Any Dangerous Boglehead Group-Think?
- William Million
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Any Dangerous Boglehead Group-Think?
Any Bogleheads ideas repeatedly espoused here . . . to the extent that group-think occurs? That is, "the psychological phenomenon that occurs within a group of people, in which the desire for harmony or conformity in the group results in an incorrect or deviant decision-making outcome." (Wikipedia)
A few possibilities:
- Faith in the Small Value Tilt. As Taylor demonstrated in a post on Sunday, small growth trounced small value over the past 15 years. Yet huge numbers of Bogleheads seem to believe fervently that small value will, over the long run, goose their portfolios.
- Ultra-Low SWR. Spendthrift Bogleheads seem to be competing with each other to declare an ever-lower SWR. It has now crept down to the 2-3% range. At 2%, you get 50 years with no interest!
Don't get me wrong: This is the best investing site out there. However, there is always danger of group-think in a highly cohesive group.
A few possibilities:
- Faith in the Small Value Tilt. As Taylor demonstrated in a post on Sunday, small growth trounced small value over the past 15 years. Yet huge numbers of Bogleheads seem to believe fervently that small value will, over the long run, goose their portfolios.
- Ultra-Low SWR. Spendthrift Bogleheads seem to be competing with each other to declare an ever-lower SWR. It has now crept down to the 2-3% range. At 2%, you get 50 years with no interest!
Don't get me wrong: This is the best investing site out there. However, there is always danger of group-think in a highly cohesive group.
Last edited by William Million on Tue Oct 15, 2013 7:10 pm, edited 1 time in total.
Re: Any Dangerous Boglehead Group-Think?
Opinions on your two examples are very diverse. That doesn't sound like group-think to me.
Re: Any Dangerous Boglehead Group-Think?
Faith in the 3-fund total market funds portfolio.
Faith that market timing does not work.
Faith that whole life insurance is generally bad.
Faith that Lump-sum investing is a whole lot better than dollar-cost averaging all the time.
Faith that one needs some TIPS to diversity their bond allocation.
Faith that market timing does not work.
Faith that whole life insurance is generally bad.
Faith that Lump-sum investing is a whole lot better than dollar-cost averaging all the time.
Faith that one needs some TIPS to diversity their bond allocation.
- William Million
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Re: Any Dangerous Boglehead Group-Think?
When you have 5 successive posts in a thread agreeing on an idea far outside the investing mainstream - and quite apart from anything John Bogle believes in - you have, arguably, mutually-reinforcing group-think. Inevitable on a site like this, but also something each investor should be conscious of.Ged wrote:Opinions on your two examples are very diverse. That doesn't sound like group-think to me.
- Noobvestor
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Re: Any Dangerous Boglehead Group-Think?
The idea that US-only investing gets one global exposure, and that ex-US investing is expensive and risky in a way that isn't compensated is persistent among some factions.
But ... now I'll play contrarian/group thinker
The low-SWR is simply a byproduct of pretty straightforward math: bond returns at near-all-time lows (around zero real) and expected stock returns (using normal metrics like P/E 10) also relatively low. The latter is up for debate, but anyone with a healthy slug of bonds needs to be realistic about SWRs being likely lower than historical.
Market timing can't work in aggregate, can it?
Whole life insurance ... *shrug*
Lump-sum is only statistically advantageous overall (and demonstrably so if we assume slow growth over long periods), and I think most people know that, so that may be a straw man.
Ah TIPS, well, most of our liabilities for most people are going to go up with inflation, so it just makes sense, right? But on the flip side: they didn't even exist in the US until recently (I Bonds did, though) so clearly a lot of folks got by without them too
But ... now I'll play contrarian/group thinker
Plenty of people don't believe Small/Value will persist. Those of us tilting that way (I hope) also understand that it's either a risk/diversification story (so more risk but more expected return and exposure to HmL and SmB) or a behavioral story (in which case we should be no worse off than going total-stock, except slight expense/tax increase).William Million wrote: - Faith in the Small Value Tilt. As Taylor demonstrated in a post on Sunday, small growth trounced small value over the past 15 years. Yet huge numbers of Bogleheads seem to believe fervently that small value will, over the long run, goose their portfolios.
- Ultra-Low SWR. Spendthrift Bogleheads seem to be competing with each other to declare an ever-lower SWR. It has now crept down to the 2-3% range. At 2%, you get 50 years with no interest
The low-SWR is simply a byproduct of pretty straightforward math: bond returns at near-all-time lows (around zero real) and expected stock returns (using normal metrics like P/E 10) also relatively low. The latter is up for debate, but anyone with a healthy slug of bonds needs to be realistic about SWRs being likely lower than historical.
Can the three-fund portfolio really fail to beat most strategies (e.g. active stock picking, active mutual funds, etc...)? Maybe bonds will prove to be the downfall of portfolios for the next few decades, in which case the two-fund will look nice in retrospect. Hard to imagine a scenario though where a three-fund loses to the average non-Boglehead investor though, so help paint me that picture?livesoft wrote:Faith in the 3-fund total market funds portfolio.
Faith that market timing does not work.
Faith that whole life insurance is generally bad.
