Dave Ramsey made me laugh today

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TheAccountant
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Dave Ramsey made me laugh today

Post by TheAccountant » Fri Jul 13, 2018 3:04 pm

I was listening to his podcast and he basically said this:

"Bonds are stupid, they decrease in value in rising interest rates. I don't own any bonds and all of my mutual funds are in stocks." He then rattled off his usual "growth, growth/income, aggressive growth, international" allocation.

Seems silly. I bet he has bonds in those funds and doesn't even know it.

What do you think?

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TheTimeLord
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Re: Dave Ramsey made me laugh today

Post by TheTimeLord » Fri Jul 13, 2018 3:11 pm

TheAccountant wrote:
Fri Jul 13, 2018 3:04 pm
I was listening to his podcast and he basically said this:

"Bonds are stupid, they decrease in value in rising interest rates. I don't own any bonds and all of my mutual funds are in stocks." He then rattled off his usual "growth, growth/income, aggressive growth, international" allocation.

Seems silly. I bet he has bonds in those funds and doesn't even know it.

What do you think?
I would not expect stocks funds to hold any meaningful amount of bills, notes or bonds. While I don't agree with him you will find plenty of people here who believe in an asset allocation of 100% equities and 0% bonds.And if he is telling the truth about holding stock growth funds he has been killing it since 2009.
Last edited by TheTimeLord on Fri Jul 13, 2018 3:13 pm, edited 1 time in total.
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Dottie57
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Re: Dave Ramsey made me laugh today

Post by Dottie57 » Fri Jul 13, 2018 3:12 pm

TheAccountant wrote:
Fri Jul 13, 2018 3:04 pm
I was listening to his podcast and he basically said this:

"Bonds are stupid, they decrease in value in rising interest rates. I don't own any bonds and all of my mutual funds are in stocks." He then rattled off his usual "growth, growth/income, aggressive growth, international" allocation.

Seems silly. I bet he has bonds in those funds and doesn't even know it.

What do you think?
I don’t care what Dave Ramsey thinks. :twisted:

stocknoob4111
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Re: Dave Ramsey made me laugh today

Post by stocknoob4111 » Fri Jul 13, 2018 3:13 pm

He hates bond funds and says one needs to immediately sell them. So essentially what he is suggesting is a 100% equities portfolio with zero diversification among other asset classes - I have not heard this type of advice from anyone else. In fact even the vast majority of other experts harp on the importance of diversification.

One thing which is really funny is that he says bonds are so awful because they can lose value, and equities don't lose value? LOL! 2008, Vanguard S&P500 index was -37% while Total Bond was +5.15%, so here is proof that his theory is wrong.

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TheTimeLord
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Re: Dave Ramsey made me laugh today

Post by TheTimeLord » Fri Jul 13, 2018 3:17 pm

stocknoob4111 wrote:
Fri Jul 13, 2018 3:13 pm
He hates bond funds and says one needs to immediately sell them. So essentially what he is suggesting is a 100% equities portfolio with zero diversification among other asset classes - I have not heard this type of advice from anyone else. In fact even the vast majority of other experts harp on the importance of diversification.
BH 3 fund portfolio holds 3 asset classes U.S. Stocks, International Stocks and Bonds. Sounds like Ramsey has 2 of the 3.
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greg24
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Re: Dave Ramsey made me laugh today

Post by greg24 » Fri Jul 13, 2018 3:17 pm

I would be mildly surprised if he knows the difference between a bond mutual fund and an equities mutual fund.

SoCalT
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Re: Dave Ramsey made me laugh today

Post by SoCalT » Fri Jul 13, 2018 3:20 pm

Yeah it's funny to laugh at DR's investment advise. Though I worry some people near retirement will take his advise to heart and go 100% equities. Then if the market takes a dive one year they'll really feel it hard.

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TheTimeLord
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Re: Dave Ramsey made me laugh today

Post by TheTimeLord » Fri Jul 13, 2018 3:23 pm

stocknoob4111 wrote:
Fri Jul 13, 2018 3:13 pm
He hates bond funds and says one needs to immediately sell them. So essentially what he is suggesting is a 100% equities portfolio with zero diversification among other asset classes - I have not heard this type of advice from anyone else. In fact even the vast majority of other experts harp on the importance of diversification.

One thing which is really funny is that he says bonds are so awful because they can lose value, and equities don't lose value? LOL! 2008, Vanguard S&P500 index was -37% while Total Bond was +5.15%, so here is proof that his theory is wrong.
If you really want to freak out listen to this starting at the 10:24 mark (this is not advice or a recommendation just an attempt to round out your knowledge).
https://www.youtube.com/watch?v=k6ra5POdsYg
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]

TheAccountant
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Re: Dave Ramsey made me laugh today

Post by TheAccountant » Fri Jul 13, 2018 3:23 pm

Dottie57 wrote:
Fri Jul 13, 2018 3:12 pm
TheAccountant wrote:
Fri Jul 13, 2018 3:04 pm
I was listening to his podcast and he basically said this:

"Bonds are stupid, they decrease in value in rising interest rates. I don't own any bonds and all of my mutual funds are in stocks." He then rattled off his usual "growth, growth/income, aggressive growth, international" allocation.

