Bogleheads.org

The Bogleheads on Investing podcast is for educational purposes only. The selection of guests and topics are designed to broaden your understanding of the financial markets, taxes, and personal finance in general. No discussion includes a recommendation to start market-timing or trade securities in an attempt to beat the market. Should you decide to take action based on any idea or opinion, that is your own choice.

Rick Ferri

hotajax wrote: ↑Thu Mar 16, 2023 2:51 pm Does Rick recommend rebalance, or is it truly a lazy portfolio and you, the customer, are really hands off?
I cannot find any reference to rebalancing or not rebalancing "lazy" portfolios.

It depends on whether it's a taxable account or non-taxable.

Yes, for non-taxable, usually covered by new contributions or withdrawals. Otherwise, once per year is fine.

Not much for taxable unless you can do it while tax-loss harvesting or using new cash.

I just listened. This sort of boils down to my earlier thread on liability matching portfolios, that was started in 2012 and was recently revived. So I’ll ask my big TIPS question here: Does Mr. Chancellor, anywhere, discuss the big “taxflation” problem of owning TIPS for high income investors with large taxable portfolios? He does not on this podcast. Rick Ferri, maybe YOU can chime in on this. For large taxable investors who believe we're headed for a 1966-1981 type period, what's the optimal thing to do? No crystal ball here. As Chancellor pointed out, during the 1966 to 1981 period, it would not have been fun owning a 60/40 portfolio. Neither stocks nor bonds generated returns over the inflation rate due to unexpectedly high inflation....

The transcript for this podcast is now available:

Bogleheads on Investing podcast, Episode 55, Edward Chancellor

Kookaburra wrote: ↑Wed Mar 08, 2023 10:31 pm

Rick Ferri wrote: ↑Mon Mar 06, 2023 6:56 am
My original Core-4 portfolio recommendation was:

Total US Stock Index
Total International Stock Index
Total Bond Index
TIPS

Individual TIPS or a TIPS fund?

Either Or. Up to you.

Harry Livermore wrote: ↑Tue Mar 07, 2023 10:17 am
Rick, you are very kind to continue to stay involved with Bogleheads, helping educate we who are not paying customers!

I've been involved with the Bogleheads for over 20 years. I think it has become part of my DNA.

Rick

For others who have not listened, this is not a podcast about financial forecasts. It is about financial history and a comparison of where we are today versus that history.

er999 wrote: ↑Sun Mar 05, 2023 11:32 pm

Rick Ferri wrote: ↑Sun Mar 05, 2023 6:55 pm

I have to agree with Chancellor that understanding the environment one is investing in is important.

Rick Ferri

Just out of curiosity what was your personal takeaway — use long term individual tips instead of total bond? Use market cap weight (or higher) for percentage of international stocks instead of tilting to us stocks as many on this board do? Lower safe withdrawal rates?

My original Core-4 portfolio recommendation was:

Total US Stock Index
Total International Stock Index
Total Bond Index
TIPS

I love Rick Ferri, but why is this a "must listen"? What actionable steps is someone like me (a set-it-and-forget-it Boglehead style passive investor) supposed to take from it? I mostly lurk on this board but the more I read, the more anxious/frustrated I get when I see topics that make me question my Boglehead approach. The more time I spend reading this board, the more I think I'd be better off staying away from here and just go about living my life, and only come on here when I have specific financial questions. Does anyone else feel the same way? Sorry for the rant, and no disrespect intended toward Mr. Ferri. I enjoyed the conversation immensely because Chancellor's analysis was based on centuries of data from markets around...

Kevin M wrote: ↑Sat Mar 04, 2023 12:42 pm Is there a transcript available?

There will be, thanks to our wonderful Bogleheads’ volunteers. It will be posted at the new center of the Bogleheads universe at BogleCenter.net, home of the John C. Bogle Center for Financial Literacy, a non-profit organization that brings you great conferences and content.

Both of Ed Chancellor’s books are excellent. I highly recommend them for any student of the markets.

