White Coat Investor critiques a David Ramsey rant on Bogle

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White Coat Investor critiques a David Ramsey rant on Bogle

Post by Wildebeest » Sun Oct 18, 2015 4:17 pm

I enjoy going to the wiki blog (Left hand corner under wiki and fifth down) to see what the WCI, Rick Ferri, Alan Roth, Larry Swedroe, Mike Piper, Harry Sit, Mel Lindauer etc are blogging about.

The White Coat investor/Jim Dahle AKA Emergdoc has an interesting review on the wiki blog in which he critiques David Ramsey.

An excerpt:
A rant from the first hour of his September 18th show starting at 10:45 and going for about 9 minutes is a good example.

The Call

A caller, Neil, calls in noting that he has been reading some of what Bogle has written and is curious about why Dave advocates he pay 5.75% loads to a mutual fund salesman. Here are some quotes from the rant along with my comments.


Jack and I don’t agree about a lot of things…and I really don’t agree with some of those people who take some of his stuff to extremes. The stance he has made is that you should only buy no-loads and that you should only buy S&P index funds. There is plenty of mathematical evidence to counter that….I get so wired up about Bogle and those guys because they cause people to get paralysis by analysis.

I would be curious how Dave Ramsey responds/ has responded to this White Coat Investor blog.

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Re: White Coat Investor critiques a David Ramsey rant on Bogle

Post by denovo » Sun Oct 18, 2015 4:35 pm

Dave Ramsey's investment advice is bad and EmergDoc's critiques aren't new, but something discussed here many times. I don't think Ramsey will respond. The only person with the stature to get that kind of attention is Jack Bogle, but I presume Bogle is too gentleman-like of a figure to get in a war of words with someone like Ramsey.
Last edited by denovo on Sun Oct 18, 2015 6:35 pm, edited 1 time in total.
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Re: White Coat Investor critiques a David Ramsey rant on Bogle

Post by Rick Ferri » Sun Oct 18, 2015 5:46 pm

Ramsey wrote:The stance he [Bogle] has made is that you should only buy no-loads and that you should only buy S&P index funds. There is plenty of mathematical evidence to counter that….I get so wired up about Bogle and those guys because they cause people to get paralysis by analysis.
This simply isn't true. Jack does not say you should only buy S&P 500 index funds, and there isn't any mathematical evidence to counter using S&P 500 index funds. It's one thing to disagree and another to make false statements.

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Re: White Coat Investor critiques a David Ramsey rant on Bogle

Post by gvsucavie03 » Sun Oct 18, 2015 6:27 pm

I heard this call... I also appreciate what White Coat Investor and Rick Ferri have added. His advice is full of holes, illogical and at times, dangerous. I also heard him quote research that said 74% of a retirement plan's success is level of contribution and (I assume he added this part) that fees were absolutely irrelevant. While it IS important to save and invest as much as possible, asset allocation, fees and taxes play a huge role in the success of a portfolio.

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Re: White Coat Investor critiques a David Ramsey rant on Bogle

Post by nedsaid » Sun Oct 18, 2015 6:38 pm

The Dave Ramsey seminar was offered at my church. I went to an introductory session and decided not to sign up for the rest of the course. The information was mostly good but there were a few things that I didn't agree with.

When someone in church tells me that you can get 12% a year by investing in mutual funds, I do an internal eye roll. The thing is that I have been investing for over 30 years and I know from market history and personal experience that it ain't so. The long term record of the U.S. Stock Market is 10-11% a year and that is with a lot of volatility and with long stretches of poor performance. Ramsey's statement implies a consistency of returns that just isn't there. Some decades, a 12% return would look low and other decades one would be lucky to break even and that with dividends.

My first ever mutual fund purchased in 1984 and which I still own has returned about 11% a year over 32 years. It was not even a particularly good fund as it had long stretches of underperformance. Not bad!! One thing that helped was my patience as an investor. At one time, this was a great fund but hasn't been for years and years.

Dave Ramsey's 12% is actually barely achievable but most investors are not patient enough with their investments and also cannot tolerate the volatility of a 100% stock portfolio. I know that I cannot. It also implies a long time horizon. You also have to know in advance which funds will return that 12% as most active funds over time underperform their benchmarks. My original fund that I purchased in 1984 had a super track record when I purchased it. It was not able to sustain that.
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Re: White Coat Investor critiques a David Ramsey rant on Bogle

Post by cheese_breath » Sun Oct 18, 2015 6:40 pm

gvsucavie03 wrote:I heard this call... I also appreciate what White Coat Investor and Rick Ferri have added. His advice is full of holes, illogical and at times, dangerous. I also heard him quote research that said 74% of a retirement plan's success is level of contribution and (I assume he added this part) that fees were absolutely irrelevant. While it IS important to save and invest as much as possible, asset allocation, fees and taxes play a huge role in the success of a portfolio.
I've also heard him say it's easy to beat the S&P. He said he can do it himself. I presume this means his ELPs can do it too. What a crock.
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Re: White Coat Investor critiques a David Ramsey rant on Bogle

Post by peppers » Sun Oct 18, 2015 6:53 pm

Anyone can beat the S&P

1) Place a copy of the S&P on a wall

2) Select the striking implement of your choice - claw hammer, broom, fly swatter, 2x4 board, etc.

