Ric Edelman "times have changed" claim

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animule
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Ric Edelman "times have changed" claim

Post by animule » Tue Jan 21, 2014 8:16 am

Caught some of the Ric Edelman show on the radio over the weekend and he had an extensive discussion on investing today, referencing John Bogle.

Ric said that "times had changed" and that "age in bonds" was old fashioned, and that even somebody of the stature of John Bogle is "not saying this anymore." No mention of any variation of "age in bonds" like "age in bonds minus 10%" or something like that.

Ric also said that the dividend ratio on the S&P 500 was around 3% at a time when bank deposits are paying almost nothing.

I'll give him the bank deposit part, but I don't see any evidence of an S&P dividend rate of 3%. Best I could find for the S&P 500 was around 1.9%. Big difference between those two.

But the part where he brought John Bogle's name in as well as Vanguard and insinuated that bond investing was a loser's best was concerning. Is Bogle that negative on bonds? Or is this a gross simplification? I don't own bonds expecting to make a fortune on them - I own them to manage downsize risk. This was not even mentioned by him.

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Re: Ric Edelman "times have changed" claim

Post by steve r » Tue Jan 21, 2014 8:29 am

animule wrote:I don't own bonds expecting to make a fortune on them - I own them to manage downsize risk. This was not even mentioned by him.
+1
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Re: Ric Edelman "times have changed" claim

Post by Call_Me_Op » Tue Jan 21, 2014 8:37 am

animule wrote: Ric said that "times had changed" and that "age in bonds" was old fashioned, and that even somebody of the stature of John Bogle is "not saying this anymore." No mention of any variation of "age in bonds" like "age in bonds minus 10%" or something like that.
I don't believe that basic investing principles change. I certainly do not believe in over-weighting stocks after a huge run-up. So I don't agree.
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Re: Ric Edelman "times have changed" claim

Post by Ed 2 » Tue Jan 21, 2014 8:53 am

I always listening Ric, but not following his ridicules statements regarding ETF's, using financial advisers.... its absolute and ignoring index funds like they never exist. I also was vary surprised by his latest ... that s&P's dividend is 3%. Sometimes he like to overstate a bit. :happy
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Re: Ric Edelman "times have changed" claim

Post by l2ridehd » Tue Jan 21, 2014 9:03 am

His statement about Jack I think relates to the fact that Jack now includes Social Security in his bond allocation which has the effect of lowering your % of bonds below your age. I have always used age in bonds minus 20 because of SS and DB pensions. And in practice go even less then that. Right now I am at 57/43 even though I am 68 years old.

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Re: Ric Edelman "times have changed" claim

Post by nisiprius » Tue Jan 21, 2014 10:05 am

Ric Edelman is a salesperson hawking his own wares. He is one of the last people you should look to for disinterested advice. He likes to make attention-getting sound bites. He will say anything that sounds good and advances his purposes, as long as it is not so false that he could get in trouble for it.

In March of 2011 he claimed that Vanguard was hiding fees of as much as 1.4% per year in its funds. Allan Roth actually managed to get him to retract that statement. Among other things, he said to Roth "Assuming the quote from the show is accurate (no doubt, as you're a thorough guy!), then I clearly didn't say what I meant to say."

Someone could say "Those Vanguard fees may look low, but remember that mutual funds can have other hidden expenses which can be as high as 1.4%." That would be a way of allowing many listeners to infer that Vanguard has such fees without saying so. That would be a way to make listeners infer that Vanguard hides 1.4% without saying so. Notice that I haven't said that Ric Edelman did this. :wink:

In May of 2011 he said that mutual funds would not exist in ten years, they would be completely replaced by ETFs. It's now a quarter of the way into that time period, maybe we should start tracking THAT claim. I couldn't find figures for 2013, though.

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Re: Ric Edelman "times have changed" claim

Post by denovo » Tue Jan 21, 2014 10:37 am

nisiprius wrote:Ric Edelman is a salesperson hawking his own wares. He is one of the last people you should look to for disinterested advice.
This is true. Although not as bad as CNBC and Cramer, listening to Edelman can be hazardous to your financial well-being.

That being said, I do have a soft spot for him. When I was a younger man when I knew nothing about finances, I was sitting at my friend's parent's home watching a game that I didn't find too interesting , so I started reading one of his books that was on the table. It was either the Lies about Money, or the Truth about Money can't remember, but I think it was the former. I got to admit the catchy title is what triggered my interest.

