Bogleheads.org

So a number of you go with an advisory service but then decide to override their recommendations - what's the point? Just DIY it yourself.

I have a 30% SCV tilt. Didn't go anywhere. The performance chasers are the ones that post about it when it is doing well and are silent when it is doing poorly. That's why there's a million money market threads now.

sharadr wrote: ↑Wed Mar 22, 2023 11:43 am What is the fee for digital advisory ? I am currently enrolled in PAS, thinking to switch to digital.

0.2% per year AUM

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As a final check on any investments I intend to make, I look and see how much money is invested in a fund to understand how other hopefully rational investors have decided. Any VG fund that has a significant amount invested ($50B?) passes this final test. Regarding one of the forum’s favorite topics, dividend irrelevance, after reading about every thread I could find here, I thought I would see how investors were voting with their feet. Just by reading the product summaries, there are at least seven (probably more) VG funds that have a dividend focus: High Dividend (VHYAX/VYM), Dividend Appreciation (VDADX/VIG), Dividend Growth (VDIGX), Equity Income (VEIRX), Wellesley Income (VWIAX), International High Dividend (VIHAX/VYMI), and Internati...

There's probably some diversification benefit to adding EM to developed but EM has unique risks that you, as a US investor, are not compensated for (expropriation risk being the big one). I've seen this claim made before but I'm not sure how true it really is. Using everyone's favorite example China, even the state owned enterprises rely on global capital markets to raise funding, there just isn't enough domestic capital within the country to meet the needs of its companies. Shouldn't we expect that global investors and institutions who participate in the primary market to price in some degree of expropriation risk? China trades at a CAPE of 12 vs 30 for the US, it certainly seems to be priced as much riskier than developed markets Perhaps...

AVGV (All Markets Value) is probably going to be dominated by LCV I would guess. Would be nice if they include a strong SCV tilt though - 50/50 LCV/SCV would be nice.

Just another example of how Vanguard is overwhelmed.

Wow, didn't know the Symantec authenticator on Fidelity was so inconvenient - you have to call to set it up and it can only be on one device? I guess that could be argued it is more secure unless anyone can easily call in and impersonate you and a Fidelity rep will give away the farm.

Fidelity should have it so that the user can use their own 2FA app. There are many proper 2FA apps out there that are more secure and offer backups. Unhappy that Fido doesn't support Google authenticator or Authy. Actually, they do. See here: There is actually an unofficial way to provision your own Symantec VIP ID and get the TOTP secret (QR code) yourself instead of being hidden inside the app or fob/token. Then you can use that secret to put into your preferred authenticator app instead of using the Symantec VIP app. Instructions: www.reddit.com/r/personalfinance/comments/hvvuwl/using_google_auth_or_your_totp_app_of_choice_for/ Just by reviewing those instructions and considering it's unofficial, I wouldn't touch it - especially with ho...

There's probably some diversification benefit to adding EM to developed but EM has unique risks that you, as a US investor, are not compensated for (expropriation risk being the big one).

As a final check on any investments I intend to make, I look and see how much money is invested in a fund to understand how other hopefully rational investors have decided. Any VG fund that has a significant amount invested ($50B?) passes this final test. Regarding one of the forum’s favorite topics, dividend irrelevance, after reading about every thread I could find here, I thought I would see how investors were voting with their feet. Just by reading the product summaries, there are at least seven (probably more) VG funds that have a dividend focus: High Dividend (VHYAX/VYM), Dividend Appreciation (VDADX/VIG), Dividend Growth (VDIGX), Equity Income (VEIRX), Wellesley Income (VWIAX), International High Dividend (VIHAX/VYMI), and Internati...

Unless there’s a survey asking Vanguard customers why they invest in the funds they do, this is all just speculation.

The combined invested amounts of these funds as of February 28, 2023 is $311 billion. If chasing dividend investments is truly not rational, why is so much money invested in pursuit of it by otherwise rational investors? There's $535 billion invested in Bitcoin right now. Not to get into a battle of statistics but there is what, $100 trillion in global stock market cap and VG has about 3% of that total, so if the amount invested in dividend strategies globally could be about $10 trillion. It may be larger, given the ex-US markets preference for dividends. The point is sufficient to say that massive amounts of money are invested in dividend strategies globally and I am interested in understanding the reasons why, without labeling those who ...

