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.
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