EP214 · Economy · first published 2023-10-05
Investing in about 50 minutes | Merja Mähkä, Esa Juntunen | Negotiator 214
Merja Mähkä and Esa Juntunen join Sami Miettinen in September 2023, each with a new book on investing. It is an unusually honest beginner's guide, because both guests also tell you their own mistakes: the dividend trap, a cyclical steelmaker as a first investment during the financial crisis, the pain of selling Kone, and the host's own Russia blunder. The load-bearing claims are time diversification, costs, and Bessenbinder's finding that only a few per cent of stocks produce the index return — from which follows that a thirty-stock diversification theory is not enough. The episode has two guests and no speaker labels, which is disclosed. The transcript is auto-captioning, which is disclosed.
Investing in about 50 minutes | Merja Mähkä, Esa Juntunen | Negotiator 214
Summary: Merja Mähkä and Esa Juntunen join Sami Miettinen in September 2023, each with a new book on investing. It is an unusually honest beginner’s guide, because both guests also tell you their own mistakes: the dividend trap, a cyclical steelmaker as a first investment during the financial crisis, the pain of selling Kone, and the host’s own Russia blunder. The load-bearing claims are time diversification, costs, and Bessenbinder’s finding that only a few per cent of stocks produce the index return — from which follows that a thirty-stock diversification theory is not enough. The episode has two guests and no speaker labels, which is disclosed. The transcript is auto-captioning, which is disclosed.
Guests, source note and attribution rule
Merja Mähkä is a journalist and non-fiction author; behind the episode is her book Sijoittajaksi noin viidessä tunnissa (“Becoming an investor in about five hours”), published as an audiobook. Esa Juntunen writes the Omavaraisuushaaste (“self-sufficiency challenge”) blog, and his book is Viisas sijoittaja — tunne itsesi (“The wise investor — know yourself”), which joins a financial-independence goal to behavioural economics. The recording is 4 October 2023.
Three disclosures:
- The episode has two guests and the transcript carries no speaker labels. This article attributes a view by name only where the speaker is identifiable from the episode’s own chapter list or from the speaker’s own biography. Other passages are written without a name. A misattribution would be particularly unfortunate here, since most of the material consists of personal portfolio decisions.
- There is no publisher caption track, so the article is based on YouTube auto-captioning. No verbatim quotation is used.
- None of this is investment advice. The episode says the same, and the portfolios described are accounts of what the speakers do themselves — not recommendations.
One timing note the episode makes itself: the Kone passage was recorded just before Henrik Ehrnrooth announced his departure. The conversation therefore does not anticipate it, and should not be read as if it did.
1. Two books with two different jobs
The setup is better than a double book plug, because the books do not compete — they solve different problems.
Mähkä’s starting point is usability. Her observation is that people excited about investing gladly tell you everything there is to tell — and that this is precisely why many never begin. So the book had to be one you can listen to while doing something else. The format is part of the content.
Juntunen’s starting point is self-knowledge. His book grew out of years of blogging, and its core is not what you invest in but what kind of investor you are. The episode says plainly that it is perhaps not the very first book for a complete beginner, since it goes deeper into equities — but that is exactly why it is the one you return to once the first enthusiasm has passed.
Mähkä’s elevator metaphor takes an unfortunately topical turn in the episode: the Finnish market’s elevator has been in the basement for the past year. And from that comes the episode’s first real insight, which runs against instinct.
2. A fallen market is a bad sales pitch and a good moment
This is the sharpest psychological observation in the episode, and it is worth reading as two separate claims, because they are different things.
Claim 1 (marketing): a falling market is not the most appetising moment to tell someone they should start. It sounds wrong.
Claim 2 (price): that is exactly when decently priced goods are on the shelf.
The two are in tension, and that tension is the whole problem of starting to invest, compressed. People begin when their nerve is greatest — which is when prices are highest.
Mähkä’s own answer is fanatical time diversification: monthly saving without timing tricks, because on her account an investor at her level should not attempt to time. That is worth noting carefully: the claim is not that timing is impossible, but that she does not believe she can do it — and she builds a rule out of that.
But she does not stop there, and this is the episode’s most usable single idea:
A strategy for exceptional times. Mähkä says she spent four years preparing so that when a crash came she could take an investment loan. The Covid crash triggered the plan. What matters is not the use of leverage but that the decision was made in advance, calmly, before the emotion was in the room. It is the same structure as a pre-agreed walk-away point in a negotiation: the decision is made while reason is still at the table.