There was a lot of good advice in that book about personal finance and he explained the basics about investing in a very readable format. His parable about savings and Jack and Jill stuck with me.

http://www.ricedelman.com/cs/education/ ... t6S9BAo6M8

He was never an advocate of whole life, but advocated term and disability and talked some of the good stuff about diversification and risks and needing a bond allocation. I think at time, he was in favor of active management, although not anymore.
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Re: Ric Edelman "times have changed" claim

Post by jimb_fromATL » Tue Jan 21, 2014 11:19 am

nisiprius wrote:Ric Edelman is a salesperson hawking his own wares. He is one of the last people you should look to for disinterested advice. He likes to make attention-getting sound bites. He will say anything that sounds good and advances his purposes, as long as it is not so false that he could get in trouble for it.


To add another couple of examples. After the market crash of 2001/2002 he was advocating buying real estate -- presumably because it was going to continue going up forever. How'd that work out?

Prior to that, in the late 90's he was advocating that people should mortgage their homes to the hilt and invest in the stock market -- presumably because it was going to continue averaging high 20% to low 30% returns forever.

Incidentally, I know a lot of people who took the advice of people like ric edlemann and took out big mortgages during the irrational exuberance of the 90s when the stock market was at an all-time high. Then when the stock market, the economy, and the high-tech job market all crashed, they lost a big chunk of the money they had invested, but still had big mortgage payments.

A lot of them had to either postpone retirement, or else go back to work because their investments could not support making the mortgage payments. Some even lost their homes to foreclosure, or had to sell and downsize to something they could afford. I knew two people who had to work several more years after normal retirement age to recover from their losses before they could afford to retire.

In no case when people lost their life savings and ended up with a big mortgage and no funds to pay it back did I ever hear of ric edlemann--or any other people who advised them to keep a big mortgage--stepping forward to help them make their mortgage payments or to reimburse them for their losses. On the other hand, those of us who had paid off our mortgages were able to ride out the market’s ups and downs with no problems. It’s a lot easier to tolerate a drop in value in your investments-- and to wait for a recovery-- when you don’t have a mortgage payment to worry about.

jimb

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Re: Ric Edelman "times have changed" claim

Post by Geist » Tue Jan 21, 2014 11:21 am

He's absolutely correct -- times have changed.

It used to be 2013. Now it's 2014.

Otherwise ... "nothing to see here, move along folks."
Call_Me_Op wrote:I don't believe that basic investing principles change. ... So I don't agree.
This.

AA (to include the use of bonds & every other asset type) is all about balancing risk. One of those risks is market risk, where you lose money on devalued holdings. Another is opportunity cost, where you miss out on what could have been potential earnings. Even on the simplest level, balancing these two is what a suitable AA can do for you, it reduces BOTH risks by managing the impact of either one on your total portfolio.

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Re: Ric Edelman "times have changed" claim

Post by SamB » Tue Jan 21, 2014 11:39 am

nisiprius wrote:Ric Edelman is a salesperson hawking his own wares. He is one of the last people you should look to for disinterested advice.
I could not agree more. If you want to really get some insight into Edelman you should go back and read one of his books, published 20 or 25 years ago. This guy is a salesman, not a saint. Edelman is successful because most people don't keep score.

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Re: Ric Edelman "times have changed" claim

Post by MrManlyMister » Tue Jan 21, 2014 2:21 pm

Calm Man wrote:Maybe one is better off with a higher expense fund and not him.
If that were the case, then one would be even better off with ETFs and not him.

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Re: Ric Edelman "times have changed" claim

Post by MrManlyMister » Tue Jan 21, 2014 2:35 pm

l2ridehd wrote:His statement about Jack I think relates to the fact that Jack now includes Social Security in his bond allocation which has the effect of lowering your % of bonds below your age. I have always used age in bonds minus 20 because of SS and DB pensions. And in practice go even less then that. Right now I am at 57/43 even though I am 68 years old.
http://socialsecurityreport.org/vanguar ... -vs-bonds/

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Re: Ric Edelman "times have changed" claim

Post by Call_Me_Op » Tue Jan 21, 2014 3:00 pm

MrManlyMister wrote:
Calm Man wrote:Maybe one is better off with a higher expense fund and not him.
If that were the case, then one would be even better off with ETFs and not him.
And such a person might be called a Boglehead. :)
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Re: Ric Edelman "times have changed" claim

Post by Random Musings » Wed Jan 22, 2014 9:41 am

To be blunt, Ric's a .......

Not a person to be trusted with his track record.

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Re: Ric Edelman "times have changed" claim

Post by livesoft » Wed Jan 22, 2014 10:06 am

Whenever one of these "He said. She said." threads show up, I wonder if anyone is capable of making up their own minds anymore. Hopefully folks do not blindly follow Mr Edelman nor Mr Bogle nor any of a number of various thoughts.

I believe everybody has at least 25% of wacky ideas, errors, misstatements, etc, so that one should always be separating the wheat from the chaff.
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Re: Ric Edelman "times have changed" claim

Post by Kenkat » Wed Jan 22, 2014 8:27 pm

Times always seem to change the most when the market hits new highs.

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Re: Ric Edelman "times have changed" claim

Post by jimb_fromATL » Wed Jan 22, 2014 8:41 pm

livesoft wrote: I believe everybody has at least 25% of wacky ideas, errors, misstatements,
True ... but most people don't make their living selling books and services that make it seem like they really know what they're talking about all the time.

jimb

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Re: Ric Edelman "times have changed" claim

Post by Mel Lindauer » Wed Jan 22, 2014 8:50 pm

SamB wrote:
nisiprius wrote:Ric Edelman is a salesperson hawking his own wares. He is one of the last people you should look to for disinterested advice.
I could not agree more. If you want to really get some insight into Edelman you should go back and read one of his books, published 20 or 25 years ago. This guy is a salesman, not a saint. Edelman is successful because most people don't keep score.
Well said, Nisi and Sam.
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Re: Ric Edelman "times have changed" claim

Post by lawman3966 » Thu Jan 23, 2014 1:33 am

There will always be shows for people too lazy to read "Common Sense on Mutual Funds" and who are willing to part with half or more of their life's savings to let someone else do their financial thinking for them.

If passive investing is a good idea, then the endless noise of the weekend finance talk shows would stop, and that would be bad for business.

I accept it for the entertainment that it is, and assume that it's (slightly) more useful than listening to the sound of the highway wind noise against my car's sheet metal.

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Re: Ric Edelman "times have changed" claim

Post by MrManlyMister » Thu Jan 23, 2014 3:10 pm

jimb_fromATL wrote:
livesoft wrote: I believe everybody has at least 25% of wacky ideas, errors, misstatements,
True ... but most people don't make their living selling books and services that make it seem like they really know what they're talking about all the time.

jimb
How many books has Mr. Bogle sold?

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Re: Ric Edelman "times have changed" claim

Post by jimb_fromATL » Thu Jan 23, 2014 3:26 pm

MrManlyMister wrote:
jimb_fromATL wrote:
livesoft wrote: I believe everybody has at least 25% of wacky ideas, errors, misstatements,
True ... but most people don't make their living selling books and services that make it seem like they really know what they're talking about all the time.

jimb
How many books has Mr. Bogle sold?
I dunno. But I'd bet his advice would be better than Ric's. Mr Bogle hasn't made his money from pretending to know about financial stuff and telling peope what they want to hear -- and changing it every time the wind changes direction.

jimb

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Re: Ric Edelman "times have changed" claim

Post by stemikger » Fri Jan 24, 2014 9:13 am

Ric Edelman, is all over the place. Many years ago, he hated index fund, then somewhere along the line, he loved them, since 2005 all he talks about are ETFs.

He talks so fast and so much on his radio show he never really gets to a point where you can feel satisfied. His books are the same way. He has all these thoughts and in one book he even had model portfolios, but again too much noise and information but nothing really substantial, it's like he always wants to make you keep guessing. Maybe it's me, but I just don't like his style.

When John Bogle answers a question, at the end of it, you have an answer, like it or not.

Ric really does remind me of a used car salesman.

Here is the master saying it best:

http://www.youtube.com/watch?v=A0gQiz0pCyI
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Re: Ric Edelman "times have changed" claim

Post by Dulocracy » Fri Jan 24, 2014 10:07 am

jimb_fromATL wrote:
To add another couple of examples. After the market crash of 2001/2002 he was advocating buying real estate -- presumably because it was going to continue going up forever. How'd that work out?
jimb- exactly. This is what bogleheads talk about when they say ignore the noise. This guy is noise.
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Re: Ric Edelman "times have changed" claim

Post by sadie wess » Fri Jan 24, 2014 11:40 am

Mel Lindauer wrote:
SamB wrote:
nisiprius wrote:Ric Edelman is a salesperson hawking his own wares. He is one of the last people you should look to for disinterested advice.
I could not agree more. If you want to really get some insight into Edelman you should go back and read one of his books, published 20 or 25 years ago. This guy is a salesman, not a saint. Edelman is successful because most people don't keep score.
Well said, Nisi and Sam.
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Re: Ric Edelman "times have changed" claim

Post by SquawkIdent » Fri Jan 24, 2014 11:53 am

Blah, blah, blah. Just more noise. More important to make your own mind up depending on your situation. Remember, he is trying to sell something. Nobody "works" for free. :sharebeer

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