Core-4 Investing is LIVE! It really is this time!

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
feh
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Re: Core-4 Investing is LIVE! It really is this time!

Post by feh » Thu Nov 01, 2018 10:31 am

vss wrote:
Wed Oct 31, 2018 11:04 pm
After carefully reading all of the 6 portfolios. I came up with this for my Traditional IRA (old 401K rollover):

ITOT (48%)
VXUS (24%)
PSCH (20%)
FAHDX (8%)

I really don't want to deviate from Rick's excellent choices but wanted to try eliminating REIT and added FAHDX for the bond.

Any thoughts?

Please advise.
I first took control of my portfolio 6 years ago, and I initially followed the core-4 approach. After a few months, I determined REIT was not necessary.

YMMV

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Re: Core-4 Investing is LIVE! It really is this time!

Post by MJW » Thu Nov 01, 2018 10:38 am

I don’t have a horse in the race here, and Rick is perfectly capable of defending himself, so this is just my observation:

I really don’t understand the cynicism or the sarcasm about the “simplicity” of the portfolio recommendations. It isn’t like an investor is going to use all 24 portfolios. The rationale of each investment philosophy is explained and a sample portfolio is given for each risk level. I had no problem tracking with the information on the site and I do not have advanced investing knowledge. The information is free to DIY’ers and if someone happens to prefer additional guidance, Rick is offering to connect with them an advisor that he feels is worth their salt. That hardly sounds like a money grab to me.

If a person finds the use of four funds to be a bridge too far, they can dismiss the site as not helpful to them (as some respondents here have). I’d like to think that most people can review the BH wiki and Rick’s site and whatever other resources are available and make an informed decision. Otherwise, why don’t we just eliminate every discussion thread on this forum aside from the one on the 3-Fund Portfolio and call it a day?
Last edited by MJW on Thu Nov 01, 2018 11:06 am, edited 1 time in total.

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Re: Core-4 Investing is LIVE! It really is this time!

Post by sgr000 » Thu Nov 01, 2018 10:50 am

Rick Ferri wrote:
Wed Oct 31, 2018 7:17 pm
Tonight I launched Core-4 Investing under the Core-4.com domain name.
Excellent typo on the portfolios page: governess --> governance.

Personally, I'd leave it that way because it would be so much fun to make up answers to people's questions about it!

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Re: Core-4 Investing is LIVE! It really is this time!

Post by bjr89 » Thu Nov 01, 2018 11:46 am

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Last edited by bjr89 on Fri Nov 16, 2018 7:16 pm, edited 1 time in total.

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Re: Rick Ferri's new Core-4 (6 versions) Website

Post by spdoublebass » Thu Nov 01, 2018 11:48 am

goblue100 wrote:
Thu Nov 01, 2018 8:23 am
You may want to check out this thread:
viewtopic.php?f=10&t=262817&newpost=419 ... ead#unread

I can't speak for Rick, but I suspect REITS are less correlated to the stock market and give a diversification benefit.
Thank you.
I searched for other threads, figuring there would be one someone but missed this one.
I'm trying to think, but nothing happens

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Re: Core-4 Investing is LIVE! It really is this time!

Post by spdoublebass » Thu Nov 01, 2018 12:01 pm

I have been awaiting this launch ever since I heard this new website was coming.

I’m speaking only as a new investor (second year in the market).

There have been other threads on this forum debating if Mr. Ferri would still include REITs in today’s market. Obviously, this website answers this question.

The questions I have are:
1. Why do I need REITs beyond market weight?
If I was holding them for the past 20 years, I would continue to hold them. As a new investor, I have yet to add them. I guess I am just looking for more explanation of why I need them.

2. Why are Ex US REITs avoided?


I’ve always been a fan of Mr. Ferri and enjoy reading his contributions to this forum.
I'm trying to think, but nothing happens

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Re: Core-4 Investing is LIVE! It really is this time!

Post by Rick Ferri » Thu Nov 01, 2018 12:45 pm

spdoublebass wrote:
Thu Nov 01, 2018 12:01 pm
The questions I have are:
1. Why do I need REITs beyond market weight?
If I was holding them for the past 20 years, I would continue to hold them. As a new investor, I have yet to add them. I guess I am just looking for more explanation of why I need them.

2. Why are Ex US REITs avoided?
Core-4 portfolios are meant to be stand alone portfolios or a base to work from and customize to your liking. That being said...

1. Commercial real estate as is major part of our economy (~13%) and a minor part of the stock market (~13%). There is a debate about whether real estate is a separate asset class from stocks. I fall on the side that it is fundamentally different. It's also structured and taxed differently than common stocks. Accordingly, I include real estate as a separate asset class in some Core-4 portfolios.

2. Splitting hairs on this one. It's really your choice. To me, it's not necessary to have every asset class in a portfolio. International real estate funds have higher costs, currency risk, and foreign withholding tax issues. I get enough of that with an international stock fund.

Good questions.

Rick Ferri
The Education of an Index Investor: born in darkness, finds indexing enlightenment, overcomplicates everything, embraces simplicity.

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Re: Core-4 Investing is LIVE! It really is this time!

