Radio Show: What’s More Important – Savings or Returns… What Meb’s Doing with U.S. Bonds… and Listener Q&A | #108

Episode 108 has a radio show format. In this one, we cover some of Meb’s Tweets of the Week and various write-in questions. After giving us the overview of his upcoming travel, Meb shares his thoughts on our recent episode with James Montier. It evolves into a conversation about the importance of “process” in investing. Next, we talk about a Tweet from Meb which evaluated what matters more – your savings rate or your rate of return. As you might guess, in the early years, savings trumps, but for longer investment horizons, rate of return is far more influential. It’s not long before we jump into listener questions. Some that you’ll hear Meb address include: What is the best way to include commodities in a portfolio? Specifically, is it better to have an ETF containing futures contracts or an ETF containing commodities equities? Obviously historical returns from bonds, especially the last 40 years, will not be repeated in the future. How will you position yourself personally – not Trinity, but personally – for the bond portion of your portfolio? What are some viable simple options for individual investors besides having a globally diversified bond portfolio? Or is global diversification the answer? Is the global risk somehow less risky than a U.S. bond allocation? Star Capital studies and your book show that ten year returns of low CAPE ratio countries are impressive. But it doesn’t tell if those returns occurs gradually, or if the path to this performance is just noise and cannot be predicted. If the path is noise, it would make sense to buy a cheap country ETF and wait at least 7-10 years. But your strategy rebalances every year. Why not hold longer to 7-10 years in total? I recently read that 88% of companies that were in the S&P 500 during the 1950’s are no longer in business. If every company is eventually heading towards zero, why are so few people able to make money on the short side? Shouldn’t the ideal portfolio be long the global market portfolio, with tilts to value and momentum, and short specific individual equities? I’ve looked at you Trinity Portfolios and noticed an allocation of 0.88% to a security. Why? Isn’t the impact neglectable? Do you suggest someone get a second opinion on their financial plan much as someone would get a second opinion for major surgery? There’s plenty more in this episode including data mining, trend following time-frames, and what Meb’s thoughts are on ramping up equity exposure in a portfolio to offset the effects of living longer. All this and more in Episode 108.