Ideal time to start investing for best results

On May 15, 2019, from A. B…….DDS, NY City, NY


I am a 65-year-old dentist and was just introduced to MMM by a colleague. I have three sons and I was wondering if it was too late for me to start investing this way. I am certainly interested in advising my children to adopt this formula. I also wanted to know that if I start DIY investing, how do I get my funds from my money manager to ETF’s that I control. Please let me know what you think.

Monday Morning Millionaire Program Answer:

Chicago School of Economics professor Eugene Fama won the Nobel prize in economics for his Efficient Market Hypothesis. The Monday Morning Millionaire Program rests solidly on a foundation of the EMH. Investment scholars universally accept the EMH, although they have different opinions on its details. It is possible but highly unlikely to do better.
At age 65, you easily have 20 years or more to earn, save and invest. Of course, your children could not do any better, either. With youth on their side, they might run fun portfolios in which they try to outperform the market. These should be quite apart from their core portfolios.
Getting your funds into ETFs which you control can be done online, today. If you have a personal relationship with your money manager simply tell him or her to make the transfer. State that you want to eliminate the management fees but that you would like to communicate from time to time and that you wish to be charged on an hourly basis.
You might want to tell your money manager that that I have a $100,000 standing bet open to all money managers, payable by the loser to the winner’s favorite charity if, over the course of a decade, whatever they are recommending, after fees, beats the simple act of holding an exchange-traded fund which mirrors S&P 500 index.

Investing outside tax-advantaged accounts

On May 6, 2019, from T. S….. S….. DDS, Ontario, Canada


Is your portfolio setup also effective in a non-registered account? That is, one in which the tax advantage has been removed?

Cheers and Thanks

Monday Morning Millionaire Program Answer:

Investing within the framework of the habits of the highly effective investors is the best way to go in any account.

Having said that, please note that all investors should top up all tax-advantaged accounts before investing outside these. Over the course of an investment lifetime, investing in a tax-advantaged account can make a positive difference of hundreds of thousands of dollars compared to investing any other way.

Tax-advantaged accounts generally do not allow selling cash-secured, uncovered puts — a minor shortcoming. Only when all tax-advantaged accounts are fully topped up should investors consider placing money in other types of accounts.

A question about tax-advantaged accounts

On April 27, 2019, from F. B. L….DDS, FAGD, Idaho


I just signed up for membership today and as I looked through your postings the “core” accounts were tax advantaged. What does that mean?  Does that mean they are in a retirement account?  I am not yet retired but at age 71 am forced to take minimum distributions and they are accumulating outside the retirement account. Is there a better way? Thanks

Monday Morning Millionaire Program Answer:

Broadly speaking, the expression “tax-advantaged” can refer to investments, accounts or plans which offer tax benefits.  These are either exempt from taxation or tax-deferred allowing investors to pay taxes later, sometimes decades later. There are many examples both in the United States and Canada.

Canadian tax-advantaged accounts and US tax-advantaged accounts go by different names but are similar. There is no better place for any investment assuming that the Government allows the particular security in any particular tax-advantaged account. Over an investing lifetime, this can amount to hundreds of thousands of dollars compared to investing outside such an account. We hope that this describes your investing history.

You would need less than one hour of your accountant’s time to focus on the best way for you to proceed. Unless your accountant has many dentist-clients, you might want to buy an hour’s time from an accountant who does in order to confirm your accountant’s suggestions.

It is almost a certainty that their views will be similar.


A question about the progress of US market size

On April 22, 2019, from L….. B….. DDS, Cayman Islands


Interesting to see the relative size of the US economy in your illustration. I was wondering if it has reached a peak at some point during this time or if it has been a continuous rise ?


Monday Morning Millionaire Program Answer:

(Used with permission from Prof. Dimson)

While it is true that predictably, stocks fluctuate (JP Morgan) and empires have 100%   failure rate (history), we don’t have a definite answer to your question.

Probably, the rise was continuous.  It’s end is not in sight.



Why did you switch from SPY to RSP?

On April 16, 2019, from John G….. Ontario, Canada


What was your motivation to switch from SPY to RSP? I understand the RSP exchange-traded fund (ETF) rebalances its exposure to less expensive stocks in the S&P 500 and trims stock that has become more expensive. But there is increased volatility and a higher MER.