Seems silly. I bet he has bonds in those funds and doesn't even know it.

What do you think?
I don’t care what Dave Ramsey thinks. :twisted:
I listen to the show for the comedy aspect.

"I just graduated college and have $ 100,000 in student loans. I just started a job making $ 45,000 a year. Can we buy a $ 250,000 house? We also owe $ 5,000 on our credit cards and just bought a new car."

Dottie57
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Re: Dave Ramsey made me laugh today

Post by Dottie57 » Fri Jul 13, 2018 5:02 pm

TheAccountant wrote:
Fri Jul 13, 2018 3:23 pm
Dottie57 wrote:
Fri Jul 13, 2018 3:12 pm
TheAccountant wrote:
Fri Jul 13, 2018 3:04 pm
I was listening to his podcast and he basically said this:

"Bonds are stupid, they decrease in value in rising interest rates. I don't own any bonds and all of my mutual funds are in stocks." He then rattled off his usual "growth, growth/income, aggressive growth, international" allocation.

Seems silly. I bet he has bonds in those funds and doesn't even know it.

What do you think?
I don’t care what Dave Ramsey thinks. :twisted:
I listen to the show for the comedy aspect.

"I just graduated college and have $ 100,000 in student loans. I just started a job making $ 45,000 a year. Can we buy a $ 250,000 house? We also owe $ 5,000 on our credit cards and just bought a new car."
It is mind bogling (pun intended) to have someone ask. I used to love the Suze Orman show Segment “Can I afford it” for the same reason.

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Re: Dave Ramsey made me laugh today

Post by Nate79 » Fri Jul 13, 2018 5:11 pm

TheAccountant wrote:
Fri Jul 13, 2018 3:04 pm
I was listening to his podcast and he basically said this:

"Bonds are stupid, they decrease in value in rising interest rates. I don't own any bonds and all of my mutual funds are in stocks." He then rattled off his usual "growth, growth/income, aggressive growth, international" allocation.

Seems silly. I bet he has bonds in those funds and doesn't even know it.

What do you think?
I think I'm not sure you know what a stock mutual fund holds. So you think stock mutual funds have bonds in them (unless you are inappropriately referring to their short term reserves as "bonds")?

There are many threads on here where Bogleheads are 100% stocks. Not all financial advisors/financial writers or podcast hosts believe in holding bonds. DR believes that stocks provide the most growth and will outperform a portfolio recommended by most who say you should have a stock/bond percentage (like age in bonds or whatever). You just have to ride the volatility but he is fine if someone wants to get conservative and hold balanced funds that do hold bonds.

You understand this right? He is perfectly fine if someone wants to have a conservative portfolio when they are older and hold bonds in a balanced fund. He doesn't do it. He doesn't need to hold bonds.

Has it already been a week since we have had a DR bashing thread?

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corn18
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Re: Dave Ramsey made me laugh today

Post by corn18 » Fri Jul 13, 2018 5:23 pm

TheTimeLord wrote:
Fri Jul 13, 2018 3:23 pm
stocknoob4111 wrote:
Fri Jul 13, 2018 3:13 pm
He hates bond funds and says one needs to immediately sell them. So essentially what he is suggesting is a 100% equities portfolio with zero diversification among other asset classes - I have not heard this type of advice from anyone else. In fact even the vast majority of other experts harp on the importance of diversification.

One thing which is really funny is that he says bonds are so awful because they can lose value, and equities don't lose value? LOL! 2008, Vanguard S&P500 index was -37% while Total Bond was +5.15%, so here is proof that his theory is wrong.
If you really want to freak out listen to this starting at the 10:24 mark (this is not advice or a recommendation just an attempt to round out your knowledge).
https://www.youtube.com/watch?v=k6ra5POdsYg
Nothing to freak out about. 100% equity, 4x leveraged will provide the best performance if you have enough money and time to ride out the bottoms. If I were managing a portfolio for my great grandkid's retirement with the first withdrawal 80 years from now, I would be 100% equities but I probably wouldn't leverage it because I wouldn't be around to bail it out at the bottoms.

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knpstr
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Re: Dave Ramsey made me laugh today

Post by knpstr » Fri Jul 13, 2018 5:27 pm

TheAccountant wrote:
Fri Jul 13, 2018 3:04 pm
I was listening to his podcast and he basically said this:

"Bonds are stupid, they decrease in value in rising interest rates. I don't own any bonds and all of my mutual funds are in stocks." He then rattled off his usual "growth, growth/income, aggressive growth, international" allocation.

Seems silly. I bet he has bonds in those funds and doesn't even know it.

What do you think?
I think bonds are stupid, particularly for me. Relatively young, multi-decade horizon. Warren Buffett says bonds are the riskier asset class, riskier than equities, for the long term investor. I'm not looking to trade off higher returns for a slightly "smoother" ride.

And yes, there is probably a small % of bonds in the growth/income mutual fund.
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius

guyesmith
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Re: Dave Ramsey made me laugh today

Post by guyesmith » Fri Jul 13, 2018 5:33 pm

Dave doesn’t do bonds. He’s 100% stocks. His financial stability comes from his businesses and his rentals.

