Holding VTSAX only

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tman9940
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Holding VTSAX only

Post by tman9940 » Thu Nov 16, 2017 11:25 am

I borrowed the following from Taylor Larimore--some really good info. I basically only hold VTSAX--after doing some research, and figuring out my risk tolerance. I feel it is good for me...simple, boring, cheap, but in the end, hopefully, extremely effective. Do others follow the strategies of the "experts" in this post? I feel in 30 years, VTSAX will provide me a good retirement. I will add bonds as retirement approaches, but that isn't for a long time. Thanks for any thoughts. 8-)


Christine Benz, Morningstar Director of Personal Finance: "The no-brainer holdings if you have taxable accounts are broad-market index funds."

Bill Bernstein: "If you own VTSMX with a bit of foreign and REIT, mixed with your bonds, you're most of the way there."

Jack Bogle: "The beauty of owning the market is that you eliminate individual stock risk, you eliminate market sector risk, and you eliminate manager risk."

Scott Burns, columnist, author: "The odd are really, really poor than any of us will do better than a low-cost broad index fund."

Andrew Clarke, co-author of Wealth of Experience: "If your stock portfoliio looks very different from the broad stock market, you're assuming additional risk that may, or may not, pay off."

John Cochrane, President American Finance Association: "The market in aggregate always gets the allocation of capital right."

Jonathan Clements, author and Wall Street Journal columnist: "If you want a surefire strategy for outpacing most other U.S. stock investors, simply shovel money into an index fund that tracks a broad U.S. market index such as the Wilshire 5000 or the Russell 3000."

Jim Dahle, adviser and author of The White Coat Investor: When interviewing potential advisers, one of the first questions I would ask is: “Can you beat the market yourself or choose mutual fund managers who can?” If the answer is "yes", stand up and walk out."

Edesess . Tsui . Fabbri . Peacock, authors of The Three Simple Rules of Investing: "The end results of the theories of Nobel Laureates in finance is that the most efficient portfolio is one that mirrors the whole market, a total market index fund."

Prof. Eugene Fama, Nobel Laureate: "When I talk with pension fund people, what I start with is the market portfolio. That's always one of the optimal portfolio' one can settle on."

Paul Farrell, author of The Lazy Person's Guide to Investing: Where does Fama invest his retirement money?" In index funds. Mostly the Wilshire 5000."

Rick Ferri, author of many financial books: "For 99% of the the investing population, I still recommend total stock and total bond market index funds."

Graham/Zweig, authors: "The single best choice for a lifelong holding is a total stock-market index fund."

Alan Greenspan, former Chairman of the Federal Reserve: "Prices in the marketplace are by definition the right price."

Sheldon Jacobs who wrote the first book on no-load fund investing: "The best index fund for almost everyone is the Total Stock Market Index Fund.--The fund can only go wrong if the market goes down and never comes back again, which is not going to happen."

Lawrence Kudlow, CNBC: "I like the concept of the Wilshire 5000, which essentially gives you a piece of the rock of all actively traded companies."

Prof. Burton Malkiel, author of the classic Random Walk Down Wall Street: "I now believe the best general U.S. index to emulate is the broader Wilshire 5,000 Stock Index--not the S&P 500."

Bill Miller, famed fund manager: "With the market beating 91% of surviving managers since the beginning of 1982, it looks pretty efficient to me."

"Morningstar (10-19-2012) named Vanguard's Total Stock Market Index Fund: "Our favorate U.S. Equity ETF."

Motley Fools: "Invest your long-term moolah in index mutual funds that are designed to track the performance of a broad market index."

Pat Regnier, former Morningstar analyst: "We should just forget about choosing fund managers and settle for index funds to mimic the market."

Ron Ross, author of The Unbeatable Market: "Giving up the futile pursuit of beating the market is the surest way to increase your investment efficiency and enhance your financial peace of mind."

Paul Sameulson, Nobel Laureate: "The most efficient way to diversify a stock portfolio is with a low-fee index fund. Statistically, a broadly based stock index fund will outperform most actively managed equity portfolios."

Gus Sauter, retired Vanguard Chief Investment Officer: "I think a very good way to gain exposure to the stock market is through the Total Stock Market Portfolio on the domestic side."

Bill Schultheis, author of The Coffeehouse Investor: The simplest approach to diversifying your stock market investments is to invest in one index fund that represents the entire stock market."

Charles Schwab: "Only about one out of every four equity funds outperforms the stock market. That's why I'm a firm believer in the power of indexing."

Chandan Sengupta, author of The Only Proven Road to Investment Success: "Use a low-cost, broad-based index fund to passively invest in a little bit of a large number of stocks.

Prof. Jeremy Siegel, author of Stocks for the Long Run: "For most of us, trying to beat the market leads to disastrous results."

Ben Stein, author and economist: "Scholarly work by Burton Malkiel, Eugene Fama and others has proved that it is the rare investor indeed who can outperform the overall market."

"Robert Stovall, investment manager: It's just not true that you can't beat the market. Every year about one-third do it. Of course, each year it is a different group."

Larry Swedroe, author many investment books: "Over the last 75-years, investors who simply invested passively in the total U.S. stock Market would have doubled their investment approximately every seven years."

Peter D. Teresa, former Morningstar Sr. Analyst: My recommendation: a fund that indexes the entire market, such as Vanguard Total Stock Market Index."

Jason Zweig, author and Wall Street Journal columnist: "I think a total stock market index fund is not only the simplest, but the very best core investment for most people.

WhiteMaxima
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Re: Holding VTSAX only

Post by WhiteMaxima » Thu Nov 16, 2017 11:38 am

Very simple and efficient way to invest. I like your choice.

alfaspider
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Re: Holding VTSAX only

Post by alfaspider » Thu Nov 16, 2017 11:44 am

I'm almost entirely VTSAX in my taxable, Roth, and child's 529, with a bit of VWIUX in my taxable. Don't have access to vanguard funds in my 401k, unfortunately, or I'd be mostly VTSAX there too. I don't see a compelling reason to go much beyond a low-cost fund that provides exposure to the entire market.

