Bogleheads.org

trajan08 wrote: ↑Sun Jan 01, 2023 9:58 pm Fancy name: Duey,Cheathem,Howe

I loved Car Talk. Particularly the chauffeur, Peekup Andropoff. A unique show difficult to replicate.

secondopinion wrote: ↑Wed Mar 22, 2023 3:11 pm Marketing is lost on me; they would do themselves a favor by having all the details and the price upfront. I have a better gauge of my own happiness then they do.

Perhaps we are a more rational lot here on the Bogleheads forum - at least I like to think so. But when I see Tik Tok influencers, I am amazed by both the vacuity of their product and by their success. I am forced to conclude that marketing works. Argh.

What value premium do you assume for planning? 2%, 1%? You probably know that a lot of effort went into cleaning and standardizing the historical data sets that were used, and still continue to be used, for factor analyses. That cleaning process required lots of small, seemingly innocuous decisions, such as whether to measure a company's book value from its last fiscal year, from its most recent quarter, or from a different time period. Various researchers have shown, however, that if you make ever so slightly different decisions on these "small" points, many of the alleged factor premia disappear. This in no way suggests sloppiness on the part of researchers; it's just a reality of the types of decisions that one must make in st...

It's easier to find information on the S&P 500 index than one of the other broad-market funds like the Russell 3000, DJ US Total Stock Market, WIlshire 5000, CRSP US Total Market, or other "Total Stock Market" index. To add to the above: On a podcast, Gus Sauter, the former Chief Investment Officer at Vanguard, said that Vanguard moved away from using the Wilshire 5000 because it was not “free float”. That is, its cap weightings included shares that were not available to be bought or sold on public exchanges. In some areas, this caused Vanguard to overweight certain stocks and underweight others in their total market fund. Just mentioning this as having more stocks in an index is not always better. It still matters, IMHO, how...

I read through most of the AVGV filing's fine print in an attempt to better gage how suitable it could be for taxable accounts. Given the fund of funds approach, the component funds & their AVGE FOF track record (albeit very limited), I'm left hoping it will be reasonably simpatico for taxable accounts. Anybody develop a more convicted view on AVGV's taxable acc suitability? If I am reading the filing correctly, AVGV (All Equity Markets Value ETF) looks to be made up of 5 underlying ETFs: Avantis U.S. Large Cap Value ETF (23%) Avantis U.S. Small Cap Value ETF (16%) Avantis International Large Cap Value ETF (47%) Avantis International Small Cap Value ETF (24%) Avantis Emerging Markets Value ETF (8%) The percentages within parentheses re...

Stef wrote: ↑Wed Mar 22, 2023 1:52 am I currently have to move some investments from from account to account without the option to just transfer the ETFs (no need to go into details why).

Completely off topic, but I noticed the 13.33% allocation to Switzerland in the signature section of your post. I assume these are Swiss equities? May I ask what the rational is for a high allocation to Switzerland? Perhaps you are Swiss and want to retain a higher allocation to your home country? Thx.

Thought I'd make it a little easier by copying and pasting the names of the ETFs below:

Avantis® All Equity Markets Value ETF
Avantis® International Small Cap Equity ETF
Avantis® Moderate Allocation ETF
Avantis® Total International Markets Equity ETF
Avantis® Total International Markets Value ETF
Avantis® U.S. Large Cap Equity ETF

Attached is an SEC filing dated today (21 March 2023). Looks like Avantis plans on launching a half dozen new ETFs.

Search for "ticker:" in the attached document to jump to each ETF.

https://www.sec.gov/Archives/edgar/data ... 212023.htm

GAAP wrote: ↑Tue Mar 21, 2023 3:09 pm The first requirement I would have for a store of value is that it reliably stores that value, which tends to mean it is not volatile. Gold doesn't qualify.

The second requirement I would have is that it is a reliable real store of value, not nominal. Gold doesn't qualify here either.

What, in your opinion, meets the above criteria?

Superb.

seajay wrote: ↑Mon Mar 20, 2023 3:46 am Which highlights how inflation is a job form of taxation.

Not disagreeing with you, just highlighting that the above is true if you have assets. If you are in debt, inflation can be your friend, depending how the debt is structured.

HanSolo wrote: ↑Mon Mar 13, 2023 4:46 pm Depending on criteria chosen, one can "prove" that one should include gold, and one can "prove" that one should not.

