Why do so many do the opposite of Mr. Bogle suggests?

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Why do so many do the opposite of Mr. Bogle suggests?

Postby stemikger » Sun Jul 14, 2013 9:00 am

As much as I learned and really appreciate the free advice from many here. There are so many others who prefer complex portfolios instead of the simple Total Stock and Total Bond market as Mr. Bogle suggests. There are so many that are adding so many funds to their portfolio that it looks like a professional did it to make it look super complex or sophisticated and I definitely do not agree with adding international bonds on top of slicing and dicing equities to the point where asset allocation will become a part time job.

If we really wanted to follow his advice we would basically pick the Total Stock Market and the Total Bond Market. Two funds and if you feel inclined a splash of international or even better one fund: The Vanguard Balanced Index Fund.
Last edited by stemikger on Sun Jul 14, 2013 9:07 am, edited 1 time in total.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby livesoft » Sun Jul 14, 2013 9:02 am

Perhaps it is because Mr Bogle is human and to err is human? We are human, too.

I have a follow up question: Why would anyone believe what Mr Bogle suggests?
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby stemikger » Sun Jul 14, 2013 9:06 am

livesoft wrote:Perhaps it is because Mr Bogle is human and to err is human? We are human, too.

I have a follow up question: Why would anyone believe what Mr Bogle suggests?


Because his record speaks for itself.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby Call_Me_Op » Sun Jul 14, 2013 9:16 am

stemikger wrote:As much as I learned and really appreciate the free advice from many here. There are so many others who prefer complex portfolios instead of the simple Total Stock and Total Bond market as Mr. Bogle suggests. There are so many that are adding so many funds to their portfolio that it looks like a professional did it to make it look super complex or sophisticated and I definitely do not agree with adding international bonds on top of slicing and dicing equities to the point where asset allocation will become a part time job.

If we really wanted to follow his advice we would basically pick the Total Stock Market and the Total Bond Market. Two funds and if you feel inclined a splash of international or even better one fund: The Vanguard Balanced Index Fund.


I don't believe in just a splash of international. I believe that international should be roughly cap weighted. I don't believe in listening to one person and doing exactly what he says. I prefer listening to many people and studying the material myself - and then making an informed decision that is right for me.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby Call_Me_Op » Sun Jul 14, 2013 9:18 am

stemikger wrote:
livesoft wrote:Perhaps it is because Mr Bogle is human and to err is human? We are human, too.

I have a follow up question: Why would anyone believe what Mr Bogle suggests?


Because his record speaks for itself.


Donald Trump has made a lot more money than John Bogle - but that doesn't mean it's wise to try to invest as he does.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby z3r0c00l » Sun Jul 14, 2013 9:22 am

Re. the question of the thread, people do it because caveman brains think very differently than a logical investor. Because when you hunt elephants for a living, you act emotionally much of the time, and value taking risks. We spend much of our lives grappling with our caveman brains.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby rmark1 » Sun Jul 14, 2013 9:26 am

Because his record speaks for itself.'

I personally know someone with an un-Bogle like portfolio who has been very successful with it. It's a lot of work as he's actively involved in turning around poorly performing projects in which he has a percentage. It's certainly not broad based passive investing.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby IlliniDave » Sun Jul 14, 2013 9:37 am

stemikger wrote:As much as I learned and really appreciate the free advice from many here. There are so many others who prefer complex portfolios instead of the simple Total Stock and Total Bond market as Mr. Bogle suggests. There are so many that are adding so many funds to their portfolio that it looks like a professional did it to make it look super complex or sophisticated and I definitely do not agree with adding international bonds on top of slicing and dicing equities to the point where asset allocation will become a part time job.

If we really wanted to follow his advice we would basically pick the Total Stock Market and the Total Bond Market. Two funds and if you feel inclined a splash of international or even better one fund: The Vanguard Balanced Index Fund.


There's things that Bogle is firm on, and things Bogle is soft on.

He's firm on long-term investing. He's firm on low costs. He's firm on passive style management (whether it be index funds or non-index funds managed in that style). He's a bit more flexible on allocations, tilts, and the like. He seems to say that for the average investor a simple 2 or 3 fund setup will work fine. I think here as a group we suffer from Lake Woebegone syndrome. We're all outside the average. We enjoy the topic of investing, paying attention, discussing, and pursuit of optimal strategies, hopefully within the confines of common sense. Not many of us are fire-and-forget, and I think when Bogle preaches the simplest essence he's speaking to people who don't want to make a lifelong active hobby out of their investments.

