The Clark Howard Podcast

Episode: 01.20.26 – Ask An Advisor With Wes Moss

Date: January 20, 2026
Host: Clark Howard (with Wes Moss and Krista Dibias)

Episode Overview

In this episode of Ask An Advisor, host Krista Dibias is joined by Wes Moss, financial advisor and investing expert, for an in-depth look at the often misunderstood world of market capitalization (market cap)—specifically, how to evaluate small cap versus large cap companies, why individual investors typically underperform the market, and a lively mailbag segment with listener questions about retirement planning, HSAs vs. Roth IRAs, dividend strategies, and the age-old Roth vs. traditional 401(k) debate. The conversation is rich with actionable investing advice, up-to-date data, and memorable analogies that make the numbers meaningful.

Key Discussion Points & Insights

1. What Do “Small Cap” and “Large Cap” Mean Today?

Timestamps: 00:40–11:25

• Market Cap Definitions Have Shifted:
  Wes points out that the definition of "large cap" has changed dramatically as companies like Microsoft become trillion-dollar giants.
  • Small cap: $500 million to $5 billion
  • Mid cap: $5 billion to $25 billion
  • Large cap: $25 billion to $300 billion
  • Mega cap ("unofficial"): $300 billion to over $1 trillion

“We have now entered a world where we have trillion dollar companies today. A trillion dollar company, remember, is 10 times the size of a $100 billion company… Hard to even for the human mind to conceive that.”
– Wes Moss (04:22)

• Historical vs Recent Performance:
  Large caps (S&P 500) have soared, whereas small caps lagged significantly over 3 years (S&P 500 up 80%, S&P 600 up 25%). However, in early 2026, small caps have started to outperform.
• Investor Behavior in 401(k)s:
  Wes warns against chasing the highest performers in their retirement plans, advocating for including overlooked small and mid caps.

“I just wouldn’t ignore a really important part of the market… just because large has done really well.”
– Wes Moss (06:07)

• Market Weighting Distortion:
  The S&P 500 is now dominated by its top 10 companies (which constitute 40% of the index).

2. Listener Mailbag: Practical Retirement Questions

Should I Max Out My HSA or Roth IRA?

Timestamp: 11:25–13:57

• Wes’s Take:
  Both offer outstanding tax advantages; the HSA has slightly better current tax benefits (contributions are deductible and withdrawals for medical expenses are tax-free). The Roth is more flexible for future withdrawals.
• Decision Factors:
  If in a high tax bracket now, HSA’s deduction advantage grows. Generally, Roth wins due to long-term flexibility—unless the tax bracket dictates otherwise.

“HSA is probably the best tax deal today… But the Roth, I'd say, is perhaps the most flexible.”
– Wes Moss (12:16)

Dividend ETFs for Retirement Income—Good Plan?

Timestamp: 13:57–17:37

• Wes’s Philosophy:
  He’s a strong advocate for dividend and income-oriented investing. Over time, dividends account for over a third of S&P 500’s total return and tend to grow faster than inflation.
• Cautions:
  Today's dividend yields are low (S&P ~1.2%), so targeting 4% requires selecting higher-yielding stocks/ETFs, which may be limited.
• Strategy:
  Dividends might cover half to two-thirds of a typical 4% withdrawal rate; appreciation fills the rest.

“Dividends have grown at twice the rate of inflation… it protects our purchasing power.”
– Wes Moss (15:34)

The “Periodic Table” FOMO Chart – Should We Diversify?

Timestamp: 17:56–21:15

• Mailbag Question:
  Is it useful to keep a little in “hot” categories that rotate to the top?
• Wes’s Take:
  The periodic returns chart visually demonstrates why diversification is key—categories’ performance bounces unpredictably year to year. Beware using it to chase last year’s winners (FOMO).
  • “Own them all or most”; don’t chase.

