Nothing is worse than the Schrödinger´s cat uncertainty in whether he is a Boglehead or an ex-Boglehead.DRiP Guy wrote:OMG, what a horrible fate!
Victoria
Nothing is worse than the Schrödinger´s cat uncertainty in whether he is a Boglehead or an ex-Boglehead.DRiP Guy wrote:OMG, what a horrible fate!
Actually, track my Vanguard portfolio against the simplest portfolio of portfolios: Target 2025.Taylor Larimore wrote:Petrocelli:
Perhaps you should.I do not follow Taylor's advice re simplicity.
Sudhi ?jidina80 wrote:I am pleased to read when someone (especially a young person) concludes that a low-cost, well-diversified, buy-and-hold investment portfolio is the best way to future wealth. However, I am curious to learn, does anyone know of someone who was totally on-board with Vanguard and Bogle's recommended investment philosophy, but later chose a different path?
I'm not talking about someone who was simply exposed to the concepts of asset allocation and index funds, but rather someone who really 'got it' but later changed their thinking so they could try do better with market timing or stock-picking.
This might be a small thread, but who knows...
Just
Amen.Petrocelli wrote:This post demonstrates one of the reasons I stopped posting here frequently. Often, one will ask a question and received a bunch of buzzwords in response based on preconceived (and often incorrect) notions. Allow me to explain.Alex Frakt wrote:You are engaged in a grand scheme of mental accounting. The only difference between deriving $x from dividends versus a sale of shares is that the taxes from the latter are typically lower.jh wrote:
In my taxable account I own index funds and individual stocks for dividend income. It is much easier to build income with individual stocks and the dividends are much more consistent with individual stocks. The downside is that an individual stock is riskier than an index fund, obviously. However, I have little fear investing in individual stocks for this purpose. Let's be realistic, the income from a company like Johnson & Johnson, Coca-Cola, Proctor & Gamble and so on is far less risky than the income I get from my w-2 job. I do use index funds in my taxable account, but they are mainly holdovers from when I got in at really good prices during the crises. My new money has been going into individual stocks recently.
I'm not suggesting that there is a huge problem with a portfolio consisting of individually held blue chips, that's probably what most of us would be doing if index funds weren't available. But it is certainly less than ideal given the alternatives. Your lack of diversification results in increased risks (individual stock risk and, given your example stocks, individual sector risk chief among them) without increasing your expected return.
A few years back, I read Stein's Yes. You can Supercharge You Portfolio! One of the main premises of the book was that you could lower standard deviation and increase returns by adding low beta stocks to a mutual fund portfolio. The book referenced a person named Geoff Considine, who wrote a number of articles on this subject.
I, therefore, added a portfolio of 20 stocks to my portfolio which (1) had a market cap over $10 billion; (2) paid at least a a 2% dividend; (3) have a PE ratio less than 20; and (4) have a beta less than 1.
I allow dividends to go to cash, and every 2-3 months, I buy shares in a stock that is below its 5% target. That is, I rebalance with cash.
Because I only make 6 to 9 transactions a year, my expenses are between $54 and $81 a year, which is far, far less than .10% of the portfolio value.
Long story short, the addition of these stocks increased returns and decreased standard deviation, as advertised.
At bottom, given that my retirement portfolio is about 50% indexed, and all low cost Vanguard funds, I agree with the Bogleheads on most things. However, I do not agree with them on all things and often find they dismiss good ideas which could increase returns.
Hi shashi:shashi wrote:Learned quite a bit from M* and diehard days and returning nearly after a decade... Surprise to see Taylor, Mel have become authors..where is Sudhi?
Wishes...