4nwestsaylng
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Re: Dave Ramsey made me laugh today

Post by 4nwestsaylng » Fri Jul 13, 2018 7:19 pm

DR is obnoxious but I have to agree with him on his opposition to student loan debt. Most of the people who call him have a major student loan debt years after graduation; it is usually their greatest outstanding debt.

I know I am a dinosaur, but I worked my way through college with tough summer jobs. Learned more about life and people from those jobs than the time I spent listening to sheltered tenured professors. The education was a valuable experience, but I would not have borrowed tens of thousands to listen to them.

I don't even think the professions such as medicine and legal are worth major student debt. If college students took a year or so off and worked, and saved, and drove an old VW like I did, they would get more out of their education,determine if they were getting value for their time spent in classes, and develop a better exit strategy from campus to enter the real world of work. This is coming from someone with over 9 years of university education.

So I agree with DR that student loan debt elimination best way to be debt free, and in that regard the best way is to work for your education and not borrow the money in the first place. Yes I know many will say the college degree will more than justify the loans, I don't buy it. Life experience and work during or before college creates more mature students and helps them clarify what they want in college. Better than guidance counselors.

TheAccountant
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Re: Dave Ramsey made me laugh today

Post by TheAccountant » Fri Jul 13, 2018 7:42 pm

Nate79 wrote:
Fri Jul 13, 2018 5:11 pm
TheAccountant wrote:
Fri Jul 13, 2018 3:04 pm
I was listening to his podcast and he basically said this:

"Bonds are stupid, they decrease in value in rising interest rates. I don't own any bonds and all of my mutual funds are in stocks." He then rattled off his usual "growth, growth/income, aggressive growth, international" allocation.

Seems silly. I bet he has bonds in those funds and doesn't even know it.

What do you think?
I think I'm not sure you know what a stock mutual fund holds. So you think stock mutual funds have bonds in them (unless you are inappropriately referring to their short term reserves as "bonds")?

There are many threads on here where Bogleheads are 100% stocks. Not all financial advisors/financial writers or podcast hosts believe in holding bonds. DR believes that stocks provide the most growth and will outperform a portfolio recommended by most who say you should have a stock/bond percentage (like age in bonds or whatever). You just have to ride the volatility but he is fine if someone wants to get conservative and hold balanced funds that do hold bonds.

You understand this right? He is perfectly fine if someone wants to have a conservative portfolio when they are older and hold bonds in a balanced fund. He doesn't do it. He doesn't need to hold bonds.

Has it already been a week since we have had a DR bashing thread?
Actually you're right, he does say "good growth stock mutual funds." He's usually vague with the growth, growth and income, etc. and if an inexperienced investor chooses a growth fund, like vanguard lifestrategy growth fund for example, there absolutely will be bonds in there.

I still think he owns a bond here and there and has no clue. :mrgreen:

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TheTimeLord
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Re: Dave Ramsey made me laugh today

Post by TheTimeLord » Fri Jul 13, 2018 7:53 pm

TheAccountant wrote:
Fri Jul 13, 2018 7:42 pm
Nate79 wrote:
Fri Jul 13, 2018 5:11 pm
TheAccountant wrote:
Fri Jul 13, 2018 3:04 pm
I was listening to his podcast and he basically said this:

"Bonds are stupid, they decrease in value in rising interest rates. I don't own any bonds and all of my mutual funds are in stocks." He then rattled off his usual "growth, growth/income, aggressive growth, international" allocation.

Seems silly. I bet he has bonds in those funds and doesn't even know it.

What do you think?
I think I'm not sure you know what a stock mutual fund holds. So you think stock mutual funds have bonds in them (unless you are inappropriately referring to their short term reserves as "bonds")?

There are many threads on here where Bogleheads are 100% stocks. Not all financial advisors/financial writers or podcast hosts believe in holding bonds. DR believes that stocks provide the most growth and will outperform a portfolio recommended by most who say you should have a stock/bond percentage (like age in bonds or whatever). You just have to ride the volatility but he is fine if someone wants to get conservative and hold balanced funds that do hold bonds.

You understand this right? He is perfectly fine if someone wants to have a conservative portfolio when they are older and hold bonds in a balanced fund. He doesn't do it. He doesn't need to hold bonds.

Has it already been a week since we have had a DR bashing thread?
Actually you're right, he does say "good growth stock mutual funds." He's usually vague with the growth, growth and income, etc. and if an inexperienced investor chooses a growth fund, like vanguard lifestrategy growth fund for example, there absolutely will be bonds in there.

I still think he owns a bond here and there and has no clue. :mrgreen:
Providing he chooses the fund by name only and never looks at anything regarding its composition. I may be unusual on this but I do not consider Lifestragey or Target Date mutual funds to be Stock Mutual funds. If you look them up on the Vanguard site they are classified as Balanced Funds Not Stock Funds.
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Re: Dave Ramsey made me laugh today

Post by knpstr » Fri Jul 13, 2018 7:57 pm

It's safe to say that this thread is not actionable. I'm not sure if the OP is just trying to troll with the repeated implication that DR is too dumb to realize what he owns.