Faith that Lump-sum investing is a whole lot better than dollar-cost averaging all the time.
Faith that one needs some TIPS to diversity their bond allocation.
Market timing can't work in aggregate, can it?
Whole life insurance ... *shrug*
Lump-sum is only statistically advantageous overall (and demonstrably so if we assume slow growth over long periods), and I think most people know that, so that may be a straw man.
Ah TIPS, well, most of our liabilities for most people are going to go up with inflation, so it just makes sense, right? But on the flip side: they didn't even exist in the US until recently (I Bonds did, though) so clearly a lot of folks got by without them too
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe
Re: Any Dangerous Boglehead Group-Think?
Faith that your IPS is right and doesn't need to change, even if there is a zero interest rate policy or if PE ratios are at record highs.
Warning: I am about 80% satisficer (accepting of good enough) and 20% maximizer
Re: Any Dangerous Boglehead Group-Think?
The only group think I can come up with on here that is 100% accepted as law is "Stay the course".
Now, was this the right move for the captain of the Titanic? I guess time will tell.
Now, was this the right move for the captain of the Titanic? I guess time will tell.
Re: Any Dangerous Boglehead Group-Think?
Faith that the Total Bond Market Fund is the one and only way to invest in the bond market.livesoft wrote:Faith in the 3-fund total market funds portfolio.
Faith that market timing does not work.
Faith that whole life insurance is generally bad.
Faith that Lump-sum investing is a whole lot better than dollar-cost averaging all the time.
Faith that one needs some TIPS to diversity their bond allocation.
Faith that the only way to even slightly increase risk is thru the equity market.
Faith that past performance is totally worthless, and one should rely on ??? in making financial decisions.
Faith that the most effective way to discredit any idea one disagrees with is to call it "market timing".
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Re: Any Dangerous Boglehead Group-Think?
I think we have different definition of dangerous.
I consider the following dangerous from a retirement planning: putting it all on red, buying lottery tickets, etc. Those has a real chance of ending up with nothing.
Betting small value will get you +2% yield when in fact will net you -1% isn't too dangerous.
I consider the following dangerous from a retirement planning: putting it all on red, buying lottery tickets, etc. Those has a real chance of ending up with nothing.
Betting small value will get you +2% yield when in fact will net you -1% isn't too dangerous.
Re: Any Dangerous Boglehead Group-Think?
Did any Boglehead actually not try to time the bond market in the past 2 years?Munir wrote:Faith that the most effective way to discredit any idea one disagrees with is to call it "market timing".livesoft wrote: Faith that market timing does not work.
I survived the Great Bond Crash of 2013!
Re: Any Dangerous Boglehead Group-Think?
I don't know the answer to this question (are we susceptible to the dangers of groupthink?), but commend the OP as it's a good question that we should chew over. My own knee-jerk response would be that Boglehead type investing is very risky and messy but less so than anything else. Is that the result of groupthink? Maybe or maybe not. I do agree that while I've made peace that indexing and allocating seems to be as good as it gets, I do wonder sometimes if there isn't something better that gets crowded out or shouted out when brought up here.
- William Million
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Re: Any Dangerous Boglehead Group-Think?
I moved money to 5-year CDs instead of bonds. I don't know if you call that market-timing.sharke wrote:Did any Boglehead actually not try to time the bond market in the past 2 years?Munir wrote:Faith that the most effective way to discredit any idea one disagrees with is to call it "market timing".livesoft wrote: Faith that market timing does not work.
Re: Any Dangerous Boglehead Group-Think?
It's a logical fallacy to dismiss commonly held points of view as "group think" or "faith" when the other option is that they are held because of reasoned conclusions. How do you know which motivation people have when you read their posts.
Leonard |
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Market Timing: Do you seriously think you can predict the future? What else do the voices tell you? |
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If employees weren't taking jobs with bad 401k's, bad 401k's wouldn't exist.
- William Million
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Re: Any Dangerous Boglehead Group-Think?
The question is: Would a Boglehead who does not read this forum still believe in the idea?leonard wrote:It's a logical fallacy to dismiss commonly held points of view as "group think" or "faith" when the other option is that they are held because of reasoned conclusions. How do you know which motivation people have when you read their posts.
Re: Any Dangerous Boglehead Group-Think?
Faith in Hero worshiping.
Faith in valuation does not matter.
Faith in valuation does not matter.
Re: Any Dangerous Boglehead Group-Think?
Some people have posted in various livesoft polls that they didn't make any changes, but some may say they didn't make any changes even though they actually did. It is the internet after all.sharke wrote:Did any Boglehead actually not try to time the bond market in the past 2 years?Munir wrote:Faith that the most effective way to discredit any idea one disagrees with is to call it "market timing".livesoft wrote: Faith that market timing does not work.
http://www.bogleheads.org/forum/viewtop ... w=viewpoll
Warning: I am about 80% satisficer (accepting of good enough) and 20% maximizer
Re: Any Dangerous Boglehead Group-Think?
I don't see how anyone could imply that Boglehead Group-Think prevails on this forum, when so much divergence of opinion prevails. For example,
Lump-sum investing versus dollar cost averaging
One hundred percent TIPS versus no TIPS or twenty percent TIPS or fifty percent TIPS
Foreign investing versus Domestic Investing or something in between.
