Investing Is Dull

Talking Real Money - Investing Talk

Don McDonald

Education, Investing, Business, How To

4.5 • 811 Ratings

🗓️ 11 November 2025

⏱️ 42 minutes

🔗️ Recording | iTunes | RSS

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Summary

Don and Tom tackle investor “magical thinking,” especially the belief that private equity, non-traded REITs, and other illiquid “exclusive” investments offer hidden superior returns. They walk through Jason Zweig’s recent reporting on a Florida pension fund that locked up money, paid higher fees, and earned under 1% a year. The conversation underscores why liquidity, transparency, and diversification matter far more than complexity or exclusivity. The episode also features listener questions on retirement withdrawal sequencing for a $9M portfolio, evaluating cash balance plans, and deciding between traditional vs. Roth 401(k) contributions. A recurring theme: boring portfolios win. 0:05 Magical thinking and the fantasy of “special” investments 1:52 Private equity realities: higher fees, no liquidity, often lower returns 2:46 The Indian Shores pension fund case 3:44 Withdrawal limits and 0.7% 5-year returns 4:34 Why endowments can do illiquid assets but you probably shouldn’t 5:21 “Roach motel” investing and lack of transparency 8:35 How mutual funds must provide daily liquidity vs. private funds that don’t 8:49 Excitement is bad; investing should be boring 9:54 Caller: $9M portfolio—withdraw taxable first or convert IRAs? 11:51 Traditional IRAs vs taxable sequencing strategy 14:17 Why taxable first lowers tax impact and preserves flexibility 16:03 Blackstone senior housing REIT losses and why “sure things” fail 17:39 Diversification protects you when single bets go bad 18:06 Why private deals appeal emotionally (exclusivity + status) 20:38 Caller: Tesla & concerns about private equity creeping into ETFs 23:07 Why mainstream ETFs won’t adopt illiquid private assets 24:43 REIT ETFs behave more like stabilizing bond substitutes 26:02 LeaveMeAlone email-unsubscribe tool discovery 28:04 Listener questions: send via site or voice form 30:51 Cash balance plan concerns—likely a stable value/insurance product 33:08 Another listener: Edward Jones 401(k) with American Funds C-shares 34:30 High-fee small-plan 401(k)s—why they happen and how to fix 36:27 Caller: Should we switch to Roth 401(k) contributions? Probably not here. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	Reality Radio for a really great future.
0:08.0	We're talking real money.
0:10.2	Do you believe in magic?
0:12.1	I think you do.
0:13.3	I really do.
0:14.1	And I kind of thought we got over that as a species.
0:17.8	That we really didn't believe there was magic.
0:19.8	I thought maybe we did it like in the
0:21.5	60s when Bewitched premiered on ABC and then the next year I dream of genie, both of which made
0:28.1	magic look ludicrous. And so I figured we got over that, but apparently we didn't. We're
0:34.0	going to talk about your magical thinking and the dumb things that it causes you to do on talking real money.
0:40.2	I'm Don McDonald. That's Tom Cox. You're... I'm over here twitching my nose for higher returns. I hope that works.
0:47.8	I guess that's not. I hope it doesn't work. Well, that's, oh, hey, oh, I want to give you a phone number.
0:53.8	It's 855935 talk. That is how you call us.
0:57.0	And look, I'm checking the lines. Yes. They're open. There they go. They're all open for you right now.
1:04.0	855-935-825-8255. Magical thinking. What magical thinking am I talking about? I'm talking about the belief that we have,
1:12.7	particularly those of us who invest, that there is some sort of magical investment vehicle out there.
1:20.5	There's something special. There's something maybe a little complicated. There's something unique and something that we're just, it's just
1:29.6	outside our grasp. And if we can only grab it, we're going to do really well. And one of those
1:35.5	things that is, it's getting a lot of press lately because the president says, hey, everybody
1:40.7	should get to play in private equity. It's private equity.
1:45.2	And there was a great, great piece by Jason Zweig in Zevo Street Journal
	...

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