My podcast with author and historian Edward Chancellor was SO interesting that it caused me to question, at least for a moment, whether we as Bogleheads are doing things the right way. You must listen to the entire podcast to understand what I am saying because much of the brain-rattling discussion comes near the end. So do it! Listen to this one, and let's have a discussion. Episode 055: Edward Chancellor on economic history and today’s markets Edward Chancellor is a financial historian, journalist, and investment strategist.  Ed graduated with first-class honors from Trinity College, Cambridge, and later from Oxford University. He worked for the London merchant bank, Lazard Brothers, and was later an editor at the financial commentary sit...

Here is the backstory. Many years ago, Mr. Bogle had asked a person who worked for Vanguard at the time to create a site to house his content. The johncbogle.com website was created for this purpose, although the URL owner was the private individual and still is. The site was neglected by the owner after Mr. Bogle died, which caused the site to go down and all Mr. Bogle's content to become unavailable. A couple of dedicated Bogleheads' volunteers used the WayBack Machine to recapture all of Mr. Bogle's original content and house it on hidden BogleCenter.net pages . We then asked permission from the Bogle family to open this section up to the public and the family graciously approved. Since that time, the owner of the johncbogle.com site upg...

If you're rolling a Roth 401k to a Roth IRA and a traditional 401k to a rollover IRA there is no tax.

Thank you for visiting the Bogle Center website.

The site was recently upgraded in part with generous book royalty donations by Taylor Larimore.

Thank you, Taylor!

John Bogle was a force for good in the investment industry. The mission of The John C. Bogle Center for Financial Literacy is to continue his work by "building a world of well-informed, capable, and empowered investors." Learn more about the Bogle Center in this recent interview with board member Karen Damato.

Q&A With Rick Ferri: The Evolution of the Bogle Center

Rick Ferri

A few thoughts: 1) Box spreads have been around for decades. It's a strategy that teases the T-bill rate out of SPX options. There is a slight counter-party risk, but it's minimal. 2) This strategy was in favor after the market crash in 1987 because people had capital losses. They substituted taxable income from money market funds and T-bills with the capital gain income created by box spreads. 3) The strategy fell out of favor as interest rates fell to 0%, and the bull market resumed. If you have a sizable capital loss carryforward from 2022 with no gains in sight to offset those losses against, you could use this strategy to create about a ~ 4% tax-free yield because the ~ 4% gain would be offset by tax-loss carry forward. Caveat: I'm not...

frugalecon wrote: ↑Mon Jan 30, 2023 4:06 pm Thanks for the interview, it was worth a listen. Just one teeny piece of advice: when discussing return assumptions, it wasn’t always clear to me whether they were real or nominal. I like to think in terms of real expected returns for, e.g., stocks, so that I don’t need to keep track of the inflation assumption as well.

Good point. The median 4% fixed income and 7% global equity expectation over 10 years was nominal. The median inflation expectation from the forecasters is around 3%, making the real expected returns 1% for fixed and 4% for equity.

Rick Ferri

robertfromtx wrote: ↑Sun Jan 29, 2023 7:22 pm Thanks Rick, really enjoyed the podcast and found it very insightful.

Thank you!

Good stuff!

Christine Benz, CFP®, is Morningstar's Director of Personal Finance and the co-host of The Long View Podcast. We discuss 2022 taxes and how SECURE Act 2.0 will affect 2023 taxes and beyond. We also dive into a safe withdrawal rate during retirement and discuss how changing market valuations, inflation expectations, and the "spending smile" during retirement affects the amount you can reasonably withdraw. HERE> Episode 054: Christine Benz discusses taxes and safe withdrawal rates in retirement This podcast is supported by the John C. Bogle Center for Financial Literacy , a non-profit organization approved by the IRS as a 501(c)(3) public charity on February 6, 2012. Your tax-deductible donation to the Bogle Center is greatly apprec...

“ Of course, I’m speaking about the average investor and everyone is different. Some people will decide 30/70 is too conservative and move up the risk scale. ”

Let’s put this in perspective. The “average investor” has $300,000 in savings as they enter retirement.