The topic of this thread is essentially: "do you think DR knows if he owns bonds or not".

Anyone in DR's position (estimated NW of $55,000,000) would be a fool to own bonds.
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius

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Geneyus
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Re: Dave Ramsey made me laugh today

Post by Geneyus » Fri Jul 13, 2018 8:17 pm

Babylon Bee (satire website) posted this story about Dave Ramsey the other day, and Dave Ramsey himself retweeted it and laughed at it on Twitter:

"Dave Ramsey Releases Official Line Of Budget Ramen"
https://babylonbee.com/news/dave-ramsey ... get-ramen/

I thought it was pretty funny. Babylon Bee pokes fun at him every once in a while.

TheAccountant
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Re: Dave Ramsey made me laugh today

Post by TheAccountant » Fri Jul 13, 2018 8:32 pm

I'm not trolling. I just thought it was funny how his advice went against the founder of Vanguard's advice.

TheAccountant
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Re: Dave Ramsey made me laugh today

Post by TheAccountant » Fri Jul 13, 2018 8:33 pm

knpstr wrote:
Fri Jul 13, 2018 7:57 pm
It's safe to say that this thread is not actionable. I'm not sure if the OP is just trying to troll with the repeated implication that DR is too dumb to realize what he owns.

The topic of this thread is essentially: "do you think DR knows if he owns bonds or not".

Anyone in DR's position (estimated NW of $55,000,000) would be a fool to own bonds.
John Bogle is worth 80 and owns bonds.

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KSOC
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Re: Dave Ramsey made me laugh today

Post by KSOC » Fri Jul 13, 2018 8:59 pm

I heard this and perked up too. What caught my attention wasn't that DR doesn't own bonds. It was the fact that the caller was 47 YO, married, hoping to retire in 15 years.That's pretty much all the info we had. Caller engaged Vanguard PAS to possibly move his/their portfolio to Vanguard. PA advised stocks, 25% being international & 15% being bonds. The question to DR was if that sounded right, 25% of equity to international? DR didn't have an issue with the international he had a cow about bonds. So in less then 2 minutes DR advised 47 YO to go 100% equity. We all know DR doesn't need bonds, but gotta admit it was a little reckless without any more information of the callers finances, let alone all the listeners who all follow everything DR says. He also belittled Vanguard advisors & of course, steered/pushed his DR Smartvestor Pros. We all know heart of a teacher...yada yada yada.

I don't like to post about DR because I do listen, and enough negative posts about him anyway. I find the questions interesting, and he's really helped folks in debt. But this thread needed a little background as to why DR said what he said & why it caught my ear.
Too soon old, too late smart.

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mlebuf
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Re: Dave Ramsey made me laugh today

Post by mlebuf » Fri Jul 13, 2018 9:07 pm

Back in 2002, Taylor made the following post on the Vanguard Diehards Forum. I keep it on my desktop as a reminder that as one approaches retirement age, it is very important to have a balanced portfolio that includes a hefty percentage of bonds.
Vanguard Diehards Conversations # 21469
Bear Market Despair
Taylor Larimore | 07-19-02| 08:42 PM

Hi Diehards:

Our family owned "Larimore's Diner" in Foxboro, Mass. in 1929. I was 5 years old and remember. When the depression hit, we lost the Diner and moved into my grandfather's home in Miami. My grandfather was an investment professional on Wall Street, who like so many
others, went bankrupt. We were forced to move when he lost his Miami home (next door to where I live now.)

These figures show what the worst bear market was like:

BEAR MARKET OF 1929-1937 (Dow plunged 89%)

-1929--1930--1931--1932

(-31%)(-25%)(-43%)(-08%) Large Cap Stocks
(-34%)(-35%)(-47%)(-06%) Mid/Small Cap Stocks
(-47%)(-38%)(-50%)(-05%) Micro Cap Stocks

Figures cannot convey the horrifying and debilitating effects of a bear market. You watch in agony as month after month your life savings evaporate before your eyes. Gloom and doom talk is everywhere. Nearly everyone else is selling. You have no idea when, or if, your portfolio will stop losing money.

Your friends and relatives urge you to sell before losing everything. Nearly all financial 'experts', including newspapers, magazines, and radio commentators recommend "sell". You are ridiculed for trying to hold on. You begin to have self-doubt. Despair sets in. Buying stocks is unthinkable. Suicides increase.

Most stock investors in the 30's sold and never returned to the stock market. Many ended their days with their family in poverty. I remember the "poor farms" on the edge of towns. There were no social security retirement benefits. Beggars were everywhere.

