3517: Are My Investments Good? by Jesse Cramer of Best Interest on Rethinking Commutes

Summary

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Episode Overview

Podcast: Optimal Finance Daily
Episode: 3517: Are My Investments Good?
Host: Diania Merriam
Featured Blogger: Jesse Cramer of Best Interest Blog
Date: April 7, 2026

In this episode, Diania Merriam narrates Jesse Cramer’s post, “Are My Investments Good?”—a deep dive into the deceptively simple question: what makes an investment "good?" Through the lens of a real-life reader question from a college student, Jesse explores the importance of investment goals, the pitfalls of stock picking, and the value of indexing, intertwining timeless investing wisdom with actionable advice for investors at any stage.

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Key Discussion Points and Insights

1. Understanding the Purpose of Investing

• Jesse receives a question from a college sophomore, Cesar: "Jesse, take a look at my investments. Do you think they're good?"
• Cesar's portfolio: five individual stocks, about $500 in total value.
• Jesse’s main point: Whether investments are "good" depends entirely on the investor’s goals.
  • For retirement: $500 is a good start, but not nearly enough for a secure retirement even with optimistic growth assumptions.
  • For learning/fun: Picking stocks with a small sum is a fantastic (and inexpensive) learning experience, even if you lose money.
  • For a short-term need: Trying to grow $500 quickly for next semester’s textbooks is far too risky. Safer options: high-yield savings or certificates of deposit.

Quote:

“When you invest, you should know what your goals are. Only then can you start to understand if your investments are good.”
— Jesse Cramer (02:56)

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2. Stock Picking: Skill or Guesswork?

• Jesse examines how and why Cesar picked certain stocks.
• Two main methods:
  1. Buying well-known companies without research, purely based on brand familiarity or emotions.
  2. Doing deep homework and buying below intrinsic value based on analysis—rarely done by the average investor.
• Jesse: Most people, including himself, don't have the time or expertise for this level of analysis.

Example:

“I chose to invest in Walmart because it’s a well-known company... Another possible explanation: I conducted an analysis on all of Walmart’s relevant financial metrics and I valued the company at $130 per share. So when I saw that the price was only $110 per share, I knew it was a great deal. That seems better. Why? The first explanation is based on opinion...the second is based on financial facts.”
— Jesse Cramer (04:08)

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3. Warren Buffett’s Baseball Analogy

• Buffett’s insight: In investing, unlike baseball, there are no called strikes—you don’t have to swing at any particular pitch (stock opportunity).
• Investors can (and should) wait for the perfect pitch based on real data, not emotion.

Quote:

“Investing is a no called strike game, as Buffett would explain. But when that perfect pitch comes, bam—you can knock it out of the park.”
— Jesse Cramer (05:22)

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4. The Case for Index Funds: Embrace the Lazy Approach

• Most people (including Jesse) can’t out-research and out-guess market experts—and even those experts routinely disagree.
• Stock prices reflect the collective wisdom (and disagreement) of thousands of professionals.
• Index funds: Let you invest in the whole market, capturing average returns without needing to identify “good” individual stocks.
• Referenced authorities: Princeton scholar Burton Malkiel and “Bogleheads” (followers of John Bogle, creator of index funds).
• Jesse’s method: “I can’t do the professionals’ homework, so I do the lazy person’s homework instead.”

Quote:

"Since the experts can't make up their minds about whether today's price is a good buy or a good sell, I invest in index funds where I buy a small portion of the entire market regardless of price."
— Jesse Cramer (06:20)

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5. Diania Merriam’s Commentary and Reinforcement

• Diania extends Jesse’s message, emphasizing that even professionals rarely beat the market.
  • “Over a 15 year period, nearly 90% of actively managed investment funds failed to beat the market.” (09:24)
• Stock picking can be intimidating: you might choose the wrong mix, or misjudge potential.
• The solution? Index funds.
  • “I’m not thinking about stock valuations because I’m not picking stocks, I’m just buying all of them.” (09:48)
• Diania recommends low-fee, total market index fund investing as the practical choice for most people.

