100% in VTSAX - Is it crazy???

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wolf359
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Re: 100% in VTSAX - Is it crazy???

Post by wolf359 » Thu Jan 17, 2019 8:51 am

dogagility wrote:
Wed Jan 16, 2019 5:11 pm
wolf359 wrote:
Wed Jan 16, 2019 12:24 pm
After it's peak in 1929, the DJIA decreased by 89% over a three year period. It recovered its peak in 1954, or about 25 years later.
According to this article (https://www.nytimes.com/2009/04/26/your ... 6stra.html), the break-even point for the market after the 1929 debacle was 1936.
I was aware that changes in the index (such as the removal of IBM) understated the recovery, but the NY Times article also includes the impact of deflation. That makes the recovery 4 1/2 years after its low, or 7 years to recover from when the crash started (since it took 3 years to reach its low.) That was a very interesting perspective.

A few months after the market finally reached that point, it collapsed again, this time another 50% drop (similar in scope to 2008). This time it took a year to recover. (1937-38) There were also a couple of additional crashes in the early 1940's (-40% and -50%) but that involved World War II (at points when the Allies were losing) and are unique to the time. The government also managed the wartime economy and money system and didn't release all the controls until the 1950's.

All these crashes between the Great Depression and World War II are often bundled together by market historians as one huge bear market, and the NY Times article points out that that characterization probably isn't accurate.

The original question, however, is whether or not having 100% stocks is a good idea or crazy, especially considering that their core expenses are covered comfortably by pensions. Many people project retirement timeframes of 25-30 years. The time frame of 1929-1954 would have been a very tumultuous period to retire with regards to the stock market. That much fluctuation would probably be very unsettling. Probably people of that time would even have had concerns about whether or not their pensions would be safe.

staythecourse
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Re: 100% in VTSAX - Is it crazy???

Post by staythecourse » Thu Jan 17, 2019 9:02 am

Not crazy and no big deal. Just do what you feel is right. Your future liabilities are covered outside of a rare, VERY RARE event something changes with your pensions.

I'm 100% equity and don't find it a big deal at all. I'm a doc. married to a doc so am pretty confident about future earnings (can always decrease, but won't be out of a job). This gives GREAT cushion to be more aggressive. If my portfolio went to zero it wouldn't affect my day to day living. Money needed for day to day living is what I see as the real risk of not having enough money.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

ignition
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Re: 100% in VTSAX - Is it crazy???

Post by ignition » Thu Jan 17, 2019 9:08 am

samsdad wrote:
Wed Jan 16, 2019 12:42 pm
The problem is, is that I’ve never seen an explanation why international equities have underperformed not only US equities over the last 30ish to 40ish years, but also why they couldn’t even beat US bonds over a similar timeframe.
Japan.
samsdad wrote:
Wed Jan 16, 2019 12:50 pm
Oh it will, I’m sure. But I have no reason to believe it will in my investing horizon.

Do you have any thoughts about why international has underperformed over the long run?
Well, according to the Credit Suisse yearbook 2016 Ex-US equities outperformed US equities from 1966 to 2015 strangely enough.
samsdad wrote:
Wed Jan 16, 2019 12:50 pm
Why will it outperform in the future?
Lower valuation.

Eric76
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Re: 100% in VTSAX - Is it crazy???

Post by Eric76 » Thu Jan 17, 2019 9:25 am

I wouldn't be comfortable with any defined benefit pension these days. I especially wouldn't be confident that the 3% cola will sustain.

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Re: 100% in VTSAX - Is it crazy???

Post by asif408 » Thu Jan 17, 2019 10:02 am

samsdad wrote:
Wed Jan 16, 2019 12:42 pm
The problem is, is that I’ve never seen an explanation why international equities have underperformed not only US equities over the last 30ish to 40ish years, but also why they couldn’t even beat US bonds over a similar timeframe.

Without that explanation, I’m at a loss to have any reason to believe why the past 30ish years won’t be the same as the next 30ish. A bond bull market over that time might explain those bond returns. And, yes, more than likely they’ll slow down what with interest rate movements.
It's not that complicated. Bond yields in the early 1980s got up to 14%, and rates fell to less than 2% just a few years ago. Even into the 1990s the 10 yield Treasury yield was 8-10%. So over the 30-40 year period bonds had unbelievable returns over that time frame relative to history, with high starting yields and falling rates as a tailwind to returns. Anyone who invested in those halcyon days was pretty much guaranteed double digit returns in bonds. As most will tell you, the starting yield is a good estimate or the future returns of bonds, so anyone expecting that kind of return in bonds going forward is delusional, unless you expect rates to fall significantly below 0%.