Monday Morning Millionaire Program Answer:

The above chart shows that over the last decade, RSP, an equal-weighted ETF has outperformed SPY, a cap-weighted ETF. As you state, RSP, an equal-weighted ETF gives each of the 500 stocks an equal 0.02% of the fund and keeps it that way. In a capitalization-weighted ETF, the market price of each of the stocks influences the ETF. The stocks with a greater price have a disproportionate impact on the ETF.

Disregarding of the volatility and the MERs, RSP outperformed SPY. Using history to predict the future is unreliable but it is the best tool which we have. We made the switch based on history alone.

Since we made the switch one month ago, RSP has gone up 4.08%while SPY has gone up 3.65%. That 0.43% difference over the course of such a short time period is meaningless but it does suggest that the switch was a good decision. Both ETFs are a good way to buy the entire American economy and over the long run, both will likely give a good result. Both fit the Monday Morning Millionaire Program philosophy of practicing the habits of highly effective investors. Let us review them again.

Continue reading “Why did you switch from SPY to RSP?”

A question about the entire US market

On March 15, 2019, from J……. C……. DDS, Lincoln, CA


I’ve really enjoyed reading about the investment strategies your group shares.  I look forward to learning more and trying the straightforward and logical options strategies outlined here.
I haven’t read anywhere on your site or book yet about indices that cover the entire US stock market, like VTI.  Mostly the S&P500.  Is there a reason total market indices are avoided by the Monday Morning Millionaire crowd?

Monday Morning Millionaire Program Answer:

While there are about 4000 publicly traded companies in the US, the S&P 500, consisting of only 500, represents the total market quite well since these companies are the largest ones. An interesting aside here is that the Dow Jones industrial index also represents the entire market quite well even though it is made up of only 30 stocks. They are the shares of well-selected, large companies.

The chart for VTI (Vanguard Total Stock Market exchange-traded fund or ETF) that you mention and the charts of the three ETFs which mirror the S&P 500 and which the Monday Morning Millionaire Program frequently refers to, are identical. In the chart above, we see all four. It looks like one.  All four are cap-weighted ETFs.

The ten-year chart below compares the Invesco S&P 500 Equal Weight ETF (symbol RSP) which is an equal weighted ETF with SPY. We recently started promoting RSP as you can see in my personal portfolio which I reported on March 11 of this year. Spend a minute or two looking over that report.

If you compare RSP with SPY  you will see that RSP is more recent and as a result, a good deal smaller than SPY, the largest ETF which mirrors the S&P 500. The RSP average daily and monthly volumes of trading are smaller and the expense ratio is more than twice as high. These issues concern institutional investors but we can ignore them.

If you are involved in options strategies, note that the SPDR S&P 500 Trust ETF (symbol SPY)  and the iShares Core S&P 500 ETF (symbol IVV) have weekly expiry dates. Weekly expiry dates tend to have higher premiums.

The Vanguard Total Stock Market ETF (symbol VTI), the Vanguard S&P 500 ETF (symbol VOO) and the Invesco S&P 500 Equal Weight ETF (symbol RSP) have monthly expiry dates.

Concerning options strategies, the Monday Morning Millionaire Program recommends that members only sell and never buy puts and calls and that they do so in their fun portfolios only. Investors always make and never lose money selling puts and calls. However, they do give up the opportunity of making even more money if the underlying ETF rises above the selected strike price.

The underlying will fluctuate and investors will lose more money occasionally than the amount of the premium they get, but only in the short run. Investing should be a long run activity. It can be successful if we observe the habits of highly effective investors.

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Getting assigned. Loss of security value

On March 12, 2019, from A… K….. DDS


You bought ABBV for $122. You are selling covered calls for $78. What if Abbv goes to $82 ++, your calls get assigned. You go into a big material loss don’t you? Particularly in a rising market. What is your objective here? Thank you.

Monday Morning Millionaire Program Answer:

The only way to beat the S&P 500 is to ignore some of the habits of highly effective investors. (See below.)

A little over one year ago, I committed my entire fun portfolio to ABBV  because the premiums on the calls were high. I ignored two habits; the previous sentence shows them both.

Can you spot them? (See below.)

As soon as I bought it (at $122) it proceeded to drop; it went down about 40%. As an aside, note that if a security drops 50%,  it needs to recover 100% just to break even.

So far, so bad.

In the Monday Morning Millionaire Program view, a drop in a security price is a loss whether the investor holds it or sells it. (Admittedly, the tax treatment differs.) Thinking that it is a loss only when it is sold is similar to thinking that we get older on our birthdays but we don’t age between birthdays.