High yield fixed Income (Rick) versus no high yield fixed income (Larry)
Commodities (Larry) versus no commodities (Rick)
Tastes good versus less filling
Lump-sum investing versus dollar cost averaging
One hundred percent TIPS versus no TIPS or twenty percent TIPS or fifty percent TIPS
Foreign investing versus Domestic Investing or something in between.
High yield fixed Income (Rick) versus no high yield fixed income (Larry)
Commodities (Larry) versus no commodities (Rick)
Tastes good versus less filling
Gordon
Re: Any Dangerous Boglehead Group-Think?
The Bogleheads are an example of the group thinking rather than groupthink.
Groupthink applies to groups whose members converge in their thinking, all individuals think about the major issues in the same way, no one deviates, and unorthodox ideas are rejected.
Group thinking, in contrast, is crowdsourcing of decision making where many diverse members of the group contribute to formulating the truth.
Groupthink is more likely to emerge in face-to-face environments, where people are brought together by a necessity (e.g., employment), and some hierarchy exists where the boss's opinions tend to dominate.
The Bogleheads, on the other hand, have numerous gates protecting them from becoming a uniformly thinking entity. To start, it's an Internet-based forum devoid of the face-to-face social influences that promote group convergence. There are no bosses and subordinates; people are free to participate or abstain as they wish. Newcomers with good ideas are welcome. The regulars with unconventional views are being listened to and respected. As a group, the Bogleheads are very astute and quickly catch mistakes, errors, nonsense, and malice. And most importantly, the underlying Bogleheads principles are based not on faith but on mathematics.
Mathematically (arithmetically, actually):
- low cost funds perform better than high-cost funds -- in the absence of other information, and there is no useful information
- broad-based funds are less risky than narrowly-defined funds
- investment money are left after expenses are subtracted from income, thus reducing expenses leaves more money to invest.
For many other investment aspects, diverse opinions exist and are respected. Some use international equities for diversification, others don't; some tilt or slice-and-dice, others choose simpler approaches; some build bond/TIPS ladders, others take it easy with TIPS funds.
The most important divergence is in the underlying approach to investing. While most Bogleheads base it on the asset allocation and rebalancing, an equally respectable approach is creating a Liability Matching Portfolio and a Risk Portfolio. This is far far from group think.
Where the idea of the Bogleheads groupthink may come from? Perhaps, some new people see the Forum as an opportunity for their business development (insurance, advising, investing). Perhaps, some new people cannot easily refocus from their old individual-stock market-timing ways. Perhaps, newcomers raise ideas that have been discussed and discarded in the past, many times. It's easy to put a label "groupthink" on a group that does not accept one's ideas and opinions. But a label does not make a groupthink.
The Bogleheads are a model of group thinking that provides tremendous advantages of discussing individual finances in the open and providing a group advice that can potentially be challenged or enhanced by hundreds highly knowledgeable members of the group.
Victoria
Groupthink applies to groups whose members converge in their thinking, all individuals think about the major issues in the same way, no one deviates, and unorthodox ideas are rejected.
Group thinking, in contrast, is crowdsourcing of decision making where many diverse members of the group contribute to formulating the truth.
Groupthink is more likely to emerge in face-to-face environments, where people are brought together by a necessity (e.g., employment), and some hierarchy exists where the boss's opinions tend to dominate.
The Bogleheads, on the other hand, have numerous gates protecting them from becoming a uniformly thinking entity. To start, it's an Internet-based forum devoid of the face-to-face social influences that promote group convergence. There are no bosses and subordinates; people are free to participate or abstain as they wish. Newcomers with good ideas are welcome. The regulars with unconventional views are being listened to and respected. As a group, the Bogleheads are very astute and quickly catch mistakes, errors, nonsense, and malice. And most importantly, the underlying Bogleheads principles are based not on faith but on mathematics.
Mathematically (arithmetically, actually):
- low cost funds perform better than high-cost funds -- in the absence of other information, and there is no useful information
- broad-based funds are less risky than narrowly-defined funds
- investment money are left after expenses are subtracted from income, thus reducing expenses leaves more money to invest.
For many other investment aspects, diverse opinions exist and are respected. Some use international equities for diversification, others don't; some tilt or slice-and-dice, others choose simpler approaches; some build bond/TIPS ladders, others take it easy with TIPS funds.
The most important divergence is in the underlying approach to investing. While most Bogleheads base it on the asset allocation and rebalancing, an equally respectable approach is creating a Liability Matching Portfolio and a Risk Portfolio. This is far far from group think.
Where the idea of the Bogleheads groupthink may come from? Perhaps, some new people see the Forum as an opportunity for their business development (insurance, advising, investing). Perhaps, some new people cannot easily refocus from their old individual-stock market-timing ways. Perhaps, newcomers raise ideas that have been discussed and discarded in the past, many times. It's easy to put a label "groupthink" on a group that does not accept one's ideas and opinions. But a label does not make a groupthink.
