Paul Merriman on newest edition of “The Little Book of Common Sense Investing”

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zwzhang
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Paul Merriman on newest edition of “The Little Book of Common Sense Investing”

Post by zwzhang » Fri Nov 03, 2017 8:27 am

https://www.marketwatch.com/story/the-l ... 2017-11-03

I have not read the book yet.
Based on Paul's article, most of the good advices by Jack Bogle are nothing new to people come to this site.

I took a note on Jack's current view on international stocks. While he is still defending a US-only equity portfolio, looks like his current view on international stocks changed a little from the previous edition.
However, Bogle admits that “perhaps the relative advantage achieved in the U.S. stock market over the past quarter-century has now been arbitraged away” and that international stocks may be relative bargains.
Looking forward to reading the new book soon.

snarlyjack
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Re: Paul Merriman on newest edition of “The Little Book of Common Sense Investing”

Post by snarlyjack » Fri Nov 03, 2017 11:20 am

I just finished reading Jack Bogle new book,
"The Little Book Of Common Sense Investing, 10th Anniversary Edition".

I thought it was a great book & I learned a lot of things I didn't know.
I now have a Jack Bogle and Warren Buffett approved portfolio.
I feel very excited about my portfolio. It's like a "arrow" flying
through the air. It's super efficient with very low drag. It's one of the
best portfolio's that I know of.

Best of all, I know what I' am doing & why. The portfolio
has been highly analyzed and is giving me peace of mind.
I 'am really curious how the portfolio performs & looks like
50 years from now...I' am starting out my investing career with
the Jack Bogle portfolio & it's very exciting.

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nedsaid
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Re: Paul Merriman on newest edition of “The Little Book of Common Sense Investing”

Post by nedsaid » Fri Nov 03, 2017 11:23 am

zwzhang wrote:
Fri Nov 03, 2017 8:27 am
https://www.marketwatch.com/story/the-l ... 2017-11-03

I have not read the book yet.
Based on Paul's article, most of the good advices by Jack Bogle are nothing new to people come to this site.

I took a note on Jack's current view on international stocks. While he is still defending a US-only equity portfolio, looks like his current view on international stocks changed a little from the previous edition.
However, Bogle admits that “perhaps the relative advantage achieved in the U.S. stock market over the past quarter-century has now been arbitraged away” and that international stocks may be relative bargains.
Looking forward to reading the new book soon.
Music to my ears that International investing maybe isn't such a bad idea after all.
A fool and his money are good for business.

snarlyjack
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Re: Paul Merriman on newest edition of “The Little Book of Common Sense Investing”

Post by snarlyjack » Fri Nov 03, 2017 11:46 am

Hey Nedsaid,

Thank you for all your help.
I think joining Bogleheads was a God send
from my Mom. She would approve of the
Bogleheads & the portfolio they designed for her.
I 'am sure she is smiling down on me with our
Boglehead portfolio...it's super good.

Once again Thank You, I appreciate all your efforts.

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onthecusp
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Re: Paul Merriman on newest edition of “The Little Book of Common Sense Investing”

Post by onthecusp » Fri Nov 03, 2017 12:41 pm

Thanks for the link to that article. Fits in with my thinking (confirmation bias?). I set a course a year ago that includes about 40% of equities in international and questioned that repeatedly after reading various well thought out opinions, both for and against, here on Bogleheads. I'm staying the course.

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stemikger
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Re: Paul Merriman on newest edition of “The Little Book of Common Sense Investing”

Post by stemikger » Fri Nov 03, 2017 4:16 pm

Thanks for posting.

I'm still sticking to my all U.S. two fund portfolio.

The reason being, is it fits my risk tolerance (comfort zone). 24 years of not holding it tells me, my two fund (all U.S. portfolio) will get me there also. I don't necessarily disagree with international investing in equities, but I definitely don't see the need to hold international bonds.
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!

bikechuck
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Re: Paul Merriman on newest edition of “The Little Book of Common Sense Investing”

Post by bikechuck » Fri Nov 03, 2017 4:23 pm

Merriman is one of the good guys. He is more slice and dice than many in this community but I have spent a lot of time reading his web site and listening to his podcasts and I am happy that I have done so.

pingo
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Re: Paul Merriman on newest edition of “The Little Book of Common Sense Investing”

Post by pingo » Fri Nov 03, 2017 4:39 pm

I have not read the 10th anniversary edition, but the original may be the finest book I've ever read on investing. It is usually the first book I think of when making a recommendation about investing.

