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Austin Pryor

Austin Pryor

Founder and Publisher

Austin leads SMI, the newsletter business he founded in 1990. With more than 40 years of experience in the investment business, Austin provides overall direction to the organization while continuing to author many articles for the SMI newsletter and web site. Before founding SMI, Austin started and ran his own investment management firm, which ranked in the top 5% of all investment advisers in the U.S. during its first five years of operations. 

He is the author of the Sound Mind Investing Handbook, A Step-By-Step Guide to Managing Your Money from a Biblical Perspective, which enjoys the endorsements of numerous respected Christian teachers and has sold more than 100,000 copies.

Austin was once on staff with Campus Crusade for Christ, working directly with founder Bill Bright, helping to develop the ministry’s approach to working with high-capacity donors. He was a founding board member of Pro Athletes Outreach, a Christian training ministry to pro athletes and coaches of many sports, and The Christian Embassy, an outreach ministry to government and diplomatic officials in Washington, D.C.

Austin received an undergraduate degree in Banking and Finance from the University of Kentucky. He and his wife, Susie, have three adult sons and 10 grandchildren, and live in Louisville, Ky.

Most Recent Articles

Now Available: Personal Portfolio Tracker & Fund Performance Rankings With Data Through 6-30-20

We've updated SMI's Personal Portfolio Tracker and monthly Fund Performance Rankings with performance data through June 30, 2020.

• The Portfolio Tracker: The Tracker makes it possible to personalize SMI's fund rankings so you can easily apply our Fund Upgrading strategy to your 401(k), 403(b), or other retirement plan.

Our fund-performance database tracks the monthly returns of more than 25,000 traditional mutual funds and ETFs. The online Personal Portfolio Tracker is designed to filter that large amount of data and produce a concise report covering only the funds available in your plan(s).

If you're new to the Tracker, watch our introductory video.

• Fund Performance Rankings (FPR): The FPR report is a 38-page downloadable PDF file containing performance data and SMI's momentum rankings for more than 1,600 no-load traditional funds and ETFs.

The funds included in the FPR are selected based on asset size, brand familiarity, and brokerage availability.

Check page 2 to learn how to use the FPR report. Page 3 includes an overview of the 70+ risk categories that will help you compare "apples to apples." Page 4 has explanations of the various data-column headings.

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Feeling the Father’s Pleasure

This month marks a milestone for Sound Mind Investing — the celebration of our 30th anniversary! To God be the glory, great things He has done!
 
Much has changed here at SMI during those 30 years, but one thing remains constant: the motivation for doing what we do. Our reason for being is to encourage and enable our readers to become generous givers. This special anniversary is a great time to revisit this heartbeat of SMI.

In Matthew 28, Jesus commissioned his followers to an awesome task. “Go,” he told them, “and make disciples of all nations…teaching them to obey all that I have commanded you.” You might be surprised to learn that this “Great Commission” (as it has come to be known) is at the heart of what we do at Sound Mind Investing. Fulfilling Jesus’ Great Commission is the driving force behind our work.

Does that seem strange? This is, after all, a financial publication. We help people understand biblical principles for managing their money, earn good returns on their investments, and secure their financial future. We offer advice on such things as getting out of debt, building an emergency fund, saving for the future, and preparing for retirement. But to truly understand SMI, you need to know that I didn’t start this newsletter 30 years ago because I have a passion for helping Christians strengthen their financial foundations. Frankly, stronger financial foundations don’t mean much to me if they’re not accompanied by greater generosity. We want to help you have more so you can give more.

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An Upgrading Overview: Easy as 1-2-3

Why Upgrade?

SMI offers two primary investing strategies for “basic” members. They are different in philosophy, the amount of attention they require, and the rate of return expected from each. Our preferred investing strategy is called Fund Upgrading, and is based on the idea that if you are willing to regularly monitor your mutual-fund holdings and replace laggards periodically, you can improve your returns. While Upgrading is relatively low-maintenance, it does require you to check your fund holdings each month and replace funds occasionally. If you don’t wish to do this yourself, a professionally managed version of Upgrading is available.

