Get These Four ETFs and You’ll Be Set for Life

Paul Winkler: I am Paul Winkler, talking money and investing. So what we do is we educate about investing matters here.

Are We Due For a Financial Bubble?

So just talking to Evan, as a matter of fact, on the phone, he had sent me a video. Evan Barnard, that is, had sent me a video that I thought was really, really good. It was just interesting simply because it was talking about investing and what you need to do. It was a video he had seen on “the only four exchange-traded funds that you will ever need.”

Now I say that this is interesting because this is something that I had actually seen a little bit earlier. It was an article talking about, “Are we due for another financial bubble?” And there was one article about that, and I’ll probably get into that a little bit.

There was another one on, it was about the current tech-driven bull market. “Does it have any kind of look? Does it look anything like the dot-com bubble?” That was the article that I was looking at a little bit earlier.

And it was just talking about information technology stocks and how much they are up, and the S&P 500, what a percentage of the S&P 500 that is. And I’ve talked about this in recent weeks.

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It’s just a huge, huge percentage. And so many American investors are unknowingly concentrated in that. 

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As a matter of fact, there was a huge firm, I am not going to name names or anything like that, but they’re a huge firm, they advertise like crazy as “We’re a fiduciary, your results and our results are going to be tied together. When you’re successful, we’re successful.” That type of advertising, which it sounds really good.

And people ask me that all the time. “Yeah, I like that about you guys, that you tie your success to us.” And I’m like, “Well, there’s a whole lot more to it than that.”

I like making sure that somebody’s educated as to what they’re doing, why they’re doing it, because sometimes what happens is part of the success of the firm is more driven by whether the client stays with the firm or not. So that’s going to be part of it.

And of course that makes sense. I mean, you think about it — any business that is operating wants to make sure that they retain their clients.

I mean, that’s just natural. Nothing new about that. Not rocket science by any stretch of the imagination, but how do you retain the client is the question.

Portfolio of Large U.S. Companies

A lot of times, what happens in the investing industry is this: They actually will make their portfolio look more like large companies, large U.S. companies, the S&P 500, or something like that, simply because it’s a familiar area. “It’s an area I’m familiar with.”

If I know that if the S&P is up, you ask somebody, “Hey, what’s the market doing?” And they’re going to typically be telling you indexes that are tracking large U.S. companies. And if that area of the market is up and the portfolio is up, their job is safe. But on the other side, if those areas of the market are down, portfolio’s down, well, you say, “You’re going to get mad at the investment advisor.”

Not necessarily, because people go, “Well, the market’s down.” When you listen to the radio, that’s all they’re reporting on: large U.S. companies.

So you just say, “Yeah, the market’s down, just got to stick with it. Markets go up and they go down.” And while that’s true, there are different markets, and a lot of people don’t recognize that.

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There are markets that have nothing to do with large U.S. companies, that aren’t driven by what large U.S. companies are doing.

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Now, they may be positively correlated, and they may move together, but they often move in very, very dissimilar fashion, whereas maybe large U.S. companies go up a certain percentage, but those areas go up way, way more in certain years, or they go down less in other years. So they don’t necessarily move in lockstep.

Sometimes they go down more than the S&P. That’s why you still want to own the S&P. You still want to own that area of the market in your portfolio, but being overly concentrated is a problem.

Well, one of the guys with us, Jonathan, actually had seen something like this. The firm in question was putting this portfolio together. It was all individual stocks. I was like, “Wow, somebody’s still doing individual stocks.”

And I didn’t even realize that they were doing that. And he did an analysis of the portfolio and almost all of the money — I mean, darn near all — was in large U.S. companies like the S&P 500 type companies. A little bit of value in the portfolio, which the S&P is going to have a little bit of value anyway.

But also you had international large, which very much moves with U.S. large companies. So it’s basically this portfolio that wasn’t very well diversified at all.

This is something that’s really, really top of mind for me right now because information technology stocks, according to this one article, 10-year return through September 18th, 2025, was 810%. That’s a huge run-up in those particular companies. And of course, the S&P 500 is going to be very, very concentrated in that area. And the point that they’re making in this article is that the ratios and the price-to-earnings and the price-to-book values on these companies, it’s just incredibly high right now.

