portfolio. Is it worth it? Looking forward to hearing your take on this.

SPEAKER_02 27:10

Okay, if you're trying to get a portfolio similar to A V G V. Why don't you just buy AVGV? Why don't you just buy AVG?

SPEAKER_03 27:16

I don't know. It's a lot of work.

SPEAKER_02 27:18

No, A VGV does not tilt that much farther towards small value to pull over that 80%.

SPEAKER_03 27:27

That you're thinking basically large cap, even though you got an international.

SPEAKER_02 27:32

It's not going to do it for you. 50-50 might get you a little closer.

SPEAKER_03 27:35

But V20 isn't going to do it.

SPEAKER_02 27:38

And if you want to just nail the same allocation as AVGE, I have an idea for you. Move everything into A V G E.

SPEAKER_03 27:45

If you're trying to accommodate that'll be a good one. Okay.

SPEAKER_02 27:54

So we're we're quibbling over, yeah, okay. Yeah. Uh again, we our expectation. Expectation based on past performance. We don't have a long-term track record for AVGE, but we do for some of the dimensional funds. And what we do see over the long haul is that you you have received a more than the expense ratio difference in return, a much higher return, substantially higher in these small value tilt funds. Again, ABGE doesn't have enough history for us to say with any confidence that they're beating the market, but over the past several years, they've actually shown a tendency to do that. But we don't like short-term data.

SPEAKER_03 28:43

No.

SPEAKER_02 28:44

As we mentioned. If you you look back at the three-year average annual return, that's all we have to compare for AVGE, you'll see that the index with with which they're being compared returned about 19.7 over that three-year period on average per year, whereas AVGE returned about twenty point seven for that additional less than twenty basis points or two-tenths of a percent. Yeah. Put your money ahead.

SPEAKER_03 29:20

In the long haul, we would expect you to do better, but can't guarantee that. Yeah. By the by the way, when does this air? I hate to do this publicly, but um I don't care.

SPEAKER_02 29:31

I don't care if we tell them that these are recorded. You were on vacation. So we had to we had to front load the funds. I mean the funds. We had to front load. It sounds like a mutual fund. We had to front load the show. There's my brokerage. There's a compliance coming back. They're gonna love that one. No, no, no. They'll they won't care about that. Uh this is when are we recording this? Uh let's see, 17. This is gonna air on I think the 16th of July.

SPEAKER_03 29:59

Okay. So I'll just that this is a great lead-in. I've had enough pasta. I've had enough uzo. Oh, because you're back from home and I'm I'm ready for your calls again. So dial them up. I've I'm home for the summer now. So um and did you spend the summer in Sparta? Do you like me the way I look in my little Yeah, you're all buffing your little skirt? Wouldn't that be nice? Uh so if if you'd like some help, yeah.

SPEAKER_02 30:25

Because of the pasta and the uzo.

SPEAKER_03 30:28

Won't help. I'll have my one thimble of oozo and then that'll be that. Uh

Back for Questions

SPEAKER_03 30:35

already have, I guess. So if you'd like some help, I'm back. I'm ready to go. Tan rested and ready, as we like to say. So uh go to talkingrealmoney.com, click on meet an advisor, and then say I want to meet with Tom.

SPEAKER_02 30:46

Burned with white t-shirt lines.

SPEAKER_03 30:49

It won't be pretty. It can be sure it's so pretty.

SPEAKER_02 30:52

Yeah, go to talkingrealmoney.com, click on meet an advisor if you want one of those meetings. Uh, otherwise, just ask your questions at talkingrealmoney.com. And if you want to know where to send people, well, send them to your favorite podcast service to listen, or just send them to the website, talkingrealmoney.com, because all over the place, all these various places, almost every day of the week, we are doing this most important thing of all. You know what it is. Talking Real Money.

SPEAKER_01 31:18

The opinions of views expressed on this podcast were current on the date recorded. Opinions, estimates, forecasts, and statements of financial market trends that are based on current market conditions constitute our judgment and our subjects change without notice, including any forward-looking estimates or statements which are based on certain expectations and assumptions. Although information and opinions given have been obtained from or based on sources believed to be reliable, no warranty or representation is made as to their correctness, completeness, or accuracy. Information presented on the podcast is not personalized investment advice from Apellow. The views and strategies described may not be suitable for everyone. This podcast does not identify all the risks, direct or indirect, or other considerations which might be material to you when entering any financial transaction. We hope you realize that the information provided on TalkingRail Money is for informational, educational, and hopefully enjoyable purposes only. The podcast is not trying to get you to buy or sell any financial products or securities. Instead, the program is provided as a public service by Apello Wealth, a fee-only registered investment advisor. A public capital L O C D B A Appello Wealth is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in the states where it is properly registered or excluded or exempt from registration requirement. Registration with the FCC or any state securities authority does not imply a certain level of skill or training. Apello does not provide tax or legal advice, and nothing either stated or implied here should be inferred as providing such advice. Thanks for listening, and please visit talkingrealmoney.com for more information and important disclosure related to performance of any specific index or fund quoted in this podcast. The lawyers get richer.