I'm more of Bogle devotee than some here and I've learned that the monicker "Boglehead" is a bit of a misnomer (which is okay, this isn't a religion). I believe if you follow closely to what Bogle does say (and read a few of his books to get the full picture before you do) you'll be fine. There's a wide variety of perspectives here when it comes to portfolio strategies, many of which he's skeptical of. He doesn't say to avoid the more sophisticated approaches outright, just to consider the risks carefully. He believes that most investors can get acceptable results through simplicity. Shooting for more involves introduction of risks.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby cheesepep » Sun Jul 14, 2013 9:40 am

Me. I hold individual stocks. Has been wildly successful for me with a continuous stream of dividends every month. Takes more work for sure, but I enjoy it.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby Boglenaut » Sun Jul 14, 2013 9:42 am

I think you'll find the results of a Poll I took here interesting.

viewtopic.php?f=9&t=103873&p=1508317

Very few of use do the opposite. Most are close, but we do deviate by design.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby IlliniDave » Sun Jul 14, 2013 9:48 am

Call_Me_Op wrote:
stemikger wrote:
livesoft wrote:Perhaps it is because Mr Bogle is human and to err is human? We are human, too.

I have a follow up question: Why would anyone believe what Mr Bogle suggests?


Because his record speaks for itself.


Donald Trump has made a lot more money than John Bogle - but that doesn't mean it's wise to try to invest as he does.


Bogle's interest does not appear to be making himself rich. His record is having enabled more small investors to make more money through investing than any other figure in the investment industry, and his legacy will continue to "compound" far into the future as long as Vanguard is able to "stay the course". While everyone else was pouring over high-level mathematics or making themselves rich by fleecing the gullible he stood back and looked at the big picture, found it wanting, and gave people a way out.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby dickenjb » Sun Jul 14, 2013 9:53 am

I am a three fund disciple so I can not explain why others choose to make the simple complex. I would rather keep my portfolio simple and spend my time on other things. I have a PhD and an MBA and am proficient with Excel so it's not like I could not handle the complexity. I just choose not to.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby Call_Me_Op » Sun Jul 14, 2013 9:57 am

IlliniDave wrote:
Call_Me_Op wrote:
stemikger wrote:
livesoft wrote:Perhaps it is because Mr Bogle is human and to err is human? We are human, too.

I have a follow up question: Why would anyone believe what Mr Bogle suggests?


Because his record speaks for itself.


Donald Trump has made a lot more money than John Bogle - but that doesn't mean it's wise to try to invest as he does.


Bogle's interest does not appear to be making himself rich.


I agree. I was just responding to a suggestion that his investment record has something to do with why I should do exactly as he says or does.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby Tigermoose » Sun Jul 14, 2013 10:03 am

Work 401k options available - that's why I slice and dice.
Institutions matter
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby haban01 » Sun Jul 14, 2013 10:21 am

IlliniDave wrote:
Call_Me_Op wrote:
stemikger wrote:
livesoft wrote:Perhaps it is because Mr Bogle is human and to err is human? We are human, too.

I have a follow up question: Why would anyone believe what Mr Bogle suggests?


Because his record speaks for itself.


Donald Trump has made a lot more money than John Bogle - but that doesn't mean it's wise to try to invest as he does.


Bogle's interest does not appear to be making himself rich. His record is having enabled more small investors to make more money through investing than any other figure in the investment industry, and his legacy will continue to "compound" far into the future as long as Vanguard is able to "stay the course". While everyone else was pouring over high-level mathematics or making themselves rich by fleecing the gullible he stood back and looked at the big picture, found it wanting, and gave people a way out.


Well Said!!
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby sschullo » Sun Jul 14, 2013 10:23 am

Boglenaut wrote:I think you'll find the results of a Poll I took here interesting.

viewtopic.php?f=9&t=103873&p=1508317

Very few of use do the opposite. Most are close, but we do deviate by design.