The Bogleheads are a model of group thinking that provides tremendous advantages of discussing individual finances in the open and providing a group advice that can potentially be challenged or enhanced by hundreds highly knowledgeable members of the group.
Victoria
Last edited by VictoriaF on Tue Oct 15, 2013 9:40 pm, edited 3 times in total.
Inventor of the Bogleheads Secret Handshake |
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Re: Any Dangerous Boglehead Group-Think?
"Gold does not have a valuable place in a balanced portfolio".
In theory, theory and practice are identical. In practice, they often differ.
Re: Any Dangerous Boglehead Group-Think?
I didn't. Bet lots of others didn't, too.sharke wrote:Did any Boglehead actually not try to time the bond market in the past 2 years?Munir wrote:Faith that the most effective way to discredit any idea one disagrees with is to call it "market timing".livesoft wrote: Faith that market timing does not work.
Re: Any Dangerous Boglehead Group-Think?
So the BH's forum is a kind of Alcoholics Anonymous program?William Million wrote:The question is: Would a Boglehead who does not read this forum still believe in the idea?leonard wrote:It's a logical fallacy to dismiss commonly held points of view as "group think" or "faith" when the other option is that they are held because of reasoned conclusions. How do you know which motivation people have when you read their posts.
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Re: Any Dangerous Boglehead Group-Think?
Jfet wrote:The only group think I can come up with on here that is 100% accepted as law is "Stay the course".
Now, was this the right move for the captain of the Titanic? I guess time will tell.
Stay the course applies after an EF is in place
an IPS and an asset allocation that one
can live with.
It does not apply when you are
reckless
arrogant
negligent
Re: Any Dangerous Boglehead Group-Think?
A more accurate "group think"is everywhere else in the DIY investment world, "group thinking" that one can beat the market by timing, trading, trying to find that gem-manager-individual stock-investment newsletter or broker.
Never in the history of market day-traders’ has the obsession with so much massive, sophisticated, & powerful statistical machinery used by the brightest people on earth with such useless results.
Re: Any Dangerous Boglehead Group-Think?
there are plenty of dissenting opinions on this board on just about every subject. I wouldn't worry about it.
Re: Any Dangerous Boglehead Group-Think?
there are plenty of dissenting opinions on this board on just about every subject. I wouldn't worry about it.
Re: Any Dangerous Boglehead Group-Think?
Nice redirect. and again you are making it about the boglehead. The real question - do they espouse tenets because of the "groupthink" or "faith" you ascribe. Or, do they arrive at the conclusion.William Million wrote:The question is: Would a Boglehead who does not read this forum still believe in the idea?leonard wrote:It's a logical fallacy to dismiss commonly held points of view as "group think" or "faith" when the other option is that they are held because of reasoned conclusions. How do you know which motivation people have when you read their posts.
You put forth no argument about why you believe bogleheads are or are not unreasoned in their conclusions or simple groupthink automatons. You simply raise an ad hominem and attempt to have it carry your point.
Leonard |
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Market Timing: Do you seriously think you can predict the future? What else do the voices tell you? |
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If employees weren't taking jobs with bad 401k's, bad 401k's wouldn't exist.
Re: Any Dangerous Boglehead Group-Think?
I agree with all the posts on this topic.
Never underestimate the power of the force of low cost index funds.
Re: Any Dangerous Boglehead Group-Think?
You've asked Bogleheads to say whether there is groupthink among them and you have many answers. Time now for your answer.William Million wrote:Any Bogleheads ideas repeatedly espoused here . . . to the extent that group-think occurs? That is, "the psychological phenomenon that occurs within a group of people, in which the desire for harmony or conformity in the group results in an incorrect or deviant decision-making outcome." (Wikipedia)
A few possibilities:
- Faith in the Small Value Tilt. As Taylor demonstrated in a post on Sunday, small growth trounced small value over the past 15 years. Yet huge numbers of Bogleheads seem to believe fervently that small value will, over the long run, goose their portfolios.
- Ultra-Low SWR. Spendthrift Bogleheads seem to be competing with each other to declare an ever-lower SWR. It has now crept down to the 2-3% range. At 2%, you get 50 years with no interest!
Don't get me wrong: This is the best investing site out there. However, there is always danger of group-think in a highly cohesive group.
My answer: I am not in the group out of a desire for harmony or conformity. I’m in it because its principles have worked for me and for others.
Last edited by Fallible on Tue Oct 15, 2013 10:58 pm, edited 1 time in total.
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
Re: Any Dangerous Boglehead Group-Think?
Perhaps the most egregious example of groupthink is that active managers of mutual funds are unworthy. And, if you give an example of where they are (worthy, that is), it's either chalked up to luck (as in, anybody can hit the dart board from time-to-time and score a bulls-eye) or a statistical aberration. The concept that there might, just might, be good stock-pickers out there is considered heresy.
That's groupthink.
I respectfully submit some managers do, indeed, hire very talented people who earn their keep. They work hard, beat their indices, and have the "edge". But no matter, every time you point out a specific fund, or a manager, you get hooted down.
That's groupthink.
It's not dangerous, but it is, for want of a better word, groupthink.
That's groupthink.
