IN THIS EPISODE, YOU’LL LEARN:

• Why indexing works for almost everyone.
• How to properly evaluate investment performance.
• Why missing just a few percentage points in returns can cost you years of your life.
• How to think about asset allocation and rebalancing using a simple, behaviorally sound framework.
• What it really means to be the overseer of your investments, even if you outsource management.
• Why missing 3% return means having to work another 6-7 years instead of retiring.
• How to use expectations in the best possible way.

Disclosure: This episode and the resources on this page are for informational and educational purposes only and do not constitute financial, investment, tax, or legal advice. For full disclosures, see link.

TRANSCRIPT

Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

[00:00:03] Stig Brodersen: In today’s episode, I’m joined by my recurring guest and close friend David Fagan for a conversation about indexing and the uncomfortable truth most investors never hear. We talk about why indexing works for the vast majority of people and how missing just a few percentage points in annual returns can quietly cost you years of your life.

[00:00:25] Stig Brodersen: We also discuss what investors should really look for with evaluating track records, benchmarks, and the value provided by financial advisors and sometimes the lack their off. In this episode, as should also hear, we cover asset allocation, rebalancing, and what it really means to be the overseer of your investments, even when you trust someone else to manage them.

[00:00:47] Stig Brodersen: And finally, the conversation goes beyond investing into expectations, behavior, and leadership. We discuss how simplicity and consistency compound over time, both in markets and in life.

[00:01:02] Intro: Since 2014 and through more than 190 million downloads, we break down the principles of value investing and sit down with some of the world’s best asset managers. We uncover potential opportunities in the market and explore the intersection between money, happiness, and the art of living a good life.

[00:01:20] Intro: This show is not investment advice. It’s intended for informational and entertainment purposes only. All opinions expressed by hosts and guests are solely their own, and they may have investments in the securities discussed. Now, for your host, Stig Brodersen.

[00:01:44] Stig Brodersen: You are listening to The Investor’s Podcast. I’m your host, Stig Brodersen, and I am here today with my friend David Fagan. David, how are you today?

[00:01:52] David Fagan: Yeah, I’m doing great Stig. Thank you very much for the invite. I’m really looking forward to this.

[00:01:57] Stig Brodersen: David, thank you for making time, and let’s just jump right into the first topic here. Today we are going to talk about why we should index. So with that very cold start, I’m just going to throw it forward to you, David.

[00:02:10] David Fagan: No, that’s lovely. Yeah, I wanted to talk about indexing and how I use that with our family’s wealth and do a bit of a deep dive of the thinking behind it. I know many of the listeners come here for value investing, concentrated portfolios, and understanding individual businesses.

[00:02:28] David Fagan: So this episode might not be directly for you, but it might be for someone that you’re connected to. I’ve shared my indexing memo titled Compounding Simplicity with more than a few of our Mastermind community members, and it’s something that they’ve passed along to their friends, their family members, and anyone just starting out who needs a reliable framework to start building wealth.

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BOOKS AND RESOURCES

• Join the exclusive ⁠⁠⁠TIP Mastermind Community⁠⁠⁠ to engage in meaningful stock investing discussions with Stig, Clay, Kyle, and the other community members.
• Learn how to join us in Omaha for the Berkshire meeting ⁠⁠⁠⁠⁠⁠⁠⁠⁠here⁠⁠⁠⁠⁠⁠⁠⁠⁠.
• Listen to our interview with David Fagan about investing like a business owner.
• Listen to our interview with David Fagan about Buffett’s favorite business book.
• Stig’s ⁠blog post⁠ on his portfolio and track record since 2014.
• Related ⁠books⁠ mentioned in the podcast.
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