Just curious: Do proponents of gold tend to favor gold stocks/ETFs, owning the physical metal in a bank safety deposit box or other 3rd party location, or owning the physical metal at home?

I know there will different preferences but, as a general rule, what does “including gold” tend to mean?

exodusing wrote: ↑Fri Mar 17, 2023 1:30 pm TIPS are still better than nominal treasuries if there is high unexpected inflation.

Enlighten me please. Does the above still apply if one buys treasuries via an ETF? In other words, during periods of high unexpected inflation, will an intermediate-term TIPS ETF do better than an intermediate-term nominals ETF, considering that in both cases your principle will fall in value? Thx.

I haven't found a microcap fund that I liked. I think small cap is good enough. However, there is a more fundamental question that you have to ask yourself -- were you attracted to those funds because the books (and studies) reported that they outperform over a 30 year period? Have you considered what it would be like to hold a fund that gets outperformed by everything else, could be 20% lower every year for more than a decade, and still believe in it and hold onto it? Because that's what it's like for microcaps and small cap value. It's possible that after the studies were published that everybody bid up the prices of small cap value and the microcaps, so the expected return has been arbitraged away. It is possible that in 30 years, you w...

Is international really a thing post 90s globalization? Can’t I buy Apple and say I’m globally diversified? He addresses it in the video. Advises to go with sector across countries over country with several sectors. To highlight the differences in sector weightings between US and Intl ETFs, I compared Vanguard VOO (S&P 500 index) versus Vanguard VEA (FTSE Developed All Cap ex US Index). As srt7 noted, buying only US firms exposes you to different industry sectors than does a global portfolio. Sector -- VOO -- VEA Communication Services -- 8% -- 3% Consumer Discretionary -- 12% -- 13% Consumer Staples -- 7% -- 8% Energy -- 5% -- 7% Financials -- 11% -- 19% Health Care -- 15% -- 11% Industrials -- 8% -- 17% Information Technology -- 26% ...

How do TIPS work for high tax bracket investors with taxable accounts? Do you recommend them at all? Do you recommend high doses of TIPS, which, in high inflation, become subject to big "taxflation". And if not TIPS for those who "won the game" then what? If “high tax bracket” equals “high net worth”, then maybe for simplicity think in terms of three options: TIPS, Nominal Treasuries or Total Stock Market (VTI). As others have noted, equities provide better inflation-adjusted returns than TIPS or nominals, and at a lower tax cost (albeit with greater risk and volatility). So if you’ve won the game and can live comfortably, even with a greater equity risk, you or your heirs will come out ahead. So maybe the question is n...

rjbraun wrote: ↑Fri Mar 17, 2023 10:08 pm If anyone can share some reference materials on this topic, I would appreciate it!

Maybe this will help.

https://crsp.org/files/JOI_CRSP_Index_Article.pdf

anil686 wrote: ↑Thu Mar 16, 2023 9:54 pm This x 1000 IMO…. It was the same (separate from Direct Indexing) with Wealthfront and others before with the continuous TLH portfolios. Those were a mess after a year….

Interesting. Did not know that.

Northern Flicker wrote: ↑Wed Mar 15, 2023 2:52 pm I'll add my own additional one:

7. The possibility of customization may lead to the investor making some active decisions or stock picking decisions, for better or for worse.

I’ll add one more.

8. At present, it’s difficult to unwind, leaving the investor with potentially hundreds of individual stocks to manage, or a sizable tax bill if sold to invest the proceeds into a Boglehead-friendly ETF. Maybe one day it will be possible to move “in kind” from a direct indexed portfolio to an ETF with no adverse tax consequences.

Apathizer wrote: ↑Wed Mar 15, 2023 7:36 pm But they're also credible sources on YouTube like Felix. The key is learning to distinguish them from from the bad and the ugly

Agree. I first came across Ben and Cameron via their podcast. I didn’t even know until recently that Ben also did YouTube videos. I still prefer the podcast, where (as you probably know) they go into vastly greater depth on investing topics.

Electron wrote: ↑Wed Mar 15, 2023 3:02 pm Franklin Templeton has posted a very interesting history on the Mutual Series Funds going back to the 1930s.