In theory, I'd like some emerging markets exposure, but I fear that emerging market equities aren't really capable of capturing the growth of these markets the way VTSAX captures the growth of the US equity market. I already own a home, so I feel like I have plenty of real estate exposure.

Valuethinker
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Re: Holding VTSAX only

Post by Valuethinker » Thu Nov 16, 2017 11:46 am

tman9940 wrote:
Thu Nov 16, 2017 11:25 am
I borrowed the following from Taylor Larimore--some really good info. I basically only hold VTSAX--after doing some research, and figuring out my risk tolerance. I feel it is good for me...simple, boring, cheap, but in the end, hopefully, extremely effective. Do others follow the strategies of the "experts" in this post? I feel in 30 years, VTSAX will provide me a good retirement. I will add bonds as retirement approaches, but that isn't for a long time. Thanks for any thoughts. 8-)
I don't know what VTSAX is? (I am not US based).

If it is a US only index fund, then you ought to think about international diversification. You've ignored roughly half of the equity out there, by market cap. Shell? Nestle? Toyota? Samsung? BMW? Taiwan Semiconductor (TSMC)? HSBC? Glaxo Smithkline? Astra Zeneca?

In addition, I would suggest no one should be without 20% in bonds. The impact on portfolio volatility is significant, and the additional return lost is relatively small. At least based on all historical evidence.

In addition, whilst your list of quotes is impressive, Proof by Authority is not a strong form of proof of anything and I am sure you know that. All that these experts can say is that, in the past, this has worked well.

This is not physics, where there are natural laws that we understand that, mostly, explain how the world works, and are constantly tested against our actual observations. Finance is a human-created domain, and that means the "laws" are anything but consistent and stable.
Last edited by Valuethinker on Thu Nov 16, 2017 12:00 pm, edited 1 time in total.

Admiral
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Re: Holding VTSAX only

Post by Admiral » Thu Nov 16, 2017 11:55 am

If you want to be 100% stocks, TSM is a fine choice, though I agree with those upthread who feel that some international exposure is helpful in this global world we live in.

That said, you note you are young. Have you ever experienced a severe market downturn with this allocation? It's only during these periods that our true appetite for risk (as opposed to what we think it is) is truly tested. If you have, and you are still ok with this AA, then go for it.

If not, I agree that even a small slice of a bond fund may be appropriate to smooth out the bumps.

Valuethinker
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Re: Holding VTSAX only

Post by Valuethinker » Thu Nov 16, 2017 12:04 pm

Admiral wrote:
Thu Nov 16, 2017 11:55 am
If you want to be 100% stocks, TSM is a fine choice, though I agree with those upthread who feel that some international exposure is helpful in this global world we live in.

That said, you note you are young. Have you ever experienced a severe market downturn with this allocation? It's only during these periods that our true appetite for risk (as opposed to what we think it is) is truly tested. If you have, and you are still ok with this AA, then go for it.

If not, I agree that even a small slice of a bond fund may be appropriate to smooth out the bumps.
I think even having had a bad market turn down is not enough test. Each downturn is different. And we have "learned" that bear markets are quickly corrected, but there is plenty of evidence from history that that is not the case.

In my investing career, at least 6 bear markets-- 1987 Crash (one day), 1990-91, 1994 (EM), 1997-98 (Asia & Russia default), 2000-03 (dot com), 2008-09 (Great Financial Crisis). And the 1970s was much longer run and more horrible.

As I get older, I get more conservative. Just shutting off looking at portfolio valuations is not enough.

These 100% equity threads (like the Bitcoin ones, I believe) are a sign of quite a late stage in a bull market- -and it's been one hell of a bull.

I would suggest any investor should be 20% bonds, and a part of me wants to say 20% TIPS (real yields are unappetizing, though, and the volatility is high so some of the point of having bonds just is not there).

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jadd806
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Re: Holding VTSAX only

Post by jadd806 » Thu Nov 16, 2017 12:09 pm

You just opened up the 2 biggest cans of worms on this forum: whether international equity exposure is necessary (and to what degree), and whether 100% equities is appropriate for any investor.

I'm younger than you and I wouldn't feel comfortable holding 100% equities, let alone 100% US equities.

I would ask how you know what your risk tolerance is if you have only ever invested during a bull market? I am making this assumption based your first post in 2015 where you claimed you were "just starting out," so correct me if I'm wrong. It's quite different to theorize losing X% of your portfolio, than to experience it in real time.

WhiteMaxima
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Re: Holding VTSAX only

Post by WhiteMaxima » Thu Nov 16, 2017 12:22 pm

VTSAX is US only. It did pretty well during last couple of years. Have you consider balanced fund:VBIAX? That's 60/40 I believe. This is more kind of boglehead approach. You compare this with VTSAX for the last 5 years return 14% vs 9%. But past performance may not repeat.

dcabler
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Re: Holding VTSAX only

Post by dcabler » Thu Nov 16, 2017 12:35 pm

jadd806 wrote:
Thu Nov 16, 2017 12:09 pm
You just opened up the 2 biggest cans of worms on this forum: whether international equity exposure is necessary (and to what degree), and whether 100% equities is appropriate for any investor.

I'm younger than you and I wouldn't feel comfortable holding 100% equities, let alone 100% US equities.

I would ask how you know what your risk tolerance is if you have only ever invested during a bull market? I am making this assumption based your first post in 2015 where you claimed you were "just starting out," so correct me if I'm wrong. It's quite different to theorize losing X% of your portfolio, than to experience it in real time.
Followed by the second biggest can of worms - should I tilt? :D "Divert all power to the shields!"