She also tells the flip side honestly: at one point her cash pile grew too large, because the market was high and nothing felt like a good purchase. That is a good problem, but it is still a problem.
3. Two portfolios, two different reasons
Both guests open their portfolios, and they are interesting precisely because each structure follows from that person’s own circumstances rather than from a model.
Mähkä’s portfolio — in her own words, all over the place:
- over half in direct equities, and over half of those in the United States;
- the share of funds has grown, and she describes herself as more disciplined, or humbler, than before;
- a little forest;
- one investment flat — and she does not much care for property investing, so it has stayed at that one.
The US weighting was not a view but a consequence: those shares have done so well. That is an honest and important observation, because weights usually come from returns rather than from decisions.
Mähkä also raises a constraint that is rarely mentioned: her work puts her close to inside information, so she cannot invest in everything, and when selling she has to think about the window so that nobody reads it maliciously. That shapes a portfolio in a way no portfolio theory models.
Juntunen’s portfolio is geographically narrower, and the reason is explicit:
- shares in his unlisted employer — a British insurance brokerage — and a lot of them;
- Finnish, US and UK equities;
- not much else, because he does not know the political risk of other markets well enough and because he has a day job.
This is a good example of a portfolio boundary being a competence boundary rather than a view — a different thing from believing these three markets will perform best.
The large weighting in employer shares is at the same time the episode’s most significant concentration risk, and a reader should notice it even though the episode does not underline it: salary and investment wealth then come from the same source.
4. Rates came back — and nobody knows how to talk about them
Here is the episode’s most honest concession, and it comes from both directions.
After the zero-rate years, fixed income is relevant again, and both describe this almost as a relief: the world works normally again. But then comes an admission more valuable for an article than any rate view:
When you set out to learn about fixed income, there is very little content aimed at ordinary people. On equities and funds there is everything; on rates, nothing.
That is a real gap, not a rhetorical one. Both have written an investing book, and neither claims to know rates in the same way.
On one practical matter they are emphatically agreed, and it is the episode’s most concrete single action: leaving money in a current account is a poor default now that money market funds exist. The episode says plainly that it is foolish for a European to keep spending money in a bank account, and that an over-large cash pile can simply be partly dumped into a money market fund. You can begin with very short-duration funds and decide separately whether to take corporate risk.
Sami brings in his own angle via Ray Dalio’s alpha portfolio — the idea that one can buy uncorrelated assets, each producing its expected return in its own world. The episode’s stance is sceptical and the reasoning is technical: under zero rates it was close to impossible to do anything but lose money with a bond sleeve, that is, to generate negative alpha. In a normal environment the structure starts working again. That is not a verdict on Dalio but an observation that the structure requires a functioning interest rate.
5. The dividend trap — the episode’s best lesson
This is the clearest single error analysis in the episode, and it is worth reading in full.
The trap is temporal. The dividend yield you see is backward-looking: it is computed from last year’s dividend and today’s price. If the price has collapsed, the yield looks magnificent precisely because the company is doing badly. The number that matters is the forward yield — an estimate of what the company will actually pay next year.
Why the trap works. The episode names the reason directly, and it is psychological: a dividend is a genuinely real thing you can measure and see. The money lands in the account, and you get a concrete feeling of ownership. That feeling is real; the signal it gives is not.
And the example that makes it convincing is the teller’s own. Juntunen started investing at 17, during the financial crisis, and his first investment was Rautaruukki — about as cyclical a company as exists, paying out the previous year’s dividend. Against deposit rates the yield looked incredible, on the order of 12 per cent. It was exactly the trap he later wrote into the book.
And then the counterparty, which is what makes the passage good. Mähkä is not willing to condemn dividends. Her position is that for an experienced investor the dividend yield is a usable signal: over half of the historical return of the Helsinki exchange has come from dividends, and once you have followed the same Finnish companies for a long time the dividend trap is in fact fairly easy to spot. Traps exist, but they are not impossible to avoid.
The disagreement is genuine, it is left open, and that is a better outcome than a compromise. The practical rule that follows from both: dividend yield is an experienced investor’s tool and a beginner’s trap.
Running underneath is a tax question Sami brings in from the previous episode: a small investor pays tax on a listed-company dividend where an owner above the ten per cent threshold receives it tax-free. That adds a layer to the trap — gross and net returns diverge differently for different owners.