I respectfully submit some managers do, indeed, hire very talented people who earn their keep. They work hard, beat their indices, and have the "edge". But no matter, every time you point out a specific fund, or a manager, you get hooted down.
That's groupthink.
It's not dangerous, but it is, for want of a better word, groupthink.
Re: Any Dangerous Boglehead Group-Think?
This is a remarkably good contribution to the forum, Victoria.VictoriaF wrote:The Bogleheads are an example of the group thinking rather than groupthink.
Groupthink applies to groups whose members converge in their thinking, all individuals think about the major issues in the same way, no one deviates, and unorthodox ideas are rejected.
Group thinking, in contrast, is crowdsourcing of decision making where many diverse members of the group contribute to formulating the truth.
Groupthink is more likely to emerge in face-to-face environments, where people are brought together by a necessity (e.g., employment), and some hierarchy exists where the boss's opinions tend to dominate.
The Bogleheads, on the other hand, have numerous gates protecting them from becoming a uniformly thinking entity. To start, it's an Internet-based forum devoid of the face-to-face social influences that promote group convergence. There are no bosses and subordinates; people are free to participate or abstain as they wish. Newcomers with good ideas are welcome. The regulars with unconventional views are being listened to and respected. As a group, the Bogleheads are very astute and quickly catch mistakes, errors, nonsense, and malice. And most importantly, the underlying Bogleheads principles are based not on faith but on mathematics.
Mathematically (arithmetically, actually):
- low cost funds perform better than high-cost funds -- in the absence of other information, and there is no useful information
- broad-based funds are less risky than narrowly-defined funds
- investment money are left after expenses are subtracted from income, thus reducing expenses leaves more money to invest.
For many other investment aspects, diverse opinions exist and are respected. Some use international equities for diversification, others don't; some tilt or slice-and-dice, others choose simpler approaches; some build bond/TIPS ladders, others take it easy with TIPS funds.
The most important divergence is in the underlying approach to investing. While most Bogleheads base it on the asset allocation and rebalancing, an equally respectable approach is creating a Liability Matching Portfolio and a Risk Portfolio. This is far far from group think.
Where the idea of the Bogleheads groupthink may come from? Perhaps, some new people see the Forum as an opportunity for their business development (insurance, advising, investing). Perhaps, some new people cannot easily refocus from their old individual-stock market-timing ways. Perhaps, newcomers raise ideas that have been discussed and discarded in the past, many times. It's easy to put a label "groupthink" on a group that does not accept one's ideas and opinions. But a label does not make a groupthink.
The Bogleheads are a model of group thinking that provides tremendous advantages of discussing individual finances in the open and providing a group advice that can potentially be challenged or enhanced by hundreds highly knowledgeable members of the group.
Victoria
Thank you,
Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
Re: Any Dangerous Boglehead Group-Think?
Excellent post! I'll see you soon at BH12 in Group Thinking Ville.VictoriaF wrote:
The Bogleheads are an example of the group thinking rather than groupthink.
Groupthink applies to groups whose members converge in their thinking, all individuals think about the major issues in the same way, no one deviates, and unorthodox ideas are rejected.
Group thinking, in contrast, is crowdsourcing of decision making where many diverse members of the group contribute to formulating the truth.
Billy
Re: Any Dangerous Boglehead Group-Think?
I can concur with this compliment (and Paul's above), but can only wish I could join you all in Group Thinking Ville at BH12.BillyG wrote:Excellent post! I'll see you soon at BH12 in Group Thinking Ville.VictoriaF wrote:
The Bogleheads are an example of the group thinking rather than groupthink.
Groupthink applies to groups whose members converge in their thinking, all individuals think about the major issues in the same way, no one deviates, and unorthodox ideas are rejected.
Group thinking, in contrast, is crowdsourcing of decision making where many diverse members of the group contribute to formulating the truth.
Billy
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
Re: Any Dangerous Boglehead Group-Think?
Without seeming heretical, might I posit that "group thinking" and "groupthink" are merely synonyms. Using Victoria's definition, if a group of like-minded flat-earthers all pile on, well, then, the earth is flat. And that's groupthink. If a group of like-minded flat-earthers don't pile on, the earth is still flat, just open to discussion? But Columbus doesn't get funding.
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Re: Any Dangerous Boglehead Group-Think?
Whenever someone poses a buy or sell situation within a segment of the market, someone quickly responds with: "That is already priced into the market" or "What do you know that the market does not know?".
We have seen our share of market bubbles in the past 10-15 years where the "smart money" was not too smart.
We have seen our share of market bubbles in the past 10-15 years where the "smart money" was not too smart.
Re: Any Dangerous Boglehead Group-Think?
Group thinking and group think use almost identical words but imply very different things. There are other similar cases. For example "X always talks uncertainly" implies that X is indecisive, whereas "X always talks about uncertainty" means that X is philosophically minded and is aware of the fundamental unpredictability of the world.john94549 wrote:Without seeming heretical, might I posit that "group thinking" and "groupthink" are merely synonyms. Using Victoria's definition, if a group of like-minded flat-earthers all pile on, well, then, the earth is flat. And that's groupthink. If a group of like-minded flat-earthers don't pile on, the earth is still flat, just open to discussion? But Columbus doesn't get funding.
