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This episode airs January 7—right in the heart of prediction season—which makes Rubin Miller the perfect guest. Rubin has never been shy about his disdain for market forecasts, especially the annual ritual of banks publishing one-year S&P 500 targets with a confidence that far exceeds what the data allows.
This is a true Talking Shop conversation: unscripted, opinionated, and focused less on what markets will do and more on how investors and advisors should think about uncertainty, expectations, and portfolio construction when the future refuses to cooperate.
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Market Forecasting and “Prediction Season”: Why One-Year Outlooks Mislead (02:00)
Rubin’s frustration with forecasting isn’t philosophical—it’s practical. Most risky assets are fundamentally unforecastable over short time horizons, yet the industry continues to act as if precision is possible. The result isn’t just bad predictions; it’s misplaced attention.
The deeper issue, Rubin argues, is that short-term forecasts distract from what actually matters in financial planning. Advisors don’t exist to guess where the S&P 500 will land next December. They exist to help people live the life they want to live—something that requires discipline, structure, and realism, not price targets.
That doesn’t mean forecasting has no place. It means forecasting needs to be framed honestly and used responsibly.
Financial Planning Return Assumptions: Using Ranges and Probabilities (Not Point Estimates) (03:10)
Financial planning forces advisors to make assumptions—there’s no way around it. You can’t build a plan without modeling how assets might grow over time. Rubin is clear about that. What he rejects is false precision.
Instead of pretending to know what returns will be, he focuses on ranges of likely outcomes, paired with probabilities. That approach respects uncertainty rather than disguising it.
Long-term averages exist for a reason. They provide a reasonable anchor—not a promise. The mistake comes when assumptions are treated as predictions rather than inputs designed to test whether a plan is resilient across many possible futures.
Portfolio Construction Basics: Stocks Are Stocks, Bonds Are Tools (06:41)
One of Rubin’s core beliefs is that stock portfolios shouldn’t vary nearly as much as people think they should. Whether a client is a high-earning 30-year-old or an 80-year-old retiree, the stocks themselves often look very similar: broadly diversified ownership of global businesses.
What changes is the weight of stocks in the portfolio—not their purpose. Stocks exist to grow capital.
Bonds, on the other hand, are tools. Their job changes depending on the client. Taxes, cash-flow needs, liability matching, predictability—these considerations drive bond decisions. Municipal bonds might make sense for a high-income household in a high-tax state. Treasuries might make sense for someone funding a known expense.
The key distinction: equities are about growth; bonds are about solving specific problems.
Setting Investor Expectations: What Forecasts Can and Can’t Do (15:56)
Rubin returns to the idea that forecasting isn’t inherently bad—it’s just often misused. The real failure isn’t saying something about the future; it’s failing to explain how confident you are and why.
Talking about returns responsibly means explaining randomness. Stocks might average 8–10% over long periods, but almost certainly won’t deliver that number in any given year. Short-term results are noisy by design.
Some assets—like one-year Treasuries—are highly predictable. Others—like stocks, crypto, or gold—aren’t. Treating them as if they sit on the same spectrum creates confusion and unrealistic expectations.
Education, in Rubin’s view, means helping people understand these differences rather than pretending everything can be forecasted the same way.
Behavioral Finance in Real Time: Volatility vs the Narrative Investors Fear (21:01)
Investors rarely panic because of volatility alone. They panic because of stories.
Rubin points out how quickly people forget major market events once prices recover. A sharp drawdown feels overwhelming in the moment, but it fades from memory as soon as markets stabilize. Then, months later, a small down day suddenly feels alarming again.
The emotional trigger isn’t the math—it’s the narrative attached to the move. Political events, technological change, macro fears—these give volatility a storyline, and stories are far more powerful than numbers.
The advisor’s real job is to keep expectations and reality aligned closely enough that clients don’t feel compelled to react.
Market Timing Bias: “I Knew This Would Happen” and Why It’s Dangerous (23:45)
One of the most destructive biases Rubin sees is confirmation bias disguised as foresight.
An investor has an opinion. The market moves in a way that seems to validate it. The investor concludes they were right—and decides it’s time to act.
But markets going down doesn’t mean they’re going down. It means they went down.
Rubin emphasizes base rates: over time, markets tend to rise more often than they fall. Selling isn’t a neutral decision—it’s a bet against long-term progress. And most investors don’t need their money next year, even though their emotions often act as if they do.
Risk Management: Probability vs Magnitude (How Investors Blow Up a Good Plan) (29:39)
Rubin draws a critical distinction between being probably right and being catastrophically wrong.
Yes, over short windows, an investor will occasionally time a move correctly. Markets zig and zag. That makes hindsight tempting and confidence seductive.
But the real risk isn’t missing a small move—it’s missing a defining moment. Being out of the market during a major recovery can permanently alter an investor’s trajectory.
That’s why Rubin favors systematic approaches that prioritize survival. Avoiding outcomes that are devastating—even if they’re unlikely—matters more than chasing scenarios that might work most of the time.
Bond Strategy: Building a Portfolio You Can Stick With (Not the Highest Return) (32:21)
Rubin spent much of his early career trading bonds, and his philosophy reflects that experience. He often recommends more bonds than clients expect—not because bonds maximize returns, but because they improve the investment journey.
People don’t invest in a vacuum. They don’t close their eyes for 30 years. They live through uncertainty, fear, and temptation. Bonds help create a portfolio that clients can stay committed to when markets get uncomfortable.
Importantly, Rubin challenges the idea that bond indexing works the same way as stock indexing. In bond markets, issuing more debt isn’t always a sign of strength. That structural difference matters.
He also sees firsthand how complicated—and ineffective—many DIY bond portfolios become, often filled with dozens or hundreds of individual bonds that function like an expensive, undiversified bond fund.
Cash Management: Ultra-Short Bond Funds, HYSAs, and the 2022 Hangover (38:30)
Rubin’s approach to cash is pragmatic. Instead of parking excess cash in traditional bank accounts or relying on individual bonds, his firm uses ultra-short, high-quality bond funds—effectively a high-yield savings account without unnecessary intermediaries.
These funds mature quickly, reset frequently, and provide clarity about expected outcomes. The scars of 2022 still influence how people think about bonds and cash, but Rubin views that year as an anomaly—not a reason to abandon sensible tools.
The bigger problem he sees is people holding large amounts of cash earning nothing, simply because they’re uncomfortable with alternatives they don’t fully understand.
Cash management, like bonds, isn’t about optimization—it’s about intention and fit.
Final Thoughts
This episode isn’t about calling markets. It’s about understanding them—and understanding ourselves.
Forecasts fail not because people are bad at math, but because the future is uncertain. The solution isn’t better predictions; it’s better expectations, better structure, and better behavior when uncertainty shows up.
If you enjoy this Talking Shop format—less scripted, more candid—let me know. And if you don’t, let me know that too.
Resources:
- Check out Rubin’s firm: Peltoma Capital Partners
The Long Term Investor audio is edited by the team at The Podcast Consultant
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