The Four ETFs You Need

So I don’t know, Nik, are you able to, if I run an audio clip, you’re going to be able to hear? Yeah, he’s nodding. Yeah, okay, cool. So this thing that Evan sent me was this guy talking about funds that you needed, and just listen to what he bills himself as, and you think, Well, this is a guy that should know something right here.

Steve: My free money cheat sheet with all my resources and lists, tag a friend in the comments and I’ll send it to both of you right now.

PW: So he basically says in here, let me see if I can run this.

Steve: These are the only four index funds and ETFs you ever need for the rest of your life. I’m Steve, a millionaire, former public school teacher, now teaching finances.

The first is an ETF that tracks the S&P 500. This allows you to invest in the top 500 companies in the United States like Nvidia, Costco, Walmart, and Microsoft. Examples of these ETFs include SPY, IVV, VOO, SPLG, or whatever you’re comfortable with.

Second is an ETF that tracks tech and growth like the Nasdaq-100. Some examples include QQQ and QQQM.

Third is an ETF that tracks the Dow Jones 30. Companies in this index include Home Depot, Coca-Cola, and Visa. And my favorite ETF that tracks this is SCHD.

The fourth is a total world stock ETF. This allows you to be globally diversified, and a popular ETF is VT.

PW: Okay, so right there, he is telling you the four ETFs, exchange-traded funds, that you need to invest in. And he says he’s teaching finance, he’s a teacher, a professor, and you think, Well, this is a person who ought to know something. 

Well, number one, what I like to do, and I do this with investors all the time, they’ll come in and they’ll say, “Hey Paul, here’s my portfolio. What do you think?” And I’ll go, “Okay, let’s look at this.” Number one, what is the first thing that drives investor behavior?

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Number one is they have a fear of the future, and sometimes greed drives it, but people have a fear of the future overall.

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And the fear is, “I’m not going to get high enough returns. I’m going to run out of money. I’m going to get caught in the next bubble and it’s going to crash.” Or maybe, “I am going to make a mistake, or all of a sudden I won’t have enough money in retirement.”

There are all kinds of fears that people have. And if I’m going to try to overcome a fear like that, what do I want to do? “If I could predict the future, just tell me what’s going to happen. What do I need to invest in?”

So number one, this appeals to that. He’s giving you four — well, he’s giving you more than four exchange-traded funds, but he’s giving you four basic ones. And all of the ones that he’s recommending, if he’s recommending multiple in a particular area, they’re all tracking the same exact thing. So he’s just basically giving you four things.

You’ll have a lot of exchange-traded funds that track the S&P 500. You’ll have a lot of different ones that track just the Nasdaq. You’ll have a lot of different ones that track international markets and things like that. But he’s just giving you four.

The Desire To Predict the Future

Okay, now, he says, “These are the things that you need to do.” So he’s satisfying that desire of predicting the future.

What do I want to invest in right now? I want to invest in whatever’s going to do well going on in the future. I mean, that’s just natural.

Well, how do I know what to invest in? Well, typically what we do is we go, “Who knows what the future has in store?” Whoever predicted the future in the past, whoever predicted accurately what’s going on right now. And we’ll often look at who did it.

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Now, often what will happen is investment advisors, and in this case, a professor or a teacher, will look at the past to select things for the future. 

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Because if they did well in the past, naturally, there are so many things in my life, if things went well in the past for, let’s say I was hiring somebody to do plumbing work around my house and they did a good job, well, they’re probably going to do a good job the next time I hire them. Or if I’m hiring a physician because I want to make sure that my health is decent. Well, I look at their track record with other people, I look at their history. That makes sense, doesn’t it?

If I want to buy some kind of a motor vehicle or something like that, I look at cars that have good ratings. Maybe their repair records are decent and they don’t have a lot of recalls or whatever.

Or maybe they’re super, super reliable. And there are several of those cars that are out there that have 200,000 or 300,000 miles on them, and they’re still cranking along. Past performance makes an awful lot of sense when it comes to judging those particular areas.

So what we do is we take the next step and we say, “Well, maybe the same thing goes with finance. Look at these funds, look at this fund, and go through the 401(k) choices I have at work. What funds really have great returns? Because I’m just going to put my money in those funds.”

Why bother doing anything else? It makes sense, doesn’t it? I want those high returns.