John Bogle's seminal work Common Sense on Mutual Funds was an industry shaker, but his Little Book is his masterpiece.

His Little Book distills the relentless rules of humble arithmetic and the tyranny of costs in an artfully written publication of wisdom and commons sense for common consumption.

It is the epitome of the majesty of simplicity.

I cannot say enough good things about!

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Earl Lemongrab
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Re: Paul Merriman on newest edition of “The Little Book of Common Sense Investing”

Post by Earl Lemongrab » Fri Nov 03, 2017 6:22 pm

Some got started from reading Bogle. I got mine from Merriman, Bernstein, Swedroe, and even Suze Orman.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

Ron Scott
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Re: Paul Merriman on newest edition of “The Little Book of Common Sense Investing”

Post by Ron Scott » Fri Nov 03, 2017 8:46 pm

I bought the book when it was released and love it. An easy read with time tested ideas, but up to date too.

Re: international, its a real stretch to say he's behind it! Let's say he's resigned to the fact that large numbers of American investors are doing it. And he's not criticizing it as much because of the new view he has on the US markets.

In addition to his usual review of stock/bond investing with an eye toward diversity, low expense fees and a long-term view, Jack is increasingly wary of the future in terms of returns. His view on real returns on a 60-40 US portfolio:

Since 1900: 4.8%
Since 1974: 6.2%
Next 10 years: 1.6% (less fees, of course)

Yep, 1.6%. This is exactly how I feel about the future too; the most valuable asset you have is your ability to earn and you'll have to work harder since your money isn't going to be working as hard for you. A wakeup call.

Overall an excellent read. Jack still rocks.
Retirement is a game best played by those prepared for more volatility in the future than has been seen in the past. The solution is not to predict investment losses but to prepare for them.

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Re: Paul Merriman on newest edition of “The Little Book of Common Sense Investing”

Post by Noobvestor » Fri Nov 03, 2017 10:56 pm

However, Bogle admits that “perhaps the relative advantage achieved in the U.S. stock market over the past quarter-century has now been arbitraged away” and that international stocks may be relative bargains.
Fascinating. Lots of respect for Jack, but he thought there was a free lunch in US investing?! That doesn't square at all with his 'buy the market' ideology. If there are (or were) free lunches to be had by hand-picking markets, why not sectors, or stocks? Such silliness.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe

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stemikger
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Re: Paul Merriman on newest edition of “The Little Book of Common Sense Investing”

Post by stemikger » Sat Nov 04, 2017 4:00 am

Posted by Ron Scott
Yep, 1.6%. This is exactly how I feel about the future too; the most valuable asset you have is your ability to earn and you'll have to work harder since your money isn't going to be working as hard for you. A wakeup call.
What does the nominal return come up to?
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!

Ron Scott
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Re: Paul Merriman on newest edition of “The Little Book of Common Sense Investing”

Post by Ron Scott » Sat Nov 04, 2017 7:01 am

stemikger wrote:
Sat Nov 04, 2017 4:00 am
Posted by Ron Scott
Yep, 1.6%. This is exactly how I feel about the future too; the most valuable asset you have is your ability to earn and you'll have to work harder since your money isn't going to be working as hard for you. A wakeup call.
What does the nominal return come up to?
3.6%, with inflation at 2%. All this is in a chapter called “When The Good Times No Longer Roll”.

Furthermore, with such low return prospects, Jack hammers home the absolute necessity of avoiding higher fee mutual funds and trying to beat the market in favor of low cost indexing. He calls this avoiding “Financial Devastation”.

All this is very impressive reading, suggesting a turning point. Jack sees his formula now as more than just the best known way for us to get our fair share of market returns; he’s telling us the alternatives offer “pitiful” odds of success.
Retirement is a game best played by those prepared for more volatility in the future than has been seen in the past. The solution is not to predict investment losses but to prepare for them.

snarlyjack
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Re: Paul Merriman on newest edition of “The Little Book of Common Sense Investing”

Post by snarlyjack » Sat Nov 04, 2017 8:52 am

Sleeping on what Jack Bogle wrote for a few days now.

I think what Jack Bogle is saying is get super efficient with
basically 2 funds. The Total Stock Market Index Fund &
Total Bond Market Index Fund, (you could use the S & P 500).

Pick your AA (everyone is different) he would suggest a higher
tilt to the Total Stock Market Index Fund. He thinks growth in
the coming decade will be hard to come by.