Here is another poll: viewtopic.php?f=10&t=68966&view=viewpoll
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby InvestorNewb » Sun Jul 14, 2013 10:31 am

cheesepep wrote:Me. I hold individual stocks. Has been wildly successful for me with a continuous stream of dividends every month. Takes more work for sure, but I enjoy it.


How do you compare against the S&P? And how long has it been successful for you?
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby nedsaid » Sun Jul 14, 2013 10:34 am

For me, I have done most of the things that Mr. Bogle suggests. In some ways, I have deviated a bit from his philosophy.
I still hold some individual stocks because I have been satisfied with the performance and I like the dividends rolling in. It is hard to abandon something that has worked. Part of my funds are at a fund company that provides managed funds. My performance there has been good and doing comparisons found that I didn't miss out on anything.

I have indexed a portion of my portfolio and in fact my largest holding is a US Total Stock Market Index fund. I index through funds and ETFs. I have always been value oriented. I keep my costs as low as possible. Don't do very much trading. Buy good stuff and keep it.

Most people don't follow Mr. Bogle's advice because it is counterintuitive. It would seem that to get good performance that one would have to be fast and nimble to take advantage of opportunities. People tend to believe that an active manager with analysts and computer power behind him or her would be able to separate the good investments from the bad.

People also crave excitement and like to talk about their successes. Talking about a three fund portfolio is not exciting or interesting. It is a very boring strategy. Many folks that invest like the intellectual challenge of investing.

People also are not good record keepers. They really don't know what their investments are costing them. They also do a poor job of tracking their returns.

Emotions play a big role. A family member commented that he "lost his shirt" in the stock market. He owned some shares of his company stock and sold at an inopportune time. It actually was a good stock and paid a very nice dividend. He was just impatient. It turned out he lost a few hundred dollars, hardly losing his shirt. When I was a young investor and the market lost 22% in one day in 1987, a few hundred dollars in losses felt like the end of the world and the loss of all the money I had. Silly, silly, silly. Just human emotions at work.

To invest like Mr. Bogle, you have to go against the grain of human nature.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby sschullo » Sun Jul 14, 2013 10:36 am

cheesepep wrote:Me. I hold individual stocks. Has been wildly successful for me with a continuous stream of dividends every month. Takes more work for sure, but I enjoy it.


"enjoy" is the key. I never enjoyed investing because I knew I was not good at it from way back and found out first hand during the tech bubble. The boglehead way allowed somebody like me who hates trading even in rebalancing and yet be invested in bond and stock market world wide. That is COOL! I "enjoy" the benefits of this time efficient method and do the things I value in retirement.

Obviously, many people love "the trade." My father in law traded everyday from the day he retired at 62 and for the next 28 years. He rarely left the house, probably took one cruise in all that time. When he died at age 90, he had $100,000 in Taser stock and he was still calling his broker up to a few weeks before he died!
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby Munir » Sun Jul 14, 2013 10:41 am

stemikger wrote:As much as I learned and really appreciate the free advice from many here. There are so many others who prefer complex portfolios instead of the simple Total Stock and Total Bond market as Mr. Bogle suggests. There are so many that are adding so many funds to their portfolio that it looks like a professional did it to make it look super complex or sophisticated and I definitely do not agree with adding international bonds on top of slicing and dicing equities to the point where asset allocation will become a part time job.

If we really wanted to follow his advice we would basically pick the Total Stock Market and the Total Bond Market. Two funds and if you feel inclined a splash of international or even better one fund: The Vanguard Balanced Index Fund.


Over the past year Jack Bogle has repeatedly raised concerns about the makeup of the Total Bond Market fund and its 70% composition of government instruments. He suggests a greater allocation to corporate bonds.

Another factor (not related to Bogle) is whether an intermediate bond fund is appropriate for all investors at all stages in their life as the only fixed income fund. For a retiree over 75 years of age in the distribution phase a shorter duration may be indicated for a good part of the fixed income assets in the current environment.

But I agree with the three or four fund portfolio for most investors. As Taylor Larimore often says, Keep It Simple.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby zaboomafoozarg » Sun Jul 14, 2013 10:41 am

Many roads to Dublin, as Taylor always says. I follow the 3-factor with ~80% of my money. The other ~20% is in REITs and SCV that is expected to improve return and volatility slightly. Of course it may not, but I'm willing to take the risk. The size of that portion will lessen over time too, as I increase my bond portion.

