"The Simplicity Manifesto" by Scott Burns

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Taylor Larimore
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"The Simplicity Manifesto" by Scott Burns

Post by Taylor Larimore »

Bogleheads:

Many years ago I discovered financial columnist Scott Burns and his "Couch Potato Portfolio." I tried using his portfolio and it worked. It became the basis for my Three-Fund Portfolio.

This morning I received an e-mail from my co-author, Michael LeBoeuf, with a link to "The Simplicity Manifesto" by Mr. Burns. I highly recommend reading it if you are trying to improve your investment portfolio:

The Simplicity Manifesto

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "This business is all about simplicity and low cost. I'm not into all these market strategies and theories and cost-benefit analyses - all the bureaucracy that goes with business. In investing, strip all the baloney out of it, and give people what you promise."
"Simplicity is the master key to financial success." -- Jack Bogle
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Re: "The Simplicity Manifesto" by Scott Burns

Post by Tuesday »

Great read. I'll never get tired of simplicity being praised.

The only thing I ever think about changing in my portfolio is US v. International. I currently am 80/20 for the reason Taylor often explains. Mr. Burns seems to argue that investing in the US is enough global diversification by itself.
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Re: "The Simplicity Manifesto" by Scott Burns

Post by nigel_ht »

Taylor Larimore wrote: Mon May 10, 2021 9:33 am Bogleheads:

Many years ago I discovered financial columnist Scott Burns and his "Couch Potato Portfolio." I tried using his portfolio and it worked. It became the basis for my Three-Fund Portfolio.

This morning I received an e-mail from my co-author, Michael LeBoeuf, with a link to "The Simplicity Manifesto" by Mr. Burns. I highly recommend reading it if you are trying to improve your investment portfolio:

The Simplicity Manifesto

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "This business is all about simplicity and low cost. I'm not into all these market strategies and theories and cost-benefit analyses - all the bureaucracy that goes with business. In investing, strip all the baloney out of it, and give people what you promise."
Yes, I started with the couch potato portfolio as well and didn't learn about bogleheads until much later. I may have only barely met the criteria for doing couch potato (ability to divide by 2 and fog a mirror) but it worked well for me.
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Re: "The Simplicity Manifesto" by Scott Burns

Post by abuss368 »

Taylor Larimore wrote: Mon May 10, 2021 9:33 am Bogleheads:

Many years ago I discovered financial columnist Scott Burns and his "Couch Potato Portfolio." I tried using his portfolio and it worked. It became the basis for my Three-Fund Portfolio.

This morning I received an e-mail from my co-author, Michael LeBoeuf, with a link to "The Simplicity Manifesto" by Mr. Burns. I highly recommend reading it if you are trying to improve your investment portfolio:

The Simplicity Manifesto

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "This business is all about simplicity and low cost. I'm not into all these market strategies and theories and cost-benefit analyses - all the bureaucracy that goes with business. In investing, strip all the baloney out of it, and give people what you promise."
Hi Taylor -

I really enjoyed this article. I added the link to the Jack Bogle - Two Fund Portfolio thread.

Thank you for sharing.
Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: "The Simplicity Manifesto" by Scott Burns

Post by retired@50 »

As usual, Scott Burns makes me chuckle. I've been a fan of his nearly as long as I've been investing.

Regards,
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Re: "The Simplicity Manifesto" by Scott Burns

Post by Greg in Idaho »

retired@50 wrote: Mon May 10, 2021 8:18 pm As usual, Scott Burns makes me chuckle...
I chuckled too, mostly at all the slice and dicers on BH trying to make complexity pay off
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Re: "The Simplicity Manifesto" by Scott Burns

Post by abuss368 »

Greg in Idaho wrote: Tue May 11, 2021 7:07 am
retired@50 wrote: Mon May 10, 2021 8:18 pm As usual, Scott Burns makes me chuckle...
I chuckled too, mostly at all the slice and dicers on BH trying to make complexity pay off
I learned a long time ago (we had 15 - 18 funds at one time), that all the moving parts resulted in additional cost and complexity.

We simplified and in hindsight it was a very wise decision.

Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: "The Simplicity Manifesto" by Scott Burns

Post by burritoLover »

If you buy the U.S. stock market, you’re already globally diversified. According to an analysis done regularly by S&P Global, 43.6 percent of sales by the S&P 500 companies were in foreign countries. Coca Cola, a canonical American company, has 58.4 percent of its sales outside of the U.S. The comparable figure for Wal-Mart is 24.1 percent, 40.1 percent for Ford and 58.1 percent for Procter & Gamble.
Not that tired argument again.
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Re: "The Simplicity Manifesto" by Scott Burns

Post by RJC »

burritoLover wrote: Tue May 11, 2021 7:47 am
If you buy the U.S. stock market, you’re already globally diversified. According to an analysis done regularly by S&P Global, 43.6 percent of sales by the S&P 500 companies were in foreign countries. Coca Cola, a canonical American company, has 58.4 percent of its sales outside of the U.S. The comparable figure for Wal-Mart is 24.1 percent, 40.1 percent for Ford and 58.1 percent for Procter & Gamble.
Not that tired argument again.
What is wrong with that argument? Is that not correct?
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Re: "The Simplicity Manifesto" by Scott Burns