3) Proceed to wail away at the S&P with reckless abandon

4) After a sufficient time has passed, throw down your striker, raise your fist in the air and declare, "There I have beaten the S&P"
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Re: White Coat Investor critiques a David Ramsey rant on Bogle

Post by nisiprius » Sun Oct 18, 2015 7:04 pm

Oh, that's a great column. Thanks for pointing it out to us.
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Re: White Coat Investor critiques a David Ramsey rant on Bogle

Post by LadyGeek » Sun Oct 18, 2015 7:46 pm

This thread is now in the Investing - Theory, News & General forum (general investing).
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Re: White Coat Investor critiques a David Ramsey rant on Bogle

Post by warner25 » Sun Oct 18, 2015 9:13 pm

This makes my blood boil. I find it both astonishing and infuriating that someone can be so plainly incompetent in their primary occupation, yet so wildly successful in terms of wealth and fame. (Speaking of Dave, of course, not Jim.)

I think this is a good reminder that (1) life isn't fair, (2) financial success should not be anyone's metric for self-worth, and (3) many "experts" in various fields probably know a lot less than they'd have us believe.

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Re: White Coat Investor critiques a David Ramsey rant on Bogle

Post by ofcmetz » Sun Oct 18, 2015 10:40 pm

nisiprius wrote:
Oh, that's a great column. Thanks for pointing it out to us.

^I totally agree. I really enjoyed reading the column.

I am very thankful for the advice I received from reading Dave Ramsey's book and listening to his show 11 years ago when I was in my mid 20's. He help set me on the path to financial freedom. I just wish he would admit he has made a mistake about some of his investing advice and move on from this. We are all human and it's ok to be wrong from time to time Dave.
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Re: White Coat Investor critiques a David Ramsey rant on Bogle

Post by Call_Me_Op » Mon Oct 19, 2015 5:42 am

peppers wrote:Anyone can beat the S&P

1) Place a copy of the S&P on a wall

2) Select the striking implement of your choice - claw hammer, broom, fly swatter, 2x4 board, etc.

3) Proceed to wail away at the S&P with reckless abandon

4) After a sufficient time has passed, throw down your striker, raise your fist in the air and declare, "There I have beaten the S&P"
..or buy a small-cap value index fund.
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Re: White Coat Investor critiques a David Ramsey rant on Bogle

Post by Toons » Mon Oct 19, 2015 5:53 am

Thank You ,
Very Insightful :happy
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Re: White Coat Investor critiques a David Ramsey rant on Bogle

Post by IlliniDave » Mon Oct 19, 2015 6:43 am

I have had a lot of appreciation for the role Ramsey plays in pop culture regarding money. But when he ranted on Bogle he crossed a line with me. He made a statement about Bogle's advice being "dangerous" because it causes analysis paralysis, which was just too much to take. Bogle's mantra is the simplest, least analytical to implement, and in terms of reaching a wide audience was groundbreaking. Ramsey's point that most of the game is a matter of showing up (i.e., the biggest factor is actually setting aside and investing money in the appropriate vehicles for retirement) is valid. I don't recall, but that might be the #1 item on Bogle's list ("save you must") as well. But after that Ramsey is stuck in the mentality of the late 80s/early 90s (even Vanguard funds may have still had loads way back then). For someone who "preaches" that a person should surround themselves with good counselors, there's a great irony at play here.
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Re: White Coat Investor critiques a David Ramsey rant on Bogle

Post by tibbitts » Mon Oct 19, 2015 7:55 am

Call_Me_Op wrote:
peppers wrote:Anyone can beat the S&P

1) Place a copy of the S&P on a wall

2) Select the striking implement of your choice - claw hammer, broom, fly swatter, 2x4 board, etc.

3) Proceed to wail away at the S&P with reckless abandon

4) After a sufficient time has passed, throw down your striker, raise your fist in the air and declare, "There I have beaten the S&P"
..or buy a small-cap value index fund.
There's no assurance that a small cap value fund will beat the s&p over a given person's investing lifetime. Also, some would argue that you'd have to leave the vanguard MF universe to find a small cap value fund.

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Re: White Coat Investor critiques a David Ramsey rant on Bogle

Post by beammeupscotty » Mon Oct 19, 2015 8:25 am

IlliniDave wrote:I have had a lot of appreciation for the role Ramsey plays in pop culture regarding money. But when he ranted on Bogle he crossed a line with me. He made a statement about Bogle's advice being "dangerous" because it causes analysis paralysis, which was just too much to take. Bogle's mantra is the simplest, least analytical to implement, and in terms of reaching a wide audience was groundbreaking. Ramsey's point that most of the game is a matter of showing up (i.e., the biggest factor is actually setting aside and investing money in the appropriate vehicles for retirement) is valid. I don't recall, but that might be the #1 item on Bogle's list ("save you must") as well. But after that Ramsey is stuck in the mentality of the late 80s/early 90s (even Vanguard funds may have still had loads way back then). For someone who "preaches" that a person should surround themselves with good counselors, there's a great irony at play here.
+1 -- he has truly jumped the shark with his unwarranted criticism of Mr. Bogle. Instead of ignoring Ramsey, I'll now actively discourage anyone from listening to him.