It was a different story for the investors who were diversified and DID NOT SELL. John Merrill, in "Outperforming the Market" gives an example of a $1 Million dollar diversified (47% stocks/47% bonds/6% cash) portfolio from the top of the bull market in September1929 until December 1935:

Y
YEAR-END------NOMINAL $----------REAL $
(Deflation adjusted)

1929----------$863,000-----------$872,000
1930-----------769,000------------823,000
1931-----------598,000------------712,000
1932-----------603,000------------802,000
1933-----------842,000----------1,111,000
1934-----------901,000----------1,171,000
1935---------1,124,000----------1,416,000

I doubt if this bear market will equal the severity of that one when I was a boy. However, if we understand how markets work the lesson is clear:

1. Selling near the bottom of a bull market is a sure way to lose money.

2. It requires courage, but NOT selling in a bear market has always rewarded investors with a profit.
Thank you, Taylor.
Last edited by mlebuf on Fri Jul 13, 2018 9:11 pm, edited 1 time in total.
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sillysaver
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Re: Dave Ramsey made me laugh today

Post by sillysaver » Fri Jul 13, 2018 9:09 pm

Since stocks will return 12% every year like clockwork, who needs bonds? Dave also says an 8% withdrawal rate is safe.

3504PIR
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Re: Dave Ramsey made me laugh today

Post by 3504PIR » Fri Jul 13, 2018 9:20 pm

In the context you provide in the OP regarding bonds, Ramsey is 100% correct. Bonds and bond funds lose value in times of raising interest rates. I’m not sure why that made you laugh. The rest of it is typical Ramsey and I don’t agree with his investment advice.

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9-5 Suited
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Re: Dave Ramsey made me laugh today

Post by 9-5 Suited » Fri Jul 13, 2018 10:06 pm

Obviously in considering the source, Dave has a very religious objection to debt as a principle. Taking him at his word, he never uses debt in his business or personal life and advises all others to do the same. He always rejects callers requests for his approval to take out business loans. So it should follow that he doesn’t believe in bonds given that they are corporate/gov’t debt. The corporate borrower is slave to the lender, as well, he might say. The good book doesn’t make an exception.

Is that good advice? Well, I certainly don’t think so :)

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Re: Dave Ramsey made me laugh today

Post by j0e0r7 » Fri Jul 13, 2018 10:11 pm

3504PIR wrote:
Fri Jul 13, 2018 9:20 pm
In the context you provide in the OP regarding bonds, Ramsey is 100% correct. Bonds and bond funds lose value in times of raising interest rates. I’m not sure why that made you laugh. The rest of it is typical Ramsey and I don’t agree with his investment advice.
Only if the rise is not expected by the market, right? And thats like saying "I don't like stocks, because they lose money during bear markets."

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Re: Dave Ramsey made me laugh today

Post by WanderingDoc » Fri Jul 13, 2018 10:23 pm

What about something like the TSP G-fund? A lot of talk about bonds being the riskier asset class. I believe the G-fund is a different animal.
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3504PIR
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Re: Dave Ramsey made me laugh today

Post by 3504PIR » Fri Jul 13, 2018 10:49 pm

j0e0r7 wrote:
Fri Jul 13, 2018 10:11 pm
3504PIR wrote:
Fri Jul 13, 2018 9:20 pm
In the context you provide in the OP regarding bonds, Ramsey is 100% correct. Bonds and bond funds lose value in times of raising interest rates. I’m not sure why that made you laugh. The rest of it is typical Ramsey and I don’t agree with his investment advice.
Only if the rise is not expected by the market, right? And thats like saying "I don't like stocks, because they lose money during bear markets."
It is the result of the market relating to current interest rates, the yield curve is very different than the way stocks move up and down. For example, you know right now you cannot have double digit returns from your bond fund on the whim of the market. And by right now, I mean today in the current market. I look at my bond funds and hope the rising yield will offset losses, but that isn’t realistic as it takes time for the portfolio to turnover.

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Re: Dave Ramsey made me laugh today

Post by mhalley » Fri Jul 13, 2018 11:12 pm

Many growth and income funds use bonds for part of their income. American funds are sort of alluded to by Dave, and if you look at American funds growth and income portfolio (GAIOX), it has 18% bonds and 5% cash. You wouldn’t know this unless you read the prospectus or looked it up at Morningstar.
http://portfolios.morningstar.com/fund/ ... ture=en_US

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Re: Dave Ramsey made me laugh today

Post by mhalley » Fri Jul 13, 2018 11:21 pm

Speaking of Dave, I was listening to Clark Howard today and a lady called in who wanted to refinance her adjustable rate mortgage, but no bank would let her because she had 200k of parent student loans for her sons out of state undergraduate degree in digital something or other. Apparantly the arm can potentially go up to 10%. The loan is in deferment for several more years, adding interest to the balance.
Clark very nicely told her she was SOL. Imagine the reaction Dave would have had to the call. :oops:
I don’t think Dave would have been as nice about it, but it would have been entertaining.
Last edited by mhalley on Fri Jul 13, 2018 11:38 pm, edited 1 time in total.

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Re: Dave Ramsey made me laugh today

Post by Nate79 » Fri Jul 13, 2018 11:37 pm

mhalley wrote:
Fri Jul 13, 2018 11:21 pm
Speaking of Dave, I was listening to Clark Howard today and a lady called in who wanted to refinance her adjustable rate mortgage, but no bank would let her because she had 200k of parent student loans for her sons out of state undergraduate degree in digital something or other. Apparantly the arm can potentially go up to 10%. The loan is in deferment for several more years, adding interest to the balance.
Clark very nicely told her she was SOL. I imagined the reaction Dave would have had to the call.
I don’t think Dave would have been as nice about it, but it would have been entertaining.
I also listened to that one tonight. Man, talk about up a creek without a paddle and a sinking canoe.