Legitimate reasons to hold dividend-only stocks or stock funds: 1. Someone who would have difficulty managing an investment portfolio (elderly, special needs, etc) and may be taken advantage of by having it managed by others and who can accept lumpy dividend payments from the equity side because their base level of spending is covered by SS and/or pensions. 2. Someone who refuses to understand (and will never make an effort to do so) how dividends work and uses dividend payments as a behavioral crutch to not sell in a down market. 3. Someone who wants a value tilt but has only dividend funds as an option in a 401k and cannot achieve their desired tilt in taxable or an IRA otherwise. 4. Someone who already has a dividend only fund in taxabl...

Legitimate reasons to hold dividend-only stocks or stock funds: 1. Someone who would have difficulty managing an investment portfolio (elderly, special needs, etc) and may be taken advantage of by having it managed by others and who can accept lumpy dividend payments from the equity side because their base level of spending is covered by SS and/or pensions. 2. Someone who refuses to understand (and will never make an effort to do so) how dividends work and uses dividend payments as a behavioral crutch to not sell in a down market. 3. Someone who wants a value tilt but has only dividend funds as an option in a 401k and cannot achieve their desired tilt in taxable or an IRA otherwise. 4. Someone who already has a dividend only fund in taxable...

Can the $1.2 trillion invested in a certain currency we can't talk here be wrong? AUM doesn't tell you anything here. Dividends are still irrelevant no matter how many retail investors "vote with their feet". AUM certainly tells you some significant subset of VG investors have a belief that dividends matter, for whatever reason they believe. To deny there is something to be understood is no different than ignoring the views of a section of society. I am quite open to understanding why and then giving it an appropriate weight. Dividends may certainly be (mostly) irrelevant from corporate and personal accounting perspectives, at least theoretically, but that is not really the point in discussion here. The question really is whether...

Can the $1.2 trillion invested in a certain currency we can't talk here be wrong? AUM doesn't tell you anything here. Dividends are still irrelevant no matter how many retail investors "vote with their feet".

aristotelian wrote: ↑Sun Mar 19, 2023 11:06 am

burritoLover wrote: ↑Sun Mar 19, 2023 10:54 am

aristotelian wrote: ↑Sun Mar 19, 2023 10:49 am I don't know how it compares from BofA, but the couple times I used Fidelity bill pay the turnaround time was unacceptably long, at least 3-4 weeks until check was cashed. I would do paper checks or ebills only with Fidelity.

Were these small local companies or something?

Two were locals, one was a major national insurance company. They advised me to use providers that offer eBills. Coincidentally I have tried to set it up to pay my BofA credit card, and it says e-bill eligible but fails when I click to enroll. I have pretty much given up!

Interesting - thanks. Hadn't hear people mention problems with Fidelity bill pay.

aristotelian wrote: ↑Sun Mar 19, 2023 10:49 am I don't know how it compares from BofA, but the couple times I used Fidelity bill pay the turnaround time was unacceptably long, at least 3-4 weeks until check was cashed. I would do paper checks or ebills only with Fidelity.

Were these small local companies or something?

Hmm, let's think about US risks that can have an effect on long-term returns: rapidly accelerating gov't spending and debt-to-GDP ratio rapidly declining birth rate, increasing age, declining academic scores rapidly increasing political risks (gulf between both parties, willingness of both parties to put the country at risk for political agendas) rapidly increasing gov't intervention in markets (QE, stimulus and interest rate manipulation at a the drop of a hat and continuing well after the crisis is adverted, bailouts of companies that should have gone out of business, policies designed to try to keep the stock market happy) rapidly increasing income inequality poor immigration policies high relative stock market valuations Many of the ab...

