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• Small Cap Showdown! Paul Merriman vs. Dr. Karsten Jeske Battle … with Millions Hanging in the Balance

  #590: 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. Jeska 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 strategies Market timing vs. buy-and-hold approaches Simplicity vs. complexity in portfolio construction The role of faith vs. evidence in investment decisions While 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 draw For more information, visit the show notes at https://affordanything.com/podcast/binge Learn more about your ad choices. Visit podcastchoices.com/adchoices

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  1:56:59
• Q&A: How Much Risk Should My Mom Take in Retirement?

  #589: Kimmy is worried that her mom’s retirement portfolio is invested too conservatively. Is she right to advise her to take on more risk? Peyton has heard the financial advice about staying away from Whole Life Insurance as an investment, but what about as a savings account for children? Is there good a use case for this? Jeff and his wife are in a great financial position, but they fear that their retirement savings are too heavily apportioned in traditional IRAs. Will they run into tax problems in the future?  Former financial planner Joe Saul-Sehy and I tackle these questions in today’s episode. Enjoy! P.S. Got a question? Leave it at https://affordanything.com/voicemail For more information, visit the show notes at https://affordanything.com/episode589 Learn more about your ad choices. Visit podcastchoices.com/adchoices

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  57:36
• First Friday: The Economic Maze We're Navigating Together

  #588: Jobs are growing, interest rates are holding, and your student loan options just hit pause. Welcome to this month's economic rollercoaster. The economy is sending mixed messages this month. We added 151,000 new jobs in February, slightly better than January's 143,000. But unemployment ticked up to 4.1 percent. Health care is booming (52,000 new jobs). Restaurants and bars? They're hurting (lost 27,500 jobs). Federal government shed 10,000 positions while state and local governments added 21,000. The Fed isn't making any sudden moves. They'll likely hold interest rates steady at 4.25 - 4.5 percent when they meet March 18-19. Fed Chair Powell made this clear: "We do not need to be in a hurry and are well-positioned to wait for greater clarity." Meanwhile, Treasury Secretary Scott Bessent is working a different angle. He's targeting 10-year Treasury yields instead of pressuring the Fed on short-term rates. His strategy? Use fiscal and regulatory reforms to convince markets that inflation will be controlled long-term. Energy costs are a key part of his plan. Bessent believes lowering gas and heating oil prices does double duty: saves consumers money and boosts economic confidence. This matters because consumer spending is 70 percent of our economy. Speaking of confidence – it's plummeting. February saw the largest monthly decline in consumer sentiment since August 2021. People across all age groups and income levels are increasingly pessimistic. They expect inflation to hit 6 percent in the coming year (significantly higher than current rates). Got federal student loans? Applications for income-driven repayment plans are temporarily on hold. This affects all plans, even the older ones not being challenged in court. The pause came after a federal appeals court expanded a suspension of the SAVE plan. About 8 million borrowers had enrolled in this program, with more than 400,000 having their debts erased. If you're working toward Public Service Loan Forgiveness, this is particularly important since income-driven plans are a key requirement. In crypto news, bipartisan legislation for stablecoins is moving forward. The Senate has the GENIUS Act while the House has the STABLE Act (yes, that spells "stable genius"). These bills would establish clear rules about who can create stablecoins and require them to be fully backed by high-quality assets like U.S. dollars or Treasury bills. They would also officially classify stablecoins as payment instruments rather than securities – a significant regulatory distinction. The housing market? It varies dramatically by location. In DC, some zip codes are seeing prices climb rapidly while others face steep declines. The lesson: real estate is hyper-local. Success comes from becoming an expert in just a couple of specific zip codes rather than trying to understand entire metropolitan markets. As Fed Chair Powell wisely put it, the key is "separating the signal from the noise as the outlook evolves." That's solid advice for navigating our current economic landscape. Episode Mentioned: Afford Anything Episode 564, The Real Story Behind Those Economic Tariffs https://affordanything.com/564-the-real-story-behind-these-new-tariffs/ Timestamps: Note: The provided timestamps are approximate and may be several minutes off due to changing ad lengths. (00:00) March's Economic Update (01:18) February Jobs Report (04:18) The Fed is to meet on March 18-19 about interest rates (08:14) Consumer Confidence Survey (10:33) Stock Market Performance (14:14) Deep Seek Chat Bot (17:28) New CFTC Chairperson is crypto friendly (20:34) Home Market in the D.C area changing (25:24) Income Driven Repayment Plan applications temporarily on hold (27:41) Stablecoins (30:58) Certain borrowers may be excluded from student loan forgiveness (31:54) Fed Chair Jerome Powell says the Fed is "awaiting greater clarity" Learn more about your ad choices. Visit podcastchoices.com/adchoices