SMI also offers an investing strategy based on index funds called Just-the-Basics (JtB). JtB requires attention only once per year. The returns expected from JtB are lower over time than what we expect (and have received) from Upgrading. JtB makes the most sense for those in 401(k) plans that lack a sufficient number of quality fund options to make successful Upgrading within the plan possible. Here are the funds and percentage allocations we recommend for our Just-the-Basics indexing strategy.

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Now Available: Personal Portfolio Tracker & Fund Performance Rankings With Data Through 5-31-20

We've updated SMI's Personal Portfolio Tracker and monthly Fund Performance Rankings with performance data through May 31, 2020.

• The Portfolio Tracker: The Tracker can personalize SMI's fund rankings to your specific situation, making it easier to apply our momentum-based Fund Upgrading strategy to your 401(k), 403(b), or other retirement plan.

Using the Tracker, you can filter the performance data of the 25,000+ funds we follow and produce a concise report covering only the funds available in your plan(s). If you're new to the online Tracker, watch our introductory video.

• Fund Performance Rankings (FPR): The FPR report is a 38-page downloadable PDF file containing the latest performance data — along with SMI's momentum rankings — for more than 1,600 no-load traditional funds and ETFs.

The funds included in the FPR are selected based on asset size, brand familiarity, and brokerage availability.

Check page 2 to learn how to use the FPR report. Page 3 includes an overview of the 70+ risk categories that will help you compare "apples to apples." Page 4 has explanations of the various data-column headings.

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A Primer on Buying Gold Bullion

Gold has a centuries-long history of serving as money because of several key characteristics: it is durable, scarce, divisible into smaller units, easily transported, and readily hidden or stored.

As discussed in this month’s cover article, we think the best approach for most SMI investors is to invest in gold using the guidance provided by our DAA strategy. But some investors may desire to have a small amount of physical gold in addition to their DAA holdings.

The more concerned a person is about the debasement of the U.S. dollar, the more attractive owning some amount of the actual metal becomes. With that in mind, here are three ways to buy physical gold. (Because owning physical gold is more involved than trading a gold ETF, the options described below are best suited for longer-term holdings.)

Gold coins

For most investors who want a relatively small amount of physical gold, we recommend buying coins over bars or digital gold (discussed later). Investors often wonder which type of coin is best, but the answer is really any of them, because you’re paying for the actual gold content with any such coin. That content just happens to vary slightly from type to type. (We’re excluding from this discussion numismatic — i.e., collectible — coins. Their value depends on their rarity and condition rather than their gold content.)

A South African Krugerrand, for example, contains one “troy ounce” of gold (precious metals usually are measured in troy ounces; a troy ounce weighs about 10% more than a regular ounce). A Krugerrand actually weighs more than one troy ounce due to the addition of a small amount of copper to add durability. As a result, the coin is only 91.67% pure gold (22 karats).

Don’t let that confuse you — a Krugerrand (named for 19th-century South African leader Paul Kruger) still contains a full troy ounce of gold. As the table shows, while fineness of the Krugerrand is lower than the prettier (due to its purity) Canadian Maple Leaf, the gold content in the two coins is nearly identical. These are best left to those with specialized knowledge and experience. (Both Krugerrands and Maple Leafs are available in silver versions as well.)

Pure gold coins, such as the Maple Leaf, the American Gold Buffalo, and others from various countries, normally sell at higher premiums due to their popularity. So be aware of this as you evaluate the options. (The premium is the difference between the spot price and the price dealers charge — in other words, their markup.) American Gold Eagles, although not pure, also tend to be popular enough to command high premiums. Krugerrands usually are the best deal in terms of actual gold per dollar spent, sometimes dramatically so.

As a general rule, the smaller the coin, the higher the markup over the spot price. (The “spot” price, which can change minute-by-minute, is the current market price of gold where it is being sold for cash and delivered immediately. The terms “spot price” and “cash price” are used interchangeably.) A 1 oz. coin typically will have a lower markup than a ½ oz. coin, which will be lower than a ¼ oz., and so forth. The smallest generally is a one-tenth ounce coin, which will normally carry the highest markup over gold’s spot price. This is because smaller coins aren’t as profitable for dealers, so they charge a larger premium to compensate.