Miriam2
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Re: Holding VTSAX only

Post by Miriam2 » Thu Nov 16, 2017 12:43 pm

Valuethinker wrote: In addition, I would suggest no one should be without 20% in bonds. The impact on portfolio volatility is significant, and the additional return lost is relatively small. At least based on all historical evidence.
Admiral wrote: If you want to be 100% stocks, TSM is a fine choice . . . Have you ever experienced a severe market downturn with this allocation? It's only during these periods that our true appetite for risk (as opposed to what we think it is) is truly tested. If you have, and you are still ok with this AA, then go for it.
If not, I agree that even a small slice of a bond fund may be appropriate to smooth out the bumps.
Where or how does 20% in bonds or a small slice of a bond fund reduce portfolio volatility or smooth out the bumps?

Do you mean in the total return of our portfolio, that with 100% equities our portfolio return will likely end up lower if the market has a severe drop (because stocks go lower) than if we hold bonds also (and bonds don't go lower) so our total return with some bonds is not as low?

Admiral
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Re: Holding VTSAX only

Post by Admiral » Thu Nov 16, 2017 12:50 pm

Miriam2 wrote:
Thu Nov 16, 2017 12:43 pm
Valuethinker wrote: In addition, I would suggest no one should be without 20% in bonds. The impact on portfolio volatility is significant, and the additional return lost is relatively small. At least based on all historical evidence.
Admiral wrote: If you want to be 100% stocks, TSM is a fine choice . . . Have you ever experienced a severe market downturn with this allocation? It's only during these periods that our true appetite for risk (as opposed to what we think it is) is truly tested. If you have, and you are still ok with this AA, then go for it.
If not, I agree that even a small slice of a bond fund may be appropriate to smooth out the bumps.
Where or how does 20% in bonds or a small slice of a bond fund reduce portfolio volatility or smooth out the bumps?

Do you mean in the total return of our portfolio, that with 100% equities our portfolio return will likely end up lower if the market has a severe drop (because stocks go lower) than if we hold bonds also (and bonds don't go lower) so our total return with some bonds is not as low?
More risk = higher volatility = higher potential return
Less risk = lower volatility = lower potential return

100% stocks = higher volatility, 80% stocks/20% bonds = lower volatility.

tman9940
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Re: Holding VTSAX only

Post by tman9940 » Thu Nov 16, 2017 1:06 pm

jadd806 wrote:
Thu Nov 16, 2017 12:09 pm
You just opened up the 2 biggest cans of worms on this forum: whether international equity exposure is necessary (and to what degree), and whether 100% equities is appropriate for any investor.

I'm younger than you and I wouldn't feel comfortable holding 100% equities, let alone 100% US equities.

I would ask how you know what your risk tolerance is if you have only ever invested during a bull market? I am making this assumption based your first post in 2015 where you claimed you were "just starting out," so correct me if I'm wrong. It's quite different to theorize losing X% of your portfolio, than to experience it in real time.
Not intentionally opening a can of worms--just trying to see if others out there think like me. You're right--I haven't experienced a big downturn as of yet. I have a good amount of cash on the sidelines, attempting to save for a house, so I'm not truly 100% stocks, but of all my money that IS invested, it is in VTSAX and a small amount in small cap. If I keep telling myself during a big downturn that the market always goes up, and will recover, and with a time horizon as long as mine, why not take on the risk and use my time to my advantage? I need my accounts to grow, and I'm willing to take on risk to do that. I'm not investing in single stocks or penny stocks etc, I view any major drop as a golden buying opportunity. I appreciate you getting me to think of all possibilities, though. Thanks!

TheHouse7
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Re: Holding VTSAX only

Post by TheHouse7 » Thu Nov 16, 2017 1:12 pm

dcabler wrote:
Thu Nov 16, 2017 12:35 pm
jadd806 wrote:
Thu Nov 16, 2017 12:09 pm
You just opened up the 2 biggest cans of worms on this forum: whether international equity exposure is necessary (and to what degree), and whether 100% equities is appropriate for any investor.

I'm younger than you and I wouldn't feel comfortable holding 100% equities, let alone 100% US equities.

I would ask how you know what your risk tolerance is if you have only ever invested during a bull market? I am making this assumption based your first post in 2015 where you claimed you were "just starting out," so correct me if I'm wrong. It's quite different to theorize losing X% of your portfolio, than to experience it in real time.
Followed by the second biggest can of worms - should I tilt? :D "Divert all power to the shields!"
Please stop making me laugh. :D
3rd can: Pay cash for cars or take advantage of low rates?
"PSX will always go up 20%, why invest in anything else?!" -Father-in-law early retired.

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Re: Holding VTSAX only

Post by snarlyjack » Thu Nov 16, 2017 1:27 pm

Tman,

I mostly invest this way but I' am very young with many years to go.
I think VTSAX is a great fund. I look for low ER (expense ratio) &
being super efficient. A great fund that has a low ER & is super efficient
is the "cat's meow"...

Admiral
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Re: Holding VTSAX only

Post by Admiral » Thu Nov 16, 2017 1:29 pm

snarlyjack wrote:
Thu Nov 16, 2017 1:27 pm
Tman,

I mostly invest this way but I' am very young with many years to go.
I think VTSAX is a great fund. I look for low ER (expense ratio) &
being super efficient. A great fund that has a low ER & is super efficient
is the "cat's meow"...
So you dumped your "high-dividend" strategy? That's good to hear! :beer

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Alexa9
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Re: Holding VTSAX only

Post by Alexa9 » Thu Nov 16, 2017 6:09 pm

Why stop there? Why not go 100% Frontier Markets Micro Cap Extra Value?

azanon
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Re: Holding VTSAX only

Post by azanon » Fri Nov 17, 2017 7:27 am

This was my facebook post yesterday:

Notable US stock valuation points (higher is more expensive): (CAPE/PE10)
September 1929 (peak): 32.56
August 1987 (before black Friday): 18.33
December 1999 (highest ever recorded): 44.20
December 2006 (peak before housing crash): 27.28
Today's valuation (Nov 2017): 31.30
Wanna buy some US stock? 🤔

tibbitts
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Re: Holding VTSAX only

Post by tibbitts » Fri Nov 17, 2017 7:45 am

My thought is that it's a better idea than keeping all your money in a 0% bank account. That doesn't make it a good idea, and it isn't, but you didn't want people to tell you that.