Post by birdog »

Good article. I cringe at the massive sums of money wasted on money managers because most people will never invest the time to learn the truth about personal finance. Articles like this are enlightening to those who are unaware of the passive vs active comparison.
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"The Simplicity Manifesto" by Scott Burns

Post by marklearnsbogle »

+1 and thank you, Taylor, and all. Simplicity has proven a change in my investing life ... and my investing balances!
"Nothing is simpler than owning the stock market and holding it forever, and that’s essentially the idea behind the index fund.” - Bogle.
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Re: "The Simplicity Manifesto" by Scott Burns

Post by nigel_ht »

RJC wrote: Tue May 11, 2021 7:50 am
burritoLover wrote: Tue May 11, 2021 7:47 am
If you buy the U.S. stock market, you’re already globally diversified. According to an analysis done regularly by S&P Global, 43.6 percent of sales by the S&P 500 companies were in foreign countries. Coca Cola, a canonical American company, has 58.4 percent of its sales outside of the U.S. The comparable figure for Wal-Mart is 24.1 percent, 40.1 percent for Ford and 58.1 percent for Procter & Gamble.
Not that tired argument again.
What is wrong with that argument? Is that not correct?
"However, Donahue finds that the benefits of international diversification are lower today than they were previously, because correlations have increased materially in the past two decades. He finds that investors can allocate up to 20% of their portfolios to international equities without increasing overall portfolio volatility. Beyond this, any increased allocation to non-U.S. equities entails a tradeoff between risk and return."

https://www.forbes.com/sites/nicksargen ... b448165afb

"Perhaps most concerning of all, the correlations between the U.S. and global markets have been steadily increasing over time. That means the benefits of diversification--namely, risk reduction at the portfolio level and higher return per unit of risk--have also been eroding. Over the 48-year stretch from 1971 through October 2019, the five-year cross correlation (which we define as the strength and direction of the linear relationship between two variables) between the S&P 500 and EAFE has been as low as 0.26. Since then, it has gradually trended up, peaking at 0.92 in August 2013. For the most recent five-year period, it dipped a tad to 0.83. That’s only slightly lower than the S&P 500’s five-year correlation with the Russell 2000 Index, a domestic index composed of small-cap stocks."

https://www.morningstar.com/articles/95 ... ernational

How long before a trend becomes an indicator of new behavior?

So...20% seems good.
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Re: "The Simplicity Manifesto" by Scott Burns

Post by nigel_ht »

This post is even better for bogleheads:

"Trust me, epiphanies are not part of my daily life. But I suddenly realized that there were two kinds of wealth. There was Complex Wealth, which is what he had. And there was Simple Wealth.

And that’s what the Burns family had, and still has. Although our net worth and income were only a small fraction of what the man of Complex Wealth had, we could easily meet our goals, give generously to charity and be helpful to our adult children. Our income exceeds our spending. Debt is not a concern because we no longer have any."

https://couchpotatoinvesting.com/the-jo ... le-wealth/
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Re: "The Simplicity Manifesto" by Scott Burns

Post by Kevin K »

I'm also a long-time Scott Burns fan but do feel obliged to point out that he doesn't exactly walk the talk when it comes to two-fund simplicity. He's the co-founder of AssetBuilder, a % of AUM DFA financial advisory firm whose stock-in-trade is exactly the kind of complex, small-and-value tilted, internationally diversified allocations folks on these forums often criticize. I note with interest that they've gotten rid of the part of the site that shows their various "stock" portfolios based on risk tolerance (perhaps because their returns have been so abysmal vs. simple 2 or 3 fund total market index funds over the past couple of decades).

https://assetbuilder.com/about-assetbuilder
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Re: "The Simplicity Manifesto" by Scott Burns

Post by abuss368 »

marklearnsbogle wrote: Tue May 11, 2021 8:32 am +1 and thank you, Taylor, and all. Simplicity has proven a change in my investing life ... and my investing balances!
That is key Mark! And your investing balances!

Glad to hear a simple and lost cost US portfolio has improved your financial life!

Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: "The Simplicity Manifesto" by Scott Burns

Post by Dave55 »

abuss368 wrote: Tue May 11, 2021 7:35 am
Greg in Idaho wrote: Tue May 11, 2021 7:07 am
retired@50 wrote: Mon May 10, 2021 8:18 pm As usual, Scott Burns makes me chuckle...
I chuckled too, mostly at all the slice and dicers on BH trying to make complexity pay off
I learned a long time ago (we had 15 - 18 funds at one time), that all the moving parts resulted in additional cost and complexity.

We simplified and in hindsight it was a very wise decision.

Tony
Tony if you had 21 funds at one time, you would be "Where the water is warm, the drinks are cold, and I don't know the names of the players! at this very moment. :sharebeer

Dave
"Reality always wins, your only job is to get in touch with it." Wilford Bion
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Re: "The Simplicity Manifesto" by Scott Burns

Post by Dave55 »

Taylor Larimore wrote: Mon May 10, 2021 9:33 am Bogleheads:

Many years ago I discovered financial columnist Scott Burns and his "Couch Potato Portfolio." I tried using his portfolio and it worked. It became the basis for my Three-Fund Portfolio.

This morning I received an e-mail from my co-author, Michael LeBoeuf, with a link to "The Simplicity Manifesto" by Mr. Burns. I highly recommend reading it if you are trying to improve your investment portfolio:

The Simplicity Manifesto

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "This business is all about simplicity and low cost. I'm not into all these market strategies and theories and cost-benefit analyses - all the bureaucracy that goes with business. In investing, strip all the baloney out of it, and give people what you promise."
Thanks Taylor, good article!

Dave
"Reality always wins, your only job is to get in touch with it." Wilford Bion
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Re: "The Simplicity Manifesto" by Scott Burns

Post by abuss368 »

Dave55 wrote: Tue May 11, 2021 6:35 pm
abuss368 wrote: Tue May 11, 2021 7:35 am
Greg in Idaho wrote: Tue May 11, 2021 7:07 am
retired@50 wrote: Mon May 10, 2021 8:18 pm As usual, Scott Burns makes me chuckle...
I chuckled too, mostly at all the slice and dicers on BH trying to make complexity pay off
I learned a long time ago (we had 15 - 18 funds at one time), that all the moving parts resulted in additional cost and complexity.

We simplified and in hindsight it was a very wise decision.

Tony
Tony if you had 21 funds at one time, you would be "Where the water is warm, the drinks are cold, and I don't know the names of the players! at this very moment. :sharebeer

Dave
Hi Dave -

Priceless! Oh my...no! I actually had 15 - 18 funds when I started with Vanguard. Crazy. Can’t even imagine that. Before that? 80 stocks at least.

Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: "The Simplicity Manifesto" by Scott Burns

Post by goblue100 »

Kevin K wrote: Tue May 11, 2021 9:28 am I'm also a long-time Scott Burns fan but do feel obliged to point out that he doesn't exactly walk the talk when it comes to two-fund simplicity. He's the co-founder of AssetBuilder, a % of AUM DFA financial advisory firm whose stock-in-trade is exactly the kind of complex, small-and-value tilted, internationally diversified allocations folks on these forums often criticize. I note with interest that they've gotten rid of the part of the site that shows their various "stock" portfolios based on risk tolerance (perhaps because their returns have been so abysmal vs. simple 2 or 3 fund total market index funds over the past couple of decades).

https://assetbuilder.com/about-assetbuilder
I would say that is a fair criticism. I've read Scott in the Dallas Morning News for over 25 years. I based my portfolio on his 10 speed (10 asset classes). I've gotten rid of TIPS and REITS over the last couple of years, and will be simplifying further over the next year or so. I would be better off if I had embraced simplicity, but simple seemed, well simple. Simple seemed insufficient, somehow.

I guess all of us keep learning, no matter our background or age. Scott is no exception. I'd rather someone evolve and state why they are evolving then to stay locked into a position that they know is wrong.
Financial planners are savers. They want us to be 95 percent confident we can finance a 30-year retirement even though there is an 82 percent probability of being dead by then. - Scott Burns
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Re: "The Simplicity Manifesto" by Scott Burns

Post by junior »

It sounds like Scott Burns is not exactly consistent, or those who think he is against international, he wasn't in 2017:

Was there a simple way to get a higher return?

There was last year. If you had gone the extra mile of effort and built the “Margarita portfolio”, your return for the year would have been a very nice 16.71 percent. And all you had to do was add a third exchange-traded fund, Vanguard FTSE Developed Markets Index Fund (ticker: VEA) and divide your money in three even parts instead of two. You can prepare for this by making several rounds of Texas’s favorite drink using the traditional 1/3, 1/3, 1/3 recipe
https://couchpotatoinvesting.com/the-co ... port-2017/
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Re: "The Simplicity Manifesto" by Scott Burns

Post by tooluser »

Greg in Idaho wrote: Tue May 11, 2021 7:07 am
retired@50 wrote: Mon May 10, 2021 8:18 pm As usual, Scott Burns makes me chuckle...
I chuckled too, mostly at all the slice and dicers on BH trying to make complexity pay off
Scott Burns himself was a slicer/dicer: Ten-Speed Portfolio. What is the appropriate payoff period to be looking at?
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Re: "The Simplicity Manifesto" by Scott Burns

Post by tooluser »

RJC wrote: Tue May 11, 2021 7:50 am
burritoLover wrote: Tue May 11, 2021 7:47 am
If you buy the U.S. stock market, you’re already globally diversified. According to an analysis done regularly by S&P Global, 43.6 percent of sales by the S&P 500 companies were in foreign countries. Coca Cola, a canonical American company, has 58.4 percent of its sales outside of the U.S. The comparable figure for Wal-Mart is 24.1 percent, 40.1 percent for Ford and 58.1 percent for Procter & Gamble.
Not that tired argument again.
What is wrong with that argument? Is that not correct?
How are domestic profits from selling things to foreign entities different than ownership of foreign entities that profit by selling to all?
I honestly don't know the answer, and have never seen anyone answer the question. :confused
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