The essence of group thinking is public discussions where people can bring different points of view and support or refute points of view brought up by others--in an open forum. Not only everyone can see these discussions as they progress, but the Forum also has a long memory. Years later, people revive old threads to check if they make sense in the new light. New members join in, look at old discussions and provide fresh views. Sometimes, regular members provide links to old threads to streamline discussions, and there are always new eyes to evaluate them, and frequently "old eyes" evolve into new eyes.
Still, there is some coherence in the Forum that keeps it together. Without this coherence, the discussions would be anarchic and lose their value. Some novel ideas may, in fact, get obscured by the noise. But those who believe in their ideas, articulate them intelligently, and support them with facts or calculations eventually prevail. See for example, Bob K's (bobcat2) record of advancing the latest economic thinking that's at odds with the asset-allocation model.
Victoria
Last edited by VictoriaF on Wed Oct 16, 2013 6:57 am, edited 2 times in total.
Inventor of the Bogleheads Secret Handshake |
Winner of the 2015 Boglehead Contest. |
Every joke has a bit of a joke. ... The rest is the truth. (Marat F)
Re: Any Dangerous Boglehead Group-Think?
I don't think so. I have learned on these forums that when you get two Bogleheads together, you get three opinions!!
A fool and his money are good for business.
Re: Any Dangerous Boglehead Group-Think?
I might agree if you can show me one (very long term manager consistently beating the market)john94549 wrote:Perhaps the most egregious example of groupthink is that active managers of mutual funds are unworthy. And, if you give an example of where they are (worthy, that is), it's either chalked up to luck (as in, anybody can hit the dart board from time-to-time and score a bulls-eye) or a statistical aberration. The concept that there might, just might, be good stock-pickers out there is considered heresy.
That's groupthink.
I respectfully submit some managers do, indeed, hire very talented people who earn their keep. They work hard, beat their indices, and have the "edge". But no matter, every time you point out a specific fund, or a manager, you get hooted down.
That's groupthink.
It's not dangerous, but it is, for want of a better word, groupthink.
- hoppy08520
- Posts: 2193
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Re: Any Dangerous Boglehead Group-Think?
I'm not so sure that's groupthink. I'd say it's making judgements based on evidence. Find an active manager who's beat his/her target benchmark with a risk-adjusted fund for more than 10 years. OK, maybe 1 out of 100? Now, today, tell me who that will be in ten years.john94549 wrote:Perhaps the most egregious example of groupthink is that active managers of mutual funds are unworthy. And, if you give an example of where they are (worthy, that is), it's either chalked up to luck (as in, anybody can hit the dart board from time-to-time and score a bulls-eye) or a statistical aberration. The concept that there might, just might, be good stock-pickers out there is considered heresy.
That's groupthink.
I respectfully submit some managers do, indeed, hire very talented people who earn their keep. They work hard, beat their indices, and have the "edge". But no matter, every time you point out a specific fund, or a manager, you get hooted down.
That's groupthink.
It's not dangerous, but it is, for want of a better word, groupthink.
I think Bogleheads aren't so much pro-passive investing as they are pro-evidence-based investing. If the evidence pointed to the sustained superiority of active management, with a way of picking the successful active managers who will outperform, in advance (not in hindsight), then I think Bogleheads would be all over active management.
Re: Any Dangerous Boglehead Group-Think?
In these two instances anyway I would not confuse passionate advocacy for something by a subset of individuals with groupthink. Advocates can be very good at shouting down those who would differ, and often people who do not agree or have a different approach just don't have any interest in debating the issue. For me personally, I am so sick and tired of both of the above discussions that I have nothing to say about it anymore.William Million wrote:Any Bogleheads ideas repeatedly espoused here . . . to the extent that group-think occurs? That is, "the psychological phenomenon that occurs within a group of people, in which the desire for harmony or conformity in the group results in an incorrect or deviant decision-making outcome." (Wikipedia)
A few possibilities:
- Faith in the Small Value Tilt. As Taylor demonstrated in a post on Sunday, small growth trounced small value over the past 15 years. Yet huge numbers of Bogleheads seem to believe fervently that small value will, over the long run, goose their portfolios.
- Ultra-Low SWR. Spendthrift Bogleheads seem to be competing with each other to declare an ever-lower SWR. It has now crept down to the 2-3% range. At 2%, you get 50 years with no interest!
Don't get me wrong: This is the best investing site out there. However, there is always danger of group-think in a highly cohesive group.
There is also a phenomenon on the board of fad discussions on topics that come and go and appear to be a generation of group think that really isn't at all.
Also, what Victoria said is excellent.
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Re: Any Dangerous Boglehead Group-Think?
Cash is trash! - You lose money by not having your money invested. One must remember, to invest is to place your money at risk of total devastation, non recoverable principal loss is worse in some respects than short term inflationary losses.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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Re: Any Dangerous Boglehead Group-Think?