Ron Scott
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Re: Holding VTSAX only

Post by Ron Scott » Fri Nov 17, 2017 8:25 am

azanon wrote:
Fri Nov 17, 2017 7:27 am
This was my facebook post yesterday:

Notable US stock valuation points (higher is more expensive): (CAPE/PE10)
September 1929 (peak): 32.56
August 1987 (before black Friday): 18.33
December 1999 (highest ever recorded): 44.20
December 2006 (peak before housing crash): 27.28
Today's valuation (Nov 2017): 31.30
Wanna buy some US stock? 🤔
I actually agree with you and believe a retrenchment of some magnitude is coming. But keep in mind that the CAPE was really high 3 years ago and those who tucked their $$ in CDs back then would have lost a 30% uptick in the market. 🤔

Also, so we don't become complacent with the CAPE/PE10 as a measure, it is about to drop significantly for US equities, when the 10th-year experience of the great recession starts to drop out of the calcs. It will appear as if stocks have become less overvalued while they will not have become so.

Johm221122
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Re: Holding VTSAX only

Post by Johm221122 » Fri Nov 17, 2017 8:35 am

Check out vanguard historical returns of portfolio
https://personal.vanguard.com/us/insigh ... llocations

I like 60-70 % stocks in accumulation phase

20-40% of equity in international

Admiral
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Re: Holding VTSAX only

Post by Admiral » Fri Nov 17, 2017 1:52 pm

azanon wrote:
Fri Nov 17, 2017 7:27 am
This was my facebook post yesterday:

Notable US stock valuation points (higher is more expensive): (CAPE/PE10)
September 1929 (peak): 32.56
August 1987 (before black Friday): 18.33
December 1999 (highest ever recorded): 44.20
December 2006 (peak before housing crash): 27.28
Today's valuation (Nov 2017): 31.30
Wanna buy some US stock? 🤔
And if you had not sold on any or all of those dates you'd have hundreds or thousands or millions more than you had the day before.

All together now: Time in market, not market timing.

ThrustVectoring
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Re: Holding VTSAX only

Post by ThrustVectoring » Fri Nov 17, 2017 2:30 pm

I'd throw in a total international fund like VTIAX, but yeah, my plans are also going 100% equities for the foreseeable future. It helps a lot that I'm young (29) and early in my investing career (faffed around instead of making serious money right after college).

I'm also planning on making way more money than I'll need to retire with, so that helps a lot.

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Re: Holding VTSAX only

Post by azanon » Fri Nov 17, 2017 7:57 pm

Ron Scott wrote:
Fri Nov 17, 2017 8:25 am
azanon wrote:
Fri Nov 17, 2017 7:27 am
This was my facebook post yesterday:

Notable US stock valuation points (higher is more expensive): (CAPE/PE10)
September 1929 (peak): 32.56
August 1987 (before black Friday): 18.33
December 1999 (highest ever recorded): 44.20
December 2006 (peak before housing crash): 27.28
Today's valuation (Nov 2017): 31.30
Wanna buy some US stock? 🤔
I actually agree with you and believe a retrenchment of some magnitude is coming. But keep in mind that the CAPE was really high 3 years ago and those who tucked their $$ in CDs back then would have lost a 30% uptick in the market. 🤔

Also, so we don't become complacent with the CAPE/PE10 as a measure, it is about to drop significantly for US equities, when the 10th-year experience of the great recession starts to drop out of the calcs. It will appear as if stocks have become less overvalued while they will not have become so.
Few points:

>3 years ago, I'd have called CAPE elevated, not "really high" (the value was 26.61). And if you really want to call 26.61 really high, then It's safe to say you're in my implied camp. At 31.3, most cape based 10-yr return projects have the estimated return lower than T-Bills. Can you imagine if that's even close to being right; the volatility of stocks, for about the same return as vanguard's short term TIPS fund (that has a negative yield)?

> Regarding CAPE dropping in the next few years, TBH anyone that's unaffected by CAPE 31.3, probably doesn't have a CAPE value that would cause them to act. At 31.3, if you're not making any adjustments, you simply don't use or believe in CAPE.
Last edited by azanon on Fri Nov 17, 2017 8:05 pm, edited 2 times in total.

azanon
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Re: Holding VTSAX only

Post by azanon » Fri Nov 17, 2017 8:00 pm

Admiral wrote:
Fri Nov 17, 2017 1:52 pm
azanon wrote:
Fri Nov 17, 2017 7:27 am
This was my facebook post yesterday:

Notable US stock valuation points (higher is more expensive): (CAPE/PE10)
September 1929 (peak): 32.56
August 1987 (before black Friday): 18.33
December 1999 (highest ever recorded): 44.20
December 2006 (peak before housing crash): 27.28
Today's valuation (Nov 2017): 31.30
Wanna buy some US stock? 🤔
And if you had not sold on any or all of those dates you'd have hundreds or thousands or millions more than you had the day before.

All together now: Time in market, not market timing.
Let's take 1929, for instance. Are you really telling others, don't sweat a 89% drop in their principle. Really? That's what happened from 1929-1932, and we're ~ at the same CAPE level today as 29'.

I think it's a hard sell, especially for someone with a sizable portfolio, to say don't sweat losing most of your money in the stock market because eventually you'll get it back.