Thanks for posting. I got a kick out of the Adapting To Changing Markets title on page 15. Those of us of a certain age will remember Franklin-Templeton as a big name player in the late 20th century, particularly in international investing. What they did not do, however, was adapt. Their lethargic, high-cost model fell out of favor when Vanguard, Fidelity and others came to prominence. Maybe they are trying to reinvent themselves.

GRP wrote: ↑Wed Mar 15, 2023 5:16 pm How can anyone accuse Ben Felix of not citing his sources when being evidence-based is literally the thing that separates him from other YouTubers?

Well said. But let me pile on: If Ben (and Cameron Passmore, his co-host on the Rational Reminder podcast) does not follow an evidence-based investing approach, then no one does. Nor is it surprising that the portfolio that his company recommends is heavy on Boglehead principles, with a meaningful tilt toward Avantis and Dimensional products.

typical.investor wrote: ↑Wed Mar 15, 2023 6:59 pm I suppose if there ever is an ETF with a decent ER and meaningful definition of a friendly shore, then I’d like to market weight by that.

FRDM ETF?

https://freedometfs.com/frdm/

Hyperchicken wrote: ↑Tue Mar 14, 2023 10:18 am This is equivalent to the fund having paid out 50% of tax-free dividends which were immediately reinvested.

Not sure if the above represents a thought exercise or an actual event. If the latter, how does one pay out tax-free dividends?

I'm considering investing in PE , JF Lehman and Associates fund VI. This will be less than 1% of my portfolio, part of my play money, and for AA I'll consider it small cap value . You old folks like me may remember that JF Lehman was secretary of the Navy under Reagan. His funds invest in small companies in the defense industry and have had good performance in the past. I’m not sure if the attraction is PE, a tilt toward the defense industry, or a tilt to small cap value. If it’s the latter two, maybe take a look at something like SPDR’s XAR ETF. XAR is an ETF that focuses on defense and aerospace. Though not small cap value, it’s an equal weight ETF, which means one’s investment is not concentrated in the handful of big defense stocks. Pl...

I wonder which topic arouses the strongest opinions on this forum, holding a portion of one’s portfolio in gold, or holding international stocks at their market cap weight?

It’s fun to read about both.

This article (https://obliviousinvestor.com/tips-vs-n ... ury-bonds/) says the difference in yield between TIPS and nominal bonds provides an estimate of future inflation.

So if I look at Vanguard's short-term TIPS ETF (VTIP, yield 1.52%) and Vanguard's short-term treasury ETF (VGSH, yield 4.85%), then the difference suggests an inflation rate of 3.33% over the next couple of years (the duration of the two ETF's).

Is this the way one compares TIPS to nominals? (Note I'm not asking whether 3.33% is a good or bad estimate, I'm just trying to understand the methodology by which one compares TIPS to nominals.).

Thx.

IMHO, Mr. Zweig is spot on. When times are tough in stocks and bonds, it can be tempting to jump into something that likely is even worse. Swensen himself, in his book Unconventional Success: A Fundamental Approach To Personal investment, recommends that individual investors stay away from illiquid and opaque assets. As you probably know, he recommended the following portfolio for us normal folk, implemented through low cost funds.

Domestic equity - 30%
Foreign developed equity - 15%
Emerging market equity - 5%
Real estate - 20%
U.S. Treasury bonds - 15%
U.S. Treasury Inflation-Protected Securities - 15%

garlandwhizzer wrote: ↑Tue Mar 07, 2023 1:57 pm Thanks for posting, Gaston. It's important to remind ourselves of the simple basic truths of indexing from time to time. The financial media is dominated by an abundance of self-serving chaff that the winds of time blow away while the precious little wheat persists. Financial media creates a carpet bombing of thinly disguised advertising, more marketing than insight in IMO.

Garland Whizzer

Agree. It’s also worthwhile to remember that the SPIVA report does not factor in taxes. So if you hold low cost, broad market index funds in taxable accounts, your advantage over active is even greater.

Candor wrote: ↑Tue Mar 07, 2023 2:22 pm The link provided takes you to the Mid-Year report. The Year-End is: https://www.spglobal.com/spdji/en/spiva ... e/spiva-us

oops. Thank you.

Looks like actively managed funds had a good year (relative to passive funds), but still underperformed in aggregate.

