Hot? Don’t Touch.

This episode dismantles the idea that successful investing comes from finding the next hot thing. Instead, Don and Tom argue that good portfolios are built by eliminating what doesn’t belong: actively managed funds, sector ETFs, alternatives, high-yield bonds, gold, and other distractions that add complexity without purpose. Drawing on a Morningstar column by Amy Arnott, they reinforce that most investing mistakes come from chasing performance rather than embracing simplicity and discipline. The show also tackles listener questions on retirement “bucket” strategies, rebalancing timing, Dimensional fund structure, and annuities—emphasizing that bonds exist for stability, cash should be limited and intentional, and any strategy must be personal, rules-based, and boring enough to actually work.

0:04 Opening banter, Apple censoring Tom’s last name, and the world becoming smooth, bland, and over-processed.

0:48 Call-in invite and Don’s recurring one-star Bitcoin critics—who somehow never call the show.

1:12 Reality check: Bitcoin down ~20% for 2025 while gold is up sharply—followed immediately by a warning not to chase either.

2:03 Core theme introduced: smart investing isn’t about picking winners—it’s about eliminating what doesn’t belong.

2:56 Discussion of Amy Arnott’s Morningstar piece on “Seven Things I Don’t Own,” starting with actively managed funds.

4:07 Why past outperformance is a trap: yesterday’s star managers are tomorrow’s disappointments.

5:28 REITs revisited—why they once made sense, why they mostly don’t anymore, and how most people already have real-estate exposure anyway.

6:01 Sector funds = performance chasing in costume.

6:37 Break tease: four more “don’t owns” coming up.

7:38 Correction corner: Amy Arnott is not related to Rob Arnott, plus her Buckingham background and credibility reset.

8:19 Alternatives dismissed: complexity, opacity, and disappointment masquerading as sophistication.

8:45 I Bonds critique—great rates once, but impractical limits and friction make them portfolio bit players at best.

9:23 High-yield (“junk”) bonds explained: higher yields compensate for higher credit risk, which defeats the purpose of bonds as stabilizers.

10:04 Bonds reframed properly—not for income or excitement, but as portfolio ballast when stocks misbehave.

11:14 Gold takedown: no intrinsic growth, no cash flow, pure agreement-based value—aka a shiny rock.

11:41 Bitcoin comparison invited and accepted—down year, narrative gymnastics, and zero reason to own it just because something else went up.

12:15 Performance envy debunked: one asset doing well is not a justification for owning it.

13:21 Big takeaway: eliminate entire categories first and investing becomes radically simpler and calmer.

15:05 Listener question on the “bucket strategy” in retirement—what Tom dislikes, where it goes wrong, and why excess cash is a drag.

17:30 Cash clarified: useful for true immediacy and emergencies, not as a long-term holding pretending to be prudent.

18:48 Florida hurricane deductibles as a real-world reason for some cash—personalization matters.

20:19 Show scale reminder: nearly 1,800 episodes and hundreds of hours of financial therapy.

21:04 Caller Dave asks about Gainbridge MYGA annuities—non-commissioned, higher yield, slightly higher risk than CDs.

23:19 Annuity risk history lesson: Executive Life, Baldwin United, and why insurance guarantees are not government guarantees.

26:22 Bottom line on MYGAs: reasonable tool if you understand the trade-offs and avoided commissions.

29:04 AIG cautionary tale—what happens when insurance math goes bad at scale.

31:04 Listener question on DFAW fund composition—Core Equity 1 vs Core Equity 2 explained.

32:41 Factor tilts clarified: Core Equity 2 leans smaller and more value; Core Equity 1 slightly larger and growthier.

34:30 Reassurance: DFAW owners don’t need to micromanage—this is Dimensional’s job.

35:53 Rebalancing question answered—timing vs thresholds and why discipline beats precision.

37:46 Practical guidance: rebalance on a schedule or wide bands to avoid whipsawing yourself.

39:11 Final reminder: don’t stare at your portfolio constantly—it will make you crazy.