Jack's main points have been the most helpful for me - keep costs low, don't try to time the market, stick with your plan.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby MOBY DICK » Sun Jul 14, 2013 10:45 am

Excellent question and my thought is you read about the philosophy and then as an initial partial believer, time teaches you directly. You learn as you get older that you're old enough too know that you don't know !
And as a previous poster mentioned the "Lake Woebegone Syndrome has a play in here as well.
As a former slicer I am simplifying as my results could have been better.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby sari » Sun Jul 14, 2013 10:57 am

I am new at this. May you provided examples of the 3 specific allocation/fund name you would suggest for the total stock, bond and international? I have read several rules: subtract age from 100 or 110 to arrive at the total stock allocation; If you are for example 33, then 33% of the allocation should be in bonds and cash and the rest in stocks; At age 65, only 45% or less should be in stock and the rest should be in bonds etc. Thanks.

stemikger wrote:As much as I learned and really appreciate the free advice from many here. There are so many others who prefer complex portfolios instead of the simple Total Stock and Total Bond market as Mr. Bogle suggests. There are so many that are adding so many funds to their portfolio that it looks like a professional did it to make it look super complex or sophisticated and I definitely do not agree with adding international bonds on top of slicing and dicing equities to the point where asset allocation will become a part time job.

If we really wanted to follow his advice we would basically pick the Total Stock Market and the Total Bond Market. Two funds and if you feel inclined a splash of international or even better one fund: The Vanguard Balanced Index Fund.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby Kosmo » Sun Jul 14, 2013 11:02 am

InvestorNewb wrote:
cheesepep wrote:Me. I hold individual stocks. Has been wildly successful for me with a continuous stream of dividends every month. Takes more work for sure, but I enjoy it.


How do you compare against the S&P?

Not necessarily a fair or accurate comparison. I work on my strength via weight lifting. But comparing how much I can hold up to a steel beam isn't the right thing to do. Enjoying the task and seeing positive results is what matters.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby stemikger » Sun Jul 14, 2013 11:06 am

sari wrote:I am new at this. May you provided examples of the 3 specific allocation/fund name you would suggest for the total stock, bond and international? I have read several rules: subtract age from 100 or 110 to arrive at the total stock allocation; If you are for example 33, then 33% of the allocation should be in bonds and cash and the rest in stocks; At age 65, only 45% or less should be in stock and the rest should be in bonds etc. Thanks.

stemikger wrote:As much as I learned and really appreciate the free advice from many here. There are so many others who prefer complex portfolios instead of the simple Total Stock and Total Bond market as Mr. Bogle suggests. There are so many that are adding so many funds to their portfolio that it looks like a professional did it to make it look super complex or sophisticated and I definitely do not agree with adding international bonds on top of slicing and dicing equities to the point where asset allocation will become a part time job.

If we really wanted to follow his advice we would basically pick the Total Stock Market and the Total Bond Market. Two funds and if you feel inclined a splash of international or even better one fund: The Vanguard Balanced Index Fund.


Hi Sari,

Here is the link to the Three Fund Portfolio. Other than Mr. Bogle himself, I do not know of a better Mentor than Mr. Taylor Larimore. viewtopic.php?f=10&t=88005&hilit=+three+fund+portfolio

He is an amazing man who teaches from the heart. You will not go wrong following his advice.

Good Luck
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby larryc » Sun Jul 14, 2013 11:08 am

Many of us started investing before we heard of John Bogle. We change gradually, but it's especially hard to change when your initial strategy has been successful (better than SP 500) over time. For myself in particular, I have held Vanguard Health Care and Vanguard Capital Opportunity for close to twenty years and I don't feel comfortable selling them for psychological and tax reasons. Retirements and deaths do make index funds seem even more attractive, and I invest more and more new money in index funds.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby House Blend » Sun Jul 14, 2013 11:08 am

stemikger wrote:There are so many that are adding so many funds to their portfolio that it looks like a professional did it to make it look super complex or sophisticated and I definitely do not agree with adding international bonds on top of slicing and dicing equities to the point where asset allocation will become a part time job.

If we really wanted to follow his advice we would basically pick the Total Stock Market and the Total Bond Market. Two funds and if you feel inclined a splash of international or even better one fund: The Vanguard Balanced Index Fund.