Admiral
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Re: Holding VTSAX only

Post by Admiral » Fri Nov 17, 2017 8:43 pm

azanon wrote:
Fri Nov 17, 2017 8:00 pm
Admiral wrote:
Fri Nov 17, 2017 1:52 pm
azanon wrote:
Fri Nov 17, 2017 7:27 am
This was my facebook post yesterday:

Notable US stock valuation points (higher is more expensive): (CAPE/PE10)
September 1929 (peak): 32.56
August 1987 (before black Friday): 18.33
December 1999 (highest ever recorded): 44.20
December 2006 (peak before housing crash): 27.28
Today's valuation (Nov 2017): 31.30
Wanna buy some US stock? 🤔
And if you had not sold on any or all of those dates you'd have hundreds or thousands or millions more than you had the day before.

All together now: Time in market, not market timing.
Let's take 1929, for instance. Are you really telling others, don't sweat a 89% drop in their principle. Really? That's what happened from 1929-1932, and we're ~ at the same CAPE level today as 29'.

I think it's a hard sell, especially for someone with a sizable portfolio, to say don't sweat losing most of your money in the stock market because eventually you'll get it back.
What I said is that I personally don't keep 100% of my investments in stocks. Nor do I recommend that for any age. However, different people have different tolerances for risk. You pick your AA based on your risk profile, and you stay the course. This is the Boglehead philosophy. Market timing--going into and out of stocks based on guess work--is a recipe for losing money. That's my view. YMMV.

snarlyjack
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Re: Holding VTSAX only

Post by snarlyjack » Fri Nov 17, 2017 9:13 pm

Yep...that's my big plan.

If the market drops I plan to continue to DCA
every month & reinvest all dividends. I've got
90 years to go & I can't be bothered by bear
market.

In the book "Snowball" by Warren Buffett he states
"to hell with the bear market I don't have time for this".
I thought that was a very interesting comment... I try
to learn from Warren Buffett.

Longtermgrowth
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Re: Holding VTSAX only

Post by Longtermgrowth » Sat Nov 18, 2017 2:25 am

Shoot, I think Buffett lives for bear markets. I remember reading something about a comment from Buffett saying to not just bring a bucket out in the rain, but to bring the bathtub!

Dang, he ain't got time for it? Berkshire Hathaway has what, about 100 billion just waiting to deploy during it?

Finridge
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Re: Holding VTSAX only

Post by Finridge » Sat Nov 18, 2017 2:55 am

tman9940 wrote:
Thu Nov 16, 2017 1:06 pm
[
Not intentionally opening a can of worms--just trying to see if others out there think like me.
Yes, there are plenty of people who have portfolios that are 90%-100% equities. However, we are the minority.

And yes, this is a lot more volatile. But the "upticks" more than the "downticks"--at least they have so far. The big test is how you react during the next bear market. If you sell, then this allocation will probably have been a big mistake.

I recommend you spend a lot of time researching asset allocations and the arguments for and against high equity allocations so you are comfortable with your choice.


Also, this is a good starting point. Fill out this questionnaire and see what they recommend.
https://personal.vanguard.com/us/FundsInvQuestionnaire

Ron Scott
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Re: Holding VTSAX only

Post by Ron Scott » Sat Nov 18, 2017 9:10 am

azanon wrote:
Fri Nov 17, 2017 7:57 pm
Ron Scott wrote:
Fri Nov 17, 2017 8:25 am
azanon wrote:
Fri Nov 17, 2017 7:27 am
This was my facebook post yesterday:

Notable US stock valuation points (higher is more expensive): (CAPE/PE10)
September 1929 (peak): 32.56
August 1987 (before black Friday): 18.33
December 1999 (highest ever recorded): 44.20
December 2006 (peak before housing crash): 27.28
Today's valuation (Nov 2017): 31.30
Wanna buy some US stock? 🤔
I actually agree with you and believe a retrenchment of some magnitude is coming. But keep in mind that the CAPE was really high 3 years ago and those who tucked their $$ in CDs back then would have lost a 30% uptick in the market. 🤔

Also, so we don't become complacent with the CAPE/PE10 as a measure, it is about to drop significantly for US equities, when the 10th-year experience of the great recession starts to drop out of the calcs. It will appear as if stocks have become less overvalued while they will not have become so.
Few points:

>3 years ago, I'd have called CAPE elevated, not "really high" (the value was 26.61). And if you really want to call 26.61 really high, then It's safe to say you're in my implied camp. At 31.3, most cape based 10-yr return projects have the estimated return lower than T-Bills. Can you imagine if that's even close to being right; the volatility of stocks, for about the same return as vanguard's short term TIPS fund (that has a negative yield)?

> Regarding CAPE dropping in the next few years, TBH anyone that's unaffected by CAPE 31.3, probably doesn't have a CAPE value that would cause them to act. At 31.3, if you're not making any adjustments, you simply don't use or believe in CAPE.
You are obviously better at timing markets with CAPE than I and that's to your credit. I am in a fortunate position in retirement however and can afford to think long term. I cannot imagine any circumstance in which I'd need to sell equities or spend less money in a very severe market downturn; to the contrary I'd probably buy stocks then, without consulting CAPE.

Buy the way, in November 2007 the 10-year CAPE was "elevated", at 25.67...

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Re: Holding VTSAX only

Post by abuss368 » Sat Nov 18, 2017 9:21 am

TheHouse7 wrote:
Thu Nov 16, 2017 1:12 pm
dcabler wrote:
Thu Nov 16, 2017 12:35 pm
jadd806 wrote:
Thu Nov 16, 2017 12:09 pm
You just opened up the 2 biggest cans of worms on this forum: whether international equity exposure is necessary (and to what degree), and whether 100% equities is appropriate for any investor.

I'm younger than you and I wouldn't feel comfortable holding 100% equities, let alone 100% US equities.