Information Overload

So we look at track record, we look at past performance, then we get overloaded with information because you’ve got tens of thousands of mutual funds out there, literally hundreds of thousands of sub-accounts for variable products and things like that.

And you go, “Wow, there’s just so many choices. What do I do?” And then you listen to people talk about what you ought to invest in, and they all seem to have a different opinion.

Go turn on the financial channels. You’ll have interview after interview after interview of people that are out there saying, “This is what I think you ought to be doing right now. This is the area I think is going to really do well going forward.” And we get overloaded with information.

And you think, The Information Age, just when we get more information, things are going to be so much better. And you go, “No, not exactly. I’m overwhelmed. There’s way too much information out there.”

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When we are overloaded with information, what do we do? We just freeze. 

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And there are studies that show that with 401(k)s. One of the best things you can do to get people to participate in a 401(k)? Give them fewer choices. We know that.

We look at, for example, the Thrift Savings Plan for the government, and they basically have a C fund, an S fund, and an I fund. They have L funds, which are just a combination of those funds. Now, of course, they have the G and F, but they’re bond funds. I’m just talking about in the stock area.

The C fund is a large U.S. stock fund. The S fund is smaller, it’s a market completion index, which are smaller companies. And then you have the I fund, which is basically big international companies.

And just like this guy, he doesn’t even have the S in here. He just has those four ETFs, and more about that in a second. But basically, what’s going on here is keep it simple. Keep it simple and people are more likely to invest.

Breaking the Rules of Investing

But the problem you run into is sometimes simple can be really costly. And if you look at the goal here, we say, “Well, we want to make sure that we don’t have these huge downturns in our portfolio and we don’t lose a whole lot of money.”

Because remember, go back to the fear of the future. That’s what I’m afraid of. You’re doing this makes it counter to that.

So we get overloaded with information, and then what we do is we just go, “Calgon, take me away. I don’t know what to do. If I feel greedy, I dump all my money in individual stocks, or maybe I hire somebody based on past performance or whatever. If I’m feeling fearful, I just stick my money under a mattress.”

And a lot of people are doing that right now; there’s a whole story about that. Matter of fact, there’s an interesting little piece about high-yield savings accounts that I’ll get to.

But anyway, we have this issue of, “I’m overloaded and I make emotion-based decisions and I break a rule of investing.” And I’ll often go, “Give me a rule of investing. What do you think some of the rules are of investing that you’ve heard in the past? And just what is it?”

And somebody will say, “Well, buy low, sell high.” And I go, “Okay, great. So when we buy after something has done well, what are you doing?”

And they’re like, “Ugh, we’re buying high maybe?” Yeah, quite possibly. So you might be breaking that rule right out of the chute.

Now, what’s another rule of investing? “Do you put everything in one place?” “No, no, no, no, no, no, no. Diversify.”

“Very good. Excellent. Diversify. Make sure that you don’t put all your eggs in one basket. What’s another rule of investing?”

“Well, I don’t know.” “Well, what are bonds there for?” “Stability?”

“Yeah, great. Okay, so we want to make sure that we own stable bonds.”

And typically, you’ll find that in a lot of people’s portfolios, they don’t have very stable bonds. They have high-yield bonds, high-risk bonds, long-duration bonds, those types of things.

So we look at these rules and we go, “Well, what happens when I break the rules of investing?” You don’t necessarily lose money, and this is the trap. You may not lose money.

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You often end up with what is called a relative loss. Now that is where you lose relative to what you should have gained. 

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And a lot of people, because they don’t know how to measure this, they’re just oblivious to it.

An Overlap Analysis

So this teacher, this professor, recommends these four ETFs. So one of the things you want to look at is let’s look at something called an overlap analysis. And this is often what I’ll do with people when they come into an office.

Let’s take a look at the different holdings in these portfolios. What are some of the stocks held? Nvidia, Microsoft, Apple, Amazon, Broadcom, Meta, Alphabet, Tesla, Cisco, Pepsi’s in there, you’d have Home Depot, Chevron, Texas Instruments, and Amgen.

So if we look at this list of companies, Nvidia, well, he named how many different ETFs? Four basic market segments. Three of them own Nvidia, three of the ETFs.

Three of them own Microsoft, three out four. Apple, three out of four own Apple. Amazon, three out of four of those ETFs named own that. Broadcom, three out four. Meta, three out of four.