I suspect that Mr. Bogle would be the first to suggest that he does not have all the answers. What I don't understand is why some Bogleheads think that he does.

I'm glad that this forum has both tilters and lumpers and indexers and non-indexers. And people who buy investment property. And gold. And people who regard a spreadsheet-based allocation strategy to be a feature, not a bug. And ...gasp... international bonds. Why can't they all be successful investors?

Are you worried about the possibility that the complexifiers are "right" (in the sense that they will have better outcomes)? I stick to my own knitting, and let others tend to theirs.

FWIW, I doubt that Mr. Bogle has ever said that "everyone" should hold TSM, TBM, and nothing else. But if that's your strategy, that's great. Out of curiousity, if Balanced Index is the purest Bogle-sanctioned strategy, how do you reconcile that with his age-in-bonds rule of thumb?
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby KyleAAA » Sun Jul 14, 2013 11:15 am

stemikger wrote:If we really wanted to follow his advice we would basically pick the Total Stock Market and the Total Bond Market. Two funds and if you feel inclined a splash of international or even better one fund: The Vanguard Balanced Index Fund.



Because some of us think Bogle is wrong about certain things. I believe his general buy-and-hold-index-funds approach to investing is spot-on, but I believe some of his specific suggestions are wrong.

Besides, slicing and dicing isn't even remotely complicated. I probably don't spend more than a full 5 minutes per year more managing my portfolio than a three-fund devotee.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby YDNAL » Sun Jul 14, 2013 11:18 am

stemikger wrote:As much as I learned and really appreciate the free advice from many here. There are so many others who prefer complex portfolios instead of the simple Total Stock and Total Bond market as Mr. Bogle suggests. There are so many that are adding so many funds to their portfolio that it looks like a professional did it to make it look super complex or sophisticated and I definitely do not agree with adding international bonds on top of slicing and dicing equities to the point where asset allocation will become a part time job.

If we really wanted to follow his advice we would basically pick the Total Stock Market and the Total Bond Market. Two funds and if you feel inclined a splash of international or even better one fund: The Vanguard Balanced Index Fund.

The widely-accepted Boglehead philosophy doesn't talk about investing in 2 funds.
Boglehead Wiki wrote:1 Develop a workable plan
2 Invest early and often
3 Never bear too much or too little risk
4 Diversify
5 Never try to time the market
6 Use index funds when possible
7 Keep Costs Low
8 Minimize taxes
9 Invest with simplicity
10 Stay the course
Link: http://www.bogleheads.org/wiki/Boglehea ... philosophy

Number 9, for instance, doesn't say that 4 funds, or 5 funds is complexity. Thus, your personal definition (opinion?) of what constitutes "simplicity" does not represent complexity - or "part time job" - for many (most?) others.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby G-Money » Sun Jul 14, 2013 11:27 am

My IPS does not tell me to do exactly as Bogle (or anyone else) suggests.

I am allowed to think independently, even if I'm a Boglehead member, right?
Don't assume I know what I'm talking about.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby Blue » Sun Jul 14, 2013 11:35 am

Answering your question with a question.....

Why does the firm he built also offer active mutual funds?
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby stemikger » Sun Jul 14, 2013 11:41 am

Great replies. However, Mr. Bogle does say in Common Sense on Mutual Funds that the ultimate in Simplicity is to invest in a single balanced fund and it works. He also says that age-in-bonds is a rough guide.

I do not fear that by following his advice I will not do well, but I do find that many younger investors and older investors like myself read so many other complicated asset allocations and theories feel that they are missing something and are not doing it right. This has been a handicap of mine and still is.

I understand everyone should not follow Mr. Bogle blindly, but the message can be very confusing here. The bottom line is you can keep it very simple and still do well.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby stemikger » Sun Jul 14, 2013 11:43 am

Blue wrote:Answering your question with a question.....

Why does the firm he built also offer active mutual funds?


This is a problem I also have with Vanguard, but when you think about it. They could not stay in business without offering other options. They have a handicap of having to offer what the other fund companies are offering to try to please everyone and be competitive. I really can't blame them for that.

Mr. Bogle also still owns Wellington which he admits he is not ready to give up because of his history with the fund.