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Re: Dave Ramsey made me laugh today

Post by farnsy » Sat Jul 14, 2018 12:36 am

TheAccountant wrote:
Fri Jul 13, 2018 3:04 pm
Seems silly. I bet he has bonds in those funds and doesn't even know it.
Could be, if he's holding actively managed mutual funds. Index funds pretty much just hold what they are supposed to hold (maybe with a few short-term treasuries to manage their liquidity) but actively managed funds frequently depart from the assets in their benchmark, sometimes grossly.

There's nothing stopping an equity fund (especially one that has "income" in the name) from buying a bunch of bonds, in fact the fund manager is likely to benefit from this as fund performance evaluation often involves looking at something like the Sharpe ratio, which would benefit from the additional diversification of adding bonds to it. Doing so doesn't help an investor that already has proper diversification and therefore effectively games mutual fund performance evaluation--unfortunately performance evaluation for mutual funds is mostly based on theory designed for a whole-portfolio investment, rather than viewing the fund as part of an investment strategy. One more reason to stick with index funds.

TheOscarGuy
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Re: Dave Ramsey made me laugh today

Post by TheOscarGuy » Sat Jul 14, 2018 5:54 am

TheAccountant wrote:
Fri Jul 13, 2018 3:04 pm
I was listening to his podcast and he basically said this:

"Bonds are stupid, they decrease in value in rising interest rates. I don't own any bonds and all of my mutual funds are in stocks." He then rattled off his usual "growth, growth/income, aggressive growth, international" allocation.

Seems silly. I bet he has bonds in those funds and doesn't even know it.

What do you think?
At a certain net worth, should it matter if you have any money in bonds? Say you only need 10million maintain your current lifestyle, and you had $100 million net portfolio (not saying Ramsey has that much or not, since I don't know), would you not seriously consider putting all in stocks? I would.

I love his rants :D I think there is a lot of entertainment value in his show, even though I can not see the logic in some of his recommendations.

sillysaver
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Re: Dave Ramsey made me laugh today

Post by sillysaver » Sat Jul 14, 2018 7:15 am

TheOscarGuy wrote:
Sat Jul 14, 2018 5:54 am
At a certain net worth, should it matter if you have any money in bonds? Say you only need 10million maintain your current lifestyle, and you had $100 million net portfolio (not saying Ramsey has that much or not, since I don't know), would you not seriously consider putting all in stocks? I would.
There are two ways of looking at this:

1) I'm wealthy beyond belief, so I don't need to take any risk. Therefore, I'll focus on wealth preservation. Bonds guarantee return of principal so I'll put it all into bonds.
2) I'm wealthy beyond belief, so I can afford to take more risk than the average person. So I'll put all my wealth into stocks, live off the dividends and ignore the market fluctuations.

Either one is valid.

dogagility
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Re: Dave Ramsey made me laugh today

Post by dogagility » Sat Jul 14, 2018 7:22 am

Nate79 wrote:
Fri Jul 13, 2018 5:11 pm
There are many threads on here where Bogleheads are 100% stocks. Not all financial advisors/financial writers or podcast hosts believe in holding bonds. DR believes that stocks provide the most growth and will outperform a portfolio recommended by most who say you should have a stock/bond percentage (like age in bonds or whatever). You just have to ride the volatility but he is fine if someone wants to get conservative and hold balanced funds that do hold bonds.
^This. One just need a longish investing horizon and a strong belief in the world economy to have a 100% equity allocation. Nothing extreme about it.

Eric76
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Re: Dave Ramsey made me laugh today

Post by Eric76 » Sat Jul 14, 2018 7:37 am

For me there is a "sleep at night" component to my portfolio. Thus, despite what the math says, 100% equities doesn't work for me. Advising that 100% equities is the right allocation for others seems overly simplistic.

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ClevrChico
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Re: Dave Ramsey made me laugh today

Post by ClevrChico » Sat Jul 14, 2018 7:55 am

No bonds seems dangerous for a lot of his audience, as I can see the same audience panic selling in a downturn. DR has been showing up on my Youtube feed recently for some reason. He's very entertaining, like most financial entertainers, but I wouldn't take his advice too seriously. (That's the actionable part you can do.)

On "How to Buy a Used Car", he recommends paying between wholesale and private party sale at a dealership. Yeah, good luck with that unless the car is a lemon.

DR also claims a consistent 12% return on his equity mutual funds. Google it, and there's many articles proving this notorious DR claim wrong.
Last edited by ClevrChico on Sat Jul 14, 2018 9:13 am, edited 2 times in total.

MnD
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Re: Dave Ramsey made me laugh today

Post by MnD » Sat Jul 14, 2018 8:40 am

I've also heard him tell people (who would likely qualify for significant premium subsidies) to buy individual health insurance directly from insurance companies instead of through the ACA exchange because the latter is "too much government". Also told a "top student" seeking an engineering degree and accepted to a great in-state State U to defer college for X years until he could pay cash. Also telling a father of young children with modest debt to deliver pizzas at night to accelerate debt payments after working all day instead of being home with family.