Get super efficient, low ER's, no trading, long term buy & hold.
Save as much as possible, be frugal, invest we must. Don't use
managed funds & really drill down on inexpensive index funds.
It's the low ER index funds + their performance that are going
to save us. Sharpen the axe on costs & get super efficient.

Buckle up the seat belt & get efficient. That's what I think
the underlying message was. Jack Bogle book was excellent
& very interesting. I would suggest everyone read it.
Invest we must...keep investing...

Ron Scott
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Re: Paul Merriman on newest edition of “The Little Book of Common Sense Investing”

Post by Ron Scott » Sat Nov 04, 2017 9:47 am

snarlyjack wrote:
Sat Nov 04, 2017 8:52 am
Sleeping on what Jack Bogle wrote for a few days now.
...

He thinks growth in the coming decade will be hard to come by.

Get super efficient, low ER's, no trading, long term buy & hold.
Save as much as possible, be frugal, invest we must. Don't use
managed funds & really drill down on inexpensive index funds.
It's the low ER index funds + their performance that are going
to save us. Sharpen the axe on costs & get super efficient.

Buckle up the seat belt & get efficient.
I think you nailed it...

Jack drives home the efficiency call-to-arms with a table that shows how a low cost 25-75 portfolio beats a higher cost 75-25 one. EXPENSES WILL KILL YOU IN A LOW RETURN ENVIRONMENT.
Retirement is a game best played by those prepared for more volatility in the future than has been seen in the past. The solution is not to predict investment losses but to prepare for them.

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stemikger
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Re: Paul Merriman on newest edition of “The Little Book of Common Sense Investing”

Post by stemikger » Sat Nov 04, 2017 11:42 pm

Ron Scott wrote:
Sat Nov 04, 2017 7:01 am
stemikger wrote:
Sat Nov 04, 2017 4:00 am
Posted by Ron Scott
Yep, 1.6%. This is exactly how I feel about the future too; the most valuable asset you have is your ability to earn and you'll have to work harder since your money isn't going to be working as hard for you. A wakeup call.
What does the nominal return come up to?
3.6%, with inflation at 2%. All this is in a chapter called “When The Good Times No Longer Roll”.

Furthermore, with such low return prospects, Jack hammers home the absolute necessity of avoiding higher fee mutual funds and trying to beat the market in favor of low cost indexing. He calls this avoiding “Financial Devastation”.

All this is very impressive reading, suggesting a turning point. Jack sees his formula now as more than just the best known way for us to get our fair share of market returns; he’s telling us the alternatives offer “pitiful” odds of success.
Thanks!
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!

pkcrafter
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Re: Paul Merriman on newest edition of “The Little Book of Common Sense Investing”

Post by pkcrafter » Sun Nov 05, 2017 8:42 am

snarlyjack wrote:
Sat Nov 04, 2017 8:52 am
Sleeping on what Jack Bogle wrote for a few days now.

I think what Jack Bogle is saying is get super efficient with
basically 2 funds. The Total Stock Market Index Fund &
Total Bond Market Index Fund, (you could use the S & P 500).

Pick your AA (everyone is different) he would suggest a higher
tilt to the Total Stock Market Index Fund. He thinks growth in
the coming decade will be hard to come by.

Get super efficient, low ER's, no trading, long term buy & hold.
Save as much as possible, be frugal, invest we must. Don't use
managed funds & really drill down on inexpensive index funds.
It's the low ER index funds + their performance that are going
to save us. Sharpen the axe on costs & get super efficient.

Buckle up the seat belt & get efficient. That's what I think
the underlying message was. Jack Bogle book was excellent
& very interesting. I would suggest everyone read it.
Invest we must...keep investing...
Well, snarly, you have become a full-fledged Boglehead! You have graduated from student to teacher. Did you read Bogle's original version of the book?

Not only that, but you have coined "The Arrow Portfolio." Please tell us what your arrow portfolio actually is.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

snarlyjack
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Re: Paul Merriman on newest edition of “The Little Book of Common Sense Investing”

Post by snarlyjack » Sun Nov 05, 2017 2:04 pm

Thank You Paul,

It took awhile but I finally got there... :sharebeer

The "Arrow Portfolio" is the aggressive portfolio
that both Jack Bogle & Warren Buffett suggest for
young investors.

90% Total Stock Market Index Fund (ER .04), (The arrow).
10% Total Bond Market Index Fund (ER .05), (The feathers on the arrow).
(You can use the S & P 500 instead of TSM, up to you).

No tilt's, just buckle up & hang on. No trading,
long term buy & hold, DCA as much as possible.
Look at it in 30-40-50 years from now.
Very aggressive, low ER, very volatile. (long term
I don't think it can be beat).
Both Jack & Warren like it... It flies like a Arrow.