The most popular gold-bullion coins are shown in the table below. Under normal conditions, premiums for 1 oz. gold-bullion coins are in the 2%-4% range, but lately some markups have topped 6% as the demand for coins has increased and supplies have dwindled. At times, demand may be so heavy that certain coins are unavailable.

As you begin your price research, you need to know at least three important things about the market for gold-bullion coins:

  • Gold coins can be sold by anyone. Dealers are not regulated, and there are no licensing requirements. So it’s “buyer beware” all the way.
     
  • Gold coin prices aren’t standardized. This means it’s not uncommon for inexperienced investors to overpay. Make sure the price you pay is competitive (i.e., shop around!).
     
  • Gold coin prices fluctuate throughout the day along with the spot price of gold. On a volatile day, this can make it challenging to compare dealer prices for the same coin. It’s better to focus instead on a dealer’s premium, which doesn’t change as frequently.

Importantly, you don’t necessarily want to use a dealer offering a significantly lower price than everyone else! Focus on reputable dealers offering reasonable prices instead. Monex and Fidelitrade are two good places to start your search.

Gold bars

Gold bars tend to be more complicated to buy and harder to resell than gold coins, so we don’t consider them as attractive as coins. An exception would be if you intend to make a substantial purchase.

The standard industry unit for gold bars is 10 troy ounces. At current price levels, that would be about $18,000 per bar. Bars sell at a smaller premium (i.e., markup) than coins do, so there’s an opportunity for some savings when making a sizable investment.


(Click Chart to Enlarge)

Digital gold

“Digital” describes the method of making transactions. You take direct ownership of actual physical gold

by making purchases online via a brokerage-type account set up with a digital-gold company. The company stores your gold holdings in secure vaults. Your online account shows how many grams or ounces you own, along with any cash balance available to make additional purchases (you can add cash to your account via a bank transfer at any time).

Buying gold in this way is as convenient as using an online brokerage account to invest in stocks or mutual funds. However, making sense of the account statements can be tricky and the monthly storage fees add up.

There are several players in the digital gold market, but the leaders are GoldMoney (which SMI has reviewed before), SmartMetals, OneGold, and the United Precious Metals Association (UPMA).

Here are the main features of GoldMoney’s service — details may vary at other firms:

  • Ownership Rights
    The gold in your account is legally your gold held in your name.
     
  • No Counterparty Risk
    Your direct ownership rights mean you are not dependent on GoldMoney’s financial solvency for protection. If for any reason the company failed, your gold would be delivered to you.
     
  • No Minimum Purchases
    You can buy and store in amounts that fit your particular strategy (whether little or much). This ability to make “fractional” purchases frees you from the standard denominations found with gold coins/bars, and makes the accounts ideal for dollar-cost-averaging.
     
  • Low Commissions
    The fee for each purchase or sale is 0.5% of the transaction amount (or 1% if you use a limit order).
     
  • Storage Fees
    The gold is stored in your choice of high-security vaults (located in North America, Europe, and Asia). The fee for this is as low as 0.12% of the value of your gold holdings per year, but the minimum is $10/month (includes the cost of insurance).
     
  • Fully Insured
    All metals holdings are insured against theft through a policy with the well-established Brink’s Company (Brink’s also handles vault security).
     
  • Regular, Mandated Audits
    Quarterly reports from the vault operators and database auditor (companies independent from GoldMoney) verify that the amount of gold shown on your statement is, indeed, in the vaults. Further, a “Big Four” accounting firm (KPMG) provides an annual audit and report.
     
  • Option of taking physical possession
    At any time, you have the option to pick up your gold from a vault or have it delivered to you (fees may apply).

These services have a lot of appeal. However, be sure to carry out your own careful investigation of GoldMoney (or any of the other digital gold companies) to gain a satisfactory comfort level.

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Don’t Let Challenging Times Cause You to Forget What You Have Learned from Experience

The COVID-19 pandemic has introduced a wild card unlike any most investors have ever seen. Unemployment has surged, businesses have closed (perhaps never to reopen), and Washington is debating various new stimulus measures, having already showered trillions of dollars on individuals, businesses, hospitals, and local governments.