I would ask how you know what your risk tolerance is if you have only ever invested during a bull market? I am making this assumption based your first post in 2015 where you claimed you were "just starting out," so correct me if I'm wrong. It's quite different to theorize losing X% of your portfolio, than to experience it in real time.
Followed by the second biggest can of worms - should I tilt? :D "Divert all power to the shields!"
Please stop making me laugh. :D
3rd can: Pay cash for cars or take advantage of low rates?
Too much! :sharebeer
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Re: Holding VTSAX only

Post by abuss368 » Sat Nov 18, 2017 9:23 am

Longtermgrowth wrote:
Sat Nov 18, 2017 2:25 am
Shoot, I think Buffett lives for bear markets. I remember reading something about a comment from Buffett saying to not just bring a bucket out in the rain, but to bring the bathtub!

Dang, he ain't got time for it? Berkshire Hathaway has what, about 100 billion just waiting to deploy during it?
I would agree. Warren Buffett has often said the be fearful when others are greedy and greedy when others and fearful.
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Re: Holding VTSAX only

Post by lostdog » Sat Nov 18, 2017 10:24 am

Even better go 50/50 VTSAX/VTIAX and call it a day. Add Total Bond funds when you get older. Simple....
Financial Independence is the best revenge. | "Our life is frittered away by detail. Simplify, simplify." -Thoreau

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Re: Holding VTSAX only

Post by Longtermgrowth » Sun Nov 19, 2017 5:28 am

lostdog wrote:
Sat Nov 18, 2017 10:24 am
Even better go 50/50 VTSAX/VTIAX and call it a day. Add Total Bond funds when you get older. Simple....
At least some percentage of international stocks, it's a big world and currently over 6k stocks in Vanguard's Total International Stock Index.

I keep referencing this thread from Mr. Larimore: viewtopic.php?t=196956

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Re: Holding VTSAX only

Post by Johnnie » Sun Nov 19, 2017 5:13 pm

From Ben Carlson writing about an Evidence Based Investing Conference:

'Barry began his fireside chat with the new incoming CEO of Vanguard, Tim Buckley, by asking what his favorite stock is. Buckley didn’t skip a beat and joked, “All of them.”'
http://awealthofcommonsense.com/2017/11 ... -ebi-east/

<snicker> :P
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Re: Holding VTSAX only

Post by jb1 » Mon Nov 20, 2017 9:39 pm

lostdog wrote:
Sat Nov 18, 2017 10:24 am
Even better go 50/50 VTSAX/VTIAX and call it a day. Add Total Bond funds when you get older. Simple....

The older I get the more I realize how I like this appraoch. I currenly have 70% VTSAX, 25% VTIAX, 5% VBTLX (only about 2k worth) but I wonder, what is even the point of keeping 2k there? Im 27 years old. 2k when im in my 50s will be peanuts to me, why not take that 2k and take a risk with it whether it is cryptos or even moving it to VTSAX?

Yes my 2k is "safe" but it is only making me $50 a year in dividends, with minimal growth, which is nothing.

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Re: Holding VTSAX only

Post by Valuethinker » Tue Nov 21, 2017 6:33 am

jb1 wrote:
Mon Nov 20, 2017 9:39 pm
lostdog wrote:
Sat Nov 18, 2017 10:24 am
Even better go 50/50 VTSAX/VTIAX and call it a day. Add Total Bond funds when you get older. Simple....

The older I get the more I realize how I like this appraoch. I currenly have 70% VTSAX, 25% VTIAX, 5% VBTLX (only about 2k worth) but I wonder, what is even the point of keeping 2k there? Im 27 years old. 2k when im in my 50s will be peanuts to me, why not take that 2k and take a risk with it whether it is cryptos or even moving it to VTSAX?

Yes my 2k is "safe" but it is only making me $50 a year in dividends, with minimal growth, which is nothing.
Well if we have a bear market then the ability to buy stocks at lower prices will seem like a good thing.

You can chuck the 5%.

I am increasingly convinced that one should never be less than 20% bonds. Having run 100% equities (or really 70%+ equities + cash) for quite a long time in my life, and experienced the 2000 effect-- money there took c. 15 years to recover its value (the UK market has lagged the US market).

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Re: Holding VTSAX only

Post by Valuethinker » Tue Nov 21, 2017 6:34 am

Longtermgrowth wrote:
Sun Nov 19, 2017 5:28 am
lostdog wrote:
Sat Nov 18, 2017 10:24 am
Even better go 50/50 VTSAX/VTIAX and call it a day. Add Total Bond funds when you get older. Simple....
At least some percentage of international stocks, it's a big world and currently over 6k stocks in Vanguard's Total International Stock Index.

I keep referencing this thread from Mr. Larimore: viewtopic.php?t=196956
This is sensible, but it's not heard. You'll get Warren Buffett thrown back at you.

If you are a US investor, home country bias is a mistake, but not a bad mistake. The correlations of international (developed) equities are very similar.

If you are a Canadian, or a Brit, or a French, say, then home country bias is an awful mistake.

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Re: Holding VTSAX only

Post by MEA » Tue Nov 21, 2017 7:59 am

jb1 wrote:
Mon Nov 20, 2017 9:39 pm
lostdog wrote:
Sat Nov 18, 2017 10:24 am
Even better go 50/50 VTSAX/VTIAX and call it a day. Add Total Bond funds when you get older. Simple....

The older I get the more I realize how I like this appraoch. I currenly have 70% VTSAX, 25% VTIAX, 5% VBTLX (only about 2k worth) but I wonder, what is even the point of keeping 2k there? Im 27 years old. 2k when im in my 50s will be peanuts to me, why not take that 2k and take a risk with it whether it is cryptos or even moving it to VTSAX?

Yes my 2k is "safe" but it is only making me $50 a year in dividends, with minimal growth, which is nothing.
I would keep the bond fund. That way when you turn 50 you won't have to go back and lookup nisiprius's (very helpful) posts to understand how an intermediate term bond fund works. Consider it the cost of an education in bonds. I do agree with you though, better to take the risk now when you're young than have to do it later.
It is speculators speculating on other speculators speculations. It is a tale told by an idiot, full of sound and fury signifying nothing.