My favorite statistic: Over 20 years, 92% of all actively managed funds underperformed passive on an absolute basis. 97% did so on a risk-adjusted basis.

https://www.spglobal.com/spdji/en/spiva ... -scorecard

xenial wrote: ↑Sun Mar 05, 2023 4:56 pm You might want to consider the iShares® iBonds® Dec 2032 Term Treasury ETF (IBTM), which invests in Treasury securities maturing in 2032.

Hi Xenial. I looked at the iShares product some time ago, but didn’t fully understand it.

If I put, say, $10,000, into the iShares 2032 ETF, will I get back the full return of my principal in 2032? If not, then what is the advantage of the iShares product versus, say, the standard Vanguard intermediate-term Treasury ETF? Thx.

https://www.ishares.com/us/strategies/b ... nd-ladders

[Thread merged into here --admin LadyGeek]

Just for amusement, I asked ChatGPT which brokerage has the best customer service. Here is its response.
– – – – – – –

It's difficult to determine which brokerage has the "best" customer service as it can depend on individual experiences and preferences. However, some brokerages are known for having strong customer service:

1. Charles Schwab - Known for having excellent customer service, including 24/7 phone support and online chat.

2. Fidelity - Also known for providing quality customer service, including personalized support and extensive online resources.

3. TD Ameritrade - Offers 24/7 phone support and an extensive network of physical branches for in-person support.

nisiprius wrote: ↑Thu Mar 02, 2023 6:17 pm The active funds are trading ten to twenty times as much as the index funds.

Thank you for clarifying. This means that active traders will keep the wheels of price discovery and market efficiency well greased.

Random Walker wrote: ↑Wed Mar 01, 2023 9:37 pm But I do think they are rules based and have no individual security selection or market timing.

Help me understand something please. Yes, quant funds have algorithms and rules-based processes that allow them to trade to a consistent strategy, but those human-built algorithms still produce buys and sells of individual securities, don’t they? I don’t see how the “human or algorithm” question relates to the “passive or active” question.

It seems like the quant guys still are picking individual stocks as opposed to buying the whole basket. Not true?

I don’t know what % of the US equity market is held in broad-market index funds, but to me the more important number would be the daily (or annual) trading volume. In other words, what % of today’s trades took place due to index fund activity versus non-index fund activity?

I don’t know the answer, but my guess is that non-index trading activity dwarfs whatever the indexers do.

Yes. The DFA equity funds I would consider passive. Fama’s definition of passive is no market timing and no individual security selection, and these funds are passive in that sense … Asness clearly calls them active. Yes, Cliff Asness, Bill Sharpe (of the Sharpe ratio), Burton Malkiel (author of A Random Walk Sown Wall Street), among others, have a pretty tight definition of passive: low cost, low turnover, broad based 3rd party index that follows a market cap weighting. So any tilt away from market cap is active, regardless whether it’s a small cap tilt, an energy sector tilt, a quant model, or individual stock selection. Another way to think about it: passive seeks beta (the cap weighted return of the market). Any investment strategy tha...

nisiprius wrote: ↑Tue Feb 28, 2023 4:09 pm I hope we can agree that this DFA product is not "passive?"

I agree (even tho there is no agreed definition of “passive”).

It’s been some time since I read the Fama French papers on 3-factor and 5-factor investing. My recollection though, is that they identified a small cap premium in their 3-factor model back in the early 90s, but when they came out with their 5-factor model in the early 00s, they backed off their claim of a small cap premium, but still emphasized a small cap value premium. For what it’s worth …

Just to bring another perspective to this question: Is there a need to insure against market declines? If the market declines by 20%, 30% or even 50%, history suggests you will be ok if you are long-term investor. Yes, it will be painful, but the market will recover. As Warren Buffet, the White Coat Investor, and others have said, what you really want to protect against is getting wiped out. So instead of insuring against a 40% decline, what you really want is a way to protect the other 60% that you still have, so that over time it will re-grow to the 100% you had before the crash. Protecting that other 60%, however, is difficult, as the risk often is not an economic one, but a geopolitical one. I've never heard a good answer on how to prot...