Post by WonderingDope » Thu Nov 01, 2018 1:10 pm

jumppilot wrote:
Thu Nov 01, 2018 3:03 am
Silk McCue wrote:
Wed Oct 31, 2018 9:21 pm
develop wrote:
Wed Oct 31, 2018 9:16 pm

I can see that I am in the minority here, and I expect some blowback for saying this, but isn't this just a way to make simplicity more complex? If someone truly valued simplicity, wouldn't they just stick with a typical three or four fund portfolio?

Six 4-fund portfolios for a total of "24 portfolios (to start)" sounds like the antithesis of simplicity. Just my two cents.
Unhelpful and unnecessary.

Cheers
I disagree. It's what we do here at this forum. We discuss investment strategies and bring up points and counter points.

On the surface, 24 portfolios is much more complex than the 3-fund portfolio.

If it wasn't Rick posting this, people would be tearing the poster apart in the name of simplicity.
My impression as well. Also the commercial aspects seem distasteful for forum that supposedly isn't trying to sell you anything. I'm reminded of Hurdle Five of William Bernstein's If You Can that is frequently promoted here.

I'm not saying that is Ricks sole motive, but the removal of the marketing aspects would help aleviate any doubts.

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Re: Rick Ferri's new Core-4 (6 versions) Website

Post by betablocker » Thu Nov 01, 2018 1:39 pm

You would use REITs for diversification. Larry Swedroe has written over the last few years that REITs have essentially correlated to the stock market particularly during equity down turns when you need the diversification the most. I think it's essentially a coin flip as to whether you include them. I'd spend more time on other alternative assets classes.

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Re: Rick Ferri's new Core-4 (6 versions) Website

Post by bloom2708 » Thu Nov 01, 2018 1:46 pm

Core-4 sounds simple enough, but 6 portfolios with 4 flavors of each. Far from simple.

Staying the course in your selected core-4 portfolio seems like it might be an issue. Then you have taxable to tax-sheltered differences.

Less is more and more is less?

The 3 fund or 4 fund with Total US, Total Int, Total US Bond and Total Int Bond seems like a better/simple solution. But, what do I know.
"We are not here to agree with you; we are here to provoke thoughtfulness." Unknown Boglehead

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Re: Rick Ferri's new Core-4 (6 versions) Website

Post by retiringwhen » Thu Nov 01, 2018 1:51 pm

bloom2708 wrote:
Thu Nov 01, 2018 1:46 pm
Core-4 sounds simple enough, but 6 portfolios with 4 flavors of each. Far from simple.

Staying the course in your selected core-4 portfolio seems like it might be an issue. Then you have taxable to tax-sheltered differences.

Less is more and more is less?

The 3 fund or 4 fund with Total US, Total Int, Total US Bond and Total Int Bond seems like a better/simple solution. But, what do I know.
Remember the 4 flavors is really just the risk profile for the AA among the portfolios.

so compared to the 3-Fund portfolio it is 1 vs. 6, not 1 vs. 24.

The process of choosing one of the 6 portfolios could be an area of future effort.

For example, this forum is pretty hostile to income oriented portfolios, but there are many trusts that are organized with income-only approaches that would make trustees of those very interested in that portfolio. This very problem came up for my family recently. The ESG is a growing interest for the marketplace, etc.... I think it is a robust way at looking how to create a simple portfolio for a very broad community that is not just saving for retirement.

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Re: Rick Ferri's new Core-4 (6 versions) Website

Post by Greenman72 » Thu Nov 01, 2018 2:36 pm

Interesting. I have never heard of this before but it is literally exactly what I do when designing portfolios for my clients. I have even been calling it the Core Four portfolio.

Determine the allocation to equities, then take 60% as Total US, 30% as Total International, and 10% as REIT. The bond portion of the portfolio is all Aggregate Bond. If you need income (because it is a trust, for example), use high-dividend funds and corporate bond funds (with maybe 20% of the total bond portion as high-yield corporate).

Personally, I use Ishares Core ETF's, and I use REET (which has a 65% allocation to Canada and US) instead of USRT, which is 100% US. Just a personal preference.
Last edited by Greenman72 on Thu Nov 01, 2018 3:05 pm, edited 1 time in total.

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Re: Rick Ferri's new Core-4 (6 versions) Website

Post by MJW » Thu Nov 01, 2018 2:42 pm

bloom2708 wrote:
Thu Nov 01, 2018 1:46 pm
Core-4 sounds simple enough, but 6 portfolios with 4 flavors of each. Far from simple.

Staying the course in your selected core-4 portfolio seems like it might be an issue. Then you have taxable to tax-sheltered differences.

Less is more and more is less?

The 3 fund or 4 fund with Total US, Total Int, Total US Bond and Total Int Bond seems like a better/simple solution. But, what do I know.
One the model portfolios on the core-4 site includes that option.

I saw the criticism leveled by forum members in the other thread and for the life of me I don't understand what people are finding so complicated about it. The four "flavors" are simply risk level options that are in line with what is found in the Vanguard Lifestrategy Funds. I guess choosing between different philosophies could be confusing for someone starting out, but the rationale for each is explained in relatively simple terms. People have a responsibility to research for themselves and determine what they are comfortable with.

