What Experts Say About "Simplicity"

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Taylor Larimore
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What Experts Say About "Simplicity"

Post by Taylor Larimore » Sat Jan 24, 2015 4:16 pm

Scott Adams, author of Dilbert: "I once tried to write a book about personal investing. After extensive research I realized I could describe everything that a young first-time investor needs to know on one page."

Antoine de Saint-Exupéry: "A designer knows he has achieved perfection not when there is nothing left to add, but when there is nothing left to take away."

Christine Benz, Morningstar Director of Personal Finance: "Simplicity is one of the greatest--but in my view, woefully underrated--virtues when managing a portfolio."

Bill Bernstein, author of Four Pillars of Investing: ""The more real people I get to know, the more I am convinced the simpler the solution, the better the solution."

Richard Bernstein, Merrill Lynch strategist: "Investors find it hard to believe that ignoring the vast majority of investment noise might actually improve their performance."

Jack Bogle: "Simplicity is the master key to financial success."

Dan Bortolotti, CFP, and author of The Money Sense Guide to the Perfect Portfolio: "The peace of mind that comes with a simple investing strategy is priceless."

Jack Brennan, former Vanguard CEO and author of Straight Talk on Investing: "It's in the interest of many financial service companies to make you think that investing is difficult.--It's really quite simple."

Warren Buffet: "To invest successfully, you need not understand beta, efficient markets, modern portfolio theory, option pricing or emerging markets. You may, in fact, be better off knowing nothing of these."

Scott Burns, creator of The Couch Potato Strategy: The advocates of complexity are generally people who are making their living from the complexity they create for us.”

Ben Carlson, author of A Wealth of Common Sense: ""I’ve spent my entire career working in portfolio management. This experience has taught me that less is always more when making investment decisions. Simplicity trumps complexity."

Jean Chatzky, NBC Financial Editor: "The problem with so much personal financial advice is that it's unnecessarily complicated, often with the goal of selling you something you don't need."

Andrew Clarke, author of "Wealth of Experience": "In investing, simple is usually more productive than complex."

Jonathan Clements, Wall Street Journal columnist: "Investing is simple. To be sure, you can make it ludicrously complicated."

J.L.Collins, author of The Simple Path to Wealth: The more complex an investment is, the less likely it is to be profitable. At best they are costly. At worst they are a cesspool of swindlers.

Paul Crafter, author of "Investment Guide": "After doing it all, I now feel I've come around in a complete circle, ending up with this: The more I learn, the less I really need to know."

James Dahle, Editor of The White-Coat Investor: "In my view, the simpler the financial product, the better it is for the consumer."

Edsger Dijkstra, famed physicist: “Simplicity is a great virtue but it requires hard work to achieve it and education to appreciate it. And to make matters worse: complexity sells better.”

Laura Dogu, Ambassador to Nicaragua and co-author of "The Bogleheads Guide to Retirement Planning": A simple portfolio is actually the ultimate in sophistication. It almost always lowers cost (including taxes), makes analysis easier, simplifies rebalancing, simplifies tax-preparation, reduces paper-work and record-keeping, and enables caregivers and heirs to easily take-over the portfolio when necessary. Best of all, a simple portfolio allows the investor to spend more time with family and friends."

Michael Edesess, author of The Big Invesment Lie: "As a mathematician I know when mathematical-sounding analyses are little more than elaborate sales pitches, designed to thoroughly obscure the simple fact that smart investing is non-mathematical and accessible to everyone."

Albert Einstein: "The five ascending levels of intellect are: smart, intelligent, brilliant, genius, simple."

Charles Ellis, co-author of "The Elements of Investing": "KISS investing--Keep It Simple, Sweetheart--is the best and easiest and lowest cost and worry-free way to invest for retirement security."

Javier Estrada Ph.D., Professor of finance: "Simplicity is often underrated; simple static strategies (balanced portfolios) have been shown to perform as well as—and often better than—more complex strategies in a wide variety of settings."

Paul Farrell, author of "The Lazy Person's Guide to Investing": "Perhaps the most amazing insight I got out of this review of the investment habits of Nobel laureates is the simplicity of their investing strategies."

Rick Ferri, CFA, advisor, and author of six financial books:[/i] "Don’t assume that a complex strategy is better than a simple strategy. The only thing extra complexity is likely to add is extra cost."