I suppose he's great for spendaholics but at his core he's an anti-government anti-debt looney-tune.

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wildungar2000
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Re: Dave Ramsey made me laugh today

Post by wildungar2000 » Sat Jul 14, 2018 8:53 am

mhalley wrote:
Fri Jul 13, 2018 11:21 pm
Speaking of Dave, I was listening to Clark Howard today and a lady called in who wanted to refinance her adjustable rate mortgage, but no bank would let her because she had 200k of parent student loans for her sons out of state undergraduate degree in digital something or other. Apparantly the arm can potentially go up to 10%. The loan is in deferment for several more years, adding interest to the balance.
Clark very nicely told her she was SOL. Imagine the reaction Dave would have had to the call. :oops:
I don’t think Dave would have been as nice about it, but it would have been entertaining.
Clark Howard is such a genuine, humble, good-hearted guy, with an incredible knowledge of money, finance, investing, etc. I cannot say enough good things about him and what he does for his audience. Every Friday in his "Clark Stinks" segment, they go through the comments and messages listeners have left in which they disagree with Clark on a topic. He always shows so much humility in his responses in this segment, reiterating the fact that we are all continually learning from each other. It is such a refreshing outlook to have.

And then there is this Dave Ramsey fellow. So as Thumper says to Bambi..."If you can't say something nice, don't say nothing at all."....well I guess I got nothing to say about Dave Ramsey then. :happy

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Re: Dave Ramsey made me laugh today

Post by deltaneutral83 » Sat Jul 14, 2018 8:57 am

Considering 95% of his callers have some sort of debt at 5% or greater and having no idea what a mutual fund is they have a long way to go before they think about investing in general and even longer before investing in bonds. I never really understand mathematically how some BH hold BND and a mortgage.

flyingaway
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Re: Dave Ramsey made me laugh today

Post by flyingaway » Sat Jul 14, 2018 9:05 am

At 54, I know 100% stocks is best for me long-termly. But I want to sleep better, so I am now about 70/30 stocks/bonds.

sadie wess
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Re: Dave Ramsey made me laugh today

Post by sadie wess » Sat Jul 14, 2018 9:19 am

MnD wrote:
Sat Jul 14, 2018 8:40 am
I've also heard him tell people (who would likely qualify for significant premium subsidies) to buy individual health insurance directly from insurance companies instead of through the ACA exchange because the latter is "too much government". Also told a "top student" seeking an engineering degree and accepted to a great in-state State U to defer college for X years until he could pay cash. Also telling a father of young children with modest debt to deliver pizzas at night to accelerate debt payments after working all day instead of being home with family.

I suppose he's great for spendaholics but at his core he's an anti-government anti-debt looney-tune.
:sharebeer

Hoosierdom
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Re: Dave Ramsey made me laugh today

Post by Hoosierdom » Sat Jul 14, 2018 9:28 am

4nwestsaylng wrote:
Fri Jul 13, 2018 7:19 pm
DR is obnoxious but I have to agree with him on his opposition to student loan debt. Most of the people who call him have a major student loan debt years after graduation; it is usually their greatest outstanding debt.

I know I am a dinosaur, but I worked my way through college with tough summer jobs. Learned more about life and people from those jobs than the time I spent listening to sheltered tenured professors. The education was a valuable experience, but I would not have borrowed tens of thousands to listen to them.

I don't even think the professions such as medicine and legal are worth major student debt. If college students took a year or so off and worked, and saved, and drove an old VW like I did, they would get more out of their education,determine if they were getting value for their time spent in classes, and develop a better exit strategy from campus to enter the real world of work. This is coming from someone with over 9 years of university education.

So I agree with DR that student loan debt elimination best way to be debt free, and in that regard the best way is to work for your education and not borrow the money in the first place. Yes I know many will say the college degree will more than justify the loans, I don't buy it. Life experience and work during or before college creates more mature students and helps them clarify what they want in college. Better than guidance counselors.
I appreciate the civility of this board, so I'll try my best. Yes, you are very much a dinosaur. How many hours working at minimum wage did it take to pay for your degree? The answer for a kid today has grown by at least an order of magnitude.

What job are you invisioning that pays for a law degree, never mind a medical one, in one year? Anyone who has such a job would never go back to school.

There's certainly value in minimizing your education costs, but an education greatly improves your career prospects, and certainly in law and medicine greatly increases your earning potential. Your advice then would be to spend more time working when you have less valuable skills and thus less time working when you have more valuable skills. Seems incorrect.