The Delphi method (/ˈdɛlfaɪ/ DEL-fy) is a structured communication technique, originally developed as a systematic, interactive forecasting method which relies on a panel of experts.[1][2][3][4] The experts answer questionnaires in two or more rounds. After each round, a facilitator provides an anonymous summary of the experts’ forecasts from the previous round as well as the reasons they provided for their judgments. Thus, experts are encouraged to revise their earlier answers in light of the replies of other members of their panel. It is believed that during this process the range of the answers will decrease and the group will converge towards the "correct" answer. Finally, the process is stopped after a pre-defined stop criterion (e.g. number of rounds, achievement of consensus, stability of results) and the mean or median scores of the final rounds determine the results.[5]
Delphi is based on the principle that forecasts (or decisions) from a structured group of individuals are more accurate than those from unstructured groups.[6] The technique can also be adapted for use in face-to-face meetings, and is then called mini-Delphi or Estimate-Talk-Estimate (ETE). Delphi has been widely used for business forecasting and has certain advantages over another structured forecasting approach, prediction markets.[7]
http://en.wikipedia.org/wiki/Delphi_technique
edited to add the link!
Delphi is based on the principle that forecasts (or decisions) from a structured group of individuals are more accurate than those from unstructured groups.[6] The technique can also be adapted for use in face-to-face meetings, and is then called mini-Delphi or Estimate-Talk-Estimate (ETE). Delphi has been widely used for business forecasting and has certain advantages over another structured forecasting approach, prediction markets.[7]
http://en.wikipedia.org/wiki/Delphi_technique
edited to add the link!
Re: Any Dangerous Boglehead Group-Think?
I personally think that "tax efficient placement" needs to be looked at again. As a young with investor with a long horizon, there seems to be an advantage to short-term tax inefficiency, which will produce long term tax efficiency (if that makes sense).
I have slightly altered the typical boglehead portfolio to include Ibonds as bond and/or e-fund, which in turn frees up tax-advantaged space to be all equities. It works for me, and as a group, I think we're prettty good at understanding our individual situations.
The true beauty of boglehead investing, is that if we are REALLY wrong about something --- there's nowhere to really hide. Most of us will be SOL regardless.
I have slightly altered the typical boglehead portfolio to include Ibonds as bond and/or e-fund, which in turn frees up tax-advantaged space to be all equities. It works for me, and as a group, I think we're prettty good at understanding our individual situations.
The true beauty of boglehead investing, is that if we are REALLY wrong about something --- there's nowhere to really hide. Most of us will be SOL regardless.
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Re: Any Dangerous Boglehead Group-Think?
Many of the Boglehead principles are just simplified axioms that a newcomer to investing can used to get started with.
With further study and understanding of one's personal risk/reward mindset, along with one's available mutual funds (in a retirement plan), there will always be reasonable customizations away from the simplest starting point...
With further study and understanding of one's personal risk/reward mindset, along with one's available mutual funds (in a retirement plan), there will always be reasonable customizations away from the simplest starting point...
Attempted new signature...
Re: Any Dangerous Boglehead Group-Think?
A Boglehead groupthink warning light always goes off in the back of my mind when Jack Bogle says something in print- sometimes contradicting something he's said previously- and Bogleheads get in line. Bogle is a great man, but when a quote from him is used in lieu of reasoning or discussion, I'm left with a funny taste in my mouth. I mean, this isn't the politburo getting in line with the latest pronouncement. I've seen posts where people dig back through years of Bogle quotes to justify a position. Appeal to authority is a strange policy for 'a group thinking'.
"Optimum est pati quod emendare non possis." |
-Seneca
Re: Any Dangerous Boglehead Group-Think?
+1johnep wrote:Whenever someone poses a buy or sell situation within a segment of the market, someone quickly responds with: "That is already priced into the market" or "What do you know that the market does not know?".
We have seen our share of market bubbles in the past 10-15 years where the "smart money" was not too smart.
Re: Any Dangerous Boglehead Group-Think?
1) Belief that no strategy that cannot be reduced to paint-by-numbers non-thinking automation has any validity.
2) Belief that subjective decision making cannot add value(returns) - that market timing always fails on average.
3) Belief that Asset Allocation manages risk.
4) Belief that re-balancing manages risk, instead of managing AA.
5) Belief that only passive indexers are 'investors' and all the rest of us are 'speculators'.
6) Belief that 'a plan' is necessary for success.
7) Belief that 'research proves that retail investors under-perform the market".
2) Belief that subjective decision making cannot add value(returns) - that market timing always fails on average.
3) Belief that Asset Allocation manages risk.
4) Belief that re-balancing manages risk, instead of managing AA.
5) Belief that only passive indexers are 'investors' and all the rest of us are 'speculators'.
6) Belief that 'a plan' is necessary for success.
7) Belief that 'research proves that retail investors under-perform the market".
Last edited by less on Wed Oct 16, 2013 10:36 am, edited 1 time in total.
- Artsdoctor
- Posts: 6063
- Joined: Thu Jun 28, 2012 3:09 pm
- Location: Los Angeles, CA
Re: Any Dangerous Boglehead Group-Think?
