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Nothing Wins
Don and Tom dive into a new Morningstar report showing that tactical allocation funds—those run by “smart” managers who actively shift investments—significantly underperformed simple buy-and-hold index portfolios. They unpack why doing nothing often wins, discuss investor behavior gaps, and revisit the power of staying the course. Listener questions follow on mortgage payoffs, TIAA advisory fees, and adjusting stock/bond splits in retirement. The episode wraps with Don revealing his personal creative project—his short story A Chance of Death on his LitReading podcast—and a teaser for his next story, Murder of Crows.
0:23 Morningstar headline: tactical allocation funds lose to “do-nothing” portfolios
1:45 What tactical allocation funds really are (a.k.a. expensive market timing)
2:52 Morningstar urges investors to “stay the course”
3:04 Revisiting “Mind the Gap” and why investors underperform their own funds
4:28 Data comparison: $10k in tactical vs. passive portfolio over 10 years
5:31 Why professionals can’t beat buy-and-hold investors
6:51 Human behavior, arrogance, and the illusion of market-timing skill
8:37 The need for a written plan and risk-based portfolio
9:58 If you have a plan, market noise stops mattering
10:22 Tangent: WWII documentaries vs. Taylor Swift’s Miss Americana
11:21 Listener question #1 – Paying off a low-rate mortgage vs. investing
13:35 Math and emot
Published on 2 months, 2 weeks ago