Taylor Larimore, affectionately known as “the dean of the Bogleheads,” has been an investor for over seven decades. Recently we asked Taylor a few questions that trace his evolution as an investor.
Financial Page: Thanks Taylor. We would be interested in your first experiences as an investor. When did you begin your investment career?
Taylor Larimore: I was talked into joining an investment club in the late 1940s when I was about 25 years old. The Club was organized by a friend and neighbor who was a Bache company stock broker. The idea was that we would have a revolving “investment committee” who would pick a few stocks for the club to buy–and later we would split the profits. The problem was there were no profits and after a couple of years we disbanded. Only our broker made money.
On Easter Sunday, 1951, I married the Miami Orange Bowl Theme Girl (Spirit of Youth) who was a professional model. Our combined income (I sold life insurance) was high and we began investing with a friend who was a Merrill Lynch stock broker. He put us in stocks and mutual funds which were often “churned.” Our broker/friend assured us we were doing well. I later realized we were badly underperforming the market. In 1986, despite pleas from our broker, we moved all our Merrill Lynch investments to Vanguard–the best investment decision we ever made.
FP: During this period you authored an investment newsletter. What did you attempt to accomplish with the newsletter?
TL: When we moved to Vanguard in 1986, I was excited to learn we could buy and sell mutual funds without commission. I was fascinated with market-timing and visited the Miami Public Library every month to read their market-timing publications (about 20).
I thought I had found the key to “beating the market” and I wrote a four-page monthly market-timing newsletter sent to about 40 friends each month. The letter lasted about two years until the 1987 bear market when my newsletter recommended funds plunged terribly. It is one of the most embarrassing episodes of my life–but I learned to never believe newsletter (or anyone else’s) forecasts.
FP: When did you decide to simplify your portfolio?
TL: When we moved to Vanguard in 1986, and knowing there were no fees, I immediately purchased 16 funds (mostly managed funds) for “diversification.” Our portfolio improved, and I was beginning to learn about John Bogle, the founder of Vanguard. I bought his first book, “Bogle on Mutual Funds” on the day it was published in 1993. It sold me on the many advantages of index funds and his “Twelve Pillars of Wisdom” (similar to “The Bogleheads’ Philosophy”) completely changed the way we invested. I have never mentioned on the forum that we are Flagship customers, but I thank John Bogle for a comfortable retirement and “living in the house that Bogle built.”
FP: You have written a third book in the Boglehead series. That must have required a great effort for a 94 year-old. Can you tell us something about it?
TL: About twenty years ago I proposed a four-fund portfolio on a Morningstar Forum. It consisted of Vanguard’s three-total market index funds plus a money market fund (I later eliminated the money market fund). In January, 2012, I made a similar post on the Bogleheads.org Forum. It was an immediate success and now contains over 2,000 replies.
I soon realized that a short, easy-to-read book on the subject of investing could help average investors everywhere. The book, The Bogleheads’ Guide to The Three-Fund Portfolio, will be released this month by the publisher. I am donating all royalties to The John C. Bogle Center for Financial Literacy.
FP: Thank you, Taylor.
The Third Bogleheads Guide
Read our interview with Taylor about his upcoming book in Interview with Taylor Larimore, author of The Bogleheads Guide to the Three-Fund Portfolio.
The Bogleheads’ Guide to the Three-Fund Portfolio: How a Simple Portfolio of Three Total Market Index Funds Outperforms Most Investors with Less Risk, written by Taylor Larimore, and published by Wiley.Hardcover: 144 pagesPublisher: Wiley; 1 edition (June 26, 2018)ISBN-13: 978-1119487333 From the publisher Wiley, the publisher, states: Twenty benefits from the three-fund total market index … Read more