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Notable Quotes & Memorable Moments

• Jesse Cramer, on learning early:
  • "Caesar might learn this at age 20 and might lose $50 or $100. It's an incredible lesson for $100." (02:08)
• On experts and prices:
  • "Why is Apple selling for $230 today? Because about half of the experts think that buying at 230 is the smart move, while the other half think that selling at 230 is a smart move." (06:12)
• Diania Merriam, on professional managers:
  • "Portfolio managers are often Ivy League educated investors who spend their entire workday attempting to outperform the stock market. If investment professionals can't consistently beat the market, why would I even try?" (09:36)

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Episode Timestamps

• 00:52 – 03:00: Jesse introduces Cesar’s question and explores the “why” behind investing
• 03:00 – 04:00: Different investment goals and the risk of stock picking for short-term needs
• 04:00 – 05:22: The difference between emotional versus data-driven investing
• 05:22 – 06:40: Warren Buffett’s baseball analogy and “no called strikes” in investing
• 06:40 – 07:58: Passive investing, market pricing, and embracing index funds
• 09:24 – 09:48: Diania’s commentary on the rarity of consistently beating the market and her support for index funds

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Summary & Takeaways

• The quality of your investments can’t be judged in a vacuum—they must be tied to your goals and your time horizon.
• Picking individual stocks usually isn’t worth the risk or research for most people, especially given that even the pros can’t reliably outperform the market.
• Index funds offer a simple, effective route for “lazy” investors to enjoy market growth without the stress of picking winners.
• Learning by doing—especially with small amounts—is valuable for young investors.
• Don’t sweat over picking the “right” stock; focus on the proven wisdom of diversified, low-fee investing.

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Final Word:
Knowing your “why” is the key to knowing whether your investments are good. If you want to learn, experiment with small stakes. But for real, long-term results, let the market do the work for you through broad index funds—a strategy even the professionals have a hard time beating.

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Your optimal life (and optimal portfolio) awaits!

