Financial expert Larry Swedroe joins Joe Anderson, CFP® and Big Al Clopine, CPA, on YMYW podcast episode 40 to discuss active versus passive investing, comparing past performance numbers to illustrate which investment strategy has a more reliable outcome. Original publish date June 18, 2016 (hour 2). Note that content may be outdated as rules and regulations have changed.

00:00 - Intro
07:07 - “The fact of the matter is, the most successful investors understand that markets will go down and they have a strategy of what they’re going to do when they go down”
08:16 - Start of Interview with Larry Swedroe
09:13 - “Let’s go over real quickly this active versus passive debate”
09:36 - “He [Eugene Fama, Nobel Prize winner] defines ‘active’ as those who are engaged in individual stock selection and/or market timing”
12:13 - “Any decision to own any asset allocation that’s different from the market is an active decision in terms of your strategy”
15:06 - “You have to be prepared to accept long periods and stay the course”
16:36 - “The market is getting smarter and it’s getting harder to outperform the market itself”
17:07 - “Because the market and investors are getting more intelligent, do you think these risk premiums would ever go away?
22:34 - “Ignore the ups and downs of the market, and if anything be a rebalancer which means you’re going to buy when everyone else is panic selling”
27:11 - “People’s focus on dividends is a purely psychological one”
31:16 - End of Interview with Larry Swedroe
33:18 - “Another way to help with the overall volatility of the portfolio is looking at the taxation of the portfolio. You have three different pools…you want money in tax-free accounts, taxable accounts and tax-deferred accounts”
36:51 - “If you can save more money in taxes then you can take less risk in the portfolio”