Regarding international stocks, Japan was at one point the largest market cap in the world, as the US is today, around 1989. So it was a huge chunk of international allocations by market cap, and since 1990 has done very poorly, hence the poor international returns. Of course, from 1970 to 1990 it had double the return of the US, and most foreign countries outperformed the US during that time frame. If you start after 2001, which was after the worst of Japan's performance, the difference in returns between US & Int'l is less than 2%, and that advantage by the US only showed up in the last few years. So the time frame you select matters in the US/Int'l debate. Japan is still the largest chunk of international stocks, but it's around 18% now, so it's nowhere near the market cap it once was with two decades of amazing trailing performance like it was in the 1980s, so the likelihood of a Japan type scenario affecting international stocks today is much less likely.

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Re: 100% in VTSAX - Is it crazy???

Post by Daedalus » Thu Jan 17, 2019 7:40 pm

28 here, 100% VTSAX and going strong.

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dogagility
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Re: 100% in VTSAX - Is it crazy???

Post by dogagility » Thu Jan 17, 2019 7:43 pm

staythecourse wrote:
Thu Jan 17, 2019 9:02 am
I'm 100% equity and don't find it a big deal at all. I'm a doc. married to a doc so am pretty confident about future earnings (can always decrease, but won't be out of a job). This gives GREAT cushion to be more aggressive.
I think this may be the key to answering the is it crazy to be 100% equity question... how much real (or perceived) "cushion", as you stated it, does a person have to withstand a market downturn. And for how long.
"The stock market is a device for transferring money from the impatient to the patient" -- Warren Buffett

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dogagility
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Re: 100% in VTSAX - Is it crazy???

Post by dogagility » Thu Jan 17, 2019 7:48 pm

wolf359 wrote:
Thu Jan 17, 2019 8:51 am
dogagility wrote:
Wed Jan 16, 2019 5:11 pm
wolf359 wrote:
Wed Jan 16, 2019 12:24 pm
After it's peak in 1929, the DJIA decreased by 89% over a three year period. It recovered its peak in 1954, or about 25 years later.
According to this article (https://www.nytimes.com/2009/04/26/your ... 6stra.html), the break-even point for the market after the 1929 debacle was 1936.
The time frame of 1929-1954 would have been a very tumultuous period to retire with regards to the stock market. That much fluctuation would probably be very unsettling. Probably people of that time would even have had concerns about whether or not their pensions would be safe.
Indeed. It wouldn't have been psychologically trying to stay the course with 100% equity during that time period... assuming one wasn't investing just "play money".
"The stock market is a device for transferring money from the impatient to the patient" -- Warren Buffett

Nowizard
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Re: 100% in VTSAX - Is it crazy???

Post by Nowizard » Thu Jan 17, 2019 7:52 pm

Congratulations on being able to invest without concern for your results other than the obvious desire to maximize them! It sounds like investing is a hobby or a challenge for someone who is a risk taker, not the Boglehead approach. It is not crazy, but would be for many folks who were not as fortunate. Please post results periodically.

Tim

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Ben Mathew
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Re: 100% in VTSAX - Is it crazy???

Post by Ben Mathew » Thu Jan 17, 2019 8:19 pm

100% stocks isn't crazy. But not including international might be, especially since international valuations are much lower than US.

Sometimes, when people think international stocks, they might be imagining some strange and exotic company they can't understand. But here are the ten largest holdings in VTIAX, constituting 9% of assets:

Royal Dutch Shell plc
Nestle SA
Tencent Holdings Ltd.
Samsung Electronics Co. Ltd.
Novartis AG
Roche Holding AG
Taiwan Semiconductor Manufacturing Co. Ltd.
HSBC Holdings plc
Alibaba Group Holding Ltd.
Toyota Motor Corp.

I don't think they look any scarier than the top ten VTSAX holdings, which are:

Microsoft Corp.
Apple Inc.
Amazon.com Inc.
Alphabet Inc.
Berkshire Hathaway Inc.
Johnson & Johnson
JPMorgan Chase & Co.
Facebook Inc.
Exxon Mobil Corp.
Pfizer Inc.

Earnings yield of VTIAX = 1/12.0 = 8.3%
Earnings yield of VTSAX = 1/16.1 = 6.2%

I see no compelling reason to hold only the more expensive (lower yielding) asset.

If anyone thinks that accounting standards are lower in foreign countries, leading to a systematic overstatement of earnings (which I admit is possible), please link to the evidence.

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Re: 100% in VTSAX - Is it crazy???

Post by shess » Thu Jan 17, 2019 9:33 pm

Ben Mathew wrote:
Thu Jan 17, 2019 8:19 pm
100% stocks isn't crazy. But not including international might be, especially since international valuations are much lower than US.
...
I see no compelling reason to hold only the more expensive (lower yielding) asset.
I think the flatness of broad-based international versus broad-based domestic over the recent past is probably a buying opportunity. It goes back to the Warren Buffett quote about whether you want to buy more tomatoes when they're expensive or when they're on sale? After all, the top holdings of both indices are multinationals which make their profits in essentially the same geographic places.

That said, I am always watchful for _why_ the returns differ even though the sources of revenue likely don't. I expect it's probably mostly down to something broad, like exchange rate movements, or tax policies, where the tide can turn and flip everything on its head.

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F150HD
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Re: 100% in VTSAX - Is it crazy???

Post by F150HD » Thu Jan 17, 2019 9:35 pm

not crazy to me. by the time you retire, formal SS retirement age will prob bump even further out then it is now, so, you may be working longer anyway (I plan to).
Long is the way and hard, that out of Hell leads up to light.

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Re: 100% in VTSAX - Is it crazy???

Post by saintsfan342000 » Thu Jan 17, 2019 11:56 pm

For what it's worth, 100% VTSAX is #2 on the White Coast Investor's list of "150 Portfolios Better than Yours".

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Re: 100% in VTSAX - Is it crazy???

Post by 123 » Fri Jan 18, 2019 1:34 am

First a note from the OP's prior threads. OP & spouse are teachers in their mid 30's so presumably the pensions are teacher's pensions.

Holding 100% in VTSAX is probably okay given your current situaiton. Over the next 10 years your perception of the situation may change causing you to move to a more conservative portfolio. The main things that could change could be your confidence in the funding of the pension system you participate in. There have been a number of situations where the financial health of public pensions have been threatened, if that type of situation begins to unravel in connection with your pension system that could put the assuredness of the pension in doubt. General social or economic issues could also come into play, if the number of students significantly declines sometimes teachers are laid off. Teachers that are able to stay within the same teacher's pension system throughout their career can do very well financially. Should some event cause you to have to leave your present pension system and begin agan elsewhere you end up with significantly less. Often the final few years in a teacher's pension plan are those that have the opportunity for the highest growth, if you have to leave a pension plan early it really makes a difference.

Economic and physical disasters can impact anyone The City of Detroit is a shell of its former self. The City of New Orleans still has scars from Katrina. The wildfires in Northern California devastated entire school districts. Those kinds of things put a signficant dent in the retirement budgets of my public employees. Of course people can also become unable to work because of an unexpected disability. It all comes down to how much risk you're willing to take with you future, you only have one.
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Re: 100% in VTSAX - Is it crazy???

Post by lostdog » Fri Jan 18, 2019 9:36 am

Ben Mathew wrote:
Thu Jan 17, 2019 8:19 pm
100% stocks isn't crazy. But not including international might be, especially since international valuations are much lower than US.

Sometimes, when people think international stocks, they might be imagining some strange and exotic company they can't understand. But here are the ten largest holdings in VTIAX, constituting 9% of assets:

Royal Dutch Shell plc
Nestle SA
Tencent Holdings Ltd.
Samsung Electronics Co. Ltd.
Novartis AG
Roche Holding AG
Taiwan Semiconductor Manufacturing Co. Ltd.
HSBC Holdings plc
Alibaba Group Holding Ltd.
Toyota Motor Corp.

I don't think they look any scarier than the top ten VTSAX holdings, which are:

Microsoft Corp.
Apple Inc.
Amazon.com Inc.
Alphabet Inc.
Berkshire Hathaway Inc.
Johnson & Johnson
JPMorgan Chase & Co.
Facebook Inc.
Exxon Mobil Corp.
Pfizer Inc.

Earnings yield of VTIAX = 1/12.0 = 8.3%
Earnings yield of VTSAX = 1/16.1 = 6.2%

I see no compelling reason to hold only the more expensive (lower yielding) asset.

If anyone thinks that accounting standards are lower in foreign countries, leading to a systematic overstatement of earnings (which I admit is possible), please link to the evidence.
+1

I don't want to miss out on some great companies listed in the international index.
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Tamalak
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Re: 100% in VTSAX - Is it crazy???

Post by Tamalak » Fri Jan 18, 2019 9:48 am

Not crazy. I'm 100% invested in stocks also, but I'm diversified internationally at capitalization - I wouldn't want to have all my eggs in ONE country-basket, as powerful and awesome as that country is right now.

100% stocks feels good to me. Even the recent down spikes didn't tempt me at all :sharebeer

Stock PRICES will spike up and down as future earnings per share fluctuate.. but those earnings per share keep happening and are the invisible force of why the stock market keeps going up.

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Re: 100% in VTSAX - Is it crazy???

Post by HomerJ » Fri Jan 18, 2019 10:01 am

wolf359 wrote:
Thu Jan 17, 2019 8:51 am
dogagility wrote:
Wed Jan 16, 2019 5:11 pm
wolf359 wrote:
Wed Jan 16, 2019 12:24 pm
After it's peak in 1929, the DJIA decreased by 89% over a three year period. It recovered its peak in 1954, or about 25 years later.
According to this article (https://www.nytimes.com/2009/04/26/your ... 6stra.html), the break-even point for the market after the 1929 debacle was 1936.
I was aware that changes in the index (such as the removal of IBM) understated the recovery, but the NY Times article also includes the impact of deflation. That makes the recovery 4 1/2 years after its low, or 7 years to recover from when the crash started (since it took 3 years to reach its low.) That was a very interesting perspective.

A few months after the market finally reached that point, it collapsed again, this time another 50% drop (similar in scope to 2008). This time it took a year to recover. (1937-38) There were also a couple of additional crashes in the early 1940's (-40% and -50%) but that involved World War II (at points when the Allies were losing) and are unique to the time. The government also managed the wartime economy and money system and didn't release all the controls until the 1950's.

All these crashes between the Great Depression and World War II are often bundled together by market historians as one huge bear market, and the NY Times article points out that that characterization probably isn't accurate.

The original question, however, is whether or not having 100% stocks is a good idea or crazy, especially considering that their core expenses are covered comfortably by pensions. Many people project retirement timeframes of 25-30 years. The time frame of 1929-1954 would have been a very tumultuous period to retire with regards to the stock market. That much fluctuation would probably be very unsettling. Probably people of that time would even have had concerns about whether or not their pensions would be safe.
Just FYI, wolf, you're ignoring dividends which you should never do. Yes, the PRICE of the DJIA only got back to 1929 levels by 1954, but you got your MONEY back far earlier (which is, of course, the only important metric).

But I agree with you that it would be a very difficult time to live through, and if you had to PULL money from a 100% stock portfolio during that time, it would be devastating.

Someone who retired and was pulling 4% from a 100% stocks portfolio in 1929 did indeed go bankrupt.

As long as someone has pensions that cover all their base expenses, they can do whatever they want with their portfolio. How guaranteed is any pension though, really? Nothing in this world is 100%.
The J stands for Jay

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Ben Mathew
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Re: 100% in VTSAX - Is it crazy???

Post by Ben Mathew » Fri Jan 18, 2019 10:10 am

shess wrote:
Thu Jan 17, 2019 9:33 pm
Ben Mathew wrote:
Thu Jan 17, 2019 8:19 pm
100% stocks isn't crazy. But not including international might be, especially since international valuations are much lower than US.
...
I see no compelling reason to hold only the more expensive (lower yielding) asset.
I think the flatness of broad-based international versus broad-based domestic over the recent past is probably a buying opportunity. It goes back to the Warren Buffett quote about whether you want to buy more tomatoes when they're expensive or when they're on sale? After all, the top holdings of both indices are multinationals which make their profits in essentially the same geographic places.

That said, I am always watchful for _why_ the returns differ even though the sources of revenue likely don't. I expect it's probably mostly down to something broad, like exchange rate movements, or tax policies, where the tide can turn and flip everything on its head.
Yes, looking at the recent performance of asset classes has the perverse effect of making the most expensive assets look the most attractive because of a run-up in prices. It happens with broad asset classes and it happens with individual hot stocks. It's a good reason to stay focused on valuations and earnings yields rather than past performance.

I too worry about why the returns are different. Warren Buffett has said that that he is not sure about the accounting standards of foreign companies (I think it was more along the lines of he doesn't know how reliable it is, and therefore it's out of his circle of competence, rather than that is was bad). So I'm concerned about the accounting. I'm not too concerned, however, about exchange rates. In the long run, exchange rates are tied to inflation. Stocks, being claims on real assets, should be reasonably protected in the long run. Accounting standards, tax policies, and long term growth prospects are where I think one could potentially make a case for lower valuations for international stocks. But I'd be interested in seeing the evidence on these, as it relates to valuations.

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Re: 100% in VTSAX - Is it crazy???

Post by DB2 » Fri Jan 18, 2019 10:55 am

I was reading Vanguard's 2019 outlook piece "Down, but not out". While speculative, of course, they are predicting 4-5% returns on U.S. stocks (similarly as Mr. Bogle had recently said) and 6-8% for International stocks over the next 10 years. I've seen some other financial companies saying similarly (I assume most work off the same thinking). However, what I also found interesting is, their portfolio recommends - depending on a portfolio for recession, current, or growth - U.S. stocks only compromise something like 34-39% of the total make-up (I might be off a percent or two here) depending on the aggressiveness of the portfolio.

wolf359
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Re: 100% in VTSAX - Is it crazy???

Post by wolf359 » Fri Jan 18, 2019 2:10 pm

HomerJ wrote:
Fri Jan 18, 2019 10:01 am
Just FYI, wolf, you're ignoring dividends which you should never do. Yes, the PRICE of the DJIA only got back to 1929 levels by 1954, but you got your MONEY back far earlier (which is, of course, the only important metric).

But I agree with you that it would be a very difficult time to live through, and if you had to PULL money from a 100% stock portfolio during that time, it would be devastating.

Someone who retired and was pulling 4% from a 100% stocks portfolio in 1929 did indeed go bankrupt.

As long as someone has pensions that cover all their base expenses, they can do whatever they want with their portfolio. How guaranteed is any pension though, really? Nothing in this world is 100%.
I agree with you that you can't ignore dividends when measuring market performance. However, DJIA is a flawed index and I'm used it to show that the market was volatile, not to seriously measure the market. I started with the premise that the DJIA isn't an accurate measure -- it's just what was available at the time.

I also agree that as long as the pension covers the base expenses, they can do whatever they want. However, during one of the worst case periods, a 100% equities position would have been extremely volatile and given them scare after scare throughout a 25 year period. Even with pensions, they may not want 100% equities.

When you're covered by pensions, 100% VTSAX isn't crazy, but that doesn't make it advisable, either. The portfolio is a backup plan for the unlikely event that the pension plan fails.

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Re: 100% in VTSAX - Is it crazy???

Post by MichCPA » Fri Jan 18, 2019 2:29 pm

Yes, even IF you are fully vested, it is crazy.

I may be a bit gun-shy, but I have seen GM and the City of Detroit go bankrupt and cut pensions. There is no guarantee that your pension will remain solvent even if it is vested. Going even 80-20 protects you from so much. You only give up 1/2% in return by doing this.

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Re: 100% in VTSAX - Is it crazy???

Post by DB2 » Fri Jan 18, 2019 10:34 pm

MichCPA wrote:
Fri Jan 18, 2019 2:29 pm
Yes, even IF you are fully vested, it is crazy.

I may be a bit gun-shy, but I have seen GM and the City of Detroit go bankrupt and cut pensions. There is no guarantee that your pension will remain solvent even if it is vested. Going even 80-20 protects you from so much. You only give up 1/2% in return by doing this.
It's a great point especially with all of the looming massive debt seemingly everywhere (corporations, state and fed governments, etc.). I remember a time when people said it was impossible for GM could go bankrupt.

I was shocked recently using even how 60/40 on the Portfolio Visualizer doesn't limit much vs 100. I'm still trying to get my head around this! lol

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Re: 100% in VTSAX - Is it crazy???

Post by TheDDC » Fri Jan 18, 2019 11:19 pm

I'm 100% VTSAX as well as a pension (govt). Not crazy. What's the point of accumulating if you can't rely on some good market runs? I just treat the pension as a fixed income position. There are a few with anti-pension jealousy that motivates some here. Do not listen to them or try to convince them otherwise as they are true believers in misery. Never mind that they do not understand the end result of deferred compensation in the public sector.

I so keep an EF in cash at Ally and a few other banks. As a single income household it helps me SWAN.

-TheDDC
Refreshingly, a double barrel shotgun blast of truth... | Rules to wealth building: 100% VTSAX piled high and deep, 0% given away to banks, minimize amount given to health care industrial complex

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Re: 100% in VTSAX - Is it crazy???

Post by furnace » Fri Jan 18, 2019 11:23 pm

Many people do 100% equities. It's great until there's a 20-40% drop, then they hate themselves. If you promise you will still be in love with yourself no matter what, then going "all-in" will likely work out well over the "long term." :sharebeer

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Re: 100% in VTSAX - Is it crazy???

Post by Davinci » Fri Jan 18, 2019 11:26 pm

100% in VTSAX - Is it crazy???
Not crazy since you both have pensions, if this is play money I do not see anything wrong at a young age.

Just stay the course and not sell if you loose 50-75%, I would personally adjust it over time to more bonds as you are getting closer to retirement.

However. they are plenty of folks with pensions in the forum that are perfectly happy and can sleep at night even at 100% stocks in retirement as their basics needs are covered.

Best of luck to you!
" Simplicity is the ultimate sophistication" Leonardo Da Vinci.

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Re: 100% in VTSAX - Is it crazy???

Post by Eric76 » Fri Jan 18, 2019 11:53 pm

TheDDC wrote:
Fri Jan 18, 2019 11:19 pm
I'm 100% VTSAX as well as a pension (govt). Not crazy. What's the point of accumulating if you can't rely on some good market runs? I just treat the pension as a fixed income position. There are a few with anti-pension jealousy that motivates some here. Do not listen to them or try to convince them otherwise as they are true believers in misery. Never mind that they do not understand the end result of deferred compensation in the public sector.

I so keep an EF in cash at Ally and a few other banks. As a single income household it helps me SWAN.

-TheDDC
My mom was a public school teacher in NJ for 30 years with a "vested" pension benefit. The state summarily dropped COLA several years ago. As a result, the "deferred compensation in the public sector" that she worked her life for was pulled out from under her with the stroke of a pen. Death and taxes are guaranteed. Everything else, including defined benefit vested pensions, is not.

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Re: 100% in VTSAX - Is it crazy???

Post by yogesh » Sat Jan 19, 2019 1:04 am

furnace wrote:
Fri Jan 18, 2019 11:23 pm
Many people do 100% equities. It's great until there's a 20-40% drop, then they hate themselves. If you promise you will still be in love with yourself no matter what, then going "all-in" will likely work out well over the "long term." :sharebeer
Add me to the list, adding stock+bond fund in account has reduced the number of times I could see big "RED" drops.
Emergency: FDIC | Taxable: VTMFX | Retirement: TR2040

VINNY
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Re: 100% in VTSAX - Is it crazy???

Post by VINNY » Sat Jan 19, 2019 1:14 am

Not crazy at all. My wife and I have pensions, and we recently went to 100% VTSAX. Read JL Collins, Simple Path to Wealth, he along with other bloggers have convinced/inspired me to do so.

I've realized that the wealth we have accumulated, came from being 100% VTSAX for the first twenty so years of investing. We were busy having kids, raising them, working and fixing up the house. Life kept us real busy and I hardly ever looked at our portfolio, so I was too busy to look or tinker. But as time went on and we crossed the seven figure milestone, I started to tinker.

I reduced VTSAX and bought some Total Bond. I wanted to "lock in some of my gains". After doing so, the market continued to climb and I started to ask myself, why did I move the money into bonds? I had no IPS and went by my emotions. Big mistake.

I have no need for the money, now and in the foreseeable future. Realistically, we will probably leave this money to our kids, so I am investing most likely for their lifetimes. So I asked myself, what should I invest in over the long term to give me the best shot of growing my money into a multi million dollar portfolio for either myself or my kids. And the answer was simple, VTSAX.

I would urge you to have an IPS in place and stick to it. I wish I had one. I'm 100% VTSAX and I am perfectly okay with it. I'm down 200K from the highs and that hasn't affected me emotionally whatsoever. Why? Because in the long run the stock market trends upwards. And I honestly feel like this is monopoly money. We have great paying jobs with minimal expenses and never touch what we invest.

I believe that stocks (VTSAX) in the long run aren't risky. As long as you have the temperament to ride out the volatility you will be rewarded for the "risk". I no longer am interested about the markets like I once was. This is the beauty of picking an AA and sticking to it, because then you can ignore all the noise.

When I had my position in Total Bond, I was always waiting for the market to go lower and paying attention to what the markets were doing, waiting for that opportunity. Until I finally decided to jump all in. I exchanged Total Bond for VTSAX. And I did so because I asked myself, will the price I pay for VTSAX now, matter 10,15 or 25 years from now? Probably not because I think it will be higher.

Now that I am invested the way I feel is suitable based on my circumstances, I can tune out the noise and know that I'm invested in a long term,wealth building fund called VTSAX. I'm no longer looking and waiting for that "opportunity". This feeling is so liberating.

When I look at the performance of the stock market over all the bad events throughout history, it has always trended upwards. I'll take the long term bet on the USA and stay with VTSAX, it's the only roller coaster ride I don't mind being on.

confusedinvestor
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Re: 100% in VTSAX - Is it crazy???

Post by confusedinvestor » Sat Jan 19, 2019 1:48 am

Curious, How did you come up with this 100% VTSAX plan ? Do you listen to ChooseFI podcasts ? or FIRE podcasts like MMM ?
bg5 wrote:
Wed Jan 16, 2019 9:17 am
Hey Gang,
Is there anyone else out there with 100% VTSAX?????

Carol88888
Posts: 218
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Re: 100% in VTSAX - Is it crazy???

Post by Carol88888 » Sat Jan 19, 2019 2:21 am

I am not holding any international. Take a look at "The Accidental Superpower" if you want to see an argument about the superiority of the US based upon geographic, demographic and natural resources.

It's really uncanny how many of the predictions in that book are being fulfilled.

KlangFool
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Re: 100% in VTSAX - Is it crazy???

Post by KlangFool » Sat Jan 19, 2019 10:06 am

Folks,

After 10 years of bull market, investor's appetite for risk gone up. And, folks are usually overly-optimistic about their job security and pension anyhow. Combination of those two factors makes sure that we have plenty of 100/0 folks.

And, as usual, when we hit the next recession, we will have plenty of folks capitulate and go into 100% cash. Many folks will be caught unprepared. The most common cause will be those folks that face the first major round of layoff from their employer.

I am not worried about the low average stock return forecast from Vanguard. I believe that there will be a fair amount of capitulation from unprepared investors with the next recession. Those that are prepared will profit tremendously from this capitulation. This happened in every recession and economy crisis that I survived.

"only when the tide goes out do you discover who has been swimming naked"
- Warren Buffett

KlangFool

lostdog
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Re: 100% in VTSAX - Is it crazy???

Post by lostdog » Sat Jan 19, 2019 10:25 am

VINNY wrote:
Sat Jan 19, 2019 1:14 am
Not crazy at all. My wife and I have pensions, and we recently went to 100% VTSAX. Read JL Collins, Simple Path to Wealth, he along with other bloggers have convinced/inspired me to do so.

I've realized that the wealth we have accumulated, came from being 100% VTSAX for the first twenty so years of investing. We were busy having kids, raising them, working and fixing up the house. Life kept us real busy and I hardly ever looked at our portfolio, so I was too busy to look or tinker. But as time went on and we crossed the seven figure milestone, I started to tinker.

I reduced VTSAX and bought some Total Bond. I wanted to "lock in some of my gains". After doing so, the market continued to climb and I started to ask myself, why did I move the money into bonds? I had no IPS and went by my emotions. Big mistake.

I have no need for the money, now and in the foreseeable future. Realistically, we will probably leave this money to our kids, so I am investing most likely for their lifetimes. So I asked myself, what should I invest in over the long term to give me the best shot of growing my money into a multi million dollar portfolio for either myself or my kids. And the answer was simple, VTSAX.

I would urge you to have an IPS in place and stick to it. I wish I had one. I'm 100% VTSAX and I am perfectly okay with it. I'm down 200K from the highs and that hasn't affected me emotionally whatsoever. Why? Because in the long run the stock market trends upwards. And I honestly feel like this is monopoly money. We have great paying jobs with minimal expenses and never touch what we invest.

I believe that stocks (VTSAX) in the long run aren't risky. As long as you have the temperament to ride out the volatility you will be rewarded for the "risk". I no longer am interested about the markets like I once was. This is the beauty of picking an AA and sticking to it, because then you can ignore all the noise.

When I had my position in Total Bond, I was always waiting for the market to go lower and paying attention to what the markets were doing, waiting for that opportunity. Until I finally decided to jump all in. I exchanged Total Bond for VTSAX. And I did so because I asked myself, will the price I pay for VTSAX now, matter 10,15 or 25 years from now? Probably not because I think it will be higher.

Now that I am invested the way I feel is suitable based on my circumstances, I can tune out the noise and know that I'm invested in a long term,wealth building fund called VTSAX. I'm no longer looking and waiting for that "opportunity". This feeling is so liberating.

When I look at the performance of the stock market over all the bad events throughout history, it has always trended upwards. I'll take the long term bet on the USA and stay with VTSAX, it's the only roller coaster ride I don't mind being on.
And a bet it is. Hopefully your bet works out. Eliminating over 6,000+ great businesses throughout the world is a gamble for sure. Good luck.
Taxable: VLCAX and VFWAX || Tax Deferred: VTWAX

TheDDC
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Re: 100% in VTSAX - Is it crazy???

