Financial expert Larry Swedroe joins Joe Anderson, CFP® and Big Al Clopine, CPA, on YMYW podcast episode 40 to discuss active versus passive investing, comparing past performance numbers to illustrate which investment strategy has a more reliable outcome. Original publish date June 18, 2016 (hour 2). Note that content may be outdated as rules and regulations have changed.
00:00 – Intro
07:07 – “The fact of the matter is, the most successful investors understand that markets will go down and they have a strategy of what they’re going to do when they go down”
08:16 – Start of Interview with Larry Swedroe
09:13 – “Let’s go over real quickly this active versus passive debate”
09:36 – “He [Eugene Fama, Nobel Prize winner] defines ‘active’ as those who are engaged in individual stock selection and/or market timing”
12:13 – “Any decision to own any asset allocation that’s different from the market is an active decision in terms of your strategy”
15:06 – “You have to be prepared to accept long periods and stay the course”
16:36 – “The market is getting smarter and it’s getting harder to outperform the market itself”
17:07 – “Because the market and investors are getting more intelligent, do you think these risk premiums would ever go away?
22:34 – “Ignore the ups and downs of the market, and if anything be a rebalancer which means you’re going to buy when everyone else is panic selling”
27:11 – “People’s focus on dividends is a purely psychological one”
31:16 – End of Interview with Larry Swedroe
33:18 – “Another way to help with the overall volatility of the portfolio is looking at the taxation of the portfolio. You have three different pools…you want money in tax-free accounts, taxable accounts and tax-deferred accounts”
36:51 – “If you can save more money in taxes then you can take less risk in the portfolio”
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IMPORTANT DISCLOSURES:
Pure Financial Advisors is a registered investment advisor. This show does not intend to provide personalized investment advice through this broadcast and does not represent that the securities or services discussed are suitable for any investor. Investors are advised not to rely on any information contained in the broadcast in the process of making a full and informed investment decision.
• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC, a Registered Investment Advisor.
• Pure Financial Advisors LLC does not offer tax or legal advice. Consult with your tax advisor or attorney regarding specific situations.
• Opinions expressed are not intended as investment advice or to predict future performance.
• Past performance does not guarantee future results.
• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. As rules and regulations change, content may become outdated.
• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.
CFP® – The CERTIFIED FINANCIAL PLANNER™ certification is by the Certified Financial Planner Board of Standards, Inc. To attain the right to use the CFP® designation, an individual must satisfactorily fulfill education, experience and ethics requirements as well as pass a comprehensive exam. Thirty hours of continuing education is required every two years to maintain the designation.
AIF® – Accredited Investment Fiduciary designation is administered by the Center for Fiduciary Studies fi360. To receive the AIF Designation, an individual must meet prerequisite criteria, complete a training program, and pass a comprehensive examination. Six hours of continuing education is required annually to maintain the designation.
CPA – Certified Public Accountant is a license set by the American Institute of Certified Public Accountants and administered by the National Association of State Boards of Accountancy. Eligibility to sit for the Uniform CPA Exam is determined by individual State Boards of Accountancy. Typically, the requirement is a U.S. bachelor’s degree which includes a minimum number of qualifying credit hours in accounting and business administration with an additional one-year study. All CPA candidates must pass the Uniform CPA Examination to qualify for a CPA certificate and license (i.e., permit to practice) to practice public accounting. CPAs are required to take continuing education courses to renew their license, and most states require CPAs to complete an ethics course during every renewal period.