6. Bessenbinder: why thirty stocks is not enough
This is the episode’s strongest research-based argument, and it is the reason to read the article to the end.
Classical teaching says roughly 30 stocks is enough for diversification — after that, company-specific risk is largely gone. Bessenbinder’s research breaks this, and the episode puts it as: only a few per cent of stocks produce the entire index return.
That is a correct and checkable result. Hendrik Bessenbinder’s work (Do Stocks Outperform Treasury Bills?, 2018) showed that all net wealth creation in the US stock market over decades comes from a very small share of firms — the majority of individual stocks underperform short-term Treasury bills over their lifetimes.
The conclusion is not what you would guess. It is not “pick the winners”. It is the opposite, and the episode puts it in a good image: you have to have an ETF net, because otherwise those few per cent slip out through the mesh of the trap. If the return depends on rare exceptions and you pick 30 stocks, the most likely outcome is not an average return but a below-average one.
This connects to the episode’s other debate, growth versus value. It refers to Ernst Grönblom’s position that winners keep winning, and notes that as technology has developed the effect has clearly strengthened. Apple is its own example here: for years by far the largest position, and — in the teller’s own words — originally bought by luck.
Alongside runs an observation that keeps the framing honest: the episode floats the question of whether anything stops this short of a Standard Oil-type break-up. That is an open question, not a forecast.
And one more trap is named separately: a fast-growing economy does not mean fast-rising share prices. China is the episode’s example — economic growth has not transferred to the shareholder. The United States has been the opposite case.
7. Costs, and the heretical concession
On costs the episode has a clear division of labour, and it is more useful than agreement would have been.
Juntunen’s position is traditional and strict, and he backs it with a calculation worth remembering: when a fee is measured against the return rather than against capital, it can suddenly be 33 or 50 per cent of the whole return. That is the number a percentage fee hides.
Mähkä’s position is one she herself calls heretical: she has started telling people that the most important thing is to start. Tolerable costs and a structure you can actually manage yourself produce a better outcome than waiting for the perfect solution. She gives the example of a friend who wanted to buy index funds — and for whom optimisation became the obstacle.
Both stay in the same world, though: it is hard to go badly wrong in index funds, as long as it is not some monstrously expensive packaged product. Low-cost ETFs are the foundation stone, and time diversification — monthly saving — is the structure in which you can hardly go wrong.
The defence of active funds stays conditional and narrow: one can make sense where the market cannot be bought as an index and where the manager has a genuine local edge. Petri Deryng’s Vietnam fund is mentioned as an example. The counter-example comes from the host himself.
8. Mistakes, said out loud
The character of the episode changes when all three tell their own blunder. That is the most valuable content for an article, because investment writing usually leaves this part out.
The host’s Russia blunder. Sami describes buying a Barings Eastern European fund during his London years. The position was not large, but when he wanted out he could not find the contact through whom to sell it. The lesson is not Russia risk but liquidity risk: an investment you cannot exit is a different product from the one you thought you bought.
Kone. One of the guests describes partly selling a Kone holding, using the word awful — Kone is to them a rare company on the Helsinki exchange, and they could not sell all of it. The reason for selling was not in the company but in China. And from this comes the episode’s best generalisation, straight out of Juntunen’s book: you cannot control the market, and the need for control is human. Even a good company’s fate can be beyond the reach of even the best.
(Reminder: this was recorded just before Henrik Ehrnrooth announced his departure, and the conversation does not refer to it.)
Seadrill. The meme stock of Juntunen’s early years — a topic on the Kauppalehti message boards, a company leasing oil rigs. The structure was fragile in a way the ratios did not show: when a single rig failed to find a charter, the whole equation fell apart, and the oil price was falling at the same time. It is a good example of operating leverage being a larger risk than financial leverage.
The rising-price illusion. In 2021 the speakers were repeatedly asked what the point of opening a securities account was, since shares only went up. Its counterpart is the episode’s coldest line: a price that has halved can halve again. A fall is not a discount unless the company is sound.
Related is the momentum discussion about Qt and Revenio — young investors’ favourites, approached blindly on the way up. The teller’s own resolution was to buy only once the fall had, in their judgement, overshot in the other direction. The phenomenon works both ways, and that is exactly the useful thing to learn from it.
