White Coat Investor Podcast #433: Investing Questions (August 21, 2025)

Host: Dr. Jim Dahle
Overview:
In this episode, Dr. Jim Dahle answers a wide array of listener-submitted investment questions, covering topics such as how to interpret stock quotes, tracking portfolio returns, introducing bonds into taxable accounts, the value and logistics of gold, the role of private equity, cost basis changes at Vanguard, and tax-loss harvesting strategies. As always, Dr. Dahle brings his signature practical tone, aiming to demystify finance for high-income professionals so they can take control of their own investment strategies.

1. Understanding Stock Quotes and Valuations

[03:00] Main Points:

• Dr. Dahle explains why picking individual stocks based on share price is a common mistake, sharing the story of a listener whose wife was excited about a $5 stock, thinking it was a "steal."
• The value of a company is determined by market capitalization (shares outstanding × price per share), not the price per individual share.
• Share price is irrelevant except in cases where an investor can only afford one share.
• Valuation should be based on price-to-earnings (P/E), price-to-book, and other ratios, not on per-share price.
• Stock splits do not change the company's value—only the number and price of shares.

Notable Quotes:

“A stock that is $5 is not cheaper than a stock that is $10. Right. It doesn’t matter if you buy two shares of the $5 one or one share of the $10 one. Right? Same, same.” — Dr. Jim Dahle (07:51)

Resources Mentioned:

• Google, Morningstar, and Vanguard’s own site for detailed stock/fund information.
• The benefit of using Morningstar for in-depth fund info.

2. Tracking Portfolio Returns: Dollar-Weighted vs. Time-Weighted

[19:30] Main Points:

• Listener Joe discusses his returns from picking individual stocks and wonders about the best benchmarking method.
• Dr. Dahle points out that if Joe is truly earning 24–25% per year, “maybe you missed your calling” and should be managing billions.
• The most accurate way to track returns is using the XIRR function in a spreadsheet for dollar-weighted (internal rate of return) results.
• Time-weighted returns (what mutual funds report) assume no money enters or leaves during the measurement period, while dollar-weighted (IRR) reflects actual investor experience.
• Resources: A blog post on the WCI site explains XIRR in detail.

Notable Quotes:

“If it turns out you’re really as talented as you are, you’ve got to ask yourself — are you lucky or are you good?” — Dr. Jim Dahle (22:15)

Tip:

• Use XIRR for tracking your real investment results over time.

3. Introducing Bonds into a Taxable Account (Three Fund Portfolio)

[20:42] Main Points:

• Listener Ricardo wants to introduce bonds into his taxable Vanguard account and asks which options are most tax-efficient.
• Dr. Dahle discusses the “Three Fund Portfolio” (US stocks, international stocks, US bonds) and notes there’s no “one true way.”
• US total stock market index funds are more tax efficient than bond funds — generally, bond funds should be kept in tax-advantaged accounts because their return is taxed as ordinary income.
• If bonds must go into taxable:
  • Municipal bonds (like Vanguard’s fund, available as an ETF) are typically best for high-income investors, as their interest is federal (and sometimes state) tax-free.
  • TIPS (inflation-indexed bonds) can also be used but are best kept in tax-advantaged accounts, if possible, due to annoying “phantom income” issues.

Notable Quotes:

“If you’re putting bonds in a taxable account and you’re listening to the White Coat Investor podcast, there’s a good chance those bonds should be municipal bonds.” — Dr. Jim Dahle (30:40)

4. The Role (and Reality) of Gold in a Portfolio

[35:35] Main Points:

• Radiologist listener questions the usefulness and liquidity of gold "in times of distress."
• Dr. Dahle does not invest in precious metals and views gold as a “speculative, not productive” asset (unlike stocks, bonds, real estate, etc.).
• Gold tends to keep up with inflation over the long run but is much more volatile and doesn't generate income.
• In true emergencies, barter items like food, gasoline, and bullets are more valuable than gold, and gold has rarely if ever actually served as currency in crises.
• Gold’s recent performance (“three times as much as it was 10 years ago”) is what attracts speculators.
• If you insist on gold, keep it to a single-digit percentage of your portfolio and rebalance if it grows too large.

Notable Quotes:

“If you really end up in the zombie apocalypse, nobody’s going to want your stupid gold. They want bullets, they want canned goods.” — Dr. Jim Dahle (41:59)

5. On Private Equity in an Investment Portfolio

[47:32] Main Points:

• Listener Ash’s advisor suggests private equity for diversification and reduced market correlation.
• “Private equity” is a catch-all term for any business not traded on public markets (ranging from small businesses to large funds).
• Public markets are transparent, regulated, and highly liquid; private markets are illiquid, often opaque, and may require you to be a “real” accredited investor.
• Dr. Dahle’s definition of “truly accredited”:
  • Able to analyze investments without professional help.
  • Able to lose the entire investment without personal financial harm.
• Risks with private equity include complexity, illiquidity, and—sometimes—diminishing a business's mission in pursuit of short-term profit.
• New trends (e.g., a Vanguard–BlackRock partnership) are making private equity more widely available, but Dr. Dahle counsels patience and careful evaluation.