Transcript

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This is Optimal Finance Daily Are My Investments Good? By Jesse Kramer of Best Interest Blog Today we're starting with a common question and we're going to answer it from a few different points of view. College student Cesar asked me, jesse, take a look at my investments. Do you think they're good? Sounds simple enough. Are my investments good? But there's more to the question than meets the eye. So let's get to work. Why are you investing? Cesar is a college sophomore, 20 years old. His current portfolio is a collection of five individual stocks from five different companies totaling about $500 in value. If Cesar is investing for retirement, then $500 is a perfectly good first step. But just a first step. Why? Well, even if Caesar's portfolio doubled every seven years, which would be better than average, he'd end up with about $32,000 at age 62. $32,000 is nothing to scoff at, but it's also not enough to retire on. Caesar should keep on taking those steps though, especially when he's young. If Cesar is investing for fun, then what he's doing is great. If you can, I highly recommend using a small amount of money to hand pick stocks. Odds are you'll do poorly, but it will be a valuable lesson. Handpicking stocks is hard and you're probably not smarter than the market. Some people never learn this lesson. Others learn it at age 50 with hundreds of thousands of dollars on the line. Cesar might learn this at age 20 and might lose $50 or $100. It's an incredible lesson for $100. If Caesar is hoping to turn $500 into $600 for next semester's textbooks, then what he's doing is very risky. Short term investing for near future expenses has just as much chance of succeeding as it does blowing up in your face, he's as likely to end up with 400 as 600, especially considering the trading fees that might eat into his potential profits. There are much lower risk investments, high yield savings or certificates of deposit that can provide solid returns 2 to 3% over short periods. When you invest, you should know what your goals are. Only then can you start to understand if your investments are good. Are Caesar's Stock Choices Good? I already mentioned my thoughts on hand picking stocks, but I'd like to provide some more insight into this. Why did Caesar choose his five companies and why did he purchase those companies at their specific prices? As an example, let's look at Caesar's ownership of Walmart. One possible explanation is I chose to invest in Walmart because it's a well known company. I purchased it at $110 because that's what it was trading for on the day I decided to purchase it. Seems perfectly reasonable. Another possible explanation is I conducted an analysis on all of Walmart's relevant financial metrics and I valued the company at $130per share. So when I saw that the price was only $110 per share, I knew it was a great deal. That seems better. Why? The first explanation is based on opinion, emotion and is dictated by the market's value. The second explanation is based on financials facts and is dictated by the company's true value. Buffett and Baseball Warren Buffett, who constantly asks himself are my investments good? Uses an excellent baseball analogy to expand this idea of of when to pull the trigger and buy. If you don't like a pitch in baseball, you can choose not to swing at it. But if that pitch is in the strike zone, then it counts against you. Three strikes, you're out. Therefore, you might end up in a situation where you have to swing at a pitch even if you dislike it simply because it's a strike, you're forced to pull the trigger and swing well. Buffett likes to point out how investing doesn't work this way. Every day the market throws thousands of pitches at you. Apple at $230, Ford at $9, Walmart at $110. You don't have to swing at or buy any of them. You can wait and wait and wait. You'll never get a strike called on you. Investing is a no called strike game, as Buffett would explain. But when that perfect pitch comes, bam. You can knock it out of the park. If you do your homework financials, facts, true value, you might find that Walmart is worth about $115 a share. The market throws you pitches over days, weeks, months, but you don't like any of them. Then don't buy. But one day the market price drops to a sweet spot, maybe $105 and you think this is a good pitch. I know I can profit off this deal, then swing away the Lazy Person's Homework Did Caesar do this kind of homework? Maybe or maybe not. I certainly know that I don't do that level of homework. I don't have the time nor the expertise. Do you Good news In investing, a lazy person doesn't necessarily have to worry Are my investments good? I do know that there are thousands of professionals who do this homework every day. They work at banks, hedge funds and pension groups. And the funny thing is, they come up with different answers from one another. Why is Apple selling for $230 today? Because about half the experts think that buying at 230 is the smart move, while the other half think that selling at 2:30 is a smart move. That's how prices are determined. Where the supply, the sellers meet the demand, the buyers, they come together and the deals they make occur right around the $230 point. Since the experts can't make up their minds about whether today's price is a good buy or a good sell, I invest in index funds where I buy a small portion of the entire market regardless of price. I can't tell the difference between good pitches and bad pitches, so the market throws me average pitches every single day. I don't have to make the hard choices about what individual companies to buy because I invest in the economy as a whole. Whether you're Princeton Scholar, Burton Mackle, or call yourself a boglehead, index funds are pretty good for simple average investors. After reading their books, the benefits and strategies of indexing made a lot more sense to me. I can't do the professional's homework, so I do the lazy person's homework instead. So back to the beginning. Are my investments good? Why are you investing? What's your goal? How are you investing? What pitches are you swinging at? You just listened to the post titled Are My Investments Good? By Jesse Kramer of Best Interest Blog Tax season is one of the only

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So good you'll want to leave a voicemail about it. Sell your car today on Carvana. Pick up. Fees may apply. Trying to determine if a stock is over or undervalued and when to buy, sell or hold is one of the things that used to intimidate me about investing. It also sounds like a lot of work and the stakes are high. What if you mess it up and choose the wrong grouping of stocks for your portfolio? I don't have a crystal ball and I have no idea which stocks are going to do better than others. I don't know which stocks have low or negative expected returns in the long run. But here's the thing no one does. Professional investment advisors make predictions all the time on which stocks will do well based on fancy metrics and pouring over earnings reports and evaluating trends. But the overwhelming majority are wrong. According to a 2020 report, over a 15 year period, nearly 90% of actively managed investment funds failed to beat the market. Portfolio managers are often Ivy League educated investors who spend their entire workday attempting to outperform the stock market. If investment professionals can't consistently beat the market, why would I even try? If you've been listening to me for a while, you already know that I'm a huge fan of low fee total Market index fund investing. I'm not thinking about stock valuations because I'm not picking stocks, I'm just buying all of them. And that should do it for today. Thank you so much for joining today and every day and I'll see you back here tomorrow where your optimal life awaits.