I know the general philosophy of this site is that investing should be kept simple, and there is no need to give away 1% to an advisor; but I’m curious if anyone has retained an advisor anyway because they find the value of the 1% is worth it for…extra gains? Non-allocation advice, etc? Not trying to be flippant, but yes, lots of people do. We on this forum have to remind ourselves once in a while that we are a minority. Lots and lots of people know little about finance and, what’s more, don’t want to know. All the wiki’s and books won’t help them a bit. Those same people often benefit from an advisor in the most basic of ways: by learning how to get out and stay out of debt, how to budget, how to live within their means, what kind in insu...

typical.investor wrote: ↑Sun Feb 26, 2023 8:29 pm You are asking a very complicated and difficult question with no easy answer. The short answer is no and a longer answer is yes but it is not easy.

I agree with the above. There are lots of traps one can fall into.

When I lived in the UK, I used these guys: https://www.ustaxfs.com/

They are not cheap, but paying for 1-2 hours of professional advice is well worth it IMHO.

We can all find a stock or fund that has beaten the S&P 500 over the last 20, 30 or 40 years. The hard part is threefold:

1. You must identify a super-performing stock or fund in advance of its stellar performance.
2. You must have enough confidence to invest a meaningful percentage of your assets in your selection.
3. You must stick with it through good times and bad.

And if you can do the above, every S&P SPIVA report, every M* Mind The Gap report, every periodic Vanguard analysis, and pretty much every academic study says that, over the long term, after all fees and taxes, you will with around a 95% likelihood underperform the market.

john0608 wrote: ↑Wed Feb 22, 2023 9:32 am - the typical 1% on 7 figure portfolios is $10,000 per million year after year so it adds up quickly for either basic advice or worse (account churning)

Say you have $1 million in assets that you place with an advisor that charges 1% per year, and you leave it with the advisor for 40 years (20 years of further accumulation + 20 years of drawdowns). That’s a fee of $10,000 per year x 40 years = $400,000.

But it’s actually higher. If your advisor invests that 1% every year into his VTI account, he’ll have about $800,000. Even more, depending on your VTI growth assumptions.

And that’s all money out of your pocket.

Vanguard is dead to me. Mr. Buckley is not Mr. Bogle by a long shot. If interested, you might want to read a book that came out this year called Inside Vanguard by Charles Ellis. I admire Mr. Bogle as much as the next person. but as is often the case, the founder of a company is not always the right person to take the company to new heights. Mr. Bogle laid the foundations of Vanguard – the mutual structure, emphasis on low cost, creation of index funds, etc – but I would not underestimate Jack Brennan (Mr. Bogle's successor). According to the book, Mr. Brennan was the guy who brought rigor and consistency to Vanguard's operations, and grew the company well beyond what Mr. Bogle had imagined, including bringing in ETF's, which Mr. Bogle was...

Nice to see some positive news about customer service at Vanguard.

I still wish that Vanguard, Fidelity and Schwab would all switch to the "Apple" model, where you go to a website, book an available slot on a calendar, and then they call you at the appointed time. No waiting for someone in customer service to pick up. Seems like all companies could manager their call-center operations more efficiently with this model, because they know 1-2 days in advance what the call volume will be.

Such a soft ball interview... really seemed like the interviewer didn't do his homework or dig in on some of Vanguard's short comings. Yes, softball. I’d like to ask Mr. Buckley one question on customer service, and just have him answer A, B or C. A = We understand Vanguard has fallen behind on customer service, and under my leadership we will make Vanguard once again a best-in-class service provider. B = We understand Vanguard has fallen behind on customer service, and we intend to make some improvements. Our goal, however, is to be good but not best-in-class. C= We understand Vanguard has fallen behind on customer service, and we will do the minimum to keep the lights on. But if you want great customer service, you might prefer owning Va...

Geologist wrote: ↑Mon Feb 13, 2023 9:16 pm Do you have examples of active funds that followed this "easy way" to become a passive fund after 2008 by creating a new index "based on some criteria"?

Not sure if this is what you’re getting at, but lots of active funds/ETFs have come up with their own indices, and then call themselves passive. The attached article gives some general examples. Part of the problem, IMHO, is that there is no agreed definition of “passive”.

https://www.investor.gov/introduction-i ... e-traded-3

Elysium wrote: ↑Mon Feb 13, 2023 5:18 pm Vanguard: Stay the course across broad market equities & bonds.

+1.

If interested, AQR Capital's top 3 investment ideas for 2023. (three-minute viewing time)

https://www.aqr.com/Insights/Quick-Take ... r-for-2023