Notable Quotes:

“You don’t have to have gold and Bitcoin and private real estate and private equity and all this stuff... You need something like three to ten asset classes in your portfolio... fund it adequately and stick with it in the long term. That’s what leads you to investing success.” — Dr. Jim Dahle (52:30)

6. Vanguard Cost Basis Method Change (“Spec ID” Letters)

[49:35] Main Points:

• Multiple listeners report getting a Vanguard letter saying Specific Identification (Spec ID) will no longer be the preferred cost basis method.
• Dr. Dahle clarifies: Spec ID is still available for individual transactions; the automated setting is only relevant for automated transactions.
• Most listeners doing tax-loss harvesting or planning sales should keep using Spec ID when entering manual sales.
• For automation, “minimum tax” (mintax) is usually the best setting, but as long as you do it manually, the change doesn’t matter.

Notable Quotes:

“Nothing else matters in this letter. You’ll still be able to use Spec ID for your individual transactions.” — Dr. Jim Dahle (51:04)

7. Tax-Loss Harvesting: Process and Emotional Barriers

[53:57] Main Points:

• Ricardo, who owns a medical practice, asks about harvesting tax losses to offset anticipated capital gains from selling his practice but feels uneasy about “selling at a loss.”
• Dr. Dahle reassures: In tax-loss harvesting, you sell low and immediately buy a very similar (but not identical) asset—you're not truly abandoning your investment position.
• For index funds/ETFs, it’s easy to swap between versions (e.g., Vanguard Total Stock Market → iShares Total Stock Market) and generate a loss for tax purposes while maintaining market exposure.
• Most investors can accumulate enough tax losses for ordinary income offset ($3,000/year limit) with occasional harvesting.
• For those expecting large future capital gains (like selling a business), accumulating more losses is particularly advantageous.
• Professional help is optional: Many investors can learn to do this themselves, but validator advisors can help transition to DIY if needed.

Notable Quotes:

“You are selling low and buying low… You’re really not changing your portfolio at all.” — Dr. Jim Dahle (55:42)

Additional Quotables & Closing Thoughts

• On simple investing strategies:

  “Go buy a bunch of index funds. They’re boring, but they really work.” (45:15)

• On the “fear of missing out” in investing:

  “This is a game with no called strikes. You don’t have to swing at any given investment.” (52:10)

Key Timestamps

• Stock Quotes & Valuation: 03:00 – 19:30
• Tracking Returns: 19:30 – 20:30
• Bonds in Taxable Accounts: 20:42 – 35:30
• Gold as Investment: 35:35 – 47:30
• Private Equity: 47:32 – 49:35
• Vanguard Spec ID Letter: 49:35 – 53:57
• Tax-Loss Harvesting: 53:57 – 57:20

Summary Table: Dr. Dahle’s Takeaways

| Topic | Dr. Dahle’s Key Point | Recommended Action | |----------------------|----------------------------------|-----------------------------------| | Stock price per share| Irrelevant to value | Focus on market cap & valuations | | Return tracking | Use dollar-weighted XIRR | Track actual cash flows | | Bonds in Taxable | Use muni bonds for high-income | Consider Vanguard's muni bond ETF | | Gold | Not productive; keeps up w/ inflation | Limit to ≤10% if you add it | | Private Equity | Caution, illiquid, complex | Only if you truly understand & can afford to lose| | Vanguard cost basis | Spec ID still usable for manual sales | Use “mintax” for automation | | Tax-loss harvesting | Selling low & buying low is fine | Accumulate losses for future gains|

Closing Thoughts

Dr. Dahle’s advice is consistent: stick to boring, broadly diversified portfolios, measure your results honestly, only branch into complex asset classes if you fully understand the risks, and don’t let fear or FOMO drive your decisions. When in doubt, focus on strategies that are “good enough” and that you can sustain long-term.

Useful References:

• White Coat Investor XIRR Guide
• Bogleheads’ Three Fund Portfolio Book by Taylor Larimore
• Vanguard Tax-Exempt Bond Funds

For personalized advice, always consult your own financial advisor.

This summary skips non-content segments such as advertisements and promotional offers. For full Q&A, listen to the episode or visit whitecoatinvestor.com.