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Re: Holding VTSAX only

Post by Admiral » Tue Nov 21, 2017 8:03 am

jb1 wrote:
Mon Nov 20, 2017 9:39 pm
lostdog wrote:
Sat Nov 18, 2017 10:24 am
Even better go 50/50 VTSAX/VTIAX and call it a day. Add Total Bond funds when you get older. Simple....

The older I get the more I realize how I like this appraoch. I currenly have 70% VTSAX, 25% VTIAX, 5% VBTLX (only about 2k worth) but I wonder, what is even the point of keeping 2k there? Im 27 years old. 2k when im in my 50s will be peanuts to me, why not take that 2k and take a risk with it whether it is cryptos or even moving it to VTSAX?

Yes my 2k is "safe" but it is only making me $50 a year in dividends, with minimal growth, which is nothing.
When you are young and with a small portfolio, growth comes primarily from contributions, not from the market. As the value of your holdings rises, market movements have a greater effect on your balance (though of course deposits are still important). True, the 2k per year may not make or break you, but as you keep adding to that amount, it will make a difference over time. But 5% in general is not enough to make a huge difference until we're talking very big numbers, which is why a larger bond allocation is typically recommended. Bonds are not for return, they are for safety in falling markets.

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Re: Holding VTSAX only

Post by azanon » Tue Nov 21, 2017 9:27 am

Ron Scott wrote:
Sat Nov 18, 2017 9:10 am
azanon wrote:
Fri Nov 17, 2017 7:57 pm
Ron Scott wrote:
Fri Nov 17, 2017 8:25 am
azanon wrote:
Fri Nov 17, 2017 7:27 am
This was my facebook post yesterday:

Notable US stock valuation points (higher is more expensive): (CAPE/PE10)
September 1929 (peak): 32.56
August 1987 (before black Friday): 18.33
December 1999 (highest ever recorded): 44.20
December 2006 (peak before housing crash): 27.28
Today's valuation (Nov 2017): 31.30
Wanna buy some US stock? 🤔
I actually agree with you and believe a retrenchment of some magnitude is coming. But keep in mind that the CAPE was really high 3 years ago and those who tucked their $$ in CDs back then would have lost a 30% uptick in the market. 🤔

Also, so we don't become complacent with the CAPE/PE10 as a measure, it is about to drop significantly for US equities, when the 10th-year experience of the great recession starts to drop out of the calcs. It will appear as if stocks have become less overvalued while they will not have become so.
Few points:

>3 years ago, I'd have called CAPE elevated, not "really high" (the value was 26.61). And if you really want to call 26.61 really high, then It's safe to say you're in my implied camp. At 31.3, most cape based 10-yr return projects have the estimated return lower than T-Bills. Can you imagine if that's even close to being right; the volatility of stocks, for about the same return as vanguard's short term TIPS fund (that has a negative yield)?

> Regarding CAPE dropping in the next few years, TBH anyone that's unaffected by CAPE 31.3, probably doesn't have a CAPE value that would cause them to act. At 31.3, if you're not making any adjustments, you simply don't use or believe in CAPE.
You are obviously better at timing markets with CAPE than I and that's to your credit. I am in a fortunate position in retirement however and can afford to think long term. I cannot imagine any circumstance in which I'd need to sell equities or spend less money in a very severe market downturn; to the contrary I'd probably buy stocks then, without consulting CAPE.

Buy the way, in November 2007 the 10-year CAPE was "elevated", at 25.67...
I don't see evaluating how much your paying for x stock, and actually caring how much you're paying as market timing. It is actually possible to evaluate how much 10-year past earnings you're getting for a share of stock. For example, you're getting roughly have the past 10-year earnings/share today, than you were in March 2009. That's CAPE. Since you're in retirement, that means you must have lived through the late 90s like I did, thus were an investing adult when you had the opportunity to witness people irrationally paying any price for shell internet companies that had nothing more than a URL. I know I made that observation. I know I can also prove through his own testimony that Mr. John Bogle also made that observation, and took action because of it.

For me, it doesn't matter what I'm buying; I always evaluate how much I'm paying for what I'm getting whenever it's actually possible to do so. We can certainly, mathematically do that with stocks. And if the price is too high, I generally pass or at the very least buy less of whatever it is. Maybe what you can really afford is to pay any price for your stock. If you can afford that, I think that's wonderful. Congratulations on your tremendous success. While I'm making great progress in my savings mid-career, I still haven't saved so much that I can stop looking at the price and pay whatever the person selling the shares wants for them. "They" want 31x ten years earnings now? I admit I'm still buying a small portion, but mostly just to hedge my bets. But all/100% VTSAX (per the subject of the thread)? Not me!

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Re: Holding VTSAX only

Post by fourwheelcycle » Tue Nov 21, 2017 9:34 am

Popular thread. Everyone has to confront these questions - bond vs. equity, international or not?

My wife and I often comment that we are like the old man with many worries, most of which have never happened. We are now approaching seventy and I have maintained about a 25% allocation of bonds and cash vs. 75% equities since we began saving in our mid-twenties. At this point most of our savings are in VTSAX and VBILX.

I have always kept the bonds as a buffer to ensure against the need to sell equities if we ever ran into a major unforeseen expense, or lost our jobs, during a down market. As it turns out, we have never had to sell one dollar of our bonds, or our equities, to cover any type of expense.

It's a tough call, but I think I would use the same allocation if we were starting over today. It has been comforting to have Vanguard tell me I am covering the right bases (except for international, which I did cover up until the mid-1990s), and it has also been very reassuring to my wife when she asks (about once every five years or so) what I am doing with our savings.
Last edited by fourwheelcycle on Tue Nov 21, 2017 9:47 am, edited 1 time in total.

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Re: Holding VTSAX only

Post by aristotelian » Tue Nov 21, 2017 9:40 am

snarlyjack wrote:
Fri Nov 17, 2017 9:13 pm
Yep...that's my big plan.