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Re: White Coat Investor critiques a David Ramsey rant on Bogle

Post by JupiterJones » Mon Oct 19, 2015 8:43 am

We had a thread about this same rant back when it occurred last month:

viewtopic.php?t=174184
Stay on target...

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Re: White Coat Investor critiques a David Ramsey rant on Bogle

Post by hexagon » Mon Oct 19, 2015 8:54 am

ofcmetz wrote:
nisiprius wrote:
Oh, that's a great column. Thanks for pointing it out to us.

^I totally agree. I really enjoyed reading the column.
Very nice article. One (very) small nit to pick:
That math stuff is tough, isn’t it. Actually, 5.75% divided by ten is 0.575%, or more than half a percent a year. But even if we round it down to “half a percent a year”, what does that really mean? Well, let’s say you’re investing $50K a year. Instead of getting 8% on it, you get 7.5%.
If we are going to worry about difference between arithmetic and geometric mean when computing returns, I think the more appropriate calculation is (1+.0575)^(1/10)-1= .0056...
so about .56% which still is not less that half a percent.

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Re: White Coat Investor critiques a David Ramsey rant on Bogle

Post by Mitchell777 » Mon Oct 19, 2015 10:06 am

I think the paralysis often comes in when people are trying to decide which non-indexed mutual fund is going to out perform the other non-indexed mutual funds, and the differences in risk and AA

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Re: White Coat Investor critiques a David Ramsey rant on Bogle

Post by White Coat Investor » Mon Oct 19, 2015 10:16 am

beammeupscotty wrote:
IlliniDave wrote:I have had a lot of appreciation for the role Ramsey plays in pop culture regarding money. But when he ranted on Bogle he crossed a line with me. ...For someone who "preaches" that a person should surround themselves with good counselors, there's a great irony at play here.
+1 -- he has truly jumped the shark with his unwarranted criticism of Mr. Bogle. Instead of ignoring Ramsey, I'll now actively discourage anyone from listening to him.
I felt the same way as you IlliniDave- he went too far this time. The critique wasn't so much of Bogle, as of you and I. So of course he should expect us to take it personally.
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Re: White Coat Investor critiques a David Ramsey rant on Bogle

Post by White Coat Investor » Mon Oct 19, 2015 10:18 am

JupiterJones wrote:We had a thread about this same rant back when it occurred last month:

viewtopic.php?t=174184
I wrote it the same day I heard it, about the time that thread was going. I'm just weeks to months out on publishing. Given how often he talks about these issues, and how timeless they are, I felt it didn't require real-time posting.
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Re: White Coat Investor critiques a David Ramsey rant on Bogle

Post by rustymutt » Mon Oct 19, 2015 10:52 am

Rick Ferri wrote:
Ramsey wrote:The stance he [Bogle] has made is that you should only buy no-loads and that you should only buy S&P index funds. There is plenty of mathematical evidence to counter that….I get so wired up about Bogle and those guys because they cause people to get paralysis by analysis.
This simply isn't true. Jack does not say you should only buy S&P 500 index funds, and there isn't any mathematical evidence to counter using S&P 500 index funds. It's one thing to disagree and another to make false statements.

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Re: White Coat Investor critiques a David Ramsey rant on Bogle

Post by Call_Me_Op » Wed Oct 21, 2015 6:12 pm

tibbitts wrote:
Call_Me_Op wrote:
peppers wrote:Anyone can beat the S&P

1) Place a copy of the S&P on a wall

2) Select the striking implement of your choice - claw hammer, broom, fly swatter, 2x4 board, etc.

3) Proceed to wail away at the S&P with reckless abandon

4) After a sufficient time has passed, throw down your striker, raise your fist in the air and declare, "There I have beaten the S&P"
..or buy a small-cap value index fund.
There's no assurance that a small cap value fund will beat the s&p over a given person's investing lifetime. Also, some would argue that you'd have to leave the vanguard MF universe to find a small cap value fund.
There's really no assurance of anything. However, small-cap stocks are riskier and so (value or not) are highly-likely to beat the S&P over (say) 20 years.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein

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Re: White Coat Investor critiques a David Ramsey rant on Bogle

Post by lumberingc » Mon Oct 26, 2015 12:00 am

Dave Ramsey's advice is more geared towards working hard, saving money, avoiding educational debt, paying off debts, and solving personal/financial conflicts. He made his fortune in real estate, but he's not particularly knowledgeable when it comes to securities.

Also, it's good that some people pursue active management because it makes the market more efficient for us Bogleheads :)

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Re: White Coat Investor critiques a David Ramsey rant on Bogle

Post by hnzw rui » Mon Oct 26, 2015 11:27 am

lumberingc wrote:Also, it's good that some people pursue active management because it makes the market more efficient for us Bogleheads :)
+1. :beer

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