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oldzey
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Re: Paul Merriman on newest edition of “The Little Book of Common Sense Investing”

Post by oldzey » Sun Nov 05, 2017 2:31 pm

Snarly, I concur with Paul that you have successfully coined the term, "Arrow Portfolio" - and I do like your interpretation of it! :D

My Arrow Portfolio is not quite as aggressive as Mr. Buffett's (I have more feathers), but it's still pretty aggressive for age 50:

80% Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX), 0.04% ER
20% TIAA Traditional RA, 0.00% ER
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman

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Taylor Larimore
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Re: Paul Merriman on newest edition of “The Little Book of Common Sense Investing”

Post by Taylor Larimore » Sun Nov 05, 2017 2:57 pm

Bogleheads:

We can read more valuable quotes in Mr. Bogle's latest: "The Little Book of Common Sense Investing" here:

The Little Book of Common Sense Investing -- A Gem

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

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nedsaid
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Re: Paul Merriman on newest edition of “The Little Book of Common Sense Investing”

Post by nedsaid » Sun Nov 05, 2017 5:21 pm

snarlyjack wrote:
Fri Nov 03, 2017 11:46 am
Hey Nedsaid,

Thank you for all your help.
I think joining Bogleheads was a God send
from my Mom. She would approve of the
Bogleheads & the portfolio they designed for her.
I 'am sure she is smiling down on me with our
Boglehead portfolio...it's super good.

Once again Thank You, I appreciate all your efforts.
I really appreciate your comments. I post here to share my experiences with the naïve hope that others will learn from my mistakes. It is also the investing equivalent of a confession booth, I get to anonymously confess my investing sins. Believe me, there are many.

Though I was an experienced investor when I joined the forum, I have learned an awful lot here too. Never too old to learn.

I wish this was around when I was your age. Starting in high school, I would watch Wall $treet Week with Louis Rukeyser faithfully every Friday night. Always looked forward to Lou's opening commentary, his panel, and his guests. Good old fashioned fun. I also enjoyed Paul Kangas and Nightly Business Report, he always closed the program by wishing us the best of good buys.

So I am sort of like the guy who you watch on TV performing stunts and who crashes and burns. Then comes the disclaimer, "These stunts are performed by highly trained professionals, don't try this at home." In my case, I sort of learned as I went along, fumbling around as I went. I had my successes and my failures. The thrill of victory and the agony of defeat.

I also would like to think that I add some humor around here, I am crushed though that no one got my joke about Indian restaurants and the "curry trade." I fired all my comedy writers and I am hiring a whole new set. Now a duck walked into a bar. . .
A fool and his money are good for business.

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nedsaid
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Re: Paul Merriman on newest edition of “The Little Book of Common Sense Investing”

Post by nedsaid » Sun Nov 05, 2017 5:24 pm

Taylor Larimore wrote:
Sun Nov 05, 2017 2:57 pm
Bogleheads:

We can read more valuable quotes in Mr. Bogle's latest: "The Little Book of Common Sense Investing" here:

The Little Book of Common Sense Investing -- A Gem

Best wishes
Taylor
What we need is somebody to pull the gems out of Taylor's latest book on the three fund portfolio. Taylor is so good at condensing material that I fear his book will run only about 3 pages. In that case, the gems will be probably the entire book! He must have worked at Readers' Digest or Campbell's Soup. Condensed.
A fool and his money are good for business.

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Taylor Larimore
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Re: Paul Merriman on newest edition of “The Little Book of Common Sense Investing”

Post by Taylor Larimore » Sun Nov 05, 2017 9:45 pm


What we need is somebody to pull the gems out of Taylor's latest book on the three fund portfolio. Taylor is so good at condensing material that I fear his book will run only about 3 pages. In that case, the gems will be probably the entire book! He must have worked at Readers' Digest or Campbell's Soup. Condensed.
Nedsaid:

You will probably not be surprised to learn that my shortest posts often take the longest time to write.

I wanted to write a short, easy-to-read, no nonsense book that would help ordinary investors put-together, and maintain, a simple three-fund portfolio to achieve their goals.

Along the way I was urged to expand my "short, easy-to-read, no nonsense book" into something bigger that would also explain the "sophistication" and logic behind The Three Fund Portfolio.

I am satisfied with the compromise and I hope investors will buy the book. I am donating all my royalties to The Bogle Center for Financial Literacy which supports this forum and much more.

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

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