Mad Money Machine

MMM-055: Dan Solin Interview + Slice and Dice

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The Mad Money Machine is proud to be sponsored by Index Funds Advisors at ifa.com. I’m going to help you go through each of the 12 Steps for Active Investors with snippets of the author Mark Hebner’s own podcast.

Please Digg Me! Please? This moves the MMM up in the Digg list of business podcasts.

Also, sign up for the Mad Money Machine email newsletter.

Listen to Warren Buffet on CNBC March 13th with Liz Clayman tell us the best way to invest.

I review Jim Cramer’s performance. I tried to pick day when the market bottomed to give him a chance to make some major gains. Here’s some of what he picked on 18-19 July 2006: GSK, KO, STJ, JNJ, PEP, UTX, and MO. If you had invested in these equally until 19 March 2007 your gain would have been 6.8%. Not too bad right? Well, compare that to the S&P 500 fund SPY which is up 11.9% since that time. And compare that to VTI which is up 13.%. And then compare it to my favorite benchmark the IFA Indexfolio(tm) 100 from 1 August 2006 thru 28 February 2007 which is up 17%. No one can pick stocks.

Visit the new diehards.org forum.

I attended the DC Area Vanguard Diehards meeting last Sunday. 14 of us met around a table aged from 30’s through 70’s. Wide-ranging discussions for 3 hours about portfolio checkups, re balancing, asset allocation, fund details, bottom line: very interesting for investment geeks like us.

Mark Hebner presents: THE ANSWER. “Is it better to slice and dice or to just buy the whole market?” That is, is it worth it to slice and dice your portfolio emphasizing value and small stocks or not? We go into some nitty-gritty details of John Bogle’s new book. Please view the charts for yourself to see the historical differences in returns for Value vs Growth. Here are some other interesting charts.

Jim calls 206-734-4763 and asks, “Are CWI or TMW as good as VTI?” I like the VTI best. I also like the new VEU better than the CWI. Both VTI and VEU have mutual fund equivalents at Vanguard.

What are two approaches to slicing the Pizza?
VTI (The total market approach)
(including any REITs it may own):
40% Large Cap Value, 40% Large Cap Growth, 18% Small Cap, 2% Micro Cap.

Slice and Dice:
Example from IFA Indexfolio(tm) 90 [oops, I had this at 100 formerly] invests its US portion (excluding REITs) this way:
50% Large Cap Value, 17% Large Cap Growth, 17% Small Cap Value, 17% Micro Cap

I review both the private and public Portfolio Smackdown results so far.

I play some sage advice from CNBC. And also the horoscope for some of my stocks.

Mark Hebner joins me as we interview Dan Solin the author of the great new book The Smartest Investment Book You’ll Ever Read: The Simple, Stress-Free Way to Reach Your Financial Goals. Make sure to watch him on the CBS Early Show also

April 1 is Index Funds Day. Send your active investing friends an eCard for it from IndexFundsDay.com

Get out your cell phone and type in 206-734-4763, add it to your contacts, make a call.

The next Mad Money Machine show to be released Tuesday, March 27th. Call me with your investing question and we will provide The Answer.

Email me: feedback at Mad Money Machine dot com, or comment, or Call me on the Mad Money Machine voicemail line at 206-734-4763

Download the show directly MMM-055.mp3

Music from music.podshow.com

Alta Plaza – XRAY Dogs
Runaway Train – Under Feather
The Answer – Eric Vardeman
Look to the Sky – The Plugs
Le pugiliste – David Cyr
California – Delfinium Blue