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  36:22
• Q&A: Should You Cash Out Your ETFs? The Hidden Consequences of That Decision …

  #587: Debi is stressed about saving a down payment to buy a house in her high-cost-of-living area. Should she cash out her brokerage account to speed up the process? Lucas and his wife are high earners, but they’re tired and ready for a change. What strategies can they use to maximize their investments and confidently step away from their jobs? Grant is thrown off by recent discussions about the efficient frontier. It sounds a lot like market timing to base an investment strategy on an arbitrary set of historical dates. What’s he missing? Former financial planner Joe Saul-Sehy and I tackle these questions in today’s episode. Enjoy! P.S. Got a question? Leave it at https://affordanything.com/voicemail For more information, visit the show notes at https://affordanything.com/episode587 Learn more about your ad choices. Visit podcastchoices.com/adchoices

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  1:08:25
• Money Doubles Every 10 Years (and Most People Never Notice!), with Scott Yamamura

  #586: If you are a complete beginner at finances, or if you know someone who is, this episode is for you. The biggest hurdle for beginners? Money seems complex and intimidating. But Scott Yamamura, author of Financial Epiphany, explains personal finance doesn't have to be complicated. He breaks compound interest into three easy-to-grasp frameworks: Money as a Multiplying Ability: Just like athletes have peak physical abilities in their 20s, your money has its greatest multiplying power when you're young. At age 22, every dollar invested can multiply 16 times by retirement (assuming a 40-year career and 7.2 percent returns). The Doubling Framework: Money can double approximately every 10 years with average market returns. This explains why a dollar invested at 22 becomes $2 by 32, $4 by 42, $8 by 52, and $16 by 62. The Halving Concept: With each decade that passes, your money's multiplying power gets cut in half. This is the inverse of the above idea. Scott shares how these simple frameworks helped him front-load his son's college savings. "We can stop now because it's going to double," he said. For beginners struggling with analysis paralysis, Scott offers a Rubik's Cube analogy: You don't need to understand all 43 quintillion possible combinations to solve it — you just need one simple method to get started. Similarly, you don't need to master every financial concept to begin investing. The most important step is just to get started. You can learn the complexities later, but starting early gives your money more time to grow. Scott also emphasizes finding your "why" — a purpose bigger than just accumulating wealth. He shares a moving story about a man named Ernie who funded his mission trip to Sierra Leone, showing how money can be used to make a profound difference in people's lives. 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) Introduction  (1:16) Scott discusses reframing compound interest as "money multiplying ability" (3:47) Money multiplying power works like athletic ability - strongest when young (7:02) Scott addresses challenges of saving when young and broke (10:29) Explanation of the Rule of 72 for doubling money (13:43) Every dollar invested at 22 multiplies 16x by retirement (17:08) What to do if you're starting late with retirement savings (20:44) Three core ideas of compound interest (23:19) Using the concept of "halving" to create urgency to invest (30:30) Finding your "why" to overcome financial temptations (33:07) Scott shares personal story about Sierra Leone mission trip (36:46) The joy of spontaneous giving as motivation for building wealth (40:53) Balancing retirement savings with paying off debt (43:38) Simplifying finance through the Rubik's Cube analogy (52:50) Paula's wrap-up with actionable investing advice for beginners For more information, visit the show notes at https://affordanything.com/episode586 Learn more about your ad choices. Visit podcastchoices.com/adchoices

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