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Re: Rick Ferri's new Core-4 (6 versions) Website

Post by bloom2708 » Thu Nov 01, 2018 2:49 pm

MJW wrote:
Thu Nov 01, 2018 2:42 pm
bloom2708 wrote:
Thu Nov 01, 2018 1:46 pm
Core-4 sounds simple enough, but 6 portfolios with 4 flavors of each. Far from simple.

Staying the course in your selected core-4 portfolio seems like it might be an issue. Then you have taxable to tax-sheltered differences.

Less is more and more is less?

The 3 fund or 4 fund with Total US, Total Int, Total US Bond and Total Int Bond seems like a better/simple solution. But, what do I know.
One the model portfolios on the core-4 site includes that option.

I saw the criticism leveled by forum members in the other thread and for the life of me I don't understand what people are finding so complicated about it. The four "flavors" are simply risk level options that are in line with what is found in the Vanguard Lifestrategy Funds. I guess choosing between different philosophies could be confusing for someone starting out, but the rationale for each is explained in relatively simple terms. People have a responsibility to research for themselves and determine what they are comfortable with.
Don't risk your life over my confusion or questions. :wink:

I guess just add 6 more sample portfolios to the 76 others to choose from. Easy for newbies and giving some direction.
"We are not here to agree with you; we are here to provoke thoughtfulness." Unknown Boglehead

Greenman72
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Re: Rick Ferri's new Core-4 (6 versions) Website

Post by Greenman72 » Thu Nov 01, 2018 3:01 pm

One criticism/note--he does not include any municipal bond funds in any of his allocations. I would be interested in hearing why not.

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Re: Rick Ferri's new Core-4 (6 versions) Website

Post by pascalwager » Thu Nov 01, 2018 3:05 pm

bloom2708 wrote:
Thu Nov 01, 2018 2:49 pm
MJW wrote:
Thu Nov 01, 2018 2:42 pm
bloom2708 wrote:
Thu Nov 01, 2018 1:46 pm
Core-4 sounds simple enough, but 6 portfolios with 4 flavors of each. Far from simple.

Staying the course in your selected core-4 portfolio seems like it might be an issue. Then you have taxable to tax-sheltered differences.

Less is more and more is less?

The 3 fund or 4 fund with Total US, Total Int, Total US Bond and Total Int Bond seems like a better/simple solution. But, what do I know.
One the model portfolios on the core-4 site includes that option.

I saw the criticism leveled by forum members in the other thread and for the life of me I don't understand what people are finding so complicated about it. The four "flavors" are simply risk level options that are in line with what is found in the Vanguard Lifestrategy Funds. I guess choosing between different philosophies could be confusing for someone starting out, but the rationale for each is explained in relatively simple terms. People have a responsibility to research for themselves and determine what they are comfortable with.
Don't risk your life over my confusion or questions. :wink:

I guess just add 6 more sample portfolios to the 76 others to choose from. Easy for newbies and giving some direction.
The initial selection process doesn't need to be simple and should certainly be undertaken carefully and deliberately, but the Core-4 portfolios themselves do seem to be simple. The somewhat simpler three-fund portfolios also have many possible variations in asset proportions.

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Re: Rick Ferri's new Core-4 (6 versions) Website

Post by Alexa9 » Thu Nov 01, 2018 3:12 pm

I don't see anything new or special here.

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Re: Core-4 Investing is LIVE! It really is this time!

Post by LadyGeek » Thu Nov 01, 2018 3:16 pm

Rick Ferri wrote:
Thu Nov 01, 2018 5:16 am
vss wrote:
Wed Oct 31, 2018 11:04 pm
After carefully reading all of the 6 portfolios. I came up with this for my Traditional IRA (old 401K rollover):

ITOT (48%)
VXUS (24%)
PSCH (20%)
FAHDX (8%)

I really don't want to deviate from Rick's excellent choices but wanted to try eliminating REIT and added FAHDX for the bond.

Any thoughts?

Please advise.
If it works for you, it works for me. The best portfolio for you is the one you'll stick with through thick and thin.

Rick Ferri
Caution, it's important to understand each investor's individual situation in context. What works for one investor may not apply to another.

vss has an on-going thread here: 401k Rollover -> What to invest?

vss - Please update your thread with this latest suggestion so we can help you decide if that's what you really want to do. It also lets the members who've helped you in that thread know what's going on.

Also, you only need to track asset allocation to the nearest 5%. Anything more precise is a lot more work for little added benefit.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

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Re: Core-4 Investing is LIVE! It really is this time!

Post by LadyGeek » Thu Nov 01, 2018 3:21 pm

I merged spdoublebass's thread into the on-going discussion.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

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Re: Rick Ferri's new Core-4 (6 versions) Website

Post by UpperNwGuy » Thu Nov 01, 2018 3:37 pm

Greenman72 wrote:
Thu Nov 01, 2018 3:01 pm
One criticism/note--he does not include any municipal bond funds in any of his allocations. I would be interested in hearing why not.
I noticed that, too. My own four-fund portfolio is Total Stock, Total International, Total Bond, and Intermediate Tax Exempt.