By writing (selling) covered calls, and when I get assigned and am in cash then writing (selling) cash-secured uncovered puts on ABBV each week, I have recovered about half the losses over a year. I will continue to do that.

What are the habits of highly effective investors? What two habits did I ignore? What is the redeeming feature in this sad tale?

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Portfolio rebalancing after a market increase/decrease

This question was posed by Richard Rogers DDS, Past President of the Maryland State Dental Association and current President of MSDS Member Perks.


Overtime, it is easy to see the impact of Dollar Cost Averaging on the overall performance of a portfolio. MMM discusses a strategy to ‘trigger’ a portfolio ‘rebalance’, back to the individual selected Asset Allocation, when we see a 10% increase/decrease in the investor’s choice of a broad-based index ETF. As we see the ETF value gradually increase and decrease over time, and we purchase at different values over time, over what period of time does a DIY Investor define the increase/decrease? Is this a sudden increase/decrease of the ETF or should the investor look at some other way to know when to look at a portfolio to rebalance?

Monday Morning Millionaire Program Answer:

Portfolio rebalancing after a change in the ETF price (increase/decrease) is not influenced by the time over which the change takes place. It could range from a week to a year or more. Historically, the Monday Morning Millionaire Program maintained a core portfolio with a 50/50 asset allocation between a US money market fund (TDB166) and a US market index exchange-traded fund (SPY or IVV of VOO). The allocation was rebalanced it every time the US market index exchange-traded fund dropped or rose by 10%. As long as fluctuations of this magnitude are happening, this asset allocation outperforms dropping and lateral markets but trails rising markets. Over the course of a market cycle (peak to trough to peak), it equals the market with half the risk as measured by market volatility. The MarketWatch article on this is worth careful study.

The 10% move was arbitrarily selected in the era of high transaction costs which could add up to hundreds or even thousands of dollars. These costs are so low today, less than $10.00 or close to 0% per transaction, that we can ignore them.

Reviewing the situation today, investors could buy more of the US market index exchange-traded fund on a 5% decrease and sell on a 15% or 20% increase. This approach would outperform the market over the course of a market cycle.

We will cover the subject in detail in a future blog.



A question about “parking” money

On February 6, 2019, from B….C……DDS


Are money market funds the best way to “park” cash temporarily?

Monday Morning Millionaire Program Answer:

Money market funds are a convenient but not great way at this time, to “park” cash temporarily. They can offer better rates because usually, they don’t allow withdrawals more often than six times a month. You can withdraw money from a savings account any number of times. In my core portfolio, I personally park money (the equal of five years’ income) in TDB166.

As our table below shows, traditional banks rarely offer good return rates for our savings. Most of the time, they don’t even equal the inflation rate. An interesting aside, writing in his book The Battle for Investment Survival, Gerald Loeb says that knowledgeable savers would gladly pay a fee to any bank which would guarantee the preservation of the purchasing power of our savings if they felt that there was any hope of the bank staying solvent. Since successful investors keep a significant percentage of their portfolios in cash or near-money, getting a decent return is critical.

Bank Savings APY Min Balance
Scotiabank Momentum Plus Savings Account 1.05% $0.00
BMO Smart Savings 0.80% $0.00
TD ePremium Savings .90% $10,000.00
TD Bank 0.05% $0.00
Ally Bank 2.00% $0.00
Bank of America 0.01% $0.00
Capital One 360 1.00% $0.00
Chase Bank 0.01% $25.00
Citibank 0.04% $0.00
Citizens Bank 0.01% $0.00
Fifth Third Bank 0.01% $0.00
HSBC 0.01% $1.00
KeyBank 0.02% $2,500.00
M&T Bank 0.02% $1.00
PNC 0.10% $2,500.00
Regions 0.01% $0.00
SunTrust 0.01% $0.00
Synchrony 2.20% $1.00
U.S. Bank 0.01% $0.00
Wells Fargo 0.01% $0.00
One of our experts writes:
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Recommended Canadian and other non-US ETFs

On February 5, 2019, from Bruno C…. DDS


I have taken your advice and purchased positions in your recommended US ETFs. What are your suggestions for:
  1. Canadian ETFs?
  2. Foreign (other than US market) ETFs?
  3. A place to “park” cash in anticipation of future “buying opportunities”?
Thanks.  Dr.B. C.

Monday Morning Millionaire Program Answer:

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