Are you seeing a trend here? Tesla, three out of four own that. Cisco, three out four. Excuse me. Oh, wait, wait, yeah, three out of four. Cisco, four out of four own that one.

All four of the ETFs mentioned. Then you’ve got Pepsi, and all four out of four own Pepsi. AbbVie, three out of four own that. Home Depot, three out of four.

You’re getting the picture. I don’t need to beat this horse to death, so to speak. But you’re getting the picture that here is a “teacher, professor,” a person that is teaching, and I am a person that near and dear, I love academics. I love professors.

I love the whole idea of becoming educated, but sometimes are we just getting educated on garbage and we don’t recognize it? This is why I spend so much time taking what you know to be true about investing and then putting that knowledge up against what you’re actually doing.

Because when you see that these two things are not lining up, when you see that what you’re doing is not in concert with what you believe to be true and what you know to be true about what you should be doing, you end up with this cognitive dissonance where, “Now I’m not comfortable anymore. I’ve got to change.” If I know that what I’m doing is not prudent, it doesn’t make any sense, it’s not logical, then I will be motivated to make a change.

And that is why I think it is so important as investors that we engage in the process. Don’t blindly just trust.

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Because often we don’t recognize what we’re falling for. We’re falling for a sales pitch, we’re falling for maybe a psychological bias like recency bias. 

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Maybe recently these market segments have done well, and all of a sudden I just think that they’re going to continue to do well, when that’s not the way markets work. Investors have to be really, really conscious of where they’re getting their information. Just because somebody says, “Hey, I’m this or I’m that,” don’t necessarily buy it.

Owning Some Gold

“Why You Should Own (Some) Gold.” Any of you that follow the show know I’m going to be like, “Oh gosh.” I thought, This is interesting. 

It was in the Wall Street Journal. I don’t know who wrote it. I don’t know the person, Greg Ip, it says the author is.

But anyway, they start the article in a funny way. “Here’s some good reasons not to invest in gold,” is how he starts the article. “First, it earns no dividends or interest.” Does that sound familiar?

That’s what I always tell people. That’s what Fama taught. It’s not me. Nobel Prize-winning economist basically said, “It’s not an investment.”

An investment has to have a cost of capital. There has to be somebody paying to use your money.

Real estate, they pay you rent. Stocks, they pay your earnings. Bonds, they pay you interest.

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With gold, they don’t pay you anything. You don’t have anything, any earnings. 

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Dividends could be a subset, would be a subset of earnings, but they don’t have dividends. They don’t have interest.

And second, you can’t live in it like real estate. But it’s doubled in the past couple of years, in the past few years. And that’s basically why I think, again, people, short-term, fast performance.

But we’ve got to look longer than short-term. You may remember me doing this whole thing that was on CNBC. Do you remember this little segment on CNBC about gold? Listen, really, really close.

Speaker 3: Andrew and Kelly, this is probably simplistic. Gold’s return over 4,500 plus years, annualized real return, zero. It preserved wealth, but then created in terms of purchasing power, one ounce of gold buys about the same amount of goods in Ancient Egypt as it does today.

PW: The uncomfortable laugh at the end of that, because how many times do you have these gold commercials on the financial channels, right? The uncomfortable laugh. Oh my goodness, the truth is coming out.

It has no return. No return historically. Well, why are they telling you to do it?

It goes on to say, “Nevertheless, this column is going to explain why the prudent investor rule doesn’t talk about investing in …” It doesn’t talk about this as being that prudent.

Matter of fact, the prudent investor rule talks a lot about not market timing, not stock picking, not engaging in having somebody tell you what you ought to do right now. Matter of fact, they tell you, don’t do that.

Diversified Investors

But anyway, it says “a prudent, diversified investor.” They use that term “diversified.”

And think about it. The professor was telling people to buy four ETFs because diversification is key. Until you go and dig deep and find out that three out of four ETFs recommended own exactly the same stocks, and in some cases, all four of them own those stocks.

They’re saying diversified investor, because that term resonates with people. It’s prudent to diversify. What does it mean?

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Diversification should mean that we own things that don’t move in tandem with each other. 