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TheTimeLord
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Re: Dave Ramsey made me laugh today

Post by TheTimeLord » Sat Jul 14, 2018 9:32 am

MnD wrote:
Sat Jul 14, 2018 8:40 am
I suppose he's great for spendaholics but at his core he's an anti-government anti-debt looney-tune.
So if you are anti-debt your are a looney-tune? You really don't believe the majority of society has difficulty with impulse control and handling debt? It seems to me leverage plays a significant role in almost every major financial crisis the market has.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]

indexonlyplease
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Re: Dave Ramsey made me laugh today

Post by indexonlyplease » Sat Jul 14, 2018 9:37 am

He could be correct. I was 100% stock funds until 3 years ago when I found the 3 fund and found the reason to have fixed income. Then I retired 2 years later. So, if you are in the growth stage of your investing career maybe it is ok. But I think the mental mistakes investors make are way more serious than anything else. If someone has a AA 50/50 and sells all when they panic during a market crash like 2008, does it matter if they are 100% stock funds or 50/50.

Why I can say this is because I did witness many of my co workers sell all their stock funds and go into fixed income during the 2008 crash. An instant loss.

Also, someone like my son 22 yrs old, invest into the Vanguard Target Fund. It has 10% bonds. Will that really make a different in a market crash.

Again, it is the mental mistakes we make.

indexonlyplease
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Re: Dave Ramsey made me laugh today

Post by indexonlyplease » Sat Jul 14, 2018 9:43 am

MnD wrote:
Sat Jul 14, 2018 8:40 am
I've also heard him tell people (who would likely qualify for significant premium subsidies) to buy individual health insurance directly from insurance companies instead of through the ACA exchange because the latter is "too much government". Also told a "top student" seeking an engineering degree and accepted to a great in-state State U to defer college for X years until he could pay cash. Also telling a father of young children with modest debt to deliver pizzas at night to accelerate debt payments after working all day instead of being home with family.

I suppose he's great for spendaholics but at his core he's an anti-government anti-debt looney-tune.
Dave is correct going to college and coming out with a 100k in student loans. What a mistake.
Being in debt because you could not control you debt correct again. Many have worked multiple jobs to make ends meet and pay off debt.

People that like being it debt because they can't control their selfess spending is what Dave is all about. And he is correct. That is his specialty.

Turbo29
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Re: Dave Ramsey made me laugh today

Post by Turbo29 » Sat Jul 14, 2018 10:09 am

deltaneutral83 wrote:
Sat Jul 14, 2018 8:57 am
Considering 95% of his callers have some sort of debt at 5% or greater and having no idea what a mutual fund is they have a long way to go before they think about investing in general and even longer before investing in bonds. I never really understand mathematically how some BH hold BND and a mortgage.
Investing is more than strict mathematics. Personal psychology comes into play.

I have to live somewhere. If I didn't have a house with a mortgage I would be paying rent, which would be more than my mortgage, insurance, and property taxes combined. I consider the mortgage expense as housing expense, not paying off a loan. As one with a spur of the moment type personality, I reserve the right to sell my house tomorrow, pay off the mortgage, and go rent; the mortgage balance is more than taken care of by the value of the house. (I most likely won't sell tomorrow but I like to have that option open).

Selling bonds to pay the mortgage off would lower one pool of relatively liquid funds that I possess. Less liquid funds means less options. I don't like that.

Yes, you are right mathematically but I don't care.

Horsefly
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Re: Dave Ramsey made me laugh today

Post by Horsefly » Sat Jul 14, 2018 10:15 am

wildungar2000 wrote:
Sat Jul 14, 2018 8:53 am
Clark Howard is such a genuine, humble, good-hearted guy, with an incredible knowledge of money, finance, investing, etc. I cannot say enough good things about him and what he does for his audience. Every Friday in his "Clark Stinks" segment, they go through the comments and messages listeners have left in which they disagree with Clark on a topic. He always shows so much humility in his responses in this segment, reiterating the fact that we are all continually learning from each other. It is such a refreshing outlook to have.

And then there is this Dave Ramsey fellow. So as Thumper says to Bambi..."If you can't say something nice, don't say nothing at all."....well I guess I got nothing to say about Dave Ramsey then. :happy
+1

Clark Howard is the opposite of DR in many ways, and I enjoy listening to him. He knows a ton about investing, and he is very kind and civil. DR doesn't, and isn't.

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1210sda
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Re: Dave Ramsey made me laugh today

Post by 1210sda » Sat Jul 14, 2018 10:24 am

sillysaver wrote:
Fri Jul 13, 2018 9:09 pm
Since stocks will return 12% every year like clockwork, who needs bonds? Dave also says an 8% withdrawal rate is safe.
Future Value of various returns (using $100,000 as the PV and a 30year term)

>>>12% each and every year: 100,000 x 12% x 30 years = $2,995,992

>>>If he meant 10.5% CAGR: 100,000 x 10.5% x 30 years = $1,999,256

>>>Rick's 30 forecast, all equities: 100,000 x 7.0% x 30 years = $761,225

>>>Rick's 30 forecast, 60/40 portfolio: 100,000 x 5.5% x 30 years = $498,395

If you applied the 8% withdrawal rate to the $2,995,992, the initial withdrawal would be $239, 679. (Max W/D)

If you applied the 4% withdrawal rate to the $498,395 the initial withdrawal would be $19,936. (Min W/D)

Quite a range. Where would the typical DR listener fall within that range.

If you're expecting to retire having $239,679 to spend but only have $19,936, that's quite a jolt.

1210

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