In fact, if I remember correctly, some very smart folks like Rick Ferri propose 30/70 for most retirees.

This is a misstatement. I do not propose 30/70 for most retirees. I wrote an article years ago suggesting that people have at least 30% in equity in retirement to achieve at least the inflation rate, then work their way higher in equity from there based on their unique situation.

Rick Ferri

Happy 99th Birthday to Taylor Larimore!

Tanelorn wrote: ↑Wed Jan 04, 2023 10:22 am

LadyGeek wrote: ↑Wed Jan 04, 2023 10:08 am You still have time to change it (if the contest manager agrees).

Yes, feel free to change or edit your post until this coming Monday if you realize a stock isn’t eligible for example, or if you change your mind.

MESA was eligible last year when I pick it and finished in next-to-last place. I'm keeping it this year even if it's "unofficially" eligible.

Rick Ferri

My single MESA stock pick is up 33% so far this year and the contest doesn't begin for another week!

Fly Baby Fly 2!

Long MESA

4107.12

I've seen MANY advisers who use active management strategies capitulate in bear markets because they wish to preserve clients as well as client assets. It only works if the adviser gets lucky twice. Once when they sell, and once again when they rebuy.

If the adviser also manages the money market, such as Fidelity, Schwab, or Vanguard, they are already being paid fees on these funds and cannot double-dip.

If the adviser is independent, they typically charge fees on all assets in an account including the money market. However, often a client requests that cash for future investment be split into a second account or separated using the adviser's accounting software and the adviser agrees not to charge a fee on that cash.

Rick Ferri

Join me for this delightful discussion with James L Collins. LINK> Episode 053: JL Collins on the simple path to wealth JL is a popular personal finance blogger , a leader in the FIRE movement (Financial Independence -Retire Early), and the author of The Simple Path to Wealth. The book has sold over 500,000 copies and is published in multiple languages. His second book, How I Lost Money in Real Estate Before it was Fashionable , highlights his experience as a landlord and provides a cautionary tale for people considering direct rental property as an investment. JL's upcoming book, Pathfinders, will feature success stories from 100 followers around the world. This podcast is hosted by Rick Ferri, CFA, a long-time Boglehead and investment adv...

We cannot thank you enough for the sacrifices you and so many others made 70 years ago so we can enjoy the freedom we have today.

Thank you for all the well wishes.

I will continue to host the Bogleheads on Investing podcast, although Jon Luskin will be a guest host for a few months this summer as my wife and I drive from Texas to Alaska and back with our camper.

Rick Ferri

It has been my pleasure to serve as the President of the John C. Bogle Center for Financial Literacy for the past three years. My tenure as President and four-year board member has come to an end. I am pleased to announce that Christine Benz has been elected as the new President! Rich Guerra was also elected as Vice President and will be taking over for Bill Bernstein. Two new board members were also added, Jon Luskin, who hosts our Bogleheads Live meetings and podcasts, and Karen Damato, who has served as a host for the Center sponsored Speakers Series and as a moderator for the 2022 Bogleheads Conference. Please see this announcement of newly elected officers and new Board Members. Welcome new board members I will remain on the conference...

Bumped up because you need to listen to this episode!

patrick wrote: ↑Wed Nov 30, 2022 8:44 am Without looking at he returns, based on recent events one probably guess US stocks would have outperformed. Nonetheless, here are the actual total returns from 29-Nov-2021 to 29-Nov-22:

-13.52% VXUS (Vanguard Total International Stock Index Fund ETF)
-15.65% VTI (Vanguard Total [US] Stock Market Index Fund ETF

Will the international outperformance continue for another year? I don't know, but stranger things have happened.

No surprise at all. The industry groups the makeup international are value-heavy industrials, financials, materials, and energy.

I learned a lot.