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Re: Rick Ferri's new Core-4 (6 versions) Website

Post by Rick Ferri » Thu Nov 01, 2018 3:49 pm

UpperNwGuy wrote:
Thu Nov 01, 2018 3:37 pm
Greenman72 wrote:
Thu Nov 01, 2018 3:01 pm
One criticism/note--he does not include any municipal bond funds in any of his allocations. I would be interested in hearing why not.
I noticed that, too. My own four-fund portfolio is Total Stock, Total International, Total Bond, and Intermediate Tax Exempt.
And that's perfectly fine. As I say on the website, you are free to mix, match and create your own.

Rick Ferri
The Education of an Index Investor: born in darkness, finds indexing enlightenment, overcomplicates everything, embraces simplicity.

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Re: Core-4 Investing is LIVE! It really is this time!

Post by Quercus Palustris » Thu Nov 01, 2018 11:39 pm

Interesting site - thank you, Rick. I have access to an ACWI/VT-like fund in my 401k at 0.05% ER which makes the Total Economy portfolio interesting - I'm rolling in an IRA soon and am trying to plan what funds to use.

Not sure what all the griping is about 4 flavors being too much or it being 24 portfolios? That'd be like claiming the 3 fund portfolio is really 100 portfolios because there's 100 ways you can split fixed:equity (or 10,000 because you can also vary domestic:foreign?). Having 4 easy to understand risk/allocation ratios seems like it'd be very useful for someone first starting out.

I kinda doubt all the people here are necessarily the intended (or receptive) audience, which is ok too.

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Re: Core-4 Investing is LIVE! It really is this time!

Post by jibantik » Fri Nov 02, 2018 12:00 am

Meh, I'll stick with my core-1: total world index.

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Core-4 Investing

Post by Ron Scott » Fri Nov 02, 2018 7:53 am

I don’t think something like core 4 is overly complex but it’ll be fun to see where we’re headed.

The original Boglehead, John C., is a 2-fund kinda guy. Most forum members seem to lean toward a separate 3-fund with international (stocks, but not bonds). There always seems to be a thread about Larry Swedlow portfolios on the forums. And now we have Rick Ferri’s thesis.

Don’t get me wrong. If bogleheads.org evolves into a place to advertise/promote a variety of competing approaches to investment including commercial services I’m perfectly fine with that. I have no role in the bogleheads company and it’s not for me to disagree with their business model. It’s just different.

Viva la difference?
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Re: Core-4 Investing

Post by retiringwhen » Fri Nov 02, 2018 8:15 am

Ron Scott wrote:
Fri Nov 02, 2018 7:53 am
I don’t think something like core 4 is overly complex but it’ll be interesting to see where we’re headed.

The original Boglehead, John C., is a 2-fund kinda guy. Most forum members seem to lean toward a separate 3-fund with international (stocks, but not bonds). There always seems to be a thread about Larry Swedlow portfolios on the forums. And now we have Rick Ferri’s thesis.

Don’t get me wrong. If bogleheads.org evolves into a place to advertise/promote a variety of competing approaches to investment including commercial services I’m perfectly fine with that. I have no role in the bogleheads company and it’s not for me to disagree with their business model. It’s just different.

Viva la difference?
Rick can defend himself, but I'll throw my thoughts in.

His site is free to users and is really just best seen as an online book to help self-managed investors educate themselves. He is totally and 100% transparent that he'll host fee-based advisors to advertise services for those who can't or won't DIY it. The advertising is solely there to pay for the upkeep of the site... I guess if he gets a hundred advisors linked to the site he may start making money, but at the rates he's asking this is definitely "pay my hosting bill" level fees. Besides this approach actually is not in the interest of 99% of all advisors so I don't expect he'll get more than a handful of true BogleHead type advisors advertising on his site. I expect he'll hope to make some royalties on books sales too, an age old noble pursuit...

This is probably (at this time) the most open and honest site out there and that includes just about every single site BH'ers tend to link to outside of this domain (Swedroe, WCI, etc...) Way more transparent than the hundreds of FIRE and related financial blogs that sneak tons of referral fee links and advertisements all through their sites with little or no disclosure. BTW, I started looking into credit card strategies and that community is almost hopelessly compromised by this disease. Even the folks that disclose their conflicts are not very open about the impact of those relationships...

About the only way he could be more transparent would be to simply ask the BH board to host the content on this domain. But, I actually think his idea of getting a cadre of advisors that are willing to work in the Core-4 (aka Bogleheadish) principles is a good idea. I think at least once a month a significant post by a newbie here who really needs an advisor gets posted to the forum and there is no real way to find them. This might be a start. I know one of the forum members (forgot exactly who) tried to start an advisor search service, but that is the only other idea. I tried some of the professional sites for CFP for example and found them counter-productive.

My family looked for an advisor for a Trust that really required a third-party advisor and co-trustee for non-investment reasons and we found the process horrible and fraught with difficulty. Basically couldn't do it without going the big-cost Corporate Trust Department approach. This may be an idea for Rick, BTW. How about thinking about adding a section for BH-style friendly trustee services?

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Re: Core-4 Investing

Post by Silk McCue » Fri Nov 02, 2018 8:17 am

Ron Scott wrote:
Fri Nov 02, 2018 7:53 am
And now we have Rick Ferri’s thesis.
Did you know that Rick Ferri has been a member since 2007 and his portfolio's are among the many that are discussed and utilized here?

Did you know that he was the co-editor of the Boglehead's Guide to Investing?

Did you know that he is the host of the new Bogleheads Guide to Investing podcast that was just recently started?

Did you know ...?


To learn more please check out this Wiki page.

https://www.bogleheads.org/wiki/Rick_Ferri

Cheers

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Re: Core-4 Investing

Post by Ron Scott » Fri Nov 02, 2018 8:21 am

Silk McCue wrote:
Fri Nov 02, 2018 8:17 am
Ron Scott wrote:
Fri Nov 02, 2018 7:53 am
And now we have Rick Ferri’s thesis.
Did you know that Rick Ferri has been a member since 2007 and his portfolio's are among the many that are discussed and utilized here?

Did you know that he was the co-editor of the Boglehead's Guide to Investing?

Did you know that he is the host of the new Bogleheads Guide to Investing podcast that was just recently started?

I did know those things. Got the book and listened to each podcast...like 'em too.

Your point?
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: Core-4 Investing is LIVE! It really is this time!

Post by rudeboy » Fri Nov 02, 2018 8:39 am

jibantik wrote:
Fri Nov 02, 2018 12:00 am
Meh, I'll stick with my core-1: total world index.
+1.

Total World for me too.

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Re: Core-4 Investing is LIVE! It really is this time!

Post by RobLIC » Fri Nov 02, 2018 8:51 am

This probably-overthought question is for Mr. Ferri or anyone with insight.

How come model portfolios are generally presented as 60/40 or 80/20, but rarely 70/30 (I.e. not in odd numbers)?

Of course I understand we are intended to tweak suggestions from any model portfolio to our own needs. And that 10% in either direction isn’t likely to have an enormous influence on anyone’s returns ... And also for the record, I find the examples on Rick’s new site incredibly helpful.

It just got me thinking that even Vanguard only offers LS funds in those even numbered proportions — I wanted to see what a basic 4-fund breakdown might look like at 70/30 and was surprised to see Vanguard offers this product in a one-fund solution to Institutional investors, just not personal investors.

As a consumer, I’d love to buy a static 70/30 global portfolio in one fund.

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Re: Core-4 Investing is LIVE! It really is this time!

Post by Dave55 » Fri Nov 02, 2018 8:53 am

Rick I think the Core-4 site is great. It brings clarity to a number of solid options and sub-categories within them for both beginning and advanced investors. Thanks for sharing your knowledge and expertise.

Dave

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Re: Core-4 Investing is LIVE! It really is this time!

Post by Elysium » Fri Nov 02, 2018 9:10 am

I am probably going to be a minority voice on this, but I have to say that I am not impressed after going through the portfolio allocations and the ETF selections.

First, the only core-4 portffolio that is worth consideration is the classic one. However, there is nothing to this core-4 that the three-fund portfolio doesn't do well, exccept for the inclusion of REIT, which most people can agree is an unwanted component that may or may not help.

Second, the rest of the portfolios aren't simple, deviates from the market, and so introduces an active decision to overweight certain secctors like high divided yielding companies in case of income-seeker portfolio, and some not so simple inclusions like preferred stocks, and floating bank rate funds. Even within that it can be argued whether high divided yield is better than dividend growth, evidence shows dividend growth is better strategy for income seekers than high dividend yield. But this is a small point. Bigger point is too much complexity and active decisions, for too little.

Third, I am going to argue that none of these portfolios will likely keep up with a simple 3-fund portfolio over a long period of time, and not in a significant way even if they do. Then, all it does is give tracking error and introduces higher risk of underperformance, selling at wrong time, etc.

Those are just some of the many issues I see. There are many others. Bottomline, why bother? it's not going to move the needle very much, and creates more problems than it solves.

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Re: Core-4 Investing is LIVE! It really is this time!

Post by Rick Ferri » Fri Nov 02, 2018 11:25 am

Elysium,

Philosophy is universal: Strategy is personal

We all have the same investment philosophy. We believe in low fees, not timing markets, and not trying to beat the markets. We are Bogleheads

That being said, you will not find two people on this forum who hold the exact same portfolio. That's because everyone is unique and we all have unique financial situations, backgrounds and experiences. The ideal portfolio for you is typically not the ideal portfolio for the person living next to you. Strategy is unique to each one of us. That's why the Core-4-com website has alternatives. These are suggestions, guides, ideas for people to consider and talk about. There is no one right answer. There is only the right answer for you.

Since the three-fund portfolio works for you, then that's what you should do.

Rick Ferri
The Education of an Index Investor: born in darkness, finds indexing enlightenment, overcomplicates everything, embraces simplicity.

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Re: Core-4 Investing is LIVE! It really is this time!

Post by Elysium » Fri Nov 02, 2018 11:50 am

Rick Ferri wrote:
Fri Nov 02, 2018 11:25 am
Elysium,

Philosophy is universal: Strategy is personal

We all have the same investment philosophy. We believe in low fees, not timing markets, and not trying to beat the markets. We are Bogleheads

That being said, you will not find two people on this forum who hold the exact same portfolio. That's because everyone is unique and we all have unique financial situations, backgrounds and experiences. The ideal portfolio for you is typically not the ideal portfolio for the person living next to you. Strategy is unique to each one of us. That's why the Core-4-com website has alternatives. These are suggestions, guides, ideas for people to consider and talk about. There is no one right answer. There is only the right answer for you.

Since the three-fund portfolio works for you, then that's what you should do.

Rick Ferri
Fair enough. I don't have a 3-fund portfolio myself, but do think most investors are better off with one. I have a strategy similar to core-4 where I have four major buckets, US Large, US Small, Intl, and Bonds, within that I may use various components such as small value and EM, but I benchmark myself against a core-4 of US TSM, US Small Value, Total Intl, and US TBM. To me, this is an appropriate benchmark for my strategy because I have made active decisions to over / under weight certain assets. I do think sometimes that I may be better off with a 3-fund portfolio for it's efficiency and simplicity.

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Re: Core-4 Investing is LIVE! It really is this time!

Post by 2pedals » Fri Nov 02, 2018 12:09 pm

Rick

I like your website. Do you have any recommendations or general guidelines for which portfolio to pick based on your stage in life such as someone entering early career versus recently retired? For example which of the core-4 would you use for an early retiree. Looks like a lot of cross over between each. For example someone as an early retiree might be attracted to the income seeker portfolio but not the aggressive growth asset allocation

p.s. I am an early retiree.

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Re: Core-4 Investing is LIVE! It really is this time!

Post by Jiu Jitsu Fighter » Fri Nov 02, 2018 4:27 pm

I must have missed the Larry Portfolio (4 funds).

SV (BOSVX)
ISV (DISVX)
EV (DFEVX)
FI (Intermediate-Term Treasury)

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Re: Core-4 Investing is LIVE! It really is this time!

Post by Silk McCue » Fri Nov 02, 2018 4:31 pm

Jiu Jitsu Fighter wrote:
Fri Nov 02, 2018 4:27 pm
I must have missed the Larry Portfolio (4 funds).

SV (BOSVX)
ISV (DISVX)
EV (DFEVX)
FI (Intermediate-Term Treasury)
The Larry Porfolio is down the street east 2 blocks then turn left and walk for100 yards and then knock on the door at the old Italian Bakery. :).

Cheers

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Re: Core-4 Investing is LIVE! It really is this time!

Post by spdoublebass » Fri Nov 02, 2018 4:48 pm

2pedals wrote:
Fri Nov 02, 2018 12:09 pm
Rick

I like your website. Do you have any recommendations or general guidelines for which portfolio to pick based on your stage in life such as someone entering early career versus recently retired? For example which of the core-4 would you use for an early retiree. Looks like a lot of cross over between each. For example someone as an early retiree might be attracted to the income seeker portfolio but not the aggressive growth asset allocation

p.s. I am an early retiree.
This is a good question.

One thing I find hard to figure out on this forum is what perspective people are coming from.
Example: what may be good for someone with a larger portfolio might not be the best situation for someone with a smaller portfolio. I'm not only speaking of Risk Tolerance, but overall strategy.

Take the Income Seeker Core-4, I know that's not for me being in the early accumulation stage, but I'm curious who should implement that strategy. Or..., who should move from one portfolio to another and at what time.

I know this may be elementary for many BH's on this forum, but for newer members it could be useful.
I'm trying to think, but nothing happens

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Re: Core-4 Investing is LIVE! It really is this time!

Post by Rick Ferri » Fri Nov 02, 2018 7:46 pm

2pedals wrote:
Fri Nov 02, 2018 12:09 pm
Rick

I like your website. Do you have any recommendations or general guidelines for which portfolio to pick based on your stage in life such as someone entering early career versus recently retired? For example which of the core-4 would you use for an early retiree. Looks like a lot of cross over between each. For example someone as an early retiree might be attracted to the income seeker portfolio but not the aggressive growth asset allocation

p.s. I am an early retiree.
I couldn’t say. It isn’t possible to give a one size fits all answer. I couldn’t say which 60/40 Core-4 will outperform the other 60/40 portfolios, or which allocation someone of some age should use. These are all “strategy” questions that are unique to each individual.

But this is a great question. I’ll write a detailed blog about this and post it on the Core-4 Blog in the next week.

Thanks for the idea!

Rick Ferri
The Education of an Index Investor: born in darkness, finds indexing enlightenment, overcomplicates everything, embraces simplicity.

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Re: Core-4 Investing is LIVE! It really is this time!

Post by jibantik » Sat Nov 03, 2018 9:10 am

Can someone explain to me why, aside from asset allocation to handle volatility as you approach retirement, there would be different fund strategies? Shouldn't we just hold the market at low fees?

What differences between people would account for one to hold REITs vs. high dividend stocks vs. small value stocks etc.? Aren't those choices pure speculation??

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Re: Core-4 Investing is LIVE! It really is this time!

Post by zaboomafoozarg » Sat Nov 03, 2018 10:01 am

jibantik wrote:
Sat Nov 03, 2018 9:10 am
Aren't those choices pure speculation??
It's definitely a type of speculation, but perhaps not "pure speculation" which seems to imply randomness of choice. For something like small value or REIT tilts, they are chosen because they offered a diversification benefit when overweighted for the last few decades (increased return or decreased volatility), and those who overweight them now are betting this behavior will continue in the next few decades.

Some say it will, others say it won't. There are dozens of academic papers and thousands of debate threads about it on this forum. But I'm enough of a slice & dice addict that I want to tilt 30% of my equity portfolio, stick with it for decades, and see how I end up.

And who knows, maybe when I'm 50 or 60 I'll get tired of the additional complexity and just switch to a single fund.

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Re: Core-4 Investing is LIVE! It really is this time!

Post by jibantik » Sat Nov 03, 2018 10:30 am

zaboomafoozarg wrote:
Sat Nov 03, 2018 10:01 am
jibantik wrote:
Sat Nov 03, 2018 9:10 am
Aren't those choices pure speculation??
It's definitely a type of speculation, but perhaps not "pure speculation" which seems to imply randomness of choice. For something like small value or REIT tilts, they are chosen because they offered a diversification benefit when overweighted for the last few decades (increased return or decreased volatility), and those who overweight them now are betting this behavior will continue in the next few decades.

Some say it will, others say it won't. There are dozens of academic papers and thousands of debate threads about it on this forum. But I'm enough of a slice & dice addict that I want to tilt 30% of my equity portfolio, stick with it for decades, and see how I end up.

And who knows, maybe when I'm 50 or 60 I'll get tired of the additional complexity and just switch to a single fund.
Ok, I think we both agree it's speculation, but I guess "pure" may not be the correct adjective as it's an educated speculation, so not completely random. Personally, I think it's foolish to speculate, at least for myself and the vast majority of people, in a place where there are so many people are smarter than me, with better tools than me, who do this full time, have more connections than me, etc., and all in a non-zero sum game.

My other question about this is, Rick has several portfolios setup and he has said that which strategy you select is unique to the individual. How is choosing some of these over others unique to the individual? For instance, what specific quality of an individual would make it such that an individual would choose (1) tilting small value VS. (2) tilting REITs? And, at the end of the day, are these not just speculations that shouldn't be encouraged?

What I would like to know is the broad description of three types of people: one who should choose classic, one who should choose total economy, and one who should choose global markets. What are the differences of these people that would make them select different portfolios?

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Re: Core-4 Investing is LIVE! It really is this time!

Post by Greenman72 » Sat Nov 03, 2018 11:37 am

jibantik wrote:
Sat Nov 03, 2018 9:10 am
Can someone explain to me why, aside from asset allocation to handle volatility as you approach retirement, there would be different fund strategies? Shouldn't we just hold the market at low fees?

What differences between people would account for one to hold REITs vs. high dividend stocks vs. small value stocks etc.? Aren't those choices pure speculation??
Well, if the client is a trust, and the trust is supposed to pay out all the income, then you might want high income-producing assets, such as REITs, dividends, preferred stock dividends, and interest. (Because capital gains are not normally part of DNI, and aren’t normally paid to the beneficiary.).

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Re: Core-4 Investing is LIVE! It really is this time!

Post by Rick Ferri » Sat Nov 03, 2018 12:25 pm

My other question about this is, Rick has several portfolios setup and he has said that which strategy you select is unique to the individual. How is choosing some of these over others unique to the individual? For instance, what specific quality of an individual would make it such that an individual would choose (1) tilting small value VS. (2) tilting REITs? And, at the end of the day, are these not just speculations that shouldn't be encouraged?
The portfolio that best fits the individual is the portfolio the individual will stick with over the long-term. That portfolio is not going to be the same for everyone who has the same tolerance for risk. Theoretically it might be, but practically it is not due to the human condition. It's why we have different flavors of ice cream and why Henry Ford was wrong in his view that Ford customers can have any color car they want as long as it's black.

Rick Ferri
The Education of an Index Investor: born in darkness, finds indexing enlightenment, overcomplicates everything, embraces simplicity.

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Re: Core-4 Investing is LIVE! It really is this time!

Post by dwickenh » Sat Nov 03, 2018 12:58 pm

Thanks Rick for the new Core 4 website,

I was intrigued with the multiple 4 fund portfolios and understand that the idea is not to market time between them.

Anyone that has been on Bogleheads for any time should know to pick a flavor and stick with it.

Thank you for the mutiple funds to meet the requirements including possible tax loss harvesting pairs.

Best to you in this endeavor,

Dan

(p.s. Still working on my wife for the motor home)
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

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Re: Core-4 Investing is LIVE! It really is this time!

Post by RadAudit » Sun Nov 04, 2018 12:05 pm

Mr. Ferri, thanks for the idea of Core-4.

Seems as if I've been almost a Core-4 investor for some time - and at least for me it's worked (so far).

Thanks again.
FI is the best revenge. LBYM. Invest the rest. Stay the course. - PS: The cavalry isn't coming, kids. You are on your own.

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Re: Core-4 Investing is LIVE! It really is this time!

Post by tj » Thu Nov 08, 2018 12:45 pm

Glad to see it's finally launched!

Curious about the advertising firm though. On Core-4 site says they only do passive strategies for all accounts, but when you go to the firm's site, says they do individual stock picking as well.

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Re: Core-4 Investing is LIVE! It really is this time!

Post by Rick Ferri » Thu Nov 08, 2018 1:28 pm

As long as the advisers "primarily" do low-fee investing or do it by default. I won't preclude a manager if they'll manage a client account that has low-cost basis stocks or the clients wants a few individual names.

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Re: Core-4 Investing is LIVE! It really is this time!

Post by RadAudit » Thu Nov 08, 2018 1:58 pm

Now that all the threads are in the same spot, I'm just amazed at the strident opposition to a new (?) idea such as Core-4. Now, I'm not against spirited discussion; but, some of this is just my idea is better because I think so.

Might have missed it; but, has anyone done a comparative analysis / back testing with available data sets to support their opinion?
Last edited by RadAudit on Thu Nov 08, 2018 7:38 pm, edited 1 time in total.
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Re: Core-4 Investing is LIVE! It really is this time!

Post by Rick Ferri » Thu Nov 08, 2018 2:05 pm

jibantik wrote:
Sat Nov 03, 2018 10:30 am
What I would like to know is the broad description of three types of people: one who should choose classic, one who should choose total economy, and one who should choose global markets. What are the differences of these people that would make them select different portfolios?
I don't know what makes each investor tick, only that some people like chocolate ice-cream and others likes maple walnut.

Rick Ferri
The Education of an Index Investor: born in darkness, finds indexing enlightenment, overcomplicates everything, embraces simplicity.

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Re: Core-4 Investing is LIVE! It really is this time!

Post by psteinx » Thu Nov 08, 2018 2:09 pm

Some extended thoughts:

1) Preface - I have generally been a fan of Mr. Ferri and his postings on this site (Bogleheads). I have browsed the new site briefly, but not really in-depth.

2) The site design, visually, doesn't seem very crisp or modern. Feels a bit low budget.

3) Mr. Ferri clearly has at least some ambitions of turning this into a significant commercial enterprise. It may get there, it may not. But "BECOME AN AFFILIATED ADVISER" and discussion of ""THE CORE-4 ADVISER ALLIANCE" suggests Ferri's potential ambitions are well beyond a few web ads defraying a few hundred bucks in hosting costs.

4) Mr. Ferri aims to educate and encourage investors to use the (supposedly) simple approach he advocates. But he drapes the name in trademark registrations. He wants to own this concept. It's a marketing pitch. AFAIK, Taylor does not assert that others using his recommended 3 fund portfolio (EDIT - even, perhaps, for commercial purposes) are violating his trademark or must be part of an alliance with him.

5) Fundamentally, it's a weird implementation, seemingly at cross purposes with itself. Called Core-4 (TM, of course), it would suggest simplicity and something close to the 3 and 4 and sometimes 2 fund portfolios that have been commonly discussed on BH for years. And yet, there are 6 flavors, using about 15 basic ingredients. Ferri is the advisor - what does HE think is best? Why not pick what HE thinks is best, and have 1 flavor, plus perhaps a variant for those with ESG concerns?

6) Doesn't seem to be very tax-aware. One of the strongest reasons why investors might logically choose to vary their portfolio from a simple standard vanilla flavor (whatever combination of ingredients goes into vanilla) is to address their specific tax concerns. But Core-4 (TM) often uses global equity funds (presumably to free up one slot in the 4 slot system, consolidating domestic and international equity), even though, if I understand correctly, global equity funds are less favorable than a 2 fund (separate domestic and international equity) for investors who can use the foreign tax credit. Similarly, no apparent inclusion of munis (as someone upthread mentions). EDIT - Also, should probably discuss some of the basics of tax-deferred accounts and investing when one has some taxable and some tax-deferred space. Perhaps this was deeper in the site/text than I ventured, and maybe it's not quite in-line with the overall push of the site, but still important, even for relatively less sophisticated/experienced investors.

7) Fundamentally, which things does Ferri consider good?

Domestic and International equity - yeah, clearly.
Bonds - yes (but not munis, apparently)
REITs - yes, he likes these, but drops them from some flavors, again, presumably because of pressure on the 4 available slots
TIPS - sometimes
Small value (equity) - sometimes
Etc - lots of ingredients in his recipes, but his guiding paradigm limits him to only 4 ingredients in any single recipe

====

I think Ferri has the wrong approach, or at least a muddled one. Simplicity can be good, especially for addressing some of the behavioral aspects of investing. But to take a basic idea of simplicity, then muddle it like this defeats the purpose.
Last edited by psteinx on Thu Nov 08, 2018 2:25 pm, edited 1 time in total.

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