As for the stock market, after closing at an all-time high on February 19, the S&P 500 closed -34% lower just 16 trading sessions later. Never had it fallen so far, so fast. Despite a dramatic rebound in May, the S&P 500 was still -12.5% below its high.

Investment news headlines swing wildly be­tween hope that life will return to some semblance of nor­mal soon and pessimism that this could all drag on for many more months — perhaps years. It all seems to hinge on the direction of infection-rate curves, vaccine trials, and the size of the latest emergency measures by global governments and central banks.

Through it all, we’ve been heartened by the performance of our Dynamic Asset Allocation strategy. Even after the market’s recent rebound, as of this writing, the stock market is still down -7.3% for the year, while DAA is up +2.2%. Not surprisingly, DAA has also charted a much smoother path through the chaos, never dropping below -10% in 2020 (as opposed to the market’s much larger losses at the lows). Still, even the most experienced investors could be forgiven if they’re checking their performance more often than usual these days.

If you’re finding the journey especially challenging right now, let me share what encourages me in the midst of all this uncertainty.

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Taking Market Turbulence in Stride

Stock prices can move suddenly and sharply, as the early months of 2020 have emphatically shown. Your holdings can take a beating, make a remarkable recovery, and then get pummeled again — all in the space of a few weeks (or even just a few days!).

How can you remain calm when the financial world periodically enters such times of temporary insanity? Here are our suggestions.

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Now Available: Personal Portfolio Tracker & Fund Performance Rankings With Data Through 4-30-20

SMI's Personal Portfolio Tracker and monthly Fund Performance Rankings are now updated with performance data through April 30, 2020.

• The Portfolio Tracker: The Tracker can personalize SMI's fund rankings to your specific situation, making it easier to apply our momentum-based Fund Upgrading strategy to your 401(k), 403(b), or other retirement plan.

Using the Tracker, you can filter the performance data of the 25,000+ funds we follow and produce a concise report covering only the funds available in your plan(s). If you're new to the online Tracker, watch the introductory video.

We typically update the Personal Portfolio Tracker with the latest month-end data from the research firm Morningstar on the 8th of the new month, except when the 8th falls on a weekend. We wait until at least the 8th because Morningstar's database is subject to revisions during the first few days of the month. By the 8th, the previous month's performance numbers are reliable.

• Fund Performance Rankings (FPR): The FPR report is a 38-page downloadable PDF file containing the latest performance data — along with SMI's momentum rankings — for more than 1,600 no-load traditional funds and ETFs.

The funds included in the FPR are selected based on asset size, brand familiarity, and brokerage availability.

Check page 2 to learn how to use the FPR report. Page 3 includes an overview of the 70+ risk categories that will help you compare "apples to apples." Page 4 has explanations of the various data-column headings.

Continue Reading

Trusting God to Work Things Together for Good

A malignant virus none of us had heard of a few months ago has left millions unemployed and many families deeply stressed. In such difficult circumstances, trusting in God’s faithfulness can be a daily battle.
 
In past difficult times, many readers have been encouraged by a story I first recounted in The SMI Handbook. We’re republishing that testimony of the Lord’s faithfulness below. As you read, be encouraged that our God is “invariably loving, inevitably faithful, and absolutely worthy of all your confidence.”
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When in Doubt, Take the Safe Route

Do you become anxious when circumstances compel you to make important investing decisions? You’re not alone. If our reader comments are any indication, there’s a high degree of financial fretting going on out there!

There’s a recurring theme in the comments we’re hearing right now:

  1. There’s so much at stake. I’d hate to make the wrong decision.
     
  2. I’m not sure I know what I’m doing. I’d hate to make the wrong decision.
     
  3. Can I fully trust SMI’s strategies? I’d hate to make the wrong decision.

What is the “wrong” decision, anyway? If you’re thinking it’s like saying 2+2=5, you have a misunderstanding about investing. Investing decisions can’t be made with mathematical certainty. Perhaps it’s because financial markets deal with numbers (e.g., “a 50-point advance,” “a 6% return”) that we get the idea that investing is somehow like scientific research: add up all the facts and you arrive at the correct solution.

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