The Finance Buff: "Making fewer decisions usually leads to better results than making more decisions."

Future Metrics looked at the performance of 224 pension plans over about 14 years compared with the performance of 60% S&P 500 index and 40% aggregate bond index benchmark. Of those 224 plans, only 19 beat that simple benchmark.

Gensler & Baer, authors of "The Great Mutual Fund Trap": "If you simply buy and hold you don't need to read investing magazines, watch financial news networks, subscribe to newsletters, or pay a broker to execute new trades."

Benjamin Graham, author, teacher, famed investor: "If you merely try to bring just a little extra knowledge and cleverness to bear upon your investment program, instead of realizing a little better than normal results, you may well find that you have done worse. -- In the stock market, the more elaborate and abstruse the mathematics, the more uncertain and speculative are the conclusions we draw therefrom."

Alan Greenspan, former Chairman of the Federal Reserve: "This decade is strewn with examples of bright people who thought they built a better mousetrap that could consistently extract abnormal returns from financial markets. Some succeed for a time. But while there may occasionally be misconfigurations among market prices that allow abnormal returns, they do not persist."

Morgan Housel: financial columnist for Wall Street Journal and Motley Fool's "Simple almost always beats complex."

Daniel Kahneman, Nobel Laureate: "All of us would be better investors if we just made fewer decisions"

Edmund Kean: "Complexity is easy. Simplicity is hard."

Kiplinger: "The big secret to successful investing is that it's actually not all that complicated. Most of the mumbo jumbo doesn't matter."

Darrow Kirkpatrick, author of Retiring Sooner: "In financial life, you should run from complexity, and run toward simplicity."

Michael LeBoeuf, author of "The Millionaire in You": "The master key to wealth can be summed up in just one word: Simplicity."

Bruce Lee: "One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity"

Leonardo da Vinci: “Simplicity is the ultimate sophistication.”

Peter Lynch, legendary fund manager: "If you spend more than fifteen minutes a year worrying about the market, you've wasted twelve minutes."

MIT Study: "The less well-informed group did far better than the group that was given all the financial news."

Scott MacKillop, CEO First Ascent Asset Management: " People who don’t know any better equate complexity with sophistication. But truly it takes more sophistication to build elegantly simple portfolios."

Joe Maglia, CEO TD Ameritrade: "Wall Street goes out of its way to make investing incredibly sophisticated and complex because they can make a tremendous amount of money by doing so."

Burton Malkiel, author of "Random Walk Down Wall Street": "The overarching rule for achieving financial security: Keep it simple. -- The most important financial advice is stunningly simple and fits on an index card."

John Markese, CEO of American Association of Individual Investors: "If you have more than eight funds you should slap yourself."

Wm McNabb, Vanguard CEO: "If you can't understand an investment product in five minutes, walk away."

Eric McWhinnie, chief analyst, Wall Street Cheat Sheet: "Keep your investment strategy simple and steer clear of complicated vehicles that are designed to benefit the people selling them."

James Montier, author of The Little Book of Behavioral Investing : "Never underestimate the value of doing nothing."

Morningstar Guide to Mutual Funds: "Good investing doesn't have to be complicated. In fact, simplification may lead to better investment results."

Issac Newton: “Truth is ever to be found in the simplicity, and not in the multiplicity and confusion of things.”

Suze Orman: "We make investing so complicated and it really is not. -- A total market index fund is a great one-stop-shopping choice that provides you instant diversification among different types of stocks."

Mike Piper, financial author: "There's an entire industry built on convincing us that investing is complicated."

"David Nadig, president of Index Universe's ETF Analytics: "Most investors—myself included—are better off the simpler we keep things."

Jane Bryant Quinn, syndicated columnist and author of "Smart and Simple Financial Strategies": "You shouldn't buy anything too complex to explain to the average 12-year old."

John Rekenthaler, Morningstar Research Director: "How many funds should you have? Four to six should do.-- A complex investment strategy, with many moving parts, means more wheels that are stuck at any given time, leading to more questions and more uncertainty."

Rodc on Bogleheads Forum: "While doing this financial engineering my wife who does no math just shook her head at my optimization games and said, 'Rod, life is uncertain, get over it.' After a lot of work, I discovered much to my surprise, she was right."

Allan Roth, CFP, CPA, author and advisor: "Investing in eight words: Maximize diversification and discipline; minimize expenses and emotions.”

Paul Samuelson, Nobel Laureate: "Investing should be like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas."

Bill Schulthies, author of "The Coffeehouse Investor": "When you simplify your investment decisions, not only do you enrich your life by spending more time on families, friends and careers, but you enhance portfolio returns in the process."

Chandon Sengupta, author of "The Only Proven Road to Investment Success": "There is overwhelming evidence that the simplest possible investment method works much better than all the other more complex ones."

George Sisti, CFP, MarketWatch contributor: "There is no perfect portfolio — yours should emphasize simplicity and shun complexity."

Larry Swedroe, author of "The Successful Investor Today": "The more complex the investment, the faster you should run away."

David Swensen, Yale Chief Investment Officer: "As a general rule of thumb, the more complexity that exists in a Wall Street creation, the faster and farther investors should run."

Henry David Thoreau: “Our life is frittered away by detail. Simplify, simplify.”

Andrew Tobias, author of The Only Investment Guide You Will Ever Need: "I believe in selecting the most straightforward and easiest-to-implement strategy for achieving our goals."

Tweddell and Pierce, authors of "Winning with Index Mutual Funds": "Keep it simple. Investment success depends on asset allocation, diversification, and risk management, not on complexity."

Eric Tyson, author of "Mutual Funds for Dummies:" "Planners may try to make it all so complicated that you believe you can't possibly manage your finances or make major financial decisions without them."

Walter Updegrave, Editor of Money magazine: "Simpler is better. Ignore the siren song of sophisticated investments"

Richard Young, author of "The Intelligence Report": "If you can't run your portfolio taking 60 minutes a month, it's too complicated."

Karen Wallace, Morningstar senior editor: "Having fewer accounts can help you streamline your monitoring and rebalancing efforts. And having your assets in one place can allow you to better assess your overall asset mix.

Jason Zweig, Wall Street Journal columnist and author of "The Intelligent Investor": "The less you fool with your portfolio, the less often you'll play the fool."

Warren Buffett: "There seems to be some perverse human characteristic that likes to make easy things difficult."

What Experts Say About Other Important Topics

Best wishes.
Taylor
Last edited by Taylor Larimore on Tue Jul 18, 2017 12:30 pm, edited 28 times in total.
"Simplicity is the master key to financial success." -- Jack Bogle

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Texas Radio
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Re: What Experts Say About "Simplicity"

Post by Texas Radio » Sat Jan 24, 2015 4:41 pm

I love these kind of posts :beer
A portfolio is like a bar of soap. The more you handle it the smaller it gets.

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Re: What Experts Say About "Simplicity"

Post by Miriam2 » Sat Jan 24, 2015 5:07 pm

Thank you Taylor for bringing us back to the roots. :happy
I especially like this one:
Taylor Larimore wrote:Laura Dogu, co-auther of "The Bogleheads Guide to Retirement Planning": A simple portfolio is actually the ultimate in sophistication. It almost always lowers cost (including taxes), makes analysis easier, simplifies rebalancing, simplifies tax-preparation, reduces paper-work and record-keeping, and enables caregivers and heirs to easily take-over the portfolio when necessary. Best of all, a simple portfolio allows the investor to spend more time with family and friends."
.

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Taylor Larimore
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Laura: "Queen of the Bogleheads"

Post by Taylor Larimore » Sat Jan 24, 2015 6:11 pm

Miriam2 wrote:Thank you Taylor for bringing us back to the roots. :happy
I especially like this one:
Taylor Larimore wrote:Laura Dogu, co-auther of "The Bogleheads Guide to Retirement Planning": A simple portfolio is actually the ultimate in sophistication. It almost always lowers cost (including taxes), makes analysis easier, simplifies rebalancing, simplifies tax-preparation, reduces paper-work and record-keeping, and enables caregivers and heirs to easily take-over the portfolio when necessary. Best of all, a simple portfolio allows the investor to spend more time with family and friends."
.

Miriam:

In addition to her valuable contributions, Laura has a wonderful way of distilling many ideas into a minimum of words. It is one of the reasons she was voted Queen of the Bogleheads at one of our annual conferences.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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Re: What Experts Say About "Simplicity"

Post by jimkinny » Sun Jan 25, 2015 6:30 am

Thanks Taylor,

It took me awhile, but with your persistence, I finally came around and learned enough to keep things simple.

Jim

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Re: What Experts Say About "Simplicity"

Post by Norris » Sun Jan 25, 2015 12:12 pm

Thanks, Taylor. Always good stuff, as per usual. I especially got a kick out of Einstein's "The five ascending levels of intellect are: smart, intelligent, brilliant, genius, simple." I love it! :happy

Norris
Life is really simple, but we insist on making it complicated. Confucius

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Re: What Experts Say About "Simplicity"

Post by Crushtheturtle » Sun Jan 25, 2015 12:15 pm

"Everything should be kept as simple as possible, but no simpler."
-Einstein

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Re: What Experts Say About "Simplicity"

Post by LadyGeek » Sun Jan 25, 2015 5:26 pm

This thread is a 1 of 8 birthday presents from Taylor Larimore: What Experts Say [about various investing topics]
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Re: What Experts Say About "Simplicity"

Post by sharukh » Fri Dec 15, 2017 11:10 am

Credit: thefinancebuff.com - Friday mails.

Solving Hard Problems With Simple Ideas by Morgan Housel at Collaborative Fund
http://www.collaborativefund.com/blog/s ... ple-ideas/

A simple idea is easier to follow consistently. The consistency makes for times when the simple idea isn't "the best."

Thanks again.

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Re: What Experts Say About "Simplicity"

Post by Fallible » Fri Dec 15, 2017 9:00 pm

sharukh wrote:
Fri Dec 15, 2017 11:10 am
Credit: thefinancebuff.com - Friday mails.

Solving Hard Problems With Simple Ideas by Morgan Housel at Collaborative Fund
http://www.collaborativefund.com/blog/s ... ple-ideas/

A simple idea is easier to follow consistently. The consistency makes for times when the simple idea isn't "the best."

Thanks again.
Thanks. Another good one from Morgan Housel.

It seems the baseball, chess, and Munger/Buffett examples all depended on an extraordinary combination of talent and experience that enabled them to concentrate, or know almost instinctively, what was most important in their professions and, thus, to not waste time on what was not. It's similar to, or perhaps the same as, the "expert intuition" psychologist Daniel Kahneman has written about. I liked de Groot's examples in chess (boldface mine):

After four moves apiece there are a quarter trillion possible chess combinations. No one, of course, can calculate a meaningful percentage of them. So the masters don’t even try. In his book Thought and Choice in Chess, de Groot showed that pretty good chess players attempt to calculate multiple moves in their head, while masters simply contextualize moves into a broad, rules-of-thumb strategy that zeros in on the board’s top few challenges. He wrote:

Although master level players – as one would expect – more often selected winning moves than lesser players, their thinking and decision making followed similar procedural lines. The main difference between grandmasters and players of average strength is the speed of recognizing the central issue in each position. Where lesser players tend to spend considerable time on unimportant options, the best players almost immediately see what the real problem is. That’s their talent. … knowledge and experience rather than a strong computational competence or an exceptional memory.
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Re: What Experts Say About "Simplicity"

Post by pkcrafter » Fri Dec 15, 2017 10:42 pm

sharukh wrote:
Fri Dec 15, 2017 11:10 am
Credit: thefinancebuff.com - Friday mails.

Solving Hard Problems With Simple Ideas by Morgan Housel at Collaborative Fund
http://www.collaborativefund.com/blog/s ... ple-ideas/

A simple idea is easier to follow consistently. The consistency makes for times when the simple idea isn't "the best."

Thanks again.
Thanks, that is a great article.
---------------------------------------------

Norris wrote:
Thanks, Taylor. Always good stuff, as per usual. I especially got a kick out of Einstein's "The five ascending levels of intellect are: smart, intelligent, brilliant, genius, simple." I love it! :happy


Hmm, I must be very intellectual because I skipped the first four. :happy

Paul
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Re: What Experts Say About "Simplicity"

Post by FrugalInvestor » Fri Dec 15, 2017 10:59 pm

Here's the conclusion of a recent Market Watch opinion article written by Ben Carlson who is quoted in Taylor's initial post. The article is titled "A lesson in investing simplicity: Why the Bogle Model beats the Yale Model"..........
This has nothing to do with active vs. passive investing. This is all about simple vs. complex, operationally efficient investment programs vs. operationally inefficient investment programs and high-probability portfolios vs. low-probability portfolios. Investing is hard enough as it is before introducing a complex, inefficient, low-probability investment style.

That’s why the simple, efficient, high-probability Bogle Model wins.
Link to article.....
https://www.marketwatch.com/story/a-les ... 2017-02-06
IGNORE the noise! | Our life is frittered away by detail... simplify, simplify. - Henry David Thoreau

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Re: What Experts Say About "Simplicity"

Post by rgs92 » Fri Dec 15, 2017 11:21 pm

Awesome post. Thanks a million Taylor!

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Re: What Experts Say About "Simplicity"

Post by DavidRoseMountain » Sat Dec 16, 2017 9:47 am

I agree with the simplicity concept, but the tax law is complex, and sometimes during the working years one is just going to have to have multiple tax-deferred accounts in order to optimize tax savings and portfolio growth.

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Re: What Experts Say About "Simplicity"

Post by Norris » Sat Dec 16, 2017 8:54 pm

pkcrafter wrote:
Fri Dec 15, 2017 10:42 pm
sharukh wrote:
Fri Dec 15, 2017 11:10 am
Credit: thefinancebuff.com - Friday mails.

Solving Hard Problems With Simple Ideas by Morgan Housel at Collaborative Fund
http://www.collaborativefund.com/blog/s ... ple-ideas/

A simple idea is easier to follow consistently. The consistency makes for times when the simple idea isn't "the best."

Thanks again.
Thanks, that is a great article.
---------------------------------------------

Norris wrote:
Thanks, Taylor. Always good stuff, as per usual. I especially got a kick out of Einstein's "The five ascending levels of intellect are: smart, intelligent, brilliant, genius, simple." I love it! :happy


Hmm, I must be very intellectual because I skipped the first four. :happy

Paul
LOL Me too :)

Norris
Life is really simple, but we insist on making it complicated. Confucius

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Re: What Experts Say About "Simplicity"

Post by Snarfanio » Sat Dec 16, 2017 9:37 pm

Thanks Taylor!!! Your list and others you have posted over the years should be required reading for high school students and MBA's alike.

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Re: What Experts Say About "Simplicity"

Post by rec7 » Sun Dec 17, 2017 12:29 pm

Reminds me of a Boglehead that only had an account at Vanguard and a local credit union. Boy did that sound good so simple but yet so good.
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Re: What Experts Say About "Simplicity"

Post by david99 » Sun Dec 17, 2017 8:33 pm

As Henry David Thoreau said in Walden, “Our life is frittered away by detail. Simplify, simplify, simplify! I say, let your affairs be as two or three, and not a hundred or a thousand; instead of a million count half a dozen, and keep your accounts on your thumb-nail.”

I think that in this era of the computer people think that everything has to be complex. I saw a commercial that said that you wouldn't do surgery on yourself so why would you want to manage your own finances. Lets face it complexity sells better than simplicity. You are not going to see an ad saying that investing is simple and we can easily do it with a three fund portfolio that is re-balanced once a year.

Thanks,
Taylor

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Re: What Experts Say About "Simplicity"

Post by birdog » Mon Dec 18, 2017 7:04 am

The move to simplicity in my life has been important for a couple of reasons. The first being that it is almost always the better and more efficient route. Second, I find my memory isn’t what it used to be and I’m no longer as capable of maintaining the levels of complexity that I used to be able to. I doubt this second reason will improve as I continue to age.
The height of cultivation always runs to simplicity -Bruce Lee

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Re: What Experts Say About "Simplicity"

Post by Fallible » Mon Dec 18, 2017 11:41 am

david99 wrote:
Sun Dec 17, 2017 8:33 pm
...
Lets face it complexity sells better than simplicity. ...
And no one knows that better than Wall Street with its ridiculousy complex jargon. WSJ columnist Jason Zweig has said of that jargon:
Wall Street has a particular fetish for inventing unnecessarily complicated ways of achieving simple goals. Most other professions, so far as I can tell, are more comfortable offering simple ways to do simple things. On Wall Street, complicated ways to do simple things have bigger payoffs — for Wall Street, that is. So complexity proliferates, and it gets encrusted with jargon to impress investors into thinking there’s something special about it.
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