I guess I just value the fact that investing can be really as simple as one balanced fund. I guess that is my message above all else. Can you do better. I'm sure you can. Can the simple strategy do well. My bet is it will and my life will be less stressful.

I truly feel in this field knowing too much may become a handicap.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby Call_Me_Op » Sun Jul 14, 2013 11:50 am

stemikger wrote:I guess I just value the fact that investing can be really as simple as one balanced fund. I guess that is my message above all else. Can you do better. I'm sure you can. Can the simple strategy do well. My bet is it will and my life will be less stressful.


Really? I have always found that putting all of my eggs in one basket is MORE stressful.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby ML 59 » Sun Jul 14, 2013 12:00 pm

"...opposite..." in the thread title, is perhaps too harsh. After much reading here, I find that most members "enhance" their risk/reward position via a few tilts. All OK as long as there is justification to do so. The beauty comes in the fact that others have done the hard work and studies - I just have to do a little homework in comparison.

I'm reading and following the work of Ferri, Larimore, and others here to come up with a low cost, thoughtfully diversified approach that is right for me. Enhancements have been added to a core of funds. This takes some, though not a lot of time. I am enjoying the journey.

This site is so full of excellent advice that it takes a while to find what is right for you. Mr. Bogle provides an elegant foundation.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby cheesepep » Sun Jul 14, 2013 12:06 pm

InvestorNewb wrote:
cheesepep wrote:Me. I hold individual stocks. Has been wildly successful for me with a continuous stream of dividends every month. Takes more work for sure, but I enjoy it.


How do you compare against the S&P? And how long has it been successful for you?


It is a different comparison because my goal as a dividend investor is not the same for people who do index investing. As an index investor, your aim is to build a sizeable nest egg when you retire and to live off the nest egg using the 4% principle or other related ideas.

As a dividend investor, your goal is to increase how much annual (or monthly) dividend you can get without touching the principle. Very different goals. And I have been successful in this. I have more than doubled my annual dividend income from X to 2X in the last two years, where X was already a large number. If the dividend investor can also reach the S&P, then that is just added gravy.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby stemikger » Sun Jul 14, 2013 12:17 pm

Call_Me_Op wrote:
stemikger wrote:I guess I just value the fact that investing can be really as simple as one balanced fund. I guess that is my message above all else. Can you do better. I'm sure you can. Can the simple strategy do well. My bet is it will and my life will be less stressful.


Really? I have always found that putting all of my eggs in one basket is MORE stressful.


Holding 3434 stocks and 5931 bonds is not the same as having all your eggs in one basket. I don't mind that you wanting to do this for effect, but I think if a young person who reads that may feel they are on the wrong path. If you disagree with holding The Vanguard Balanced Index fund and nothing else may be wrong for other reasons (i.e. no international, etc.) I will understand, but please don't say holding this fund is the same as not being diversified. Other then no international how is this like having all your eggs in one basket?
Last edited by stemikger on Sun Jul 14, 2013 12:24 pm, edited 1 time in total.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby pennstater2005 » Sun Jul 14, 2013 12:23 pm

Call_Me_Op wrote:
stemikger wrote:I guess I just value the fact that investing can be really as simple as one balanced fund. I guess that is my message above all else. Can you do better. I'm sure you can. Can the simple strategy do well. My bet is it will and my life will be less stressful.


Really? I have always found that putting all of my eggs in one basket is MORE stressful.


How is that putting all your eggs in one basket? If one were to use the Balanced Index fund that is approx. 7000 stocks and bonds.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby zebrafish » Sun Jul 14, 2013 12:33 pm

I think more people don't follow Bogle's advice for the same reason that everyone thinks they're an above-average driver, their children are above-average, etc.

People tend to think they are smarter than everyone else out there. No one wants to pick "average". Except in the investing game, "average" is above average due to costs.

There are a lot of people worried that indexing will eventually overtake the market. I'm not worried about this at all. With all these studies showing an increase self-narcissism in younger generations, I doubt indexing will ever take over as an investing strategy. There are also too many people who enjoy gambling!
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby ML 59 » Sun Jul 14, 2013 12:58 pm

If a person just wanted to purchase one "set and forget" fund, and 60/40 was at at near your AA preference, then Vanguard Balance Index (VBIAX) (@ 0.10 ER) would be a very respectable choice.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby gerrym51 » Sun Jul 14, 2013 1:01 pm

stemikger wrote:As much as I learned and really appreciate the free advice from many here. There are so many others who prefer complex portfolios instead of the simple Total Stock and Total Bond market as Mr. Bogle suggests. There are so many that are adding so many funds to their portfolio that it looks like a professional did it to make it look super complex or sophisticated and I definitely do not agree with adding international bonds on top of slicing and dicing equities to the point where asset allocation will become a part time job.