Sometimes stepping back can be helpful. Click on the Wiki and check out at Investment Philosophy link. It's pretty straightforward and level-headed. But there is also another link which you can find helpful as well: http://www.bogleheads.org/wiki/Variatio ... _investing
I think there's plenty of room for a variety of opinions here. One of the strengths of the forum is the challenging nature of discourse. Sometimes it gets a little heated but it's almost always better to be challenged in order to consider other frames of reference and solidify your own plan.
This is the best investment forum out there.
I think there's plenty of room for a variety of opinions here. One of the strengths of the forum is the challenging nature of discourse. Sometimes it gets a little heated but it's almost always better to be challenged in order to consider other frames of reference and solidify your own plan.
This is the best investment forum out there.
Re: Any Dangerous Boglehead Group-Think?
I can prove that there is group-think at Bogleheads.org.
I know that there is group-think because Bogleheads all express the same ideas using the exact same words.
There is kind of an odd expression that is commonly used by Boglehead: take your risk on the equity side. Obviously it only has meaning to someone that spends an inordinate amount of time discussing asset allocation. Most people wouldn't even know what the subject is. What is "equity side"? Home equity? Is there another side?
I did a Google search on the exact phrase take your risk on the equity side on bogleheads.org and found 34,900 times that this phrase has been used.
For control purposes, I did the same search on an investing site marketwatch.com and this was the result:
No everyone is just repeating what they read. I'm not even sure if it's a Bogle idea. It probably originated in one of Larry Swedroe's books.
I know that there is group-think because Bogleheads all express the same ideas using the exact same words.
There is kind of an odd expression that is commonly used by Boglehead: take your risk on the equity side. Obviously it only has meaning to someone that spends an inordinate amount of time discussing asset allocation. Most people wouldn't even know what the subject is. What is "equity side"? Home equity? Is there another side?
I did a Google search on the exact phrase take your risk on the equity side on bogleheads.org and found 34,900 times that this phrase has been used.
For control purposes, I did the same search on an investing site marketwatch.com and this was the result:
Clearly everyone has not thought it through themselves, came to the identical conclusion, and then presented the idea using the exact same phrase. Someone could have said "bonds are for safety, stocks are for return" or phrased it a hundred other ways. But everyone uses the same phrase.No results found for "take your risk on the equity side" site:marketwatch.com
No everyone is just repeating what they read. I'm not even sure if it's a Bogle idea. It probably originated in one of Larry Swedroe's books.
Last edited by grayfox on Wed Oct 16, 2013 11:03 am, edited 2 times in total.
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Re: Any Dangerous Boglehead Group-Think?
That's Larry's quotation that has been paraphrased on the forum - I should know, I think I've used that quotation from time to time.grayfox wrote:I can prove that there is group-think at Bogleheads.org.
I know that there is group-think because Bogleheads all express the same ideas using the exact same words.
I did a Google search on the exact phrase take your risk on the equity side on bogleheads.org and found 34,900 times that this phrase has been used.
For control purposes, I did the same search on an investing site marketwatch.com and this was the result:
Clearly everyone has not thought it through themselves, came to the identical conclusion, and then presented the idea using the exact same phrase.No results found for "take your risk on the equity side" site:marketwatch.com
No everyone is just repeating what they read. I'm not even sure if it's a Bogle idea. It probably originated in one of Larry Swedroe's books.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Re: Any Dangerous Boglehead Group-Think?
Let's stick to the OP's definition of groupthink and then expand on that - then see if you think it describes the Bogleheads (boldface mine).
The OP's original definition from Wikipedia: groupthink is "the psychological phenomenon that occurs within a group of people, in which the desire for harmony or conformity in the group results in an incorrect or deviant decision-making outcome."
Here's more from that definition: "Group members try to minimize conflict and reach a consensus decision without critical evaluation of alternative ideas or viewpoints, and by isolating themselves from outside influences. Loyalty to the group requires individuals to avoid raising controversial issues or alternative solutions, and there is loss of individual creativity, uniqueness and independent thinking.."
It goes on, of course, but the more it does, I think the more obvious it becomes that the Bogleheads do not fit the groupthink definition, especially not so long as the principles, in particular low-cost indexing and proper asset allocation, continue to work.
There are many dangers for Bogleheads and any small investor, such as taking on too much risk and setting an improper asset allocation, or trying to time the market, not saving enough, etc. We need to continue focusing on those dangers, the real ones.
The OP's original definition from Wikipedia: groupthink is "the psychological phenomenon that occurs within a group of people, in which the desire for harmony or conformity in the group results in an incorrect or deviant decision-making outcome."
Here's more from that definition: "Group members try to minimize conflict and reach a consensus decision without critical evaluation of alternative ideas or viewpoints, and by isolating themselves from outside influences. Loyalty to the group requires individuals to avoid raising controversial issues or alternative solutions, and there is loss of individual creativity, uniqueness and independent thinking.."
It goes on, of course, but the more it does, I think the more obvious it becomes that the Bogleheads do not fit the groupthink definition, especially not so long as the principles, in particular low-cost indexing and proper asset allocation, continue to work.
There are many dangers for Bogleheads and any small investor, such as taking on too much risk and setting an improper asset allocation, or trying to time the market, not saving enough, etc. We need to continue focusing on those dangers, the real ones.
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle