Jack Bogle - Two Fund Portfolio

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Northern Flicker
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Re: Jack Bogle - Two Fund Portfolio

Post by Northern Flicker »

abuss368 wrote: Not really. The beauty and simplicity of Jack Bogle’s Two Fund Portfolio is Total Stock and Total Bond. Many Bogleheads are learning that the portfolio will never be below average and are choosing to simplify. It is an encouraging trend.
You make it sound like holding a US-only portfolio is a new phenomenon that people are finally choosing. When I first invested in index funds, there were no int'l equity index funds available to retail investors in the US. We are fortunate today to have low cost implementations of any asset class that an individual investor should need.

Over the last 30 years, the trend has been toward more diversification, not less. You can be successful with a US-only portfolio. Vanguard's position is that a US investor should have at least 20% non-US equity. This is a determination not by one person, but by a large organization filled with investment professionals and economists. It is not just Vanguard. Can you find a single target date fund that holds exclusively US equities? Can you find a 401K plan that lacks non-US equity funds? If there is a trend to hold US-only portfolios, nobody has notified the mutual fund and retirement plan industries of that yet.

I have a lot of sentiment for a US-only portfolio. I don't hold non-US bonds. Non-US equities are only 25% of my equity holdings. I won't be happy if things turn out badly for US equities. But if nothing else, Covid has demonstrated how much uncertainty there is in the future. Globalization is still a major force of change in the world with an uncertain outcome. And the unprecedented interventions in economies around the world by central banks is new territory. There is no playbook for how things will unfold in the future.
Last edited by Northern Flicker on Sun May 09, 2021 3:00 pm, edited 1 time in total.
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
mikejuss
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Re: Jack Bogle - Two Fund Portfolio

Post by mikejuss »

abuss368 wrote: Sun May 09, 2021 2:34 pm
vineviz wrote: Sun May 09, 2021 2:01 pmI see no reason to hold a dedicated REIT fund.
Vince -

What do you base that on? I thoughts REITs have a lot fo overlap with small cap funds?

Tony
The great Taylor Larimore recently provided a link to this table of investment returns by asset class. To my mind, it makes a pretty strong case for holding REITs, as they are consistently among the top three performers. I'm personally considering doing so.
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Re: Jack Bogle - Two Fund Portfolio

Post by Triple digit golfer »

Northern Flicker wrote: Sun May 09, 2021 2:54 pmOver the last 30 years, the trend has been toward more diversification, not less. You can be successful with a US-only portfolio. Vanguard's position is that a US investor should have at least 20% non-US equity. This is a determination not by one person, but by a large organization filled with investment professionals and economists. It is not just Vanguard. Can you find a single target date fund that holds exclusively US equities? Can you find a 401K plan that lacks non-US equity funds? If there is a trend to hold US-only portfolios, nobody has notified the mutual fund and retirement plan industries of that yet.
But Jack said.

In all seriousness, even the legendary Jack Bogle was not nearly as dogmatic about "simplicity" and avoiding international funds as some of the participants in this thread will lead you to believe.

"If there's one place I don't want people to take my advice, it's international. I want you to think it through for yourself." - Jack Bogle

Like all investors and experts in their field, Jack Bogle has his opinions. As an average investor, I would trust all the big institutions and their experts, who all agree that 35-45% of equities in international is appropriate, before one person, even if that person is my personal hero. And he certainly is. But I've done as Jack said. I've thought it through for myself. I've stayed the course. I've used low cost index funds. I've invested regularly. I've done all the things that Jack Bogle said one must do.

Ironically, some of the people yelling the loudest to dump or avoid international in the same of simplicity have violated one of Bogle's big must-do's - staying the course.
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Re: Jack Bogle - Two Fund Portfolio

Post by anon_investor »

Nathan Drake wrote: Sun May 09, 2021 1:11 pm
The good news is that the amount of diversification needed, though hotly debated, doesn't necessarily need to be market weight to add significant protection. Just 30-40%, as most Target Date Funds recommend, is a perfectly adequate position.
So 20% would not be enough? That is a number often cited by BHs and Jack Bogle often said if you must have int'l, no more than 20%.
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Re: Jack Bogle - Two Fund Portfolio

Post by Triple digit golfer »

anon_investor wrote: Sun May 09, 2021 4:04 pm
Nathan Drake wrote: Sun May 09, 2021 1:11 pm
The good news is that the amount of diversification needed, though hotly debated, doesn't necessarily need to be market weight to add significant protection. Just 30-40%, as most Target Date Funds recommend, is a perfectly adequate position.
So 20% would not be enough? That is a number often cited by BHs and Jack Bogle often said if you must have int'l, no more than 20%.
20% is more diversified than 0%.
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Re: Jack Bogle - Two Fund Portfolio

Post by tomd37 »

My overall stock allocation is 40% based on my advanced age of 84. I do not have any allocation to international stock by choice and if I did it would be no more than 20%. 20% of a 40% allocation is only 8% and my position is anything less than 10% does not play any significant role in a portfolio. I am very satisfied with my 40/60 allocation using total stock market index and intermediate-term bond index funds from Vanguard. :moneybag
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Re: Jack Bogle - Two Fund Portfolio

Post by UpperNwGuy »

tomd37 wrote: Sun May 09, 2021 4:22 pm My overall stock allocation is 40% based on my advanced age of 84. I do not have any allocation to international stock by choice and if I did it would be no more than 20%. 20% of a 40% allocation is only 8% and my position is anything less than 10% does not play any significant role in a portfolio. I am very satisfied with my 40/60 allocation using total stock market index and intermediate-term bond index funds from Vanguard. :moneybag
Total Stock Index and Intermediate Bond Index are my two favorite Vanguard funds.
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Re: Jack Bogle - Two Fund Portfolio

Post by UpperNwGuy »

mikejuss wrote: Sun May 09, 2021 3:00 pm
abuss368 wrote: Sun May 09, 2021 2:34 pm
vineviz wrote: Sun May 09, 2021 2:01 pmI see no reason to hold a dedicated REIT fund.
Vince -

What do you base that on? I thoughts REITs have a lot fo overlap with small cap funds?

Tony
The great Taylor Larimore recently provided a link to this table of investment returns by asset class. To my mind, it makes a pretty strong case for holding REITs, as they are consistently among the top three performers. I'm personally considering doing so.
The last time REITs were in the top 3 was 2014.
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Re: Jack Bogle - Two Fund Portfolio

Post by vineviz »

mikejuss wrote: Sun May 09, 2021 3:00 pm
abuss368 wrote: Sun May 09, 2021 2:34 pm
vineviz wrote: Sun May 09, 2021 2:01 pmI see no reason to hold a dedicated REIT fund.
Vince -

What do you base that on? I thoughts REITs have a lot fo overlap with small cap funds?

Tony
The great Taylor Larimore recently provided a link to this table of investment returns by asset class. To my mind, it makes a pretty strong case for holding REITs, as they are consistently among the top three performers. I'm personally considering doing so.
There are five equity groups in that chart. ALL five of them will be “consistently among the top three performers” if for no other reason than pure luck.

And why include REITS but no other US equity sectors? Why not utilities or consumer staples?
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

vineviz wrote: Sun May 09, 2021 4:31 pm
mikejuss wrote: Sun May 09, 2021 3:00 pm
abuss368 wrote: Sun May 09, 2021 2:34 pm
vineviz wrote: Sun May 09, 2021 2:01 pmI see no reason to hold a dedicated REIT fund.
Vince -

What do you base that on? I thoughts REITs have a lot fo overlap with small cap funds?

Tony
The great Taylor Larimore recently provided a link to this table of investment returns by asset class. To my mind, it makes a pretty strong case for holding REITs, as they are consistently among the top three performers. I'm personally considering doing so.
There are five equity groups in that chart. ALL five of them will be “consistently among the top three performers” if for no other reason than pure luck.

And why include REITS but no other US equity sectors? Why not utilities or consumer staples?
REITs have often been considered a separate asset class (rather than a sector). David Swensen discussed that at length in “Unconventional Success”.

Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Jack Bogle - Two Fund Portfolio

Post by vineviz »

abuss368 wrote: Sun May 09, 2021 4:35 pm REITs have often been considered a separate asset class (rather than a sector).
Yes. And the Earth has often been believed to be flat, and UFOs to be real.

REITs aren’t a separate asset class by any reasonable definition of the concept of “asset class”. They are simply a sector of the stock market. You can confirm this by looking in the holdings of your favorite total stock market index fund.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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Re: Jack Bogle - Two Fund Portfolio

Post by Triple digit golfer »

vineviz wrote: Sun May 09, 2021 4:43 pm
abuss368 wrote: Sun May 09, 2021 4:35 pm REITs have often been considered a separate asset class (rather than a sector).
Yes. And the Earth has often been believed to be flat, and UFOs to be real.

REITs aren’t a separate asset class by any reasonable definition of the concept of “asset class”. They are simply a sector of the stock market. You can confirm this by looking in the holdings of your favorite total stock market index fund.
Correct. They may be more popular than other sector funds, but they're absolutely not a separate asset class. They're equities.
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Re: Jack Bogle - Two Fund Portfolio

Post by anon_investor »

Triple digit golfer wrote: Sun May 09, 2021 4:11 pm
anon_investor wrote: Sun May 09, 2021 4:04 pm
Nathan Drake wrote: Sun May 09, 2021 1:11 pm
The good news is that the amount of diversification needed, though hotly debated, doesn't necessarily need to be market weight to add significant protection. Just 30-40%, as most Target Date Funds recommend, is a perfectly adequate position.
So 20% would not be enough? That is a number often cited by BHs and Jack Bogle often said if you must have int'l, no more than 20%.
20% is more diversified than 0%.
But does 20% really offer much more than 0%?
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Re: Jack Bogle - Two Fund Portfolio

Post by anon_investor »

vineviz wrote: Sun May 09, 2021 4:43 pm
abuss368 wrote: Sun May 09, 2021 4:35 pm REITs have often been considered a separate asset class (rather than a sector).
Yes. And the Earth has often been believed to be flat, and UFOs to be real.

REITs aren’t a separate asset class by any reasonable definition of the concept of “asset class”. They are simply a sector of the stock market. You can confirm this by looking in the holdings of your favorite total stock market index fund.
But UFOs are real! Just ask all those Navy aviators!
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

vineviz wrote: Sun May 09, 2021 4:43 pm
abuss368 wrote: Sun May 09, 2021 4:35 pm REITs have often been considered a separate asset class (rather than a sector).
Yes. And the Earth has often been believed to be flat, and UFOs to be real.

REITs aren’t a separate asset class by any reasonable definition of the concept of “asset class”. They are simply a sector of the stock market. You can confirm this by looking in the holdings of your favorite total stock market index fund.
Are you sure? David Swensen made a great argument for including. Have you ever read Unconventional Success?

What about Roswell?😂🤣

Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Jack Bogle - Two Fund Portfolio

Post by anon_investor »

abuss368 wrote: Sun May 09, 2021 5:14 pm
vineviz wrote: Sun May 09, 2021 4:43 pm
abuss368 wrote: Sun May 09, 2021 4:35 pm REITs have often been considered a separate asset class (rather than a sector).
Yes. And the Earth has often been believed to be flat, and UFOs to be real.

REITs aren’t a separate asset class by any reasonable definition of the concept of “asset class”. They are simply a sector of the stock market. You can confirm this by looking in the holdings of your favorite total stock market index fund.
Are you sure? David Swensen made a great argument for including. Have you ever read Unconventional Success?

What about Roswell?😂🤣

Tony
Roswell was just a "weather balloon" haha! 8-)
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Re: Jack Bogle - Two Fund Portfolio

Post by Da5id »

anon_investor wrote: Sun May 09, 2021 4:54 pm
Triple digit golfer wrote: Sun May 09, 2021 4:11 pm
anon_investor wrote: Sun May 09, 2021 4:04 pm
Nathan Drake wrote: Sun May 09, 2021 1:11 pm
The good news is that the amount of diversification needed, though hotly debated, doesn't necessarily need to be market weight to add significant protection. Just 30-40%, as most Target Date Funds recommend, is a perfectly adequate position.
So 20% would not be enough? That is a number often cited by BHs and Jack Bogle often said if you must have int'l, no more than 20%.
20% is more diversified than 0%.
But does 20% really offer much more than 0%?
If you have a look at figure 3 in https://www.vanguard.com/pdf/ISGGEB.pdf Vanguard believes that 20% offers a good portion of the reduction in volatility. Just doesn't maximize that reduction, which is at ~40% int'l.
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

Da5id wrote: Sun May 09, 2021 5:20 pm
If you have a look at figure 3 in https://www.vanguard.com/pdf/ISGGEB.pdf Vanguard believes that 20% offers a good portion of the reduction in volatility. Just doesn't maximize that reduction, which is at ~40% int'l.
Do you ever see at some point in the future Vanguard will recommend 50% to Total Stock and 50% to Total International?

Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Jack Bogle - Two Fund Portfolio

Post by Da5id »

abuss368 wrote: Sun May 09, 2021 5:26 pm
Da5id wrote: Sun May 09, 2021 5:20 pm
If you have a look at figure 3 in https://www.vanguard.com/pdf/ISGGEB.pdf Vanguard believes that 20% offers a good portion of the reduction in volatility. Just doesn't maximize that reduction, which is at ~40% int'l.
Do you ever see at some point in the future Vanguard will recommend 50% to Total Stock and 50% to Total International?

Tony
Not a predictor of such things, how could I possibly know? If they changed, hopefully they'd have a good reason as these aren't meant to be very dynamic tactically allocated funds (e.g. not responding to CAPE).

I'd guess (but have no evidence) that LifeStrategy style funds are driven partially by academic research on portfolio management, and partially by market competition. I think that having allocations closer to other competitors is probably "safer". But don't know.
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Re: Jack Bogle - Two Fund Portfolio

Post by Triple digit golfer »

anon_investor wrote: Sun May 09, 2021 4:54 pm
Triple digit golfer wrote: Sun May 09, 2021 4:11 pm
anon_investor wrote: Sun May 09, 2021 4:04 pm
Nathan Drake wrote: Sun May 09, 2021 1:11 pm
The good news is that the amount of diversification needed, though hotly debated, doesn't necessarily need to be market weight to add significant protection. Just 30-40%, as most Target Date Funds recommend, is a perfectly adequate position.
So 20% would not be enough? That is a number often cited by BHs and Jack Bogle often said if you must have int'l, no more than 20%.
20% is more diversified than 0%.
But does 20% really offer much more than 0%?
Depends how you define "much."

It would be illogical to think that 40% is too much, but 20% is not enough to make a difference, and then settle on 0%.
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Re: Jack Bogle - Two Fund Portfolio

Post by anon_investor »

Triple digit golfer wrote: Sun May 09, 2021 5:39 pm
anon_investor wrote: Sun May 09, 2021 4:54 pm
Triple digit golfer wrote: Sun May 09, 2021 4:11 pm
anon_investor wrote: Sun May 09, 2021 4:04 pm
Nathan Drake wrote: Sun May 09, 2021 1:11 pm
The good news is that the amount of diversification needed, though hotly debated, doesn't necessarily need to be market weight to add significant protection. Just 30-40%, as most Target Date Funds recommend, is a perfectly adequate position.
So 20% would not be enough? That is a number often cited by BHs and Jack Bogle often said if you must have int'l, no more than 20%.
20% is more diversified than 0%.
But does 20% really offer much more than 0%?
Depends how you define "much."

It would be illogical to think that 40% is too much, but 20% is not enough to make a difference, and then settle on 0%.
That still does not answer the question. Does 20% offer enough benefit to do anything? For low equity portfolios, is it enough to have much of an impact on the overall portfolio? For very high equity portfolios, is 20% enough to have much of an impact either?
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Re: Jack Bogle - Two Fund Portfolio

Post by Triple digit golfer »

anon_investor wrote: Sun May 09, 2021 6:25 pm
Triple digit golfer wrote: Sun May 09, 2021 5:39 pm
anon_investor wrote: Sun May 09, 2021 4:54 pm
Triple digit golfer wrote: Sun May 09, 2021 4:11 pm
anon_investor wrote: Sun May 09, 2021 4:04 pm

So 20% would not be enough? That is a number often cited by BHs and Jack Bogle often said if you must have int'l, no more than 20%.
20% is more diversified than 0%.
But does 20% really offer much more than 0%?
Depends how you define "much."

It would be illogical to think that 40% is too much, but 20% is not enough to make a difference, and then settle on 0%.
That still does not answer the question. Does 20% offer enough benefit to do anything? For low equity portfolios, is it enough to have much of an impact on the overall portfolio? For very high equity portfolios, is 20% enough to have much of an impact either?
How's half the benefit at 20%? Sounds good enough to me to be with it.

From Vanguard:

"On average, an allocation of 20% of a domestic portfolio to international equities has provided at least 50% of the maximum diversification benefit. An investor who allocated 30% to international equities has captured at least 70% of the maximum diversification benefit, on average. These results indicate that investors can benefit substantially from exposure to international equities while remaining sensitive to the potentially higher risks of a portfolio whose allocations are based on global market capitalization."
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Re: Jack Bogle - Two Fund Portfolio

Post by mikejuss »

vineviz wrote: Sun May 09, 2021 4:31 pmThere are five equity groups in that chart. ALL five of them will be “consistently among the top three performers” if for no other reason than pure luck.
Yes--but REITs more than others.
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Re: Jack Bogle - Two Fund Portfolio

Post by Da5id »

mikejuss wrote: Sun May 09, 2021 8:00 pm
vineviz wrote: Sun May 09, 2021 4:31 pmThere are five equity groups in that chart. ALL five of them will be “consistently among the top three performers” if for no other reason than pure luck.
Yes--but REITs more than others.
And as they say below the table (bold mine):
The Callan Periodic Table of Investment Returns conveys the strong case for diversification across asset classes (stocks vs. bonds), capitalizations (large vs. small), and equity markets (U.S. vs. global ex-U.S.)
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Re: Jack Bogle - Two Fund Portfolio

Post by mikejuss »

Da5id wrote: Sun May 09, 2021 8:08 pm
mikejuss wrote: Sun May 09, 2021 8:00 pm
vineviz wrote: Sun May 09, 2021 4:31 pmThere are five equity groups in that chart. ALL five of them will be “consistently among the top three performers” if for no other reason than pure luck.
Yes--but REITs more than others.
And as they say below the table (bold mine):
The Callan Periodic Table of Investment Returns conveys the strong case for diversification across asset classes (stocks vs. bonds), capitalizations (large vs. small), and equity markets (U.S. vs. global ex-U.S.)
Agreed--in fact, ex-US equities look a lot better than US equities in that table.
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Re: Jack Bogle - Two Fund Portfolio

Post by Da5id »

mikejuss wrote: Sun May 09, 2021 8:13 pm
Da5id wrote: Sun May 09, 2021 8:08 pm
mikejuss wrote: Sun May 09, 2021 8:00 pm
vineviz wrote: Sun May 09, 2021 4:31 pmThere are five equity groups in that chart. ALL five of them will be “consistently among the top three performers” if for no other reason than pure luck.
Yes--but REITs more than others.
And as they say below the table (bold mine):
The Callan Periodic Table of Investment Returns conveys the strong case for diversification across asset classes (stocks vs. bonds), capitalizations (large vs. small), and equity markets (U.S. vs. global ex-U.S.)
Agreed--in fact, ex-US equities look a lot better than US equities in that table.
Welp, you might think that. But location in chart order and magnitude of return aren't same thing. Since 2001 US equities have outperformed ex-US significantly. But if investing were just picking yesterdays winners rather than diversifying for the unknown future we'd all be vastly more wealthy no doubt.
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Re: Jack Bogle - Two Fund Portfolio

Post by vineviz »

mikejuss wrote: Sun May 09, 2021 8:00 pm
vineviz wrote: Sun May 09, 2021 4:31 pmThere are five equity groups in that chart. ALL five of them will be “consistently among the top three performers” if for no other reason than pure luck.
Yes--but REITs more than others.
That does not appear to be true for one thing.

And it’d be a terrible way to build a portfolio if it were true.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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Re: Jack Bogle - Two Fund Portfolio

Post by Northern Flicker »

abuss368 wrote: Sun May 09, 2021 5:14 pm
vineviz wrote: Sun May 09, 2021 4:43 pm
abuss368 wrote: Sun May 09, 2021 4:35 pm REITs have often been considered a separate asset class (rather than a sector).
Yes. And the Earth has often been believed to be flat, and UFOs to be real.

REITs aren’t a separate asset class by any reasonable definition of the concept of “asset class”. They are simply a sector of the stock market. You can confirm this by looking in the holdings of your favorite total stock market index fund.
Are you sure? David Swensen made a great argument for including. Have you ever read Unconventional Success?

What about Roswell?😂🤣

Tony
It...does...not...matter. You can decide on the granularity of asset classes as part of designing your asset allocation. Real estate is an equity sector defined for equity indices. It includes more than just REITs, eg home builders.

I think the S&P400 midcap index has a slightly larger sllocation to RE than the S&P smallcap 600.
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

vineviz wrote: Sun May 09, 2021 8:30 pm
mikejuss wrote: Sun May 09, 2021 8:00 pm
vineviz wrote: Sun May 09, 2021 4:31 pmThere are five equity groups in that chart. ALL five of them will be “consistently among the top three performers” if for no other reason than pure luck.
Yes--but REITs more than others.
That does not appear to be true for one thing.

And it’d be a terrible way to build a portfolio if it were true.
REITs are included in Total Stock at market weight.

Tony
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

Northern Flicker wrote: Sun May 09, 2021 9:18 pm
abuss368 wrote: Sun May 09, 2021 5:14 pm
vineviz wrote: Sun May 09, 2021 4:43 pm
abuss368 wrote: Sun May 09, 2021 4:35 pm REITs have often been considered a separate asset class (rather than a sector).
Yes. And the Earth has often been believed to be flat, and UFOs to be real.

REITs aren’t a separate asset class by any reasonable definition of the concept of “asset class”. They are simply a sector of the stock market. You can confirm this by looking in the holdings of your favorite total stock market index fund.
Are you sure? David Swensen made a great argument for including. Have you ever read Unconventional Success?

What about Roswell?😂🤣

Tony
It...does...not...matter. You can decide on the granularity of asset classes as part of designing your asset allocation. Real estate is an equity sector defined for equity indices. It includes more than just REITs, eg home builders.

I think the S&P400 midcap index has a slightly larger sllocation to RE than the S&P smallcap 600.
Vanguard REIT is pretty much all REITs. Very small percentage to home builders and other. Vanguard’s website has more information.

Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Jack Bogle - Two Fund Portfolio

Post by Northern Flicker »

Yes (although VNQ does have about a 4% allocation to non-REIT assets). My comment was that the real estate sector of a market index as defined by S&P, CRSP, or MSCI includes RE companies other than just REITs, and more than 4% of the sector.

Also, some REIT indices include mortgage REITs, which are more like a levered mortgage portfolio than like real estate.
Last edited by Northern Flicker on Sun May 09, 2021 10:03 pm, edited 1 time in total.
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
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Re: Jack Bogle - Two Fund Portfolio

Post by Northern Flicker »

anon_investor wrote: Sun May 09, 2021 4:04 pm
Nathan Drake wrote: Sun May 09, 2021 1:11 pm
The good news is that the amount of diversification needed, though hotly debated, doesn't necessarily need to be market weight to add significant protection. Just 30-40%, as most Target Date Funds recommend, is a perfectly adequate position.
So 20% would not be enough? That is a number often cited by BHs and Jack Bogle often said if you must have int'l, no more than 20%.
It is used by some BHs, but they are in the minority, and at least one prominent BH who advocated very unambiguously for 20% as the correct amount, subsequently sold out of int'l equities.
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

Northern Flicker wrote: Sun May 09, 2021 9:51 pm
anon_investor wrote: Sun May 09, 2021 4:04 pm
Nathan Drake wrote: Sun May 09, 2021 1:11 pm
The good news is that the amount of diversification needed, though hotly debated, doesn't necessarily need to be market weight to add significant protection. Just 30-40%, as most Target Date Funds recommend, is a perfectly adequate position.
So 20% would not be enough? That is a number often cited by BHs and Jack Bogle often said if you must have int'l, no more than 20%.
It is used by some BHs, but they are in the minority, and at least one prominent BH who advocated very unambiguously for 20% as the correct amount, subsequently sold out of int'l equities.
If you are referring to Taylor, he did explain that the amount in Total International was small. I believe he took a distribution and closed the account.

Tony
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Re: Jack Bogle - Two Fund Portfolio

Post by goonie »

Nathan Drake wrote: Sun May 09, 2021 1:11 pm
goonie wrote: Sun May 09, 2021 10:39 am This thread is dangerous for people under the age of 50 who might have 40, 50, or even 60 years of investing left.

Indeed. And it's dangerous when people take the OP's position as fact. "Buy the haystack" but omit most of the equities around the globe. "The two fund portfolio will never underperform" [despite countless evidence to the contrary].

The OP is doing a disservice with his lack of honesty regarding this strategy.

I'm glad there's been more debate recently in this thread, rather than it just being an echo chamber.
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Re: Jack Bogle - Two Fund Portfolio

Post by 1789 »

I doubt this is an echo chamber. The two funds people hold here are different than eachother. Some have cash and some have bonds for example. BH principles still hold for one/two/three ... fund portfolios.

For example for most BHs, an SP500 index fund is good enough and for me it is not good enough, because it is "more than enough".
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Re: Jack Bogle - Two Fund Portfolio

Post by Northern Flicker »

I reveiwed a bunch of target date fund products, using target 2040 funds for comparison to have a consistent point in the glide paths. I could not find any with equities that were 100% US. The lowest int'l allocation I looked at was American Century OneChoice 2040 with non-US equities at about 24% of equities. (American Century also has the lowest ratio of stocks to bonds). Vanguard, Fidelity, and Blackrock are around 40% int'l. T. Rowe Price has non-US equities at about 33%. TIAA is at 30% non-US.

Maybe US equities will overperform forever, but it is not easy to find qualified professionals in the retirement investment business who recommend US-only equity portfolios to retirement savers in the US. I thus would challenge Tony's assertion that people are moving towards his line of thinking on this. Quite the opposite is what I observe to have been happening.

A US index fund will return the average performance of US equity investors. It may fail to return the average of investors in total world equity.
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

Bogleheads -

An excellent article “Jack Bogle: My new winning portfolio strategy” discussing 60% to Total Stock and 40% to Total Bond.

https://finance.yahoo.com/news/jack-bog ... 27705.html

In my opinion this is key:

4. Bogle believes that if you make the 'simple' portfolio choices, you'll spend a lot less time worrying.

The genius of Bogle's portfolio, for him, is its simplicity. It's easy for him to track and understand, and therefore stick to. You might like the challenge of trying to maximize your returns by adding diversification or rebalancing — just be sure you can stick to what you decided and won't sell in a panic or buy in greed. The fundamental thing you want from your portfolio is a sense that it's the right choice for you over the long term.


Enjoy!
Tony
Last edited by abuss368 on Mon May 10, 2021 6:56 pm, edited 1 time in total.
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Re: Jack Bogle - Two Fund Portfolio

Post by Da5id »

abuss368 wrote: Mon May 10, 2021 6:35 pm Bogleheads -

An excellent article “Jack Bogle: My new winning portfolio strategy” discussing 60% to Total Stock and 40% to Total Bond.

In my opinion this is key:

4. Bogle believes that if you make the 'simple' portfolio choices, you'll spend a lot less time worrying.

The genius of Bogle's portfolio, for him, is its simplicity. It's easy for him to track and understand, and therefore stick to. You might like the challenge of trying to maximize your returns by adding diversification or rebalancing — just be sure you can stick to what you decided and won't sell in a panic or buy in greed. The fundamental thing you want from your portfolio is a sense that it's the right choice for you over the long term.


Enjoy!
Tony
Is there a link? Is this just bumping the thread with old news to keep it on the front page????
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

Da5id wrote: Mon May 10, 2021 6:40 pm
abuss368 wrote: Mon May 10, 2021 6:35 pm Bogleheads -

An excellent article “Jack Bogle: My new winning portfolio strategy” discussing 60% to Total Stock and 40% to Total Bond.

In my opinion this is key:

4. Bogle believes that if you make the 'simple' portfolio choices, you'll spend a lot less time worrying.

The genius of Bogle's portfolio, for him, is its simplicity. It's easy for him to track and understand, and therefore stick to. You might like the challenge of trying to maximize your returns by adding diversification or rebalancing — just be sure you can stick to what you decided and won't sell in a panic or buy in greed. The fundamental thing you want from your portfolio is a sense that it's the right choice for you over the long term.


Enjoy!
Tony
Is there a link? Is this just bumping the thread with old news to keep it on the front page????
^ see above.

Enjoy!
Tony
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Re: Jack Bogle - Two Fund Portfolio

Post by goonie »

abuss368 wrote: Mon May 10, 2021 6:35 pm Bogleheads -

An excellent article “Jack Bogle: My new winning portfolio strategy” discussing 60% to Total Stock and 40% to Total Bond.

In my opinion this is key:

4. Bogle believes that if you make the 'simple' portfolio choices, you'll spend a lot less time worrying.

The genius of Bogle's portfolio, for him, is its simplicity. It's easy for him to track and understand, and therefore stick to. You might like the challenge of trying to maximize your returns by adding diversification or rebalancing — just be sure you can stick to what you decided and won't sell in a panic or buy in greed. The fundamental thing you want from your portfolio is a sense that it's the right choice for you over the long term.


Enjoy!
Tony
You like to mention often the importance of being able to stick to your allocation. Considering that you dropped International in 2016 after 7 years of US outperformance and that, in the 5 years since, you haven't been through a prolonged period of US underperformance...how are you so certain that you're going to be able to stick with your new allocation?

Also, how is Total World more complicated than Total US?
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

Northern Flicker wrote: Mon May 10, 2021 1:33 pm I thus would challenge Tony's assertion that people are moving towards his line of thinking on this. Quite the opposite is what I observe to have been happening.
I am not so sure about that. Over the past couple of years, there appears to be a lot of posts expressing frustration and abandoning international stocks on the forum. Perhaps motivated by US outperformance.

Tony
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Re: Jack Bogle - Two Fund Portfolio

Post by goonie »

abuss368 wrote: Mon May 10, 2021 6:57 pm
Da5id wrote: Mon May 10, 2021 6:40 pm
Is there a link? Is this just bumping the thread with old news to keep it on the front page????
^ see above.

Enjoy!
Tony
That article is from 6 years ago.
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Re: Jack Bogle - Two Fund Portfolio

Post by Da5id »

goonie wrote: Mon May 10, 2021 6:59 pm
abuss368 wrote: Mon May 10, 2021 6:57 pm
Da5id wrote: Mon May 10, 2021 6:40 pm
Is there a link? Is this just bumping the thread with old news to keep it on the front page????
^ see above.

Enjoy!
Tony
That article is from 6 years ago.
Given that Mr. Bogle passed away over 2 years ago I knew it wasn't very fresh. A fine quote from the article is below
But Bogle's advice goes against conventional wisdom and even some Vanguard Group research. In 2014, Vanguard research suggested that investors allocate at least 20 percent of an equity allocation to non-U.S. stocks.

Tim McCarthy, former president of Charles Schwab and author of "The Safe Investor," agrees with Vanguard in this case, not Bogle.

"No matter how great a country is, putting zero outside your own country is the wrong answer on both a risk and return basis," said McCarthy by email. "Having a minority portion in international over the decades will decrease your risk and increase your returns."
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Re: Jack Bogle - Two Fund Portfolio

Post by goonie »

abuss368 wrote: Mon May 10, 2021 6:58 pm
Northern Flicker wrote: Mon May 10, 2021 1:33 pm I thus would challenge Tony's assertion that people are moving towards his line of thinking on this. Quite the opposite is what I observe to have been happening.
I am not so sure about that. Over the past couple of years, there appears to be a lot of posts expressing frustration and abandoning international stocks on the forum. Perhaps motivated by US outperformance.

Tony
That's the opposite of what all the major investment firms have been doing with their all-in-one funds. They've been adding more International, not abandoning it. To me, that carries considerably more weight than some anecdotal posts on the Bogleheads forum.
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Re: Jack Bogle - Two Fund Portfolio

Post by Da5id »

abuss368 wrote: Mon May 10, 2021 6:58 pm
Northern Flicker wrote: Mon May 10, 2021 1:33 pm I thus would challenge Tony's assertion that people are moving towards his line of thinking on this. Quite the opposite is what I observe to have been happening.
I am not so sure about that. Over the past couple of years, there appears to be a lot of posts expressing frustration and abandoning international stocks on the forum. Perhaps motivated by US outperformance.
Ah performance chasing. Nothing says bogleheads quite like it.
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Re: Jack Bogle - Two Fund Portfolio

Post by Nathan Drake »

goonie wrote: Mon May 10, 2021 7:13 pm
abuss368 wrote: Mon May 10, 2021 6:58 pm
Northern Flicker wrote: Mon May 10, 2021 1:33 pm I thus would challenge Tony's assertion that people are moving towards his line of thinking on this. Quite the opposite is what I observe to have been happening.
I am not so sure about that. Over the past couple of years, there appears to be a lot of posts expressing frustration and abandoning international stocks on the forum. Perhaps motivated by US outperformance.

Tony
That's the opposite of what all the major investment firms have been doing with their all-in-one funds. They've been adding more International, not abandoning it. To me, that carries considerably more weight than some anecdotal posts on the Bogleheads forum.
Everyone is 100% on board with Tony’s two fund portfolio, it never underperforms!

Except when compared to his Uncle Vinny’s portfolio of REITs, tech stocks, and dividend investments!
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

Nathan Drake wrote: Mon May 10, 2021 7:32 pm
goonie wrote: Mon May 10, 2021 7:13 pm
abuss368 wrote: Mon May 10, 2021 6:58 pm
Northern Flicker wrote: Mon May 10, 2021 1:33 pm I thus would challenge Tony's assertion that people are moving towards his line of thinking on this. Quite the opposite is what I observe to have been happening.
I am not so sure about that. Over the past couple of years, there appears to be a lot of posts expressing frustration and abandoning international stocks on the forum. Perhaps motivated by US outperformance.

Tony
That's the opposite of what all the major investment firms have been doing with their all-in-one funds. They've been adding more International, not abandoning it. To me, that carries considerably more weight than some anecdotal posts on the Bogleheads forum.
Everyone is 100% on board with Tony’s two fund portfolio, it never underperforms!

Except when compared to his Uncle Vinny’s portfolio of REITs, tech stocks, and dividend investments!
Awesome! :sharebeer
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Re: Jack Bogle - Two Fund Portfolio

Post by Northern Flicker »

Yes, some anecdotal postings. There are BH's who have always held a US-only portfolio, which is fine, but if you add up the total assets of those who threw in the towel and decided to lock in their non-US underperformance, it would be microscopic in comparison to the growth in assets in the target date funds of companies in my posting.
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
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Re: Jack Bogle - Two Fund Portfolio

Post by Taylor Larimore »

goonie wrote:That article is from 6 years ago.
The wonderful thing about Jack Bogle is that his advice is timeless!

Best wishes.
Taylor
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Re: Jack Bogle - Two Fund Portfolio

Post by abuss368 »

Taylor Larimore wrote: Mon May 10, 2021 8:00 pm
goonie wrote:That article is from 6 years ago.
The wonderful thing about Jack Bogle is that his advice is timeless!

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "I would say, go into the casino, which is what Wall Street is today. Bet on the entire stock market and then get out of the casino and never show yourself there again.”
Taylor -

Thank you fro sharing this Couch Potato link in another thread. The Two Fund Portfolio and the Balanced INdex are discussed.

Simplicity is truly the master key to financial success!

https://couchpotatoinvesting.com/the-si ... manifesto/

Best.
Tony
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