Post by TheDDC » Sat Jan 19, 2019 7:36 pm

Eric76 wrote:
Fri Jan 18, 2019 11:53 pm
TheDDC wrote:
Fri Jan 18, 2019 11:19 pm
I'm 100% VTSAX as well as a pension (govt). Not crazy. What's the point of accumulating if you can't rely on some good market runs? I just treat the pension as a fixed income position. There are a few with anti-pension jealousy that motivates some here. Do not listen to them or try to convince them otherwise as they are true believers in misery. Never mind that they do not understand the end result of deferred compensation in the public sector.

I so keep an EF in cash at Ally and a few other banks. As a single income household it helps me SWAN.

-TheDDC
My mom was a public school teacher in NJ for 30 years with a "vested" pension benefit. The state summarily dropped COLA several years ago. As a result, the "deferred compensation in the public sector" that she worked her life for was pulled out from under her with the stroke of a pen. Death and taxes are guaranteed. Everything else, including defined benefit vested pensions, is not.
COLAs are completely different than a base pension which is already owed and are accounted for based on a formula agreed upon during employment. You don't get a COLA benefit until you start collecting the base pension. It hasn't actually been "earned" yet since it's based on projected annual salary which has yet to be determined.

I do not factor COLAs into pensions nor do I believe in them as they are "projected increases" much like a "projected salary increase" yet to be assessed. My pension does not have a COLA anyway, so I never agreed upon a COLA as a term of employment either. No reason to throw out the baby with the bathwater.

-TheDDC
Refreshingly, a double barrel shotgun blast of truth... | Rules to wealth building: 100% VTSAX piled high and deep, 0% given away to banks, minimize amount given to health care industrial complex

watchman1675
Posts: 33
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Re: 100% in VTSAX - Is it crazy???

Post by watchman1675 » Fri Aug 09, 2019 9:11 pm

100% Vanguard Balanced Index Admiral (VBIAX) for life got Mr. Bogle's nod. 60% Total Stock Market and 40% Total Bond all in one fund with a low .07% expense ratio and no second guessing of rebalancing. It will should weather future bear markets a bit better than 100% VTSAX. I don't think it gets any easier than this.

stocknoob4111
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Re: 100% in VTSAX - Is it crazy???

Post by stocknoob4111 » Fri Aug 09, 2019 10:11 pm

I would diversify into International, Small Caps and even Bonds... 100% VTSAX which is essentially just S&P500 by another name isn't diversification.

nix4me
Posts: 373
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Re: 100% in VTSAX - Is it crazy???

Post by nix4me » Fri Aug 09, 2019 10:44 pm

Not crazy, we are:
~33% Large Cap Growth
~33% S&P 500
~33% Total Market

Workable Goblin
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Location: Honolulu, HI

Re: 100% in VTSAX - Is it crazy???

Post by Workable Goblin » Fri Aug 09, 2019 11:39 pm

samsdad wrote:
Wed Jan 16, 2019 12:42 pm
But what about international equities? I’ve never heard that they were in a bear market for an extended period of time. The graph doesn’t show some extended bear market. In fact the movements of both US and international have vaguely the same shapes/movements. So why the slower growth in international? And why should anyone think it’s gonna change? What’s the paradigm shift that’s going to occur that’ll reverse the growth charts?
Perhaps you should instead reverse the question and ask why the United States has been outperforming its peers in the developed world (and in fact has over a very long duration). Two possible reasons immediately occur to me: first, that American companies benefited from its position as the sole superpower in the capitalist world (to about 1990) and as the world's dominant superpower (since about 1990), which means that they tended to benefit from favorable positions in trade relative to their competitors. To put it pithily, France can strong-arm Françafrique; the United States can strong-arm France. Obviously the latter is more valuable a market than the former, so being able to benefit from that helps boost returns somewhat.

Second, without taking a political stance on the idea, many other developed nations have at various points in time and for various durations nationalized industries which in the United States were always private, and thereby removed whole swathes of their economy from the market. Neither love nor money could have bought you a share of British Rail until the 1990s, for example, so whatever its performance between its formation and its privatization, it had no effect on the market at all. To the extent that nationalized sectors did well globally, then, those returns would tend to appear in countries where those sectors were still private, i.e. in the United States.

I'm not sure that either of these actually explain the whole over performance, especially in the more recent period you actually discuss, but it seems plausible that they explain some of the over performance. To the extent that they do, then, you would expect international to yield somewhat less than the United States even if all else were equal.

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welderwannabe
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Re: 100% in VTSAX - Is it crazy???

Post by welderwannabe » Sat Aug 10, 2019 4:01 pm

Go read all the posts on here from 2008-2009. If after doing so you still believe in 100% VTSAX then great.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.

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