“It's a FOMO chart, but it’s also a good educational chart...You want to have many or most of those categories, because we don’t know when the tide changes.”
– Wes Moss (19:15)

3. Why Individual Investors Lag Behind the Market

Timestamps: 23:20–28:32

• Dalbar Research Findings:
  The average individual investor consistently underperforms benchmarks because of poor timing, emotional reactions (chasing gains/selling after losses), and not sticking with plans.

  • 10-year returns: S&P 500 ~13%, average investor ~9.8% (a 30% reduction).
  • Balanced (60/40) investors: 8.4%.
  • Fixed income investors: negative returns on average over 20 years!

• Cause:
  Investors buy high (chasing last year’s strong returns), sell low (fear), and move out of funds when performance dips only to miss recoveries.

“The gap is because of the emotional reactions of volatility, the poor market timing, buying high, selling when things are low, chasing performance, etc. And that is just a perennial issue.”
– Wes Moss (27:30)

• Advice:
  Keep investing simple, have a written plan, prioritize diversification and balance to avoid emotional traps.

4. More Mailbag Q&A

$70K Settlement – Market Bubble Fears (Tammy in Florida)

Timestamp: 28:32–30:51

• Situation:
  Tammy’s son (age 34) is worried about investing $70K due to market highs.
• Advice:
  Assign a long-term time horizon as he already subconsciously does with his 401(k)/Roth. Keep ~$35K as an emergency fund, invest the rest for retirement. Younger investors benefit greatly from time in the market.

“It never feels like a good time to invest… But you subconsciously know that the 401k is long-term money and the chances that it’s going to be worth more in five, ten years are very, very high.”
– Wes Moss (29:14)

Roth vs. Traditional 401(k) for High Incomes (Anonymous in TN)

Timestamp: 30:51–33:42

• Dilemma:
  Household income $400K—Roth or traditional 401(k)?
• Wes’s Rule:
  Go by tax bracket, not “age + 20” rules. For 2026, under $403K (top of 24% bracket), use Roth; above that, strongly consider traditional for immediate tax deduction. Hybrid approaches for those right on the cusp.

“Brackets move slowly… if you’re going to be in a lower tax bracket in the future, then the 401k actually does make more sense.”
– Wes Moss (32:11)

Roth IRA Contributions for Minors (Greg in Utah)

Timestamp: 33:42–34:54

• Question:
  Can his daughter contribute her gross income (~$1,000), or only the net amount after FICA/tax?
• Wes’s Answer:
  Contributions are based on gross income—wages, consulting, tips, etc.—not after-tax/net.

Notable Quotes & Memorable Moments

• On Overlooking Small/Mid Caps:
  “I just wouldn’t ignore a really important part of the market… just because large has done really well.” (06:07)

• On Emotional Investing:
  “The more education we have around that, the less likely you are to fall victim to this.” (27:57)

• On Dividends:
  “Dividends have made up over a third of the total return of the S&P 500.” (15:04)

• On Market timing fears:
  “The market’s always at a… bubble. We're always worried about that. And then when stocks are low, we're worried they're going to go even lower.” (29:07)

• On Rules of Thumb:
  “If you're going to be in a lower tax bracket in the Future, then the 401k actually does make more sense.” (32:11)

Timestamps for Key Segments

• 00:40 – The shifting definition of large and small caps
• 05:18 – How 401(k) investors typically allocate (and mistake to avoid)
• 11:25 – HSA vs. Roth IRA decision
• 13:57 – Dividend ETFs and retirement income
• 17:56 – Is the periodic investment chart FOMO or educational?
• 23:20 – Why individual investors underperform (Dalbar study)
• 28:32 – $70K bubble-fear scenario for younger investors
• 30:51 – Roth vs. traditional 401(k) at high incomes
• 33:42 – Roth IRA contributions for minors

Tone & Takeaways

Friendly, data-driven, and packed with easily digestible analogies (from soda brands to jam). Wes Moss demystifies emerging shifts in what “large” and “small” caps mean, makes a strong case for long-term thinking and discipline, and arms listeners with practical frameworks to make smarter and happier financial decisions.

Clark’s Team Motto: Save more. Spend less. Don’t fall for fads. Diversify, automate, and stick with the plan.