If we really wanted to follow his advice we would basically pick the Total Stock Market and the Total Bond Market. Two funds and if you feel inclined a splash of international or even better one fund: The Vanguard Balanced Index Fund.


because most of my money is allocated by target funds.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby Default User BR » Sun Jul 14, 2013 1:02 pm

zebrafish wrote:I think more people don't follow Bogle's advice for the same reason that everyone thinks they're an above-average driver, their children are above-average, etc.

People tend to think they are smarter than everyone else out there. No one wants to pick "average". Except in the investing game, "average" is above average due to costs.

There are a lot of people worried that indexing will eventually overtake the market. I'm not worried about this at all. With all these studies showing an increase self-narcissism in younger generations, I doubt indexing will ever take over as an investing strategy. There are also too many people who enjoy gambling!

You seem to be taking the position that the original post in the thread addressed active management. In fact, it discussed the very common slice-and-dice with index funds. We who utilize that method generally are basing it upon the academic work of such notables as professors Fama and French.

I deviate from Mr. Bogle's advice because I never built my portfolio on his advice. I developed it well before I found this portfolio, based on my reading and investigation.


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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby stemikger » Sun Jul 14, 2013 1:10 pm

gerrym51 wrote:
stemikger wrote:As much as I learned and really appreciate the free advice from many here. There are so many others who prefer complex portfolios instead of the simple Total Stock and Total Bond market as Mr. Bogle suggests. There are so many that are adding so many funds to their portfolio that it looks like a professional did it to make it look super complex or sophisticated and I definitely do not agree with adding international bonds on top of slicing and dicing equities to the point where asset allocation will become a part time job.

If we really wanted to follow his advice we would basically pick the Total Stock Market and the Total Bond Market. Two funds and if you feel inclined a splash of international or even better one fund: The Vanguard Balanced Index Fund.


because most of my money is allocated by target funds.


The Vanguard target Retirement funds and lifestyle funds are balanced funds, so I guess you agree.
I do like them both, but feel they add things that are not really necessary and I'm not a big fan of the Target Retirement Funds changing course several times since they have been introduced. To be honest, it makes me a little nervous. However, if I die before my wife and she sticks everything into one of these funds I will not come back to haunt her. I just feel the unloved Balanced Index Fund is the purest form of indexing without any professional second guessing what the market is going to do. I love everything about this unappreciated little guy. The only way I would love it more is if they had one that was 50/50 but since they don't I'll settle for 60/40. I intend to keep this allocation forever. It gives me the confidence that I will be able to withstand bear and bull markets but still feel like I'm participating and getting decent growth.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby InvestorNewb » Sun Jul 14, 2013 4:08 pm

cheesepep wrote:
InvestorNewb wrote:
cheesepep wrote:Me. I hold individual stocks. Has been wildly successful for me with a continuous stream of dividends every month. Takes more work for sure, but I enjoy it.


How do you compare against the S&P? And how long has it been successful for you?


It is a different comparison because my goal as a dividend investor is not the same for people who do index investing. As an index investor, your aim is to build a sizeable nest egg when you retire and to live off the nest egg using the 4% principle or other related ideas.

As a dividend investor, your goal is to increase how much annual (or monthly) dividend you can get without touching the principle. Very different goals. And I have been successful in this. I have more than doubled my annual dividend income from X to 2X in the last two years, where X was already a large number. If the dividend investor can also reach the S&P, then that is just added gravy.


Thanks for the info. It's interesting because I have the same goal but to do it with index funds instead. i.e. buy up enough shares over my working career so that I can live off the dividends in retirement. The only issue is that the dividends on index funds (apart from REITs) aren't that high so you basically need to own tons of shares to successfully be able to do this.

Buying dividend paying stocks is appealing to me, but I haven't a clue what to buy, how many companies to buy, how much weighting to give each, etc.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby jginseattle » Sun Jul 14, 2013 7:22 pm

Personal preference is an important component of investing. It helps you to stick with your plan.