If the market drops I plan to continue to DCA
every month & reinvest all dividends. I've got
90 years to go & I can't be bothered by bear
market.

In the book "Snowball" by Warren Buffett he states
"to hell with the bear market I don't have time for this".
I thought that was a very interesting comment... I try
to learn from Warren Buffett.
How do you figure 90 years? Are you negative 10 years old?

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Re: Holding VTSAX only

Post by azanon » Tue Nov 21, 2017 9:47 am

fourwheelcycle wrote:
Tue Nov 21, 2017 9:34 am

My wife and I often comment that we are like the old man with many worries, most of which have never happened. We are now approaching seventy and I have maintained about a 25% allocation of bonds and cash vs. 75% equities since we began saving in our mid-twenties. At this point most of our savings are in VTSAX and VBILX.

...............

It's a tough call, but I think I would use the same allocation if we were starting over today. It has been comforting to have Vanguard tell me I am covering the right bases (except for international, which I did cover up until the mid-1990s), and it has also been very reassuring to my wife when she asks (about once every five years or so ) what I am doing with our savings.
I really appreciate how you made both of those points. For someone that's invested 50 years or thereabouts with a static portfolio, valuations and it's associated concerns are virtually meaningless since the inherent strategy intentionally gives no consideration for it. From the perspective of CAPE, once you're 10 years into a holding period, especially if you started young with a really small portfolio, valuations are of no concern at all.

But if you never really had a set system and have, say, 1 million+ ready to finally make that decision for a static portfolio along the lines of what you do, it's not going to be near as easy to just put the blinders on and make no assessment at all of the current investing climate. You say you might still just do the same thing anyway, but I really appreciate that you recognize that in that scenario it's not near as easy, and I think that's for good reason.

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Re: Holding VTSAX only

Post by Miriam2 » Tue Nov 21, 2017 12:23 pm

Admiral wrote:
jb1 wrote:
lostdog wrote: Even better go 50/50 VTSAX/VTIAX and call it a day. Add Total Bond funds when you get older. Simple....
The older I get the more I realize how I like this appraoch. I currenly have 70% VTSAX, 25% VTIAX, 5% VBTLX (only about 2k worth) but I wonder, what is even the point of keeping 2k there? Im 27 years old. 2k when im in my 50s will be peanuts to me, why not take that 2k and take a risk with it whether it is cryptos or even moving it to VTSAX?

Yes my 2k is "safe" but it is only making me $50 a year in dividends, with minimal growth, which is nothing.
When you are young and with a small portfolio, growth comes primarily from contributions, not from the market. As the value of your holdings rises, market movements have a greater effect on your balance (though of course deposits are still important). True, the 2k per year may not make or break you, but as you keep adding to that amount, it will make a difference over time. But 5% in general is not enough to make a huge difference until we're talking very big numbers, which is why a larger bond allocation is typically recommended. Bonds are not for return, they are for safety in falling markets.
MEA wrote: I would keep the bond fund. That way when you turn 50 you won't have to go back and lookup nisiprius's (very helpful) posts to understand how an intermediate term bond fund works. Consider it the cost of an education in bonds. I do agree with you though, better to take the risk now when you're young than have to do it later.
Admiral and MEA - Just wanted to let you both know that these very simple explanations were helpful to those of us learning personal finance. Many of us wonder about the practical value of that measly 10% of the 90/10 asset allocation.

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Re: Holding VTSAX only

Post by Admiral » Tue Nov 21, 2017 1:56 pm

Miriam2 wrote:
Tue Nov 21, 2017 12:23 pm
Admiral wrote:
jb1 wrote:
lostdog wrote: Even better go 50/50 VTSAX/VTIAX and call it a day. Add Total Bond funds when you get older. Simple....
The older I get the more I realize how I like this appraoch. I currenly have 70% VTSAX, 25% VTIAX, 5% VBTLX (only about 2k worth) but I wonder, what is even the point of keeping 2k there? Im 27 years old. 2k when im in my 50s will be peanuts to me, why not take that 2k and take a risk with it whether it is cryptos or even moving it to VTSAX?

Yes my 2k is "safe" but it is only making me $50 a year in dividends, with minimal growth, which is nothing.
When you are young and with a small portfolio, growth comes primarily from contributions, not from the market. As the value of your holdings rises, market movements have a greater effect on your balance (though of course deposits are still important). True, the 2k per year may not make or break you, but as you keep adding to that amount, it will make a difference over time. But 5% in general is not enough to make a huge difference until we're talking very big numbers, which is why a larger bond allocation is typically recommended. Bonds are not for return, they are for safety in falling markets.
MEA wrote: I would keep the bond fund. That way when you turn 50 you won't have to go back and lookup nisiprius's (very helpful) posts to understand how an intermediate term bond fund works. Consider it the cost of an education in bonds. I do agree with you though, better to take the risk now when you're young than have to do it later.
Admiral and MEA - Just wanted to let you both know that these very simple explanations were helpful to those of us learning personal finance. Many of us wonder about the practical value of that measly 10% of the 90/10 asset allocation.
You're welcome! Just remember that in this (now, what, 11th year of a bull market??) everyone looks like an investing genius with very heavy allocations of stocks versus bonds. It's crucial to a) not be greedy and b) understand your own emotions when it comes to investing.

Many of us (and I include myself here) had a very serious reckoning in 2008/9 about what was truly a comfortable asset allocation and how much risk we could stomach and still sleep at night. There are those who were 100% stocks and say they slept like babies. That wasn't me. And based on what the markets did, it wasn't the majority of people, either.

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Re: Holding VTSAX only

Post by lt1948 » Tue Nov 21, 2017 2:09 pm

At the very least I would add VTIAX as your other core holding

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Re: Holding VTSAX only

Post by LadyGeek » Wed Nov 22, 2017 4:35 pm

I removed an off-topic post related to tax reform. As a reminder, see: Political comments and proposed tax plan remain off-topic, which is a sticky at the top of every forum.
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