9. Investing for a child, and why it is discussed as freedom
This is the warmest passage in the episode and at the same time its clearest practical advice.
The reasoning is structural rather than sentimental: investing for a child gives you perfect time diversification, because there are effectively 18 years and no reason to rush. Classical portfolio theory says the equity weighting should fall as a function of age — from which it follows that in a child’s portfolio it belongs high.
Mähkä’s own story is what makes the argument concrete. As a child she was given shares — the episode mentions Amer Sports, Orion and Wärtsilä among others — and with the proceeds from the sale of Merita, on the order of 30,000 markka, she had the deposit for a flat. Her own assessment is direct: it was decisive for her entire subsequent wealth.
And then the part that matters more than the shares: what was decisive was not the gift of shares but what it made possible. She got out of mortgage debt relatively fast because house prices rose — and only after that could she save a great deal. Even a small nest egg when young changes everything that comes after it.
Connected to this is the equality observation carried over from the previous episode: through the equity savings account, as much is currently being saved for girls as for boys.
10. The mortgage, and an honest generational caveat
Two things are said about mortgages, and the second partly cancels the first. That is a good sign.
The defence: a mortgage is cheap leverage and forced saving. Repayment builds wealth even though it does not feel like saving. Rates move up and down, and a long term diversifies that over time.
The caveat: the market has been merciless lately, and the speakers name the generational phenomenon as applying to themselves: their generation bought homes at high prices under zero rates, and now prices have fallen and rates risen. It is not offered as a warning to others but as a description of their own position.
There is also one concrete rule of thumb that is easy to miss: if you intend to move within three years, buying does not pay — transfer tax alone eats roughly what you gain from owning rather than renting. The speaker tells this from their own London situation, where they were always about to leave within three years.
11. Equity savings account or securities account — and why the question is an obstacle
The episode identifies a problem larger, for getting started, than its solution: the choice between a securities account and an equity savings account stops people.
The reason is logical: the benefit of the equity savings account depends on what kind of shares you buy — it rewards dividend payers, because taxation is deferred until withdrawal. But that means before you have bought a single share you are supposed to know what kind of shares you want. The episode calls this absurd, and that is the right characterisation.
The practical position that follows: Finnish dividend payers into the equity savings account — and that is why one of the speakers has not opened one. They know they would buy “super-boring” dividend stocks into it, and that is not where their portfolio’s centre of gravity lies.
The episode also makes a side remark that is easy to skip past but is the most important one: an investor is an investor even without owning a single share. Fund investing is investing. Talk about equity savings accounts easily implies the opposite.
12. A portfolio is a garden, not a machine
The closing section answers what you do with a portfolio once the foundation is in place. The answer is unanimous, and it comes as an image that holds:
A portfolio is a garden, not an autopilot. It has to be tended to stay green.
Two qualifications make the image usable:
- “Buy and forget” is dangerous in direct equities, because industries now change fast. The episode uses the example of shares left in an account for years — the outcome is not good, and it makes no difference which account they sit in.
- The same rule does not apply in the same way to index funds, and that is precisely why they are praised: you can keep growing them for as long as you like.
And the thing said last, which investment guides say rarely: you are also allowed to reduce your risk level. Needs change, circumstances change, and portfolio theory says the same as a function of age. One of the speakers says they are at such a turning point themselves.
13. Biases: what knowing does not fix
The last section is the core territory of Juntunen’s book, and one passage in it is unusually well put.
The basic phenomena are familiar: confirmation bias — once we have chosen an investment we start looking for information that supports it — and anchoring. The episode states plainly that everyone does this to some degree, and that awareness therefore matters.
Sami offers an example from Market Wizards: one trader programmatically flipped his screen upside down so that the up-and-down bias would cancel out. It is funny, and it is also an admission that knowledge alone is not enough.
And here comes the episode’s most important meta-observation. Kahneman’s later book Noise deals with the bias blind spot: once we know the cognitive biases, we easily believe we are protected from them — and that belief becomes a new bias. What stays with the listener is the book’s image of shot dispersion on a target: accuracy and spread are different problems, and spread is the one nobody notices.
This ties the episode together better than any summary. Reading a book about biases does not remove the biases. Which is why every usable piece of advice in the episode is a structure rather than an insight: monthly saving, a crash plan made in advance, a low-cost ETF foundation, a forward-looking dividend yield — and starting.