I avoid credit risk, for example, despite what Mr. Bogle has been suggesting recently.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby avalpert » Sun Jul 14, 2013 11:18 pm

cheesepep wrote:
InvestorNewb wrote:
cheesepep wrote:Me. I hold individual stocks. Has been wildly successful for me with a continuous stream of dividends every month. Takes more work for sure, but I enjoy it.


How do you compare against the S&P? And how long has it been successful for you?


It is a different comparison because my goal as a dividend investor is not the same for people who do index investing. As an index investor, your aim is to build a sizeable nest egg when you retire and to live off the nest egg using the 4% principle or other related ideas.

As a dividend investor, your goal is to increase how much annual (or monthly) dividend you can get without touching the principle. Very different goals. And I have been successful in this. I have more than doubled my annual dividend income from X to 2X in the last two years, where X was already a large number. If the dividend investor can also reach the S&P, then that is just added gravy.

Please, there is not such thing as an index investor or a dividend investor. An investor is an investor - the goal is always to get the maximum return for a given level of risk. That you use mental accounting or anchors to trick yourself into thinking dividends are a special form of return doesn't change that.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby pastafarian » Mon Jul 15, 2013 1:36 am

stemikger wrote: If we really wanted to follow his advice we would basically pick the Total Stock Market and the Total Bond Market. Two funds and if you feel inclined a splash of international or even better one fund: The Vanguard Balanced Index Fund.

We use a two fund approach, just not the default choices of JB, Total World Stock and Total Bond Market. We substitute Limited Term TE for Total Bond in taxable.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby cheesepep » Mon Jul 15, 2013 3:45 am

avalpert wrote:
cheesepep wrote:
InvestorNewb wrote:
cheesepep wrote:Me. I hold individual stocks. Has been wildly successful for me with a continuous stream of dividends every month. Takes more work for sure, but I enjoy it.


How do you compare against the S&P? And how long has it been successful for you?


It is a different comparison because my goal as a dividend investor is not the same for people who do index investing. As an index investor, your aim is to build a sizeable nest egg when you retire and to live off the nest egg using the 4% principle or other related ideas.

As a dividend investor, your goal is to increase how much annual (or monthly) dividend you can get without touching the principle. Very different goals. And I have been successful in this. I have more than doubled my annual dividend income from X to 2X in the last two years, where X was already a large number. If the dividend investor can also reach the S&P, then that is just added gravy.

Please, there is not such thing as an index investor or a dividend investor. An investor is an investor - the goal is always to get the maximum return for a given level of risk. That you use mental accounting or anchors to trick yourself into thinking dividends are a special form of return doesn't change that.


Yes, we are both investors, but how we obtain our goals is different, thus the two different names. There is more than one way to skin a cat.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby IlliniDave » Mon Jul 15, 2013 6:35 am

Call_Me_Op wrote:
IlliniDave wrote:
Call_Me_Op wrote:
stemikger wrote:
livesoft wrote:Perhaps it is because Mr Bogle is human and to err is human? We are human, too.

I have a follow up question: Why would anyone believe what Mr Bogle suggests?


Because his record speaks for itself.


Donald Trump has made a lot more money than John Bogle - but that doesn't mean it's wise to try to invest as he does.


Bogle's interest does not appear to be making himself rich.


I agree. I was just responding to a suggestion that his investment record has something to do with why I should do exactly as he says or does.


Sorry, didn't mean that to sound like I was being disagreeable, was only pursuing the thought a little further.
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Re: Why do so many do the opposite of Mr. Bogle suggests?

Postby IlliniDave » Mon Jul 15, 2013 6:44 am

ML 59 wrote:If a person just wanted to purchase one "set and forget" fund, and 60/40 was at at near your AA preference, then Vanguard Balance Index (VBIAX) (@ 0.10 ER) would be a very respectable choice.


I agree, although I'd be inclined to go with Wellington if I had to decide today. While I like to think I'll be a lean, mean, investing machine to the end; I'm beginning to concede that in reality at some point I'll probably be best off raking everything into one pile for the sake of simplicity/ease. Let someone else keep it balanced and automatically deposit the distributions in my bank account.
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