Who were Regan's targets for these investments?

So the ideal demographic for him was somebody who was older, typically 55 and up, who had at least $100,000 in assets.

So you're older, you do have some accumulated assets, you're not wealthy, and you might have some major health issues, and the phone rings, and it's a friendly agent, or it's Paul Regan himself describing this insured, riskless, guaranteed return of 10% or more.

Regan was scamming everyday people, the sick, the elderly, people like that Vietnam veteran who lost the money he needed to pay for his friend's nursing home.

These investors have crippling anxiety and worry about whether they'll ever get any of the money back.

And, you know, I think this is the point where we should say that a lot of our listeners think, I would never fall for a Ponzi scheme.

I'm too smart to fall for that.

There's a sentiment that if something like this happens to you, you deserved it because you're either greedy or stupid.

So why are these index providers looking to make these changes? What's the motivation?

Money.

These companies make billions of dollars a year through basically royalties that they charge index funds for the privilege of using the brand name of an index like the S&P 500 or the Nasdaq 100 or the MSCI World Index.

All of those index names are intellectual property, and they're probably the most valuable intellectual property in the stock market.

So what does this mean for you if you own index funds?

Index funds are generating a lot of profit for the companies that build indexes.

And as an index fund investor, you and I need to monitor their behavior to make sure that they don't bend over backwards to accommodate companies going public, because the job of an index provider really should be to serve the best interest of the index, not the best interest of the issuing company.

And that's the thing that I'm really watching as this trend unfolds.

That gap

... it's the gap between what you spend and what y- and the happiness you expect to get from the spending that causes the disappointment that people feel.

And, you know, uh, I think everyone listening has had a similar experience.

You know, you, you've been in a starter house.

You see a, a new house you love.

You talk about it with your significant other.

You agree we're gonna take the plunge.

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But before they fell out of fashion, tontines were some of the earliest tools that people used for retirement.

If you think about it, is in principle, not that different from a lot of forms of ensuring for retirement, and i-i-it's an interesting metaphor for the risk that's inherent in, in every retirement system.

We're all making a gamble that the money set aside for retirement, either by us, by our company, or by the government, will be there when we need it when we retire, and it doesn't always feel like a gamble, but there's always some risk inherent in it.

Is it still all just a gamble?

It is somewhat of a gamble.

There's a common belief that if you hold stocks long enough, you're effectively guaranteed a robust positive return, and both statistically and historically, it's not really true.

I hope, and this is the gamble that I'm taking, and everyone invested in the stock market is taking it with me, I hope that the stock market will perform great over the next few decades so that the money I have invested in it for my retirement will continue to grow, but there's no guarantee of that.

You've gotta pay taxes on the, on that profit.

Yep.

Uncle Sam is your partner, and he's always got his hand in your pocket.

If you buy and hold, you can defer those, most of those taxes, and often all of them, until you eventually sell.

And the final friction is your own behavior.

Most people are very prone to performance chasing.

When something goes up, instead of thinking to ourselves, "Oh, it's become more expensive.

But what, what's your take when you just look at the valuations of those stocks?

Why do these influencers advise taking your Social Security as early as possible?

The return on Social Security is low, and the historical return on stocks is high.

So you should take the money from Social Security, where it's gonna get a low return, and put it in the stock market, where it's gonna get a high return.

Over the long term, the stock market has returned an average of 7% a year after inflation, and if you do the math, let's say you get $2,000 a month in Social Security if you retire at the age of 62, and you just take all that money and you pump it into stocks, if you start doing that at age 62 and you live until age 85, you're gonna end up with pretty close to a million dollars.

If you delay Social Security until age 70 and then put the same amount of money into stocks every month, you'll end up with a little over 800,000, so you come out ahead.

So what's the catch?

There's just one problem with this, which is that stocks don't always return 7% a year.

Sometimes they go down, and if this just so happens to be the case right around the time you're retiring, you'll end up with less money if you take your Social Security early and put it into the stock market than if you waited until, say, age 70.

How do the last few market cycles fit into the big picture of the last 80 years in markets?

The key thing to put in perspective as an investor is that the long run tells us unambiguously that y- you should be rewarded for sticking with US stocks if you can stick with them long enough.

We've had over 60 instances of stocks losing 5% or more.

We've had a couple dozen corrections where they went down 10% or 20%.

And just in the past few years, we've had two severe bear markets where stocks lost 20% or more.

And over time, the markets have always overcome that and delivered ample returns for people who could stick with it.

However, (laughs) it's not a guarantee, and ultimately if you try to force yourself to be the kind of investor you're not-... you might end up worse off.

I wonder, what would you say to someone about using the market to build wealth and this sense of security?

Is it also important to recognize that most of us are not Warren Buffett?

One of the points that I made in this column is that there are two types of people who should concentrate their stock picks and the first type is people like Warren Buffett or Charlie Munger who have just extraordinary skills at picking stocks.

The second type is what you might call a control person, a CEO or another extremely senior executive at a publicly traded company where your decisions have influence over the outcome of the company's future.

In either of those cases, it makes a lot of sense to concentrate your portfolio, but wow is that a small number of people.

Surely institutional investors run by the pros know better, right?

No, they don't (laughs).

This is not an individual investor problem, it's a human problem.

Anyone who invests a lot of money in a single asset that does very well will feel the same pressure to hang on to it.

Not just for how long he's been in the game or how well he's done, but also for his investing philosophy which he's been honing since he was 11 years old.

He bought, I think, three shares of what then was called Cities Service, which was an oil company.

He recalls that his sister got nervous, uh, I think when the price went down a few months later so he sold it and, um, you know, i- it went on to, you know, make thousands and thousands and thousands of percent, um, teaching him the lesson that, you know, selling too soon can be a huge mistake.

Here's Jason again.

I think his legacy is that he leaves a really clear roadmap that pretty much anybody could follow, if they chose to, on how to be a better investor.

Ignore the short-term fluctuations of the market.

Focus on your own long-term goals and the potential of the assets you hold to have long-term growth.

Try to take the other side of the emotions of the market.