Keep in mind that Fidelity is not a bank and their CMA account is not exactly equivalent to holding your cash in a single bank of your choosing. When you want FDIC insured deposits, their CMA account moves your money into actual banks - Fidelity provides you a list of "program" banks that you have to choose from: https://accountopening.fidelity.com/ftgw/aong/aongapp/fdicBankList?type=fcma That program list can change at any time and they can drop the bank you select in the future - generally you'll get some notice on that and get to choose another bank but Fidelity reserves the right to move you out of your chosen bank(s) and into whatever they want in certain circumstances. Fidelity receives a fee from the program banks so they a...

In the longest running funds since Fama and French's 3-factor paper, DFA small cap and small cap value funds have both outperformed the Vanguard 500. This is not a free lunch - higher volatility and higher drawdowns are what you ended up with. As should be expected as both small and value are riskier than the market portfolio.

If these are taxable accounts, I doubt when transitioning to PAS, Vanguard would liquidate US stocks and generate a big taxable event just to get international to 40%.

Hmm, let's think about US risks that can have an effect on long-term returns:
rapidly accelerating gov't spending and debt-to-GDP ratio
rapidly declining birth rate, increasing age, declining academic scores
rapidly increasing political risks (gulf between both parties, willingness of both parties to put the country at risk for political agendas)
rapidly increasing gov't intervention in markets (QE, stimulus and interest rate manipulation at a the drop of a hat and continuing well after the crisis is adverted, bailouts of companies that should have gone out of business, policies designed to try to keep the stock market happy)
rapidly increasing income inequality
poor immigration policies
high relative stock market valuations

Apathizer wrote: ↑Fri Mar 17, 2023 11:54 am

burritoLover wrote: ↑Fri Mar 17, 2023 11:49 am Actually Australia's stock market has outperformed the US historically so if you're 100% US stocks, you're really just investing in the 2nd best market in the world.

Yeah, I've mentioned that in other threads, yet I doubt most arguing for 100% US would consider 100% Australia instead. Why not if past performance is all that matters?

Well, maybe they can hedge their performance chasing bets with a tilt to Australia.

Actually Australia's stock market has outperformed the US historically so if you're 100% US stocks, you're really just investing in the 2nd best market in the world.

+1 on M1 finance. There's no fee. You can set up "pies" any way you want. So, let's say you want a 25% small value tilt. So, you could have a "market" pie at 75% and a "small value" pie (you name these) at 25%. Within the "small value" pie, you could have 50% AVUV, 50% AVDV or whatever. You can set up auto-contribute or you can manually move money in at any time and it will buy the securities (ETFs or individual stocks) that are underweight according to your allocation so it is dynamically rebalancing. It is pretty slick.

YTD the Mid-Cap Fund is up only .4% vs. the S&P 500 Index being up 3.5%, and the Extended Market fund up 2.7%. I have never seen this type of variance in the Mid-Cap fund from the other broader market indexes. I understand that the Small Cap Value sector is weighing down the Extended Market but I have no idea what is depressing the Mid-Cap fund. Anyone have any insight into why this decoupling has occurred? Maybe the S&P 500 is overperforming relative to the rest. The fact is that tracking error should be expected when looking at sections of the total index. SCV was significantly "underperforming" in the 1990s for quite a while - it was not pretty, I can tell you from personal experience having been heavily weighted to SC...

The problem with your analogy is Apple has many competitors and you’re assuming that the mass of those competitors will outperform Apple. In any given year I’m sure many many countries outperform the US stock market…so what? No one can guess which of those countries will outperform the US. But history has shown us that the totality of those countries have not outperformed the US over any substantial length of time in modern history in our lifetimes. You could use the same logic that since AAPL has had returns of 23% per year for 36 years (the entirety of its existence) that must mean we should expect the same going forward? Why should we bother investing in any of Apple's competitors - no one can guess which of those competitors will outpe...

It's not just this exceptional ability of the US to respond to crisis. There's an exceptional ability to undermine foreign companies and countries through the many tools of economic warfare which are at the disposal of the US government. We saw it in the 80s when the Japanese semiconductor industry was considered a threat, we're seeing it extensively now when China's rise is considered a threat, and also now when the US government is trying to give an advantage to US clean energy and chip manufacturing. The US has an unfair advantage due to its reserve currency status, control of the international payments system, and geopolitical factors such as strong leverage on allied countries which are dependent on the US for security (see the recent...

Some stats from the video (paraphrased):
From 1950 to 1989, US stocks underperformed ex-US stocks by 2.65% real per year.
From 1968 to 1982, US stocks returned -0.08% real per year, while ex-US stocks returned 3.61% real per year.
From 2000 to 2009, US stocks returned -2.25% real per year, while ex-US stocks returned 1.01% real per year.

From 1980 to 2020, nearly all of the outperformance of US stock over ex-US developed was from valuation increases. US outperformed ex-US by 2% per year over this period but when adjusted for their valuation changes, the outperformance is only about 0.4%.

Simply put: The response of the US government to a crisis is still not fully priced in to markets. I'm not 100% US but when decisions like FDIC action over the past week repeat time and time again I think there is a preference for US investments that meets and continually surpasses expectation. This is not taken into account in the theoretical asset allocation models in the sense that economists don't consult with political scientists, sociologists, and psychologists to attempt to include more human-based factors in the model (I understand, doing so would make the model intractable). My guess is in my lifetime the US's ability to do this with minor consequence will be lessened (I'm in my 50s) but I can't be sure. I'm pretty sure people in ...

Simply put: The response of the US government to a crisis is still not fully priced in to markets. I'm not 100% US but when decisions like FDIC action over the past week repeat time and time again I think there is a preference for US investments that meets and continually surpasses expectation. This is not taken into account in the theoretical asset allocation models in the sense that economists don't consult with political scientists, sociologists, and psychologists to attempt to include more human-based factors in the model (I understand, doing so would make the model intractable). My guess is in my lifetime the US's ability to do this with minor consequence will be lessened (I'm in my 50s) but I can't be sure. I'm pretty sure people in ...

So don’t invest in EM but developed. It only seems like yesterday (OK, I'm old and 2007 seems like yesterday) that everyone was insisting on the huge importance of investing in emerging markets. Even John C. Bogle on a few occasions, though only as a footnote to saying you don't need ex-US at all. He then went on to suggest, as an aside, something like "but if you want to, maybe 10% total international and 10% emerging markets--but no more than 20%." 2007 was also the era when people like Burton Malkiel were writing books with titles like "From Wall Street to the Great Wall: How Investors Can Profit from China's Booming Economy." And scoffing at anyone for quoting prospectus language about emerging markets risk. That is...

Trying to rationalize a probably heavy home country bias by looking at short-term market movements (one day lol) - classic behavioral error.

Apathizer wrote: ↑Wed Mar 15, 2023 6:48 pm

burritoLover wrote: ↑Wed Mar 15, 2023 6:44 pm So don’t invest in EM but developed.

Not sure I agree. EM is riskier, but has been less correlated with the US than developed ex-US markets.

The risk is a valid concern though.

Interesting take also from Ben Felix. Personally, I limit to 10%.

Episode 191: Emerging Markets: Diversifying Asset or a Reverse Lottery

https://rationalreminder.ca/podcast/191?format=amp

So don’t invest in EM but developed.

Nice documentary on the feds ridiculous manipulation of markets.

Tom_T wrote: ↑Wed Mar 15, 2023 10:20 am

burritoLover wrote: ↑Wed Mar 15, 2023 10:15 am

Tom_T wrote: ↑Wed Mar 15, 2023 9:11 am AVGE now down 10 percent off its ATH of February 3. I guess the exposure to smaller international banks is hurting it.

At 2% international SCV, nah.

Then maybe the large international banks!

AVUS (US equity) and AVLV (US LCV) are down 7% at 1 month which make up 58% of AVGE.

Tom_T wrote: ↑Wed Mar 15, 2023 9:11 am AVGE now down 10 percent off its ATH of February 3. I guess the exposure to smaller international banks is hurting it.

At 2% international SCV, nah.

I would make sure you at least have a bank account separate from Fidelity that has enough money to pay bills and live on for a period of a month or so. If your brokerage account is the target of fraud or locked down for whatever reason, it isn't like you are made whole again/given access instantly. There could be a period of time where you can't do anything with the account. If there's widespread fraud committed against Fidelity clients (let's say a mass security breach / info leak) and many of these account holders are impacted, expect it to take even longer.

timing the bond market is harder than timing the stock market. It's pointless - you might get lucky and it works to your advantage. Over the long-term with multiple attempts at timing, very high probability it won't. There any obvious cues are already priced in based on their probability of happening.

You're covered by $500k SIPC insurance per brokerage: https://www.sipc.org/for-investors/what-sipc-protects SIPC protects against the loss of cash and securities – such as stocks and bonds – held by a customer at a financially-troubled SIPC-member brokerage firm. The limit of SIPC protection is $500,000, which includes a $250,000 limit for cash. Most customers of failed brokerage firms are protected when assets are missing from customer accounts. SIPC does not protect against the decline in value of your securities. SIPC does not protect individuals who are sold worthless stocks and other securities. SIPC does not protect against losses due to a broker's bad investment advice, or for recommending inappropriate investments. SIPC protects cas...

Apparently, he wasn't a fan (see below). Although he did tell retirees to have dividend tilts - albeit that is more investing in value by proxy. The Telltale Chart Keynote Speech by John C. Bogle June 26, 2002 In any event, place me squarely in the camp of the contrarians who don’t accept the inherent superiority of value strategies over growth strategies. I’ve been excoriated for my views, but I’m comforted by this reported exchange between Dr. Fama and a participant at a recent investment conference: “What do you say to otherwise intelligent people like Jack Bogle who examine this same data and conclude that there is no size or value premium?” His response: “How far are they from the slide? If I get far enough away, I don’t see it either ...

nyc212 wrote: ↑Mon Mar 13, 2023 12:19 pm As I understand it, brokerage accounts at, for example, Schwab, are SIPC insured up to $500K, but only up to $250K for cash.

Money Market accounts such as SNAXX are not insured at all.

From the SIPC page:

Money market mutual funds, often thought of as cash, are protected as securities by SIPC. SIPC protects cash held by the broker for customers in connection with the customers’ purchase or sale of securities whether the cash is in U.S. dollars or denominated in non-U.S. dollar currency.

https://www.sipc.org/for-investors/what-sipc-protects

I think any tilting is pointless unless there are certain risks that one's personal portfolio needs to reduce and other risks that they can accept instead. I assert that neither is more profitable on a expected basis, but it could be that one is more likely to be profitable (essentially, I think skew/kurtosis plays a role). Sadly, I think too many are seeking alpha (or even risk-adjusted alpha in the sense of standard deviation) and not many are considering the other statistical moments, let alone the specific risks increased/reduced by the tilt. Of course, this is opinion; but I doubt it is unreasonable to assume that certain factors, if tilted towards, will incur more of some risks and less of others. If Fama and French factors are uniqu...

I think any tilting is pointless unless there are certain risks that one's personal portfolio needs to reduce and other risks that they can accept instead. I assert that neither is more profitable on a expected basis, but it could be that one is more likely to be profitable (essentially, I think skew/kurtosis plays a role). Sadly, I think too many are seeking alpha (or even risk-adjusted alpha in the sense of standard deviation) and not many are considering the other statistical moments, let alone the specific risks increased/reduced by the tilt. Of course, this is opinion; but I doubt it is unreasonable to assume that certain factors, if tilted towards, will incur more of some risks and less of others. If Fama and French factors are uniqu...

Value outperforming growth is thought to be a risk-based phenomenon. You could show a 30 year graph of some time period where high yield bonds underperform intermediate treasuries. That doesn't mean it's "reversion to the mean" and that high yield ("junk") bonds no longer have a risk premium. Risk can and does show up. If you want to present the value premium as a behavioral phenomenon that has likely gone away after Fama and French factor models, that is certainly a valid perspective. Likely it is a bit of both. Factors are merely a statistical explanation of the variance of returns for stocks. As is the market portfolio (CAPM). Credit and duration are factors for bonds, albeit perhaps more deterministic and easier to ...

When you see a price quote, it is what some transaction was completed at - doesn't mean that every limit order in the entire world at that price was executed. This is especially the case during volatile periods.