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If I’ve got 1,800 boats on the ocean, but I just decide to put all my money in one of those boats and I’m hoping that that one boat doesn’t sink, that’s not prudent, that doesn’t make sense, that’s not diversified. But if I put a little bit of money in all of the boats, the likelihood of all of them simultaneously sinking is very low.

And when I’m really diversified, instead of just owning a handful of companies — and yes, 500 companies is a handful in the universe of all companies that can be owned — that doesn’t make a whole lot of sense. That’s not diversification.

But if I own all of the companies around the world globally in 40, 50 countries, what is the likelihood that all of those companies will go bankrupt or go under? Very, very little likelihood. And if it does happen, we’ve got bigger problems.

So anyway, it says, “This isn’t about potential return, it’s about insurance. It tends to go up when bad things happen from inflation and runaway government debt to war and political instability.”

So they’re talking about newly mined gold increases the stock of gold less than 2% per year. But you look at that, and that can be significant over time. And I think you may have heard me say, if you’ve listened to the show long enough, that half of the world’s gold that has ever been mined in the history of Earth has been mined since around 1970. That’s pretty significant.

But anyway, it says we’re not increasing the supply, is basically what they’re trying to argue right there. If you increase the supply too much, it can drive down the price.

But they’re saying that, “The remainder of gold wealth comes from rising price,” blah, blah, blah. “The purpose of gold is to damp the impact. When something hammers stocks, bonds and the dollar, the trick is to figure out what that something is.”

It’s always the trick. It’s always the trick.

“Gold does best when fiat currencies,” the kind central banks issue, fiat currency, like the dollar, like the euro. When you don’t have it backed by something physical, they call that a fiat currency.

And so when these things lose purchasing power, that’s when gold does the best. And you think about it, you did have an increase in value in gold in the 1970s, but you still had tons of inflation when the dollar was dropping in value — that’s what inflation is — during the 1980s. But that’s when gold did its worst. It actually dropped in value significantly.

U.S. Inflation

But anyway, it says “U.S. inflation around 3%, hardly a disaster.” So now it’s making an argument against gold again in the article. It’s like, where on earth are you on this argument? “U.S. inflation around 3%, hardly a disaster.”

And you go back through history, you say, “Well, what’s the Fed target on inflation too?” That’s what the Fed target is. That’s what they want it to be.

But if we go back 100 years, what has it been? It’s been three. So it’s pretty much where it’s been through history.

So I would agree with that line. That’s hardly a disaster. And the Federal Reserve thinks it will be lower in a year, in part because of a weaker labor market.

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If you have a weaker labor market, you don’t have as much demand for employment. It has a downward pressure on wages. 

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So, point well-made there. “But the structural forces that kept inflation below the Fed’s 2% target before 2020 have switched direction. Globalization, which brought a flood of low cost goods to American shores, is out.”

So we’re not necessarily importing as much stuff because of the current administration. Their stance on that is basically what they’re saying there.

“Terrorist protection and reshoring are in.” But as they well point out here, the birth rates are down. And if you look at that, that can weaken demand for things, so it’s not necessarily the end of the world.

And then AI, they don’t necessarily mention that here, that I saw, AI actually can have a downward pressure and increase productivity. So that would be something that would offset it as well.

Now, they said here, “Gold is insurance. Gold is insurance.” So that’s why they’re saying that you need to own this.

Fear of inflation, fiscal comments. And you think, Well, you’re doing this for insurance purposes, you’re insuring, you’re not necessarily doing this because it is something that’s going to increase returns or anything like that. So we think, Well, maybe they want you to put a bunch of money in gold. 

Well, the funny thing about this whole thing right here is you know how much they’re telling you to put in gold in your portfolio in this article? You read all the way through and get all the way to the end.

You know how much money? How much? Ten percent, 15%, 20% of your portfolio? No, 0.5% is basically 29% of the portfolio in gold.

Now, that’s quite a range, but 0.5, that’s pretty funny. It’s just not a whole lot. So how much do they really believe it if they’re talking about having that little in gold? And I’m wondering who’s selling the gold here.

Advisory services offered through Paul Winkler, Inc an SEC registered investment advisor. The opinions voiced and information provided in this material are for general informational purposes only and not intended to provide specific advice or recommendations for any individual. To determine what investments are appropriate for you, please consult with a financial advisor. PWI does not provide tax or legal advice. Please consult your tax or legal advisor regarding your particular situation.