An important new podcast: Episode 052: Ryan Barrett and Mike Piper on estate planning Proper estate planning is one of the most important elements of a complete financial plan and often the most overlooked. Roughly half of my new clients either have no estate plan or an incomplete plan or an outdated plan. My two guests to discuss the issues are Ryan Barrett , a member of both the State Bar of California and Utah State Bar, and Mike Piper, CPA . Ryan is an estate planning attorney who began his legal career in southern California ten years ago after obtaining a Juris Doctor as well as a Master of Business Administration from a concurrent program at Pepperdine Law and Pepperdine Graziadio Business School. Mike is the author of the popular bl...

What is consensus on the validity of these types of protection tools? I have been using the "significantly below average market" approach to (presumably) be safe. I suspect the consensus answer you receive here will be to dismiss the simulations out-of-hand. There's a distinct anti-intellectual streak among some (though definitely not all) frequent participants. If you asked a group of people with actual professional expertise, you'd get the opposite answer I'm sure. I have 35 years of actual professional expertise and I dismiss this tool also. It's used mainly by less-experienced advisers who wish to create an illusion of control via a precise output when all the inputs they use are imprecise or incomplete samples. Rick Ferri

VanGar+Goyle wrote: ↑Sat Nov 19, 2022 10:20 am As an ex-tennis player, the scoring makes no sense.
No love, 15, 30 40, duece, or ad!
and it starts at 0-0-2? What is with that.
At least you rarely serve into your partner at the net

Tennis players either love pickleball or hate it. There seems to be no middle ground.

Read this reminder if you think 60/40 creates positive returns every year:

Worst years ever for a 60/40 portfolio

TN_Boy wrote: ↑Tue Nov 15, 2022 8:41 am I think that 60/40 has mostly worked for individual investors since the 90s (maybe the 80s) right? I.e. very few of us have seen this sort of thing in our investing lifetimes. So I'm not surprised by the surprise. How many individual investors as a percent of all US investors frequent this forum?

When the markets become predictable, real returns approach zero.

Rick Ferri

No one with any real knowledge of stock and bond market correlation ever said 60/40 was guaranteed to work every year.

Rick Ferri

Interesting that you dug up this old thread. Here is more on the Great Debate from 15-years ago:

The Great Commodities Debate, Part 1

The Great Commodities Debate, Part 2

Rick Ferri

The duration of your fixed income should be close to the duration of your liabilities. In other words, keep cash and short-term bonds for liabilities you know are coming up short-term. If you have no short-term liabilities, then invest intermediate-term or longer.

BigDGB wrote: ↑Fri Nov 04, 2022 8:57 am
Since you have enough conviction to tilt to 25% small cap value would this fund be a strong consideration for you in your quest for simplicity?

Thoughts?

If you are committed to maintaining a tilt continuously for 25 years, then any low-cost value fund should provide some level of premium if one materializes. If you're not committed, then don't do any tilt.

Rick

Much of my "bond" portfolio is composed of mortgages made to my children, an intermediate-term municipal bond fund, a preferred stock fund (rather than HY but much the same risk), iBonds rather than TIPS, and a short-term bond index fund.

Is there a return premium expected from small value? I expect one because there is more risk than TSM, but whether one materializes or not remains to be seen.

Within the equity portion of my portfolio, after reallocation, I own approximately:

40% US Total Stock Market
35% International Total Market
25% US Small-Cap Value

After much thought, I have decided to eliminate REITs from my portfolio and consolidate my equity holdings in the total US market index, total international stock index, and small-cap value index. This isn't a bearish call on REITs, it's that I hold enough real estate personally and don't see a need to include REITs going forward.

Rick Ferri

1) Not very good. The two guests are back office people who specialize in the mechanics of buying stocks and assembling indexes not asset allocation. 2) No real useful information on why US investors should buy international, why US investors should take currency risk, why the US year after year has become an even larger portion of the global portfolio, 3) why EM index investors should hold 28% PRC or whatever the number is. Criticism is fine if you are quoting facts. The fact is all this was covered. 1) The two guests were senior portfolio managers and Vanguard principals, not "back office" people. 2) I couldn't have made it clearer why investing in international stocks provides more industry diversification and currency diversi...