Sound Investing

Paul Merriman is amazed at the interest in GameStop. People he's known for years and never had an interest in the stock market are getting involved…. only emotionally for most, but for many both emotionally and financially. In this podcast, Paul explains the difference between going “long" and ‘short” in the market, and what drove him to buy GameStop when it was selling for under $10 a share. He addresses the problems with short selling and why the unit-of-return per unit return stinks. If people are happy to see hedge funds fail, they should be happy to learn that only about 5% of hedge funds stay in business for more than 10 years. The good news is GameStop is a major holding for Vanguard and DFA — over 9 million shares between them.

Paul discusses the Grizzly Fund (GRZZX), which is one of the better performing short funds. Over last 15 years, a $1000 investment became worth $100, which is better than the average short fund where $1000 became worth $50. Why? The answer includes the long-term returns of short recommendations from "The Hulbert Financial Digest"’s study of newsletters.

Questions & Answers

How should I invest for the next 10 years?  Do you think 2 Funds for Life would be right for me? Paul answers and also references Chapter 10 of his book, Financial Fitness Forever.

In our current low-interest-rate environment, do you think that will affect the ability of bonds to help counteract market downturns?

Is it possible to include the inflation rate along with the return in the tables the foundation creates? Paul suggests a number of other data points that would be nice to have.

Finally, Paul explores an investor's claim that he has done well since the mid-1980s. Was it luck or was it skill?

This podcast is part of the educational offerings from The Merriman Financial Education Foundation, a registered 501(c)3.